Document:

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                                                                    Exhibit 10.3

                 SECOND AMENDED AND RESTATED ADVISORY AGREEMENT

     THIS SECOND AMENDED AND RESTATED ADVISORY AGREEMENT, dated as of September
30, 2005, is between CORPORATE PROPERTY ASSOCIATES 16 - GLOBAL INCORPORATED, a
Maryland corporation (the "COMPANY"), and CAREY ASSET MANAGEMENT CORP., a
Delaware corporation and wholly-owned subsidiary of W. P. Carey & Co. LLC (the
"ADVISOR").

                                   WITNESSETH:

     WHEREAS, the Company intends to qualify as a REIT (as defined below), and
to invest its funds in investments permitted by the terms of any prospectus
pursuant to which it raised equity capital and Sections 856 through 860 of the
Code (as defined below);

     WHEREAS, the Company desires to avail itself of the experience, sources of
information, advice and assistance of, and certain facilities available to, the
Advisor and to have the Advisor undertake the duties and responsibilities
hereinafter set forth, on behalf of, and subject to the supervision of the Board
of Directors of the Company, all as provided herein; and

     WHEREAS, the Advisor is willing to render such services, subject to the
supervision of the Board of Directors, on the terms and conditions hereinafter
set forth;

     NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements contained herein, the parties hereto agree as follows:

     1. DEFINITIONS. As used in this Agreement, the following terms have the
definitions hereinafter indicated:

     Acquisition Expense. To the extent not paid or to be paid by the seller or
lessee in the case of a Property or the borrower in the case of a Loan, those
expenses, including but not limited to travel and communications expenses, the
cost of appraisals, title insurance, nonrefundable option payments on Property
not acquired, legal fees and expenses, accounting fees and expenses and
miscellaneous expenses, related to selection, acquisition and origination of
Properties and Loans, whether or not acquired. Acquisition Expenses shall not
include Acquisition Fees.

     Acquisition Expense Allowance. An amount equal to one half percent of the
Contract Purchase Price of a Property or Loan, to be paid to the Advisor in
connection with Properties and Loans acquired using proceeds of the Part I
Offering, to provide for the payment by the Advisor of Acquisition Expenses and
such other expenses as provided in Section 10(b) hereof.

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     Acquisition Fee. Any fee or commission (including any interest thereon)
paid by the Company to the Advisor or, with respect to Section 9(d), by the
Company to any party, in connection with the making or investing in Loans and
the purchase, development or construction of Properties by the Company. A
Development Fee or a Construction Fee paid to a Person not affiliated with the
Sponsor in connection with the actual development or construction of a project
after acquisition of the Property by the Company shall not be deemed an
Acquisition Fee. Acquisition Fees include, but are not limited to, any real
estate commission, selection fee, development fee (other than as described
above) or any fee of a similar nature, however designated. Acquisition Fees
include Subordinated Acquisition Fees unless the context otherwise requires.
Acquisition Fees shall not include Acquisition Expenses or the Acquisition
Expense Allowance.

     Adjusted Invested Assets. The average during any period of the aggregate
historical cost, or to the extent available for a particular asset, the most
recent Appraised Value, of the Investment Assets of the Company, before
accumulated reserves for depreciation or bad debt allowances or other similar
non-cash reserves, computed (unless otherwise specified) by taking the average
of such values at the end of each month during such period.

     Adjusted Investor Capital. As of any date, the Initial Investor Capital
reduced by any Redemptions, other than Redemptions intended to qualify as a
liquidity event for purposes of this Agreement, and by any other Distributions
on or prior to such date determined by the Board to be from Cash from Sales and
Financings.

     Adjusted Net Income. For any period, the total revenues recognized in such
period, less the total expenses recognized in such period, excluding additions
to reserves for depreciation and amortization, bad debts or other similar
non-cash reserves; provided, however, if the Advisor receives a Subordinated
Incentive Fee, Adjusted Net Income for purposes of calculating total allowable
Operating Expenses shall exclude any gain, losses or writedowns from the sale of
the Company's assets that gave rise to such Subordinated Incentive Fee.

     Advisor. Carey Asset Management Corp, a corporation organized under the
laws of the State of Delaware and wholly-owned by W. P. Carey & Co. LLC.

     Affiliate. An Affiliate of another Person shall include any of the
following: (i) any Person directly or indirectly owning, controlling, or
holding, with power to vote ten percent or more of the outstanding voting
securities of such other Person; (ii) any Person ten percent or more of whose
outstanding voting securities are directly or indirectly owned, controlled, or
held, with power to vote, by such other Person; (iii) any Person directly or
indirectly controlling, controlled by, or under common control with such other
Person; (iv) any executive officer, director, trustee or general partner of such
other Person; or (v) any legal entity for which such Person acts as an executive
officer, director, trustee or general partner.

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     Agreement. This Advisory Agreement.

     Appraised Value. Value according to an appraisal made by an Independent
Appraiser, which may take into consideration any factor deemed appropriate by
such Independent Appraiser, including, but not limited to, the terms and
conditions of any lease of the relevant property, the quality of any lessee's
credit and the conditions of the credit markets. The Appraised Value may be
greater than the construction cost or the replacement cost of the property. For
purposes of the definition of Adjusted Invested Assets, Appraised Value shall
not include the initial appraisal of any property in connection with the
acquisition of that property.

     Articles of Incorporation. Articles of Incorporation of the Company under
the General Corporation Law of Maryland, as amended from time to time, pursuant
to which the Company is organized.

     Asset Management Fee. The Asset Management Fee as defined in Section 9(a)
hereof.

     Average Invested Assets. The average during any period of the aggregate
book value of the assets of the Company invested, directly or indirectly, in
Properties and in Loans, before reserves for depreciation or bad debts or other
similar non-cash reserves computed by taking the average of such daily values at
the end of each month during such period.

     Board or Board of Directors. The Board of Directors of the Company.

     Bylaws. The bylaws of the Company.

     Cash from Financings. Net cash proceeds realized by the Company from the
financing of Investment Assets or the refinancing of any Company indebtedness.

     Cash from Sales. Net cash proceeds realized by the Company from the sale,
exchange or other disposition of any of its assets after deduction of all
expenses incurred in connection therewith. Cash from Sales shall not include
Cash from Financings.

     Cash from Sales and Financings. The total sum of Cash from Sales and Cash
from Financings.

     Cause. With respect to the termination of this Agreement, fraud, criminal
conduct, willful misconduct or willful or negligent breach of fiduciary duty by
the Advisor that, in each case, is determined by a majority of the Independent
Directors to be materially adverse to the Company.

     Change of Control. A change of control of the Company of a nature that
would be required to be reported in response to the disclosure requirements of

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Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of
1934, as amended (the "EXCHANGE ACT"), as enacted and in force on the date
hereof, whether or not the Company is then subject to such reporting
requirements; provided, however, that, without limitation, a Change of Control
shall be deemed to have occurred if: (i) any "person" (within the meaning of
Section 13(d) of the Exchange Act, as enacted and in force on the date hereof)
is or becomes the "beneficial owner" (as that term is defined in Rule 13d-3, as
enacted and in force on the date hereof, under the Exchange Act) of securities
of the Company representing 8.5% or more of the combined voting power of the
Company's securities then outstanding; (ii) there occurs a merger, consolidation
or other reorganization of the Company which is not approved by the Board; (iii)
there occurs a sale, exchange, transfer or other disposition of substantially
all of the assets of the Company to another entity, which disposition is not
approved by the Board; or (iv) there occurs a contested proxy solicitation of
the Shareholders of the Company that results in the contesting party electing
candidates to a majority of the Board's positions next up for election.

     Code. Internal Revenue Code of 1986, as amended.

     Company. Corporate Property Associates 16 - Global Incorporated, a
corporation organized under the laws of the State of Maryland.

     Competitive Real Estate Commission. The real estate or brokerage commission
paid for the purchase or sale of a property that is reasonable, customary and
competitive in light of the size, type and location of the property.

     Construction Fee. A fee or other remuneration for acting as general
contractor and/or construction manager to construct improvements, supervise and
coordinate projects or to provide major repairs or rehabilitation on a Property.

     Contract Purchase Price. The amount actually paid for, or allocated to, the
purchase, development, construction or improvement of a Property or acquired
Loan or, in the case of an originated Loan, the principal amount of such Loan,
exclusive, in each case, of Acquisition Fees, Acquisition Expenses and the
Acquisition Expense Allowance.

     Contract Sales Price. The total consideration received by the Company for
the sale of Properties and Loans.

     Cumulative Return. For the period for which the calculation is being made,
the percentage resulting from dividing (A) the total Distributions for such
period (not including Distributions out of Cash from Sales and Financings), by
(B) the product of (i) the average Adjusted Investor Capital for such period
(calculated on a daily basis), and (ii) the number of years (including fractions
thereof) elapsed during such period. Notwithstanding the foregoing, neither the
Shares received by the Advisor or its Affiliates for any consideration other
than

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cash, nor the Distributions in respect of such Shares, shall be included in the
foregoing calculation.

     Development Fee. A fee for the packaging of a Property including
negotiating and approving plans, and undertaking to assist in obtaining zoning
and necessary variances and necessary financing for the specific Property,
either initially or at a later date.

     Directors. The persons holding such office, as of any particular time,
under the Articles of Incorporation, whether they be the directors named therein
or additional or successor directors.

     Distributions. Distributions declared by the Board.

     Good Reason. With respect to the termination of this Agreement, (i) any
failure to obtain a satisfactory agreement from any successor to the Company to
assume and agree to perform the Company's obligations under this Agreement; or
(ii) any material breach of this Agreement of any nature whatsoever by the
Company; provided that such breach (a) is of a material term or condition of
this Agreement and (b) the Company has not cured such breach within 30 days of
written notice thereof or, in the case of any breach that cannot be cured within
30 days by reasonable effort, has not taken all necessary action within a
reasonable time period to cure such breach.

     Gross Offering Proceeds. The aggregate purchase price of Shares sold in any
Offering.

     Independent Appraiser. A qualified appraiser of real estate as determined
by the Board, who is not affiliated, directly or indirectly, with the Company,
the Advisor or their respective Affiliates. Membership in a nationally
recognized appraisal society such as the American Institute of Real Estate
Appraisers or the Society of Real Estate Appraisers shall be conclusive evidence
of such qualification.

     Independent Director. A Director of the Company who meets the criteria for
an Independent Director specified in the Bylaws.

     Individual. Any natural person and those organizations treated as natural
persons in Section 542(a) of the Code.

     Initial Closing Date. The first date on which Shares were issued pursuant
to an Offering.

     Initial Investor Capital. The total amount of capital invested from time to
time by Shareholders (computed at the Original Issue Price per Share), excluding
any Shares received by the Advisor or its Affiliates for any consideration other
than cash.

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     Investment Asset. Any Property, Loan or Other Permitted Investment Asset.

     Loan Refinancing Fee. The Loan Refinancing Fee as defined in Section 9(e)
hereof.

     Loans. The notes and other evidences of indebtedness or obligations
acquired or entered into by the Company as lender which are secured or
collateralized by personal property, or fee or leasehold interests in real
estate or other assets, including but not limited to first or subordinate
mortgage loans, construction loans, development loans, loans secured by capital
stock or any other assets or form of equity interest and any other type of loan
or financial arrangement, such as providing or arranging for letters of credit,
providing guarantees of obligations to third parties, or providing commitments
for loans. The term "Loans" shall not include leases which are not recognized as
leases for Federal income tax reporting purposes.

     Market Value. The value calculated by multiplying the total number of
outstanding Shares by the average closing price of the Shares over the 30
trading days beginning 180 calendar days after the Shares are first listed on a
national security exchange or included for quotation on Nasdaq, as the case may
be.

     Nasdaq. The national automated quotation system operated by the National
Association of Securities Dealers, Inc.

     Offering. The offering of Shares pursuant to a Prospectus.

     Operating Expenses. All operating, general and administrative expenses paid
or incurred by the Company, as determined under generally accepted accounting
principles, except the following: (i) interest and discounts and other cost of
borrowed money; (ii) taxes (including state and Federal income tax, property
taxes and assessments, franchise taxes and taxes of any other nature); (iii)
expenses of raising capital, including Organization and Offering Expenses,
printing, engraving, and other expenses, and taxes incurred in connection with
the issuance and distribution of the Company's Shares and Securities; (iv)
Acquisition Expenses, real estate commissions on resale of property and other
expenses connected with the acquisition, disposition, origination, ownership and
operation of real estate interests, mortgage loans, or other property, including
the costs of foreclosure, insurance premiums, legal services, brokerage and
sales commissions, maintenance, repair and improvement of property; (v)
Acquisition Fees or Subordinated Disposition Fees payable to the Advisor or any
other party; (vi) non-cash items, such as depreciation, amortization, depletion,
and additions to reserves for depreciation, amortization, depletion, losses and
bad debts; (vii) Termination Fees; and (viii) Subordinated Incentive Fees paid
in compliance with Section 9(i). Notwithstanding anything herein to the
contrary, Operating Expenses shall include the Asset Management Fee and the Loan
Refinancing Fee.

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     Organization and Offering Expenses. Those expenses payable by the Company
in connection with the formation, qualification and registration of the Company
and in marketing and distributing Shares, including, but not limited to: (i) the
preparation, printing, filing and delivery of any registration statement or
Prospectus and the preparing and printing of contractual agreements between the
Company and the Sales Agent and the Selected Dealers (including copies thereof);
(ii) the preparing and printing of the Articles of Incorporation and Bylaws,
solicitation material and related documents and the filing and/or recording of
such documents necessary to comply with the laws of the State of Maryland for
the formation of a corporation and thereafter for the continued good standing of
a corporation; (iii) the qualification or registration of the Shares under state
securities or "Blue Sky" laws; (iv) any escrow arrangements, including any
compensation to an escrow agent; (v) the filing fees payable to the SEC and to
the National Association of Securities Dealers, Inc.; (vi) reimbursement for the
reasonable and identifiable out-of-pocket expenses of the Sales Agent and the
Selected Dealers, including the cost of their counsel; (vii) the fees of the
Company's counsel; (viii) all advertising expenses incurred in connection with
the Offering, including the cost of all sales literature and the costs related
to investor and broker-dealer sales and information meetings and marketing
incentive programs; and (ix) selling commissions, marketing fees, incentive
fees, due diligence fees and wholesaling fees and expenses incurred in
connection with the sale of the Shares.

     Original Issue Price. For any share issued in an Offering, $10 per Share,
regardless of whether reduced selling commissions were paid in connection with
the purchase of such Shares from the Company.

     Other Permitted Investment Asset. An asset, other than cash, cash
equivalents, short term bonds, auction rate securities and similar short term
investments, acquired by the Company for investment purposes that is not a Loan
or a Property and is consistent with the investment objectives and policies of
the Company.

     Other Permitted Investment Assets Fee. The Other Permitted Investment
Assets Fee as defined in Section 9(h).

     Part I Offering. The Offering of 110,000,000 Shares of the Company,
declared effective by the Securities and Exchange Commission pursuant to the
Company's Registration Statement on Form S-11 (File No. 333-106838).

     Part II Offering. The Offering of 55,000,000 Shares of the Company,
declared effective by the Securities and Exchange Commission pursuant to the
Company's Registration Statement on Form S-11 (File No. 333-119265).

     Person. An Individual, corporation, partnership, joint venture,
association, company, trust, bank, or other entity, or government or any agency
or political subdivision of a government.

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     Preferred Return. A Cumulative Return of six percent computed from the
Initial Closing Date through the date as of which such amount is being
calculated.

     Property or Properties. The Company's partial or entire interest in real
property (including leasehold interests) and personal or mixed property
connected therewith.

     Property Management Fee. A fee for property management services rendered by
the Advisor or its Affiliates in connection with Properties acquired directly or
through foreclosure.

     Prospectus. Any prospectus pursuant to which the Company offers Shares in a
public offering, as the same may at any time and from time to time be amended or
supplemented after the effective date of the registration statement in which it
is included.

     Redemptions. An amount determined by multiplying the number of Shares
redeemed by the Original Issue Price.

     REIT. A real estate investment trust, as defined in Sections 856-860 of the
Code.

     Sales Agent. Carey Financial Corporation.

     Securities. Any stock, shares (other than currently outstanding Shares and
subsequently issued Shares), voting trust certificates, bonds, debentures, notes
or other evidences of indebtedness, secured or unsecured, convertible,
subordinated or otherwise or in general any instruments commonly known as
"securities" or any certificate of interest, shares or participation in
temporary or interim certificates for receipts (or, guarantees of, or warrants,
options or rights to subscribe to, purchase or acquire any of the foregoing),
which subsequently may be issued by the Company.

     Selected Dealers. Broker-dealers who are members of the National
Association of Securities Dealers, Inc. and who have executed an agreement with
the Sales Agent in which the Selected Dealers agree to participate with the
Sales Agent in the Offering.

     Shareholders. Those Persons who, at the time any calculation hereunder is
to be made, are shown as holders of record of Shares on the books and records of
the Company.

     Shares. All of the shares of common stock of the Company, $.001 par value,
and any other shares of common stock of the Company.

     Sponsor. W.P. Carey & Co. LLC and any other Person directly or indirectly
instrumental in organizing, wholly or in part, the Company or any person who
will control, manage or participate in the management of the

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Company, and any Affiliate of any such person. Sponsor does not include a person
whose only relationship to the Company is that of an independent property
manager and whose only compensation is as such. Sponsor also does not include
wholly independent third parties such as attorneys, accountants and underwriters
whose only compensation is for professional services.

     Subordinated Acquisition Fee. The Subordinated Acquisition Fee as defined
in Section 9(c).

     Subordinated Disposition Fee. The Subordinated Disposition Fee as defined
in Section 9(g) hereof.

     Subordinated Incentive Fee. The Subordinated Incentive Fee as defined in
Section 9(i) hereof.

     Termination Date. The effective date of any termination of this Agreement.

     Termination Fee. An amount equal to 15% of the amount, if any, by which (1)
the fair value of the Investment Assets on the Termination Date, less the amount
of all indebtedness secured by such Investment Assets, exceeds (2) the total of
the Adjusted Investor Capital plus an amount equal to the Preferred Return
through the Termination Date reduced by the total Distributions paid by the
Company from its inception through the Termination Date (other than
Distributions made from Cash from Sales and Financings that are counted in
determining Adjusted Investor Capital). For purposes of calculating this Fee (i)
the fair value of any Property shall be its Appraised Value, and (ii) any
payments in respect of redeemed Shares (other than in respect of Redemptions
intended to qualify as a liquidity event for purposes of this Agreement). Shares
received by the Advisor or its Affiliates for any consideration other than cash
and the Distributions in respect of such Shares shall be excluded.

     Total Property Cost. With regard to any Property or Loan, an amount equal
to the sum of the Contract Purchase Price of such Property or Loan plus the
Acquisition Fees paid in connection with such Property or Loan.

     Two Percent/25% Guidelines. The requirement that, in the 12-month period
immediately preceding the end of any fiscal quarter, the Operating Expenses not
exceed the greater of two percent of the Company's Average Invested Assets
during such 12-month period or 25% of the Company's Adjusted Net Income over the
same 12-month period.

     2. APPOINTMENT. The Company hereby appoints the Advisor to serve as its
advisor on the terms and conditions set forth in this Agreement, and the Advisor
hereby accepts such appointment.

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     3. DUTIES OF THE ADVISOR. The Advisor undertakes to use its best efforts to
present to the Company potential investment opportunities and to provide a
continuing and suitable investment program consistent with the investment
objectives and policies of the Company as determined and adopted from time to
time by the Board. In performance of this undertaking, subject to the
supervision of the Board and consistent with the provisions of the Articles of
Incorporation and Bylaws of the Company and any Prospectus pursuant to which
Shares are offered, the Advisor shall, either directly or by engaging an
Affiliate:

          (a) serve as the Company's investment and financial advisor and
     provide research and economic and statistical data in connection with the
     Company's assets and investment policies;

          (b) provide the daily management of the Company and perform and
     supervise the various administrative functions reasonably necessary for the
     management of the Company;

          (c) investigate, select, and, on behalf of the Company, engage and
     conduct business with such Persons as the Advisor deems necessary to the
     proper performance of its obligations hereunder, including but not limited
     to consultants, accountants, correspondents, lenders, technical advisors,
     attorneys, brokers, underwriters, corporate fiduciaries, escrow agents,
     depositaries, custodians, agents for collection, insurers, insurance
     agents, banks, builders, developers, property owners, mortgagors, and any
     and all agents for any of the foregoing, including Affiliates of the
     Advisor, and Persons acting in any other capacity deemed by the Advisor
     necessary or desirable for the performance of any of the foregoing
     services, including but not limited to entering into contracts in the name
     of the Company with any of the foregoing;

          (d) consult with Directors of the Company and assist the Board in the
     formulation and implementation of the Company's financial policies and, as
     necessary, furnish the Board with advice and recommendations with respect
     to the making of investments consistent with the investment objectives and
     policies of the Company and in connection with any borrowings proposed to
     be undertaken by the Company;

          (e) subject to the provisions of Sections 3(g) and 4 hereof: (i)
     locate, analyze and select potential investments in Investment Assets; (ii)
     structure and negotiate the terms and conditions of transactions pursuant
     to which investments in Investment Assets will be made, purchased or
     acquired by the Company; (iii) make investments in Investment Assets on
     behalf of the Company in compliance with the investment objectives and
     policies of the Company; (iv) arrange for financing and refinancing of,
     make other changes in the asset or capital structure of, dispose of,
     reinvest the proceeds from the sale of, or otherwise deal with the
     investments in, Investment Assets; and (v) enter into leases and service
     contracts for

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     Properties and, to the extent necessary, perform all other operational
     functions for the maintenance and administration of such Properties;

          (f) provide the Board with periodic reports regarding prospective
     investments in Investment Assets;

          (g) obtain the prior approval of the Board (including a majority of
     the Independent Directors) for any and all investments in Property which do
     not meet all of the requirements set forth in Section 4(b) hereof;

          (h) negotiate on behalf of the Company with banks or lenders for loans
     to be made to the Company, and negotiate on behalf of the Company with
     investment banking firms and broker-dealers or negotiate private sales of
     Shares and Securities or obtain loans for the Company, but in no event in
     such a way so that the Advisor shall be acting as broker-dealer or
     underwriter; and provided, further, that any fees and costs payable to
     third parties incurred by the Advisor in connection with the foregoing
     shall be the responsibility of the Company;

          (i) obtain reports (which may be prepared by the Advisor or its
     Affiliates), where appropriate, concerning the value of investments or
     contemplated investments of the Company in Investment Assets;

          (j) obtain for, or provide to, the Company such services as may be
     required in acquiring, managing and disposing of Investment Assets,
     including, but not limited to: (i) the negotiation, making and servicing of
     Loans; (ii) the disbursement and collection of Company monies; (iii) the
     payment of debts of and fulfillment of the obligations of the Company; and
     (iv) the handling, prosecuting and settling of any claims of or against the
     Company, including, but not limited to, foreclosing and otherwise enforcing
     mortgages and other liens securing the Loans;

          (k) from time to time, or at any time reasonably requested by the
     Board, make reports to the Board of its performance of services to the
     Company under this Agreement;

          (l) communicate on behalf of the Company with Shareholders as required
     to satisfy the reporting and other requirements of any governmental bodies
     or agencies to Shareholders and third parties and otherwise as requested by
     the Company;

          (m) provide or arrange for administrative services and items, legal
     and other services, office space, office furnishings, personnel and other
     overhead items necessary and incidental to the Company's business and
     operations;

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          (n) provide the Company with such accounting data and any other
     information requested by the Company concerning the investment activities
     of the Company as shall be required to prepare and to file all periodic
     financial reports and returns required to be filed with the Securities and
     Exchange Commission and any other regulatory agency, including annual
     financial statements;

          (o) maintain the books and records of the Company;

          (p) supervise the performance of such ministerial and administrative
     functions as may be necessary in connection with the daily operations of
     the Properties and Loans;

          (q) provide the Company with all necessary cash management services;

          (r) do all things necessary to assure its ability to render the
     services described in this Agreement;

          (s) perform such other services as may be required from time to time
     for management and other activities relating to the assets of the Company
     as the Advisor shall deem advisable under the particular circumstances;

          (t) arrange to obtain on behalf of the Company as requested by the
     Board, and deliver to or maintain on behalf of the Company copies of, all
     appraisals obtained in connection with investments in Properties and Loans;
     and

          (u) if a transaction, proposed transaction or other matter requires
     approval by the Board or by the Independent Directors, deliver to the Board
     or the Independent Directors, as the case may be, all documentation
     reasonably requested by them to properly evaluate such transaction,
     proposed transaction or other matter.

     4. AUTHORITY OF ADVISOR.

          (a) Pursuant to the terms of this Agreement (including the
     restrictions included in this Section 4 and in Section 7 hereof), and
     subject to the continuing and exclusive authority of the Board over the
     management of the Company, the Board hereby delegates to the Advisor the
     authority to: (1) locate, analyze and select investment opportunities; (2)
     structure the terms and conditions of transactions pursuant to which
     investments will be made or acquired for the Company; (3) acquire Property,
     make or acquire Loans and make or acquire Other Permitted Investment Assets
     in compliance with the investment objectives and policies of the Company;
     (4) arrange for financing or refinancing, or make

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     changes in the asset or capital structure of, and dispose of or otherwise
     deal with, Investment Assets; (5) enter into leases and service contracts
     for Properties, and perform other property level operations; (6) oversee
     non-affiliated property managers and other non-affiliated Persons who
     perform services for the Company; and (7) undertake accounting and other
     record-keeping functions at the Investment Asset level.

          (b) Notwithstanding the foregoing, any investment in Property,
     including any acquisition of any Property by the Company (as well as any
     financing acquired by the Company in connection with such acquisition),
     will require the prior approval of the Board unless, prior to completion of
     any such transaction, the Advisor provides the Company with:

               (i) an appraisal for the Property indicating that the Total
          Property Cost of the Property does not exceed the Appraised Value of
          the Property; and

               (ii) a representation from the Advisor that the Property, in
          conjunction with the Company's other investments and proposed
          investments, at the time the Company is committed to purchase the
          Property, is reasonably expected to fulfill the Company's investment
          objectives and policies as established by the Board and then in
          effect.

          (c) Notwithstanding the foregoing, any investment in a Loan, including
     any acquisition of any Loan by the Company, shall comply with Article VIII
     (Restrictions on Investments and Activities) and related sections of the
     Bylaws.

          (d) Notwithstanding the foregoing, the prior approval of the Board,
     including a majority of the Independent Directors and a majority of the
     Directors not interested in the transaction, will be required for: (i)
     investments in Properties made through co-investment or joint venture
     arrangements with the Sponsor, the Advisor or any of their Affiliates; (ii)
     investments in Investment Assets which are not contemplated by the terms of
     a Prospectus; (iii) transactions that present issues which involve
     conflicts of interest for the Advisor or an Affiliate (other than conflicts
     involving the payment of fees or the reimbursement of expenses); (iv) the
     lease of assets to the Sponsor, any Director, the Advisor or any Affiliate
     of the Advisor; (v) any purchase or sale of an Investment Asset from or to
     the Advisor or an Affiliate; and (vi) the retention of any Affiliate of the
     Advisor to provide services to the Company not expressly contemplated by
     this Agreement and the terms of such services by such Affiliate. In
     addition, the Advisor shall comply with any further approval requirements
     set forth in the Bylaws.

                                       13

<PAGE>

          (e) The Board may, at any time upon the giving of notice to the
     Advisor, modify or revoke the authority set forth in this Section 4. If and
     to the extent the Board so modifies or revokes the authority contained
     herein, the Advisor shall henceforth comply with such modification or
     revocation, provided however, that such modification or revocation shall be
     effective upon receipt by the Advisor and shall not be applicable to
     investment transactions to which the Advisor has committed the Company
     prior to the date of receipt by the Advisor of such notification.

     5. BANK ACCOUNTS. The Advisor may establish and maintain one or more bank
accounts in its own name for the account of the Company or in the name of the
Company and may collect and deposit into any such account or accounts, and
disburse from any such account or accounts, any money on behalf of the Company,
provided that no funds shall be commingled with the funds of the Advisor; and
the Advisor shall from time to time render appropriate accountings of such
collections and payments to the Board and to the auditors of the Company.

     6. RECORDS; ACCESS. The Advisor shall maintain appropriate records of all
its activities hereunder and make such records available for inspection by the
Board and by counsel, auditors and authorized agents of the Company, at any time
or from time to time during normal business hours. The Advisor shall at all
reasonable times have access to the books and records of the Company.

     7. LIMITATIONS ON ACTIVITIES. Anything else in this Agreement to the
contrary notwithstanding, the Advisor shall refrain from taking any action
which, in its sole judgment made in good faith, would adversely affect the
status of the Company as a REIT, subject the Company to regulation under the
Investment Company Act of 1940, would violate any law, rule, regulation or
statement of policy of any governmental body or agency having jurisdiction over
the Company, its Shares or its Securities, or otherwise not be permitted by the
Articles of Incorporation or Bylaws, except if such action shall be ordered by
the Board, in which case the Advisor shall notify promptly the Board of the
Advisor's judgment of the potential impact of such action and shall refrain from
taking such action until it receives further clarification or instructions from
the Board. In such event the Advisor shall have no liability for acting in
accordance with the specific instructions of the Board so given. Notwithstanding
the foregoing, the Advisor, its shareholders, directors, officers and employees,
and partners, shareholders, directors and officers of the Advisor's shareholders
and Affiliates of any of them, shall not be liable to the Company, or to the
Directors or Shareholders for any act or omission by the Advisor, its
shareholders, directors, officers and employees, or partners, shareholders,
directors or officers of the Advisor's shareholders except as provided in
Sections 20 and 22 hereof.

     8. RELATIONSHIP WITH DIRECTORS. There shall be no limitation on any
shareholder, director, officer, employee or Affiliate of the Advisor serving

                                       14

<PAGE>

as a Director or an officer of the Company, except that no employee of the
Advisor or its Affiliates who also is a Director or officer of the Company shall
receive any compensation from the Company for serving as a Director or officer
other than for reasonable reimbursement for travel and related expenses incurred
in attending meetings of the Board; for the avoidance of doubt, the limitations
of this Section 8 shall not apply to any compensation paid by the Advisor or any
Affiliate for which the Company reimbursed the Advisor or Affiliate in
accordance with Section 10 hereof.

     9. FEES.

          (a) ASSET MANAGEMENT FEE. The Company shall pay to the Advisor as
     compensation for the advisory services rendered to the Company hereunder an
     amount equal to one percent per annum of the Adjusted Invested Assets of
     the Company (the "ASSET MANAGEMENT FEE") calculated as set forth below. The
     Asset Management Fee will be calculated monthly, beginning with the month
     in which the Company first makes an investment in Investment Assets, on the
     basis of one-twelfth of one percent of the Adjusted Invested Assets for
     that month, computed as a daily average. One-half of the Asset Management
     Fee calculated with respect to each month shall be payable on the first
     business day following such month. One-half of such Asset Management Fee
     shall be subordinated to the extent described below and shall be payable
     quarterly. The subordinated Asset Management Fee for any quarter shall be
     payable only if the Preferred Return has been met through the end of the
     applicable quarter. Any portion of the subordinated Asset Management Fee
     not paid due to the Company's failure to meet the Preferred Return shall be
     paid by the Company, to the extent it is not restricted by the 2%/25%
     Guidelines as described below, at the end of the next fiscal quarter
     through which the Company has met the Preferred Return. If at the end of
     any fiscal quarter, the Company's Operating Expenses exceed the 2%/25%
     Guidelines over the immediately preceding 12 months, payment of the
     subordinated Asset Management Fee will be withheld consistent with Section
     13. For purposes of calculating the value per share of restricted stock
     given for payment of the Asset Management Fee, the price per share shall
     be: (i) the net asset value per share as determined by the most recent
     appraisal performed by an independent third party at the time such Asset
     Management Fee was earned or, if an appraisal has not yet been made and
     accepted by the Company, (ii) $10 per share. Any part of the Asset
     Management Fee that has been subordinated pursuant to this subsection (a)
     shall not be deemed earned until such time as payable hereunder.

          (b) ACQUISITION FEE. The Advisor may receive as compensation for
     services rendered in connection with the investigation, selection,
     acquisition or origination (by purchase, investment or exchange) of any
     Property or Loan, an Acquisition Fee payable by the Company. The total such
     Acquisition Fees (not including Subordinated Acquisition Fees

                                       15

<PAGE>

     and any interest thereon) payable to the Advisor may not exceed
     two-and-one-half percent of the aggregate Total Property Cost of all
     Properties and Loans acquired or originated by the Company, measured at
     such time as the Company shall have completed all Offerings (other than
     pursuant to its dividend reinvestment plan) and invested substantially all
     of the net proceeds of such Offerings, unless a majority of the Board
     (including a majority of the Independent Directors) not otherwise
     interested in any transaction approves the excess as being commercially
     competitive, fair and reasonable to the Company.

          (c) SUBORDINATED ACQUISITION FEE. In addition to the Acquisition Fee
     described in Section 9(b) above, the Advisor may receive as additional
     compensation for services rendered in connection with the investigation,
     selection, acquisition or origination (by purchase, investment or exchange)
     of Properties and Loans a Subordinated Acquisition Fee payable by the
     Company to the Advisor or its Affiliates (the "SUBORDINATED ACQUISITION
     FEE"). The total Subordinated Acquisition Fees paid may not exceed two
     percent of the aggregate Total Property Cost of all Properties and Loans
     purchased and originated by the Company, measured at such time as the
     Company shall have completed all Offerings (other than pursuant to its
     dividend reinvestment plan) and invested substantially all of the net
     proceeds of such Offerings, unless a majority of the Directors (including a
     majority of the Independent Directors) not otherwise interested in any
     transaction approves the excess as being commercially competitive, fair and
     reasonable to the Company. The unpaid portion of the Subordinated
     Acquisition Fee payable to the Advisor and its Affiliates with respect to
     any Property or Loan shall bear interest at the rate of five percent per
     annum from the date of acquisition of such Property or Loan until such
     portion is paid. Subject to the following sentence, the Subordinated
     Acquisition Fee with respect to any Investment Asset shall be payable in
     equal annual installments on January 1 of each of the three calendar years
     following the date such Asset was purchased; accrued interest on all unpaid
     Subordinated Acquisition Fees shall also be payable on such dates. The
     portion of the Subordinated Acquisition Fees, and accrued interest thereon,
     otherwise payable on any January 1 shall be payable only if the Preferred
     Return through the end of the fiscal year preceding such January 1 has been
     met. Any portion of the Subordinated Acquisition Fees, and accrued interest
     thereon, not paid due to the Company's failure to meet the Preferred Return
     through any fiscal year end shall be paid by the Company on the January 1
     following the first fiscal year thereafter through which the Preferred
     Return has been met.

          (d) SIX PERCENT LIMITATION. The total amount of Acquisition Fees
     (including Subordinated Acquisition Fees and any interest thereon), whether
     payable to the Advisor or a third party, and Acquisition Expenses may not
     exceed six percent of the sum of the

                                       16

<PAGE>

     aggregate Contract Purchase Price of all Properties and Loans unless a
     majority of the Directors (including a majority of the Independent
     Directors) not otherwise interested in any transaction approves fees in
     excess of this limit as being commercially competitive, fair and reasonable
     to the Company.

          (e) LOAN REFINANCING FEE. The Company shall pay to the Advisor for all
     qualifying loan refinancings of Properties a Loan Refinancing Fee in the
     amount up to one percent of the principal amount of the refinanced loan.
     Any Loan Refinancing Fee shall be due and payable upon the funding of the
     related loan or as soon thereafter as is reasonably practicable. A
     refinancing will qualify for a Loan Refinancing Fee only if the refinanced
     loan is secured by Property and (i) the maturity date of the refinanced
     loan (which must have a term of five years or more) is less than one year
     from the date of the refinancing; or (ii) the terms of the new loan
     represent, in the judgment of a majority of the Independent Directors, an
     improvement over the terms of the refinanced loan; or (iii) the new loan is
     approved by the Board, including a majority of the Independent Directors
     and, in each case, the Loan Refinancing Fee is found, in the judgment of a
     majority of the Independent Directors, to be in the best interest of the
     Company.

          (f) PROPERTY MANAGEMENT FEE. No Property Management Fee shall be paid
     unless approved by a majority of the Independent Directors.

          (g) SUBORDINATED DISPOSITION FEE. If the Advisor or an Affiliate
     provides a substantial amount of services (as determined by a majority of
     the Independent Directors) in the sale of a Property, the Advisor or such
     Affiliate shall receive a fee equal to the lesser of: (i) 50% of the
     Competitive Real Estate Commission and (ii) three percent of the Contract
     Sales Price of such Property (the "SUBORDINATED DISPOSITION FEE"). The
     Subordinated Disposition Fee will be paid only if Shareholders have
     received in the aggregate a return of 100% of Initial Investor Capital
     (through liquidity or Distributions) plus a Preferred Return through the
     date the Subordination Disposition Fee has been paid. The return
     requirement will be deemed satisfied if the total Distributions paid by the
     Company have satisfied the Preferred Return requirement and the Market
     Value of the Company equals or exceeds Adjusted Investor Capital. To the
     extent that Subordinated Disposition Fees are not paid by the Company on a
     current basis due to the foregoing limitation, the unpaid fees will be due
     and paid at such time as the limitation has been satisfied. The
     Subordinated Disposition Fee may be paid in addition to real estate
     commissions paid to non-Affiliates, provided that the total of all real
     estate commissions in respect of a Property paid to all Persons by the
     Company and the Subordinated Disposition Fee shall not exceed an amount
     equal to the lesser of: (i) six percent of the Contract Sales Price of such
     Property or

                                       17

<PAGE>

     (ii) the Competitive Real Estate Commission. If this Agreement is
     terminated prior to such time as the Shareholders have received (through
     liquidity or Distributions) a return of 100% of Initial Investor Capital
     plus a Preferred Return through the date of termination of this Agreement,
     an appraisal of the Properties then owned by the Company shall be made and
     any unpaid Subordinated Disposition Fee on Properties sold prior to the
     date of termination will be payable if the Appraised Value of the
     Properties then owned by the Company plus Distributions to Shareholders
     prior to the date of termination of this Agreement (through liquidity or
     Distributions) is equal to or greater than 100% of Initial Investor Capital
     plus an amount sufficient to pay a Preferred Return through the date of
     termination of this Agreement. If the Company's Shares are listed on a
     national securities exchange or included for quotation on Nasdaq and, at
     the time of such listing, the Advisor or an Affiliate has provided a
     substantial amount of services in the sale of Property, for purposes of
     determining whether the subordination conditions for the payment of the
     Subordinated Disposition Fee have been satisfied, Shareholders will be
     deemed to have received a Distribution in an amount equal to the Market
     Value of the Company.

          (h) OTHER PERMITTED INVESTMENT ASSETS FEE. The Advisor may receive as
     compensation for services rendered in connection with the investigation,
     selection, acquisition or origination of Other Permitted Investments a fee
     (the "OTHER PERMITTED INVESTMENT ASSETS FEE") that shall be negotiated in
     good faith by the Advisor and the Company and approved by the Board
     (including a majority of the Independent Directors) on a case by case
     basis; provided that such compensation shall be on terms not more
     favorable, taken as a whole, than what the Advisor receives in respect of
     investments in Properties and Loans.

          (i) SUBORDINATED INCENTIVE FEE. A fee shall be payable to the Advisor
     in an amount equal to 15% of Cash from Sales distributable to Shareholders
     after Shareholders have received a return of 100% of Initial Investor
     Capital (through liquidity or Distributions) plus a Preferred Return
     through the date payment is made (the "SUBORDINATED INCENTIVE Fee"). For
     these purposes the Shareholders will be deemed to have been provided
     liquidity if the Shares are listed on a national security exchange or
     included for quotation on Nasdaq. The return requirement will be deemed
     satisfied if the total Distributions paid by the Company has satisfied the
     Preferred Return requirement and the Market Value of the Company equals or
     exceeds Adjusted Investor Capital. The Company shall have the option to pay
     such fee in the form of a promissory note or as set forth in Section 9(l).
     The promissory note shall be fully amortizing over five years, provide for
     quarterly payments and bear interest at the prime rate announced from time
     to time in The Wall Street Journal.

                                       18

<PAGE>

          (j) LOANS FROM AFFILIATES. The Company shall not borrow funds from the
     Advisor or its Affiliates unless (A) the transaction is approved by a
     majority of the Independent Directors and a majority of the Directors who
     are not interested in the transaction as being fair, competitive and
     commercially reasonable, (B) the interest and other financing charges or
     fees received by the Advisor or its Affiliates do not exceed the amount
     which would be charged by non-affiliated lending institutions and (C) the
     terms are not less favorable than those prevailing for comparable
     arm's-length loans for the same purpose. The Company will not borrow on a
     long-term basis from the Advisor or its Affiliates unless it is to provide
     the debt portion of a particular investment and the Company is unable to
     obtain a permanent loan at that time or in the judgment of the Board, it is
     not in the Company's best interest to obtain a permanent loan at the
     interest rates then prevailing and the Board has reason to believe that the
     Company will be able to obtain a permanent loan on or prior to the end of
     the loan term provided by the Advisor or its Affiliates.

          (k) CHANGES TO FEE STRUCTURE. In the event the Shares are listed on a
     national securities exchange or are included for quotation on Nasdaq, the
     Company and the Advisor shall negotiate in good faith to establish a fee
     structure appropriate for an entity with a perpetual life. A majority of
     the Independent Directors must approve the new fee structure negotiated
     with the Advisor. In negotiating a new fee structure, the Independent
     Directors may consider any of the factors they deem relevant, including but
     not limited to: (a) the size of the Advisory Fee in relation to the size,
     composition and profitability of the Company's portfolio; (b) the success
     of the Advisor in generating opportunities that meet the investment
     objectives of the Company; (c) the rates charged to other REITs and to
     investors other than REITs by Advisors performing similar services; (d)
     additional revenues realized by the Advisor and its Affiliates through
     their relationship with the Company, including loan administration,
     underwriting or broker commissions, servicing, engineering, inspection and
     other fees, whether paid by the Company or by others with whom the Company
     does business; (e) the quality and extent of service and advice furnished
     by the Advisor; (f) the performance of the investment portfolio of the
     Company, including income, conversion or appreciation of capital, frequency
     of problem investments and competence in dealing with distress situations;
     and (g) the quality of the portfolio of the Company in relationship to the
     investments generated by the Advisor for its own account. The new fee
     structure can be no more favorable to the Advisor than the current fee
     structure.

          (l) PAYMENT. Compensation payable to the Advisor pursuant to this
     Section 9 shall be paid in cash; provided, however, that any fee payable
     pursuant to Section 9 may be paid, at the option of the

                                       19

<PAGE>

     Advisor, in the form of: (i) cash, (ii) common stock of the Company, or
     (iii) a combination of cash and common stock. The Advisor shall notify the
     Company in writing annually of the form in which the fee shall be paid.
     Such notice shall be provided no later than January 15 of each year. If no
     such notice is provided, the fee shall be paid in cash. For purposes of the
     payment of compensation to the Advisor in the form of stock, the value of
     each share of common stock shall be: (i) the Net Asset Value per Share as
     determined by the most recent appraisal of the Company's assets performed
     by an Independent Appraiser, or (ii) if an appraisal has not yet been
     performed, $10 per share. If shares are being offered to the public at the
     time a fee is paid with stock, the value shall be the price of the stock
     without commissions. The Net Asset Value determined on the basis of such
     appraisal may be adjusted on a quarterly basis by the Board to account for
     significant capital transactions. Stock issued by the Company to the
     Advisor in payment of fees hereunder shall be governed by the terms set
     forth in Schedule A hereto, or such other terms as the Advisor and the
     Company may from time to time agree.

     10. EXPENSES. (a) Subject to the limitations set forth in Section 9(d), to
the extent applicable, in addition to the compensation paid to the Advisor
pursuant to Section 9 hereof, the Company shall pay directly or reimburse the
Advisor for the following expenses:

               (i) the Company's Organization and Offering Expenses; provided
          however, that within 60 days after the end of the month in which any
          Offering terminates, the Advisor shall reimburse the Company for any
          Organization and Offering Expense reimbursements received by the
          Advisor pursuant to this Section 10 to the extent that such
          reimbursements, when added to the balance of the Organization and
          Offering Expenses (excluding selling commissions, and fees paid and
          expenses reimbursed to the Selected Dealers) paid directly by the
          Company, exceed four percent of the Gross Offering Proceeds; provided
          further, however, that the Advisor shall be responsible for the
          payment of all Organization and Offering Expenses (excluding such
          commissions and such fees and expense reimbursements) in excess of
          four percent of the Gross Offering Proceeds;

               (ii) expenses other than Acquisition Expenses incurred in
          connection with the investment of the funds of the Company;

               (iii) interest and other costs for borrowed money, including
          discounts, points and other similar fees;

                                       20

<PAGE>

               (iv) taxes and assessments on income of the Company, to the
          extent paid or advanced by the Advisor, or on Property and taxes as an
          expense of doing business;

               (v) costs associated with insurance required in connection with
          the business of the Company or by the Directors;

               (vi) expenses of managing and operating Properties owned by the
          Company, whether payable to an Affiliate of the Advisor or a
          non-affiliated Person;

               (vii) fees and expenses of legal counsel for the Company;

               (viii) fees and expense of auditors and accountants for the
          Company;

               (ix) all expenses in connection with payments to the Directors
          and meetings of the Directors and Shareholders;

               (x) expenses associated with listing the Shares and Securities on
          a securities exchange or Nasdaq if requested by the Board;

               (xi) expenses connected with payments of Distributions in cash or
          otherwise made or caused to be made by the Board to the Shareholders;

               (xii) expenses of organizing, revising, amending, converting,
          modifying, or terminating the Company or the Articles of
          Incorporation;

               (xiii) expenses of maintaining communications with Shareholders,
          including the cost of preparation, printing and mailing annual reports
          and other Shareholder reports, proxy statements and other reports
          required by governmental entities;

               (xiv) expenses related to the Properties and Loans and other fees
          relating to making investments including personnel and other costs
          incurred in Property or Loan transactions where a fee is not payable
          to the Advisor other than as provided in Section 10(b) hereof; and

               (xv) all other expenses the Advisor incurs in connection with
          providing services to the Company, including reimbursement to the
          Advisor or its Affiliates for the cost of rent, goods, materials and
          personnel incurred by them based upon the compensation of the Persons
          involved and an appropriate share of

                                       21

<PAGE>

          overhead allocable to those Persons as reasonably determined by the
          Advisor on a basis approved annually by the Board (including a
          majority of the Independent Directors). No reimbursement shall be made
          for the cost of personnel to the extent that such personnel are used
          in transactions for which the Advisor receives a separate fee.

          (b) Notwithstanding anything to the contrary in Section 10(a), with
     respect to Properties and Loans acquired using proceeds of the Part I
     Offering, the Advisor shall be responsible for payment of (i) all
     Acquisition Expenses, (ii) all expenses of whatever nature directly
     connected with the proposed acquisition of any property or loan that does
     not result in the actual acquisition of Properties or Loans; (iii) finder's
     fees and similar payments to the extent not paid by the seller of Property
     or other third party; and (iv) costs of retaining industry or economic
     consultants. The Company shall pay to the Advisor the Acquisition Expense
     Allowance, which shall be used by Advisor to pay the expenses described in
     this Section 10(b). To the extent the expenses paid by the Advisor pursuant
     to this Section 10(b) exceed the Acquisition Expense Allowance, the Company
     shall have no duty to reimburse the Advisor for the amount of such excess.
     To the extent the Acquisition Expense Allowance exceeds the expenses paid
     by the Advisor pursuant to this Section 10(b), the Advisor shall have no
     duty to repay or account to the Company for any such excess.

          (c) With respect to Properties and Loans acquired using proceeds of
     the Part II Offering, no Acquisition Expense Allowance shall be payable to
     the Advisor and the Company shall be solely responsible for payment of (i)
     all Acquisition Expenses; (ii) all expenses of whatever nature directly
     connected with the proposed acquisition of any property or loan that does
     not result in the actual acquisition of Properties or Loans; (iii) finder's
     fees and similar payments to the extent not paid by the seller of Property
     or other third party; and (iv) costs of retaining industry or economic
     consultants.

          (d) With respect to Properties and Loans acquired using a mixture of
     proceeds from the Part I and Part II Offerings, the Acquisition Expense
     Allowance shall be calculated and payable to the Advisor on a pro rata
     basis, and the Advisor and the Company shall be responsible for its
     respective pro rata share of the expenses described in Section 10(b) and
     10(c).

          (e) Expenses incurred by the Advisor on behalf of the Company and
     payable pursuant to this Section 10 shall be reimbursed quarterly to the
     Advisor within 60 days after the end of each quarter. The Advisor shall
     prepare a statement documenting the expenses of the Company other than
     Acquisition Expenses during each quarter, and shall

                                       22

<PAGE>

     deliver such statement to the Company within 45 days after the end of each
     quarter.

     11. OTHER SERVICES. Should the Board request that the Advisor or any
shareholder or employee thereof render services for the Company other than as
set forth in Section 3 hereof, such services shall be separately compensated and
shall not be deemed to be services pursuant to the terms of this Agreement.

     12. FIDELITY BOND. The Advisor shall maintain a fidelity bond for the
benefit of the Company which bond shall insure the Company from losses of up to
$5,000,000 and shall be of the type customarily purchased by entities performing
services similar to those provided to the Company by the Advisor.

     13. LIMITATION ON EXPENSES. (a) Within 60 days after the end of any fiscal
quarter, if Operating Expenses of the Company during the 12-month period ending
with the last month of such quarter exceed the greater of (i) two percent of the
Average Invested Assets during the same 12-month period or (ii) 25% of the
Adjusted Net Income of the Company during the same 12-month period, then subject
to paragraph (b) of this Section 13, such excess amount shall be the sole
responsibility of the Advisor and the Company shall not be liable for payment
therefor.

          (b) Notwithstanding the foregoing, to the extent that the Advisor
     becomes responsible for any such excess amount, if a majority of the
     Independent Directors finds such excess amount justified based on such
     unusual and non-recurring factors as they deem sufficient, the Company
     shall reimburse the Advisor in future quarters for the full amount of such
     excess, or any portion thereof, but only to the extent such reimbursement
     would not cause the Company's Operating Expenses to exceed the 2%/25%
     Guidelines in the 12-month period ending on any such quarter. In no event
     shall the Operating Expenses paid by the Company in any 12-month period
     ending at the end of a fiscal quarter exceed the 2%/25% Guidelines.

          (c) To the extent Organization and Offering Expenses payable by the
     Company exceed 15% of the Gross Offering Proceeds, the excess will be paid
     by the Advisor.

          (d) All computations made under paragraphs (a) and (b) of this Section
     13 shall be determined in accordance with generally accepted accounting
     principles applied on a consistent basis.

          (e) If the Advisor receives a Subordinated Incentive Fee for the sale
     of Property, Adjusted Net Income, for purposes of calculating the Operating
     Expenses, shall exclude the gain from the sale of such Property.

                                       23

<PAGE>

     14. OTHER ACTIVITIES OF THE ADVISOR. Nothing herein contained shall prevent
the Advisor from engaging in other activities, including without limitation
direct investment by the Advisor and its Affiliates in assets that would be
suitable for the Company, the rendering of advice to other investors (including
other REITs) and the management of other programs advised, sponsored or
organized by the Advisor or its Affiliates; nor shall this Agreement limit or
restrict the right of the Advisor or any of its Affiliates or of any director,
officer, employee or shareholder of the Advisor or its Affiliates to engage in
any other business or to render services of any kind to any other partnership,
corporation, firm, individual, trust or association. The Advisor may, with
respect to any investment in which the Company is a participant, also render
advice and service to each other participant therein. The Advisor shall report
to the Board the existence of any condition or circumstance, existing or
anticipated, of which it has knowledge, which creates or could create a conflict
of interest between the Advisor's obligations to the Company and its obligations
to or its interest in any other partnership, corporation, firm, individual,
trust or association. The Advisor or its Affiliates shall promptly disclose to
the Board knowledge of such condition or circumstance. If the Sponsor, Advisor,
Director or Affiliates thereof has or have sponsored other investment programs
with similar investment objectives which have investment funds available at the
same time as the Company, it shall be the duty of the Advisor to adopt a
reasonable method by which properties are to be allocated to the competing
investment entities and to use its best efforts to apply such method fairly to
the Company.

     The Advisor shall be required to use its best efforts to present a
continuing and suitable investment program to the Company that is consistent
with the investment policies and objectives of the Company, but subject to the
last sentence of the preceding paragraph, neither the Advisor nor any Affiliate
of the Advisor shall be obligated generally to present any particular investment
opportunity to the Company even if the opportunity is of character which, if
presented to the Company, could be taken by the Company.

     If the Advisor or its Affiliates is presented with a potential investment
which might be made by the Company and by another investment entity which the
Advisor or its Affiliates advises or manages, the Advisor shall consider the
investment portfolio of each entity, cash flow of each entity, the effect of the
acquisition on the diversification of each entity's portfolio, rental payments
during any renewal period, the estimated income tax effects of the purchase on
each entity, the policies of each entity relating to leverage, the funds of each
entity available for investment, the amount of equity required to make the
investment and the length of time such funds have been available for investment.
To the extent that a Property might be suitable for the Company and for another
investment entity which is advised or managed by the Advisor, the Advisor shall
give priority to the investment entity, including the Company, which has
uninvested funds for the longest period of time. The Advisor may consider the
Property for private placement only if such Property is deemed inappropriate for

                                       24

<PAGE>

any investment entity which is advised or managed by the Advisor, including the
Company.

     15. RELATIONSHIP OF ADVISOR AND COMPANY. The Company and the Advisor agree
that they have not created and do not intend to create by this Agreement a joint
venture or partnership relationship between them and nothing in this Agreement
shall be construed to make them partners or joint venturers or impose any
liability as partners or joint venturers on either of them.

     16. TERM; TERMINATION OF AGREEMENT. This Agreement, as amended and
restated, shall continue in force until September 30, 2006 and thereafter shall
be automatically renewed from year to year, unless either party shall give
notice in writing of non-renewal to the other party not less than 60 days before
the end of any such year.

     17. TERMINATION BY COMPANY. At the sole option the Board (including a
majority of the Independent Directors), this Agreement may be terminated
immediately by written notice of termination from the Company to the Advisor
upon the occurrence of events which would constitute Cause or if any of the
following events occur:

          (a) If the Advisor shall breach this Agreement; provided that such
     breach (i) is of a material term or condition of this Agreement and (ii)
     the Advisor has not cured such breach within 30 days of written notice
     thereof or, in the case of any breach that cannot be cured within 30 days
     by reasonable effort, has not taken all necessary action within a
     reasonable time period to cure such breach;

          (b) If the Advisor shall be adjudged bankrupt or insolvent by a court
     of competent jurisdiction, or an order shall be made by a court of
     competent jurisdiction for the appointment of a receiver, liquidator, or
     trustee of the Advisor, for all or substantially all of its property by
     reason of the foregoing, or if a court of competent jurisdiction approves
     any petition filed against the Advisor for reorganization, and such
     adjudication or order shall remain in force or unstayed for a period of 30
     days; or

          (c) If the Advisor shall institute proceedings for voluntary
     bankruptcy or shall file a petition seeking reorganization under the
     federal bankruptcy laws, or for relief under any law for relief of debtors,
     or shall consent to the appointment of a receiver for itself or for all or
     substantially all of its property, or shall make a general assignment for
     the benefit of its creditors, or shall admit in writing its inability to
     pay its debts, generally, as they become due.

     Any notice of termination under Section 16 or 17 shall be effective on the
date specified in such notice, which may be the day on which such notice is
given or any date thereafter. The Advisor agrees that if any of the events
specified in

                                       25

<PAGE>

Section 17(b) or (c) shall occur, it shall give written notice thereof to the
Board within 15 days after the occurrence of such event.

     18. TERMINATION BY EITHER PARTY. This Agreement may be terminated
immediately without penalty (but subject to the requirements of Section 20
hereof) by the Advisor by written notice of termination to the Company upon the
occurrence of events which would constitute Good Reason or by the Company
without cause or penalty (but subject to the requirements of Section 20 hereof)
by action of a majority of the Independent Directors or by action of a majority
of the Shareholders, in either case upon 60 days' written notice.

     19. ASSIGNMENT PROHIBITION. This Agreement may not be assigned by the
Advisor without the approval of the Board (including a majority of the
Independent Directors); provided, however, that such approval shall not be
required in the case of an assignment to a corporation, partnership,
association, trust or organization which may take over the assets and carry on
the affairs of the Advisor, provided: (i) that at the time of such assignment,
such successor organization shall be owned substantially by an entity directly
or indirectly controlled by the Sponsor and only if such entity has a net worth
of at least $5,000,000, and (ii) that the board of directors of the Advisor
shall deliver to the Board a statement in writing indicating the ownership
structure and net worth of the successor organization and a certification from
the new Advisor as to its net worth. Such an assignment shall bind the assignees
hereunder in the same manner as the Advisor is bound by this Agreement. The
Advisor may assign any rights to receive fees or other payments under this
Agreement without obtaining the approval of the Board. This Agreement shall not
be assigned by the Company without the consent of the Advisor, except in the
case of an assignment by the Company to a corporation or other organization
which is a successor to the Company, in which case such successor organization
shall be bound hereunder and by the terms of said assignment in the same manner
as the Company is bound by this Agreement.

     20. PAYMENTS TO AND DUTIES OF ADVISOR UPON TERMINATION.

          (a) After the Termination Date, the Advisor shall not be entitled to
     compensation for further services hereunder but shall be entitled to
     receive from the Company the following:

               (i) all unpaid reimbursements of Organization and Offering
          Expenses and of Operating Expenses payable to the Advisor;

               (ii) all earned but unpaid Asset Management Fees payable to the
          Advisor prior to the Termination Date;

                                       26

<PAGE>

               (iii) all earned but unpaid Subordinated Acquisition Fees, in
          each case payable to the Advisor relating to the acquisition of any
          Property prior to the Termination Date;

               (iv) all earned but unpaid Subordinated Disposition Fees payable
          to the Advisor relating to the sale of any Property prior to the
          Termination Date;

               (v) all earned but unpaid Loan Refinancing Fees payable to the
          Advisor relating to the financing or refinancing of any Property prior
          to the Termination Date; and

               (vi) all earned but unpaid Property Management Fees payable to
          the Advisor or its Affiliates relating to the management of any
          property prior to the termination of this Agreement.

          (b) Notwithstanding the foregoing, if this Agreement is terminated by
     the Company for Cause, the Advisor will not be entitled to receive the sums
     in Section 20(a) above.

          (c) If this Agreement is terminated by the Company for any reason
     other than Cause, by either party in connection with a Change of Control,
     or by the Advisor for Good Reason, the Advisor shall be entitled to payment
     of the Termination Fee. Notwithstanding the foregoing, the Advisor shall
     not be entitled to payment of the Termination Fee if:

               (i) this Agreement is terminated because of failure of the
          Company and the Advisor to establish, following good-faith
          negotiations pursuant to Section 9(k) hereof, a fee structure
          appropriate for an entity with a perpetual life in the event the
          Shares are listed on a national securities exchange or are included
          for quotation on Nasdaq, or

               (ii) the Subordinated Incentive Fee is paid to the Advisor as a
          result of the listing of the Shares on a national securities exchange
          or their inclusion for quotation on Nasdaq and this Agreement is
          terminated after such listing or inclusion.

          (d) Any and all amounts payable to the Advisor pursuant to Section
     20(a) and Section 20(c) shall be paid in a manner determined by the Board,
     but in no event on terms less favorable to the Advisor than those
     represented by a note (i) maturing upon the liquidation of the Company or
     three years from the Termination Date, whichever is earlier, (ii) with no
     less than twelve equal quarterly installments and (iii) bearing a fair,
     competitive and commercially reasonable interest rate (the "NOTE") . The
     Note, if any, may be prepaid by the Company at any time prior to maturity
     with accrued interest to the date of payment but without premium

                                       27

<PAGE>

     or penalty. Notwithstanding the foregoing, any amounts that relate to
     Investment Assets (i) shall be an amount which provides compensation to the
     Advisor only for that portion of the holding period for the respective
     Investment Assets during which the Advisor provided services to the
     Company, (ii) shall not be due and payable until the Investment Asset to
     which such amount relates is sold or refinanced, and (iii) shall not bear
     interest until the Investment Asset to which such amount relates is sold or
     refinanced. A portion of the amount shall be paid as each Investment Asset
     owned by the Company on the Termination Date is sold. The portion of such
     amount payable upon each such sale shall be equal to (i) such amount
     multiplied by (ii) the percentage calculated by dividing the fair value (at
     the Termination Date) of the Investment Asset sold by the Company divided
     by the total fair value (at the Termination Date) of all Investment Assets
     owned by the Company on the Termination Date. For purposes of the
     Termination Fee, the fair value of any Property shall be its Appraised
     Value.

          (e) The Advisor shall promptly upon termination:

               (i) pay over to the Company all money collected and held for the
          account of the Company pursuant to this Agreement, after deducting any
          accrued compensation and reimbursement for its expenses to which it is
          then entitled;

               (ii) deliver to the Board a full accounting, including a
          statement showing all payments collected by it and a statement of all
          money held by it, covering the period following the date of the last
          accounting furnished to the Board;

               (iii) deliver to the Board all assets, including Properties and
          Loans, and documents of the Company then in the custody of the
          Advisor; and

               (iv) cooperate with the Company to provide an orderly management
          transition.

     21. INDEMNIFICATION BY THE COMPANY. (a) The Company shall not indemnify the
Advisor or any of its Affiliates for any loss or liability suffered by the
Advisor or the Affiliate, or hold the Advisor or the Affiliate harmless for any
loss or liability suffered by the Company, unless all of the following
conditions are met:

               (i) The Advisor or Affiliate has determined, in good faith, that
          the course of conduct which caused the loss or liability was in the
          best interests of the Company;

                                       28

<PAGE>

               (ii) The Advisor or the Affiliate was acting on behalf of or
          performing services for the Company; and

               (iii) Such liability or loss was not the result of negligence or
          misconduct by the Advisor or the Affiliate.

          (b) Notwithstanding the foregoing, the Advisor and its Affiliates
     shall not be indemnified by the Company for any losses, liabilities or
     expenses arising from or out of the alleged violation of federal or state
     securities laws unless one or more of the following conditions are met:

               (i) There has been a successful adjudication on the merits of
          each count involving alleged securities law violations as to the
          particular indemnitee;

               (ii) Such claims have been dismissed with prejudice on the merits
          by a court of competent jurisdiction as to the particular indemnitee;
          or

               (iii) A court of competent jurisdiction approves a settlement of
          the claims against a particular indemnitee and finds that
          indemnification of the settlement and the related costs should be
          made, and the court considering the request for indemnification has
          been advised of the position of the Securities and Exchange Commission
          and of the published position of any state securities regulatory
          authority in which securities of the Company were offered or sold as
          to indemnification for violation of securities laws.

          (c) The Company shall advance funds to the Advisor or its Affiliates
     for legal expenses and other costs incurred as a result of any legal action
     for which indemnification is being sought only if all of the following
     conditions are satisfied:

               (i) The legal action relates to acts or omissions with respect to
          the performance of duties or services on behalf of the Company;

               (ii) The legal action is initiated by a third party who is not a
          Shareholder or the legal action is initiated by a Shareholder acting
          in his or her capacity as such and a court of competent jurisdiction
          specifically approves such advancement; and

               (iii) The Advisor or the Affiliate undertakes to repay the
          advanced funds to the Company, together with the applicable

                                       29

<PAGE>

          legal rate of interest thereon, in cases in which such Advisor or
          Affiliate is found not to be entitled to indemnification.

          (d) Notwithstanding the foregoing, the Advisor shall not be entitled
     to indemnification or be held harmless pursuant to this Section 21 for any
     activity which the Advisor shall be required to indemnify or hold harmless
     the Company pursuant to Section 22.

          (e) Any amounts paid pursuant to this Section 21 shall be recoverable
     or paid only out the net assets of the Company and not from Shareholders.

     22. INDEMNIFICATION BY ADVISOR. The Advisor shall indemnify and hold
harmless the Company from liability, claims, damages, taxes or losses and
related expenses including attorneys' fees, to the extent that such liability,
claims, damages, taxes or losses and related expenses are not fully reimbursed
by insurance and are incurred by reason of the Advisor's bad faith, fraud,
willful misfeasance, misconduct, negligence or reckless disregard of its duties.

     23. NOTICES. Any notice, report or other communication required or
permitted to be given hereunder shall be in writing unless some other method of
giving such notice, report or other communication is accepted by the party to
whom it is given, and shall be given by being delivered by hand or by overnight
mail or other overnight delivery service to the addresses set forth herein:

To the Board        Corporate Property Associates 16 - Global Incorporated
and to the Company: 50 Rockefeller Plaza
                    New York, NY 10020

To the Advisor:     Carey Asset Management Corp.
                    50 Rockefeller Plaza
                    New York, NY 10020

     Either party may at any time give notice in writing to the other party of a
change in its address for the purposes of this Section 23.

     24. MODIFICATION. This Agreement shall not be changed, modified,
terminated, or discharged, in whole or in part, except by an instrument in
writing signed by both parties hereto, or their respective successors or
assignees.

     25. SEVERABILITY. The provisions of this Agreement are independent of and
severable from each other, and no provision shall be affected or rendered
invalid or unenforceable by virtue of the fact that for any reason any other or
others of them may be invalid or unenforceable in whole or in part.

                                       30

<PAGE>

     26. CONSTRUCTION. This Agreement shall be governed by, construed and
enforced in accordance with the laws of the State of New York.

     27. ENTIRE AGREEMENT. This Agreement contains the entire agreement and
understanding among the parties hereto with respect to the subject matter
hereof, and supersedes all prior and contemporaneous agreements, understandings,
inducements and conditions, express or implied, oral or written, of any nature
whatsoever with respect to the subject matter hereof. The express terms hereof
control and supersede any course of performance and/or usage of the trade
inconsistent with any of the terms hereof. This Agreement may not be modified or
amended other than by an agreement in writing.

     28. INDULGENCES, NOT WAIVERS. Neither the failure nor any delay on the part
of a party to exercise any right, remedy, power or privilege under this
Agreement shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, remedy, power or privilege preclude any other or further
exercise of the same or of any other right, remedy, power or privilege, nor
shall any waiver of any right, remedy, power or privilege with respect to any
occurrence be construed as a waiver of such right, remedy, power or privilege
with respect to any other occurrence. No waiver shall be effective unless it is
in writing and is signed by the party asserted to have granted such waiver.

     29. GENDER. Words used herein regardless of the number and gender
specifically used, shall be deemed and construed to include any other number,
singular or plural, and any other gender, masculine, feminine or neuter, as the
context requires.

     30. TITLES NOT TO AFFECT INTERPRETATION. The titles of Sections and
subsections contained in this Agreement are for convenience only, and they
neither form a part of this Agreement nor are they to be used in the
construction or interpretation hereof.

     31. EXECUTION IN COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original as against any
party whose signature appears thereon, and all of which shall together
constitute one and the same instrument. This Agreement shall become binding when
one or more counterparts hereof, individually or taken together, shall bear the
signatures of all of the parties reflected hereon as the signatories.

     32. NAME. W.P. Carey & Co. LLC has a proprietary interest in the name
"Corporate Property Associates" and "CPA(R)" Accordingly, and in recognition of
this right, if at any time the Company ceases to retain Carey Asset Management
Corp., or an Affiliate thereof to perform the services of Advisor, the Company
will, promptly after receipt of written request from Carey Asset Management
Corp., cease to conduct business under or use the name "Corporate Property
Associates" or "CPA(R)" or any diminutive thereof and the Company

                                       31

<PAGE>

shall use its best efforts to change the name of the Company to a name that does
not contain the name "Corporate Property Associates" or "CPA(R)" or any other
word or words that might, in the sole discretion of the Advisor, be susceptible
of indication of some form of relationship between the Company and the Advisor
or any Affiliate thereof. Consistent with the foregoing, it is specifically
recognized that the Advisor or one or more of its Affiliates has in the past and
may in the future organize, sponsor or otherwise permit to exist other
investment vehicles (including vehicles for investment in real estate) and
financial and service organizations having "Corporate Property Associates" or
"CPA(R)" as a part of their name, all without the need for any consent (and
without the right to object thereto) by the Company or its Directors.

     33. INITIAL INVESTMENT. The Advisor has contributed to the Company $200,000
in exchange for 20,000 Shares (the "INITIAL INVESTMENT"). The Advisor or its
Affiliates may not sell any of the Shares purchased with the Initial Investment
during the term of this Agreement. The restrictions included above shall not
continue to apply to any Shares other than the Share acquired through the
Initial Investment acquired by the Advisor or its Affiliates. The Advisor shall
not vote any Shares it now owns or hereafter acquires in any vote for the
election of Directors or any vote regarding the approval or termination of any
contract with the Advisor or any of its Affiliates.

                                       32

<PAGE>

     IN WITNESS WHEREOF, the parties hereto have executed this Advisory
Agreement as of the day and year first above written.

                                        CORPORATE PROPERTY ASSOCIATES 16 -
                                        GLOBAL INCORPORATED

                                        By:
                                            ------------------------------------
                                        Name: Thomas Zacharias
                                        Title: President

                                        CAREY ASSET MANAGEMENT CORP.

                                        By:
                                            ------------------------------------
                                        Name: Gordon DuGan
                                        Title: President and
                                               Chief Executive Officer

                                       33

<PAGE>

                                   SCHEDULE A

     This Schedule sets forth the terms governing any Shares issued by the
Company to the Advisor in payment of advisory fees set forth in the Agreement.

     1. Restrictions. The Shares are subject to vesting over a five-year period.
The Shares shall vest ratably over a five-year period with 20% of the Shares
paid in each payment vesting on each of the first through fifth anniversary of
the date hereof. Prior to the vesting of the ownership of the Shares in the
Advisor, the Shares may not be transferred by the Advisor.

     2. Immediate Vesting. Upon the expiration of the Agreement for any reason
other than a termination for Cause under paragraph 17 or upon a "Change of
Control" of CPA(R):16 (as defined below), all Shares granted to the Advisor
hereunder shall vest immediately and all restrictions shall lapse. For purposes
of this Schedule A, a "Change of Control" of the Company shall be deemed to have
occurred if there has been a change in the ownership of the Company of a nature
that would be required to be reported in response to the disclosure requirements
of Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act
of 1934, as amended (the "EXCHANGE ACT"), as enacted and in force on the date
hereof, whether or not the Company is then subject to such reporting
requirements; provided, however, that, without limitation, a Change of Control
shall be deemed to have occurred if:

     (i) any "person," as such term is used in Sections 13(d) and 14(d) of the
Exchange Act (other than the Company, any of its subsidiaries, any trustee,
fiduciary or other person or entity holding securities under any employee
benefit plan of the Company or any of its subsidiaries), together with all
"affiliates" and "associates" (as such terms are defined in Rule 14b-2 under the
Exchange Act) of such person, shall become the "beneficial owner" (as such term
is defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 25% or more of either (A) the combined
voting power of the Company's then outstanding securities having the right to
vote in an election of the Board ("VOTING SECURITIES") or (B) the then
outstanding common stock of the Company (in either such case other than as a
result of acquisition of securities directly from the Company);

     (ii) persons who, as of the date hereof, constitute the Board (the
"INCUMBENT DIRECTORS") cease for any reason, including without limitation, as a
result of a tender offer, proxy contest, merger or similar transaction, to
constitute at least a majority of the Board, provided that any person becoming a
director of the Company subsequent to the date hereof whose election or
nomination for election was approved by a vote of at least a majority of the
Incumbent Directors shall be considered an Incumbent Director; or

     (iii) the stockholders of the Company shall approve (A) any consolidation
or merger of the Company or any subsidiary where the stockholders

                                       A-1

<PAGE>

of the Company, immediately prior to the consolidation or merger, would not,
immediately after the consolidation or merger, beneficially own (as such term is
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, shares
representing in the aggregate 50% or more of the voting equity of the entity
issuing cash or securities in the consolidation or merger (or of its ultimate
parent entity, if any), (B) any sale, lease, exchange or other transfer (in one
transaction or a series of transactions contemplated or arranged by any party as
a single plan) of all or substantially all of the assets of the Company or (C)
any plan or proposal for the liquidation or dissolution of the Company.

     Notwithstanding the foregoing, a "CHANGE OF CONTROL" shall not be deemed to
have occurred for purposes of the foregoing clause (i) solely as the result of
an acquisition of securities by the Company which, by reducing the number of
Shares of Common Stock outstanding, increases (A) the proportionate number of
Shares beneficially owned by any person to 25% or more of the Shares then
outstanding, or (B) the proportionate voting power represented by the Shares
beneficially owned by any person to 25% or more of the combined voting power of
all then outstanding voting Securities; provided, however, that if any person
referred to in clause (A) or (B) of this sentence shall thereafter become the
beneficial owner of any additional Shares or other Voting Securities (other than
pursuant to a Share split, Share dividend, or similar transaction), then a
"Change of Control" shall be deemed to have occurred for purposes of the
foregoing clause (i).

                                      A-2EX-10.1

 

Exhibit 10.1

			
	 	 	 
	Contract: Crowley VMS
	 	Contract Date: 08/23/05

Description: Twin Screw Heavy Fuel Burning Ocean Tugs (4) and ATB Barges (4)

Page 1 of 2

	 	 	 	 	 
	Article No.	 	Title	 	Page Number
	 
	 	Contract Effective Date	 	1
	 
	 	 	 	 
	Article I
	 	Description of the Units	 	1-3
	 
	 	 	 	 
	Article II
	 	Price and Payment	 	3-5
	 
	 	 	 	 
	Article III
	 	Time and Conditions of Delivery and Acceptance; Title	 	5-7
	 
	 	 	 	 
	Article IV
	 	Changes in the Plans and Specifications	 	7-8
	 
	 	 	 	 
	Article V
	 	Liquidated Damages	 	8-9
	 
	 	 	 	 
	Article VI
	 	Owner Furnished Equipment	 	9
	 
	 	 	 	 
	Article VII
	 	Inspection By Owner’s Representative	 	10
	 
	 	 	 	 
	Article VIII
	 	Force Majeure	 	10-11
	 
	 	 	 	 
	Article IX
	 	Warranty	 	11-14
	 
	 	 	 	 
	Article X
	 	Performance Warranty	 	14-16
	 
	 	 	 	 
	Article XI
	 	Insurance	 	16-18
	 
	 	 	 	 
	Article XII
	 	Builder Guarantee	 	18-19
	 
	 	 	 	 
	Article XIII
	 	Liability and Indemnity	 	19-21
	 
	 	 	 	 
	Article XIV
	 	No Consequential Damages	 	21
	 
	 	 	 	 
	Article XV
	 	Prohibition of Liens	 	21-22
	 
	 	 	 	 
	Article XVI
	 	Taxes	 	22
	 
	 	 	 	 
	Article XVII
	 	Patents	 	22
	 
	 	 	 	 
	Article XVIII
	 	Use of the Plans and Specifications	 	23
	 
	 	 	 	 
	Article XIX
	 	Bankruptcy	 	23
	 
	 	 	 	 
	Article XX
	 	Events of Default	 	24-27
	 
	 	 	 	 
	Article XXI
	 	Notices	 	27-28
	 
	 	 	 	 
	Article XXII
	 	Construction	 	28

1

 

	 	 	 	 	 
	Article No.	 	Title	 	Page Number
	Article XXIII
	 	Choice of Law and Dispute Resolution	 	28-29
	 
	 	 	 	 
	Article XXIV
	 	Assignment	 	29
	 
	 	 	 	 
	Article XXV
	 	Parent Guarantees	 	29
	 
	 	 	 	 
	Article XXVI
	 	Production Schedule	 	30
	 
	 	 	 	 
	Article XXVII
	 	Cooperation with Owner’s Lender	 	30
	 
	 	 	 	 
	Article XXVIII
	 	Miscellaneous	 	30

2

 

VESSEL CONSTRUCTION CONTRACT

     THIS VESSEL CONSTRUCTION CONTRACT (the “Contract”) entered into as of this twenty-third of
August, 2005, by and between VT HALTER MARINE, INC. (VTHM), a Delaware corporation (hereinafter
called “Builder”), and VESSEL MANAGEMENT SERVICES, INC., a Delaware corporation (hereinafter called
“Owner”).

WITNESSETH:

ARTICLE I — DESCRIPTION OF THE UNITS 

     (a) Description of the Units

     Builder, for and in consideration of the sum to be paid by Owner as hereinafter set forth,
agrees to design, engineer, build, launch, equip, outfit, complete and deliver at the shipyard as
designated in the attached Exhibits, free and clear from liens, claims and encumbrances, four (4)
135’ x 42’ x 22’ Twin Screw Heavy Fuel Burning Ocean Tugs and four (4) 587’ x 74’ x 40’ Ocean ATB
Barges (hereinafter individually referred to as the “Vessel(s)” and a Tug and Barge set is
collectively referred to as the “Unit(s)”, each of which is more particularly described on the
attached Tug Exhibits “A-1-T”, “A-2-T”, “A-3-T” and “A-4-T” and Barge Exhibits “A-1-B”, “A-2-B”,
“A-3-B”, “A-4-B”which shall be constructed in accordance with this Contract , those specifications
listed on attached Tug Exhibit “B-1” and Barge Exhibit “B-2” and the Plans and Drawings listed on
the attached Tug Exhibit “C-l” and Barge Exhibit “C-2” all of which have concurrently been
identified and initialed by the parties hereto and made a part hereof as if fully set forth herein.
(The Units referred to in the preceding sentence may be referred to as “Unit No. HFO-1”, “Unit
No.HFO-2”, “Unit No.HFO-3” and “Unit No.HFO-4” or “Units 1-4” as the context may require.)

     For purposes of this Contract, the Contract Documents shall consist of the following documents
(as each is defined in the Contract): this Contract, Tug Exhibits A-1-T, A-2-T, A-3-T and A-4-T,
Barge Exhibits A-1-B, A-2-B, A-3-B and A-4-B, Tug Specifications listed on Exhibits B-1 and Barge
Specifications B-2, Plans and Drawings

3

 

listed on Tug Exhibits C-l and Barge Exhibits C-2, any Change Orders executed pursuant to
Article IV hereof and amendments in writing properly signed by the parties.

     Except for any Owner-furnished equipment and materials as may be listed in the Contract
Documents in connection with construction of the Vessels (collectively, the “Owner Furnished
Equipment”), Builder agrees to furnish all facilities, labor, tools, equipment and material
necessary for the construction and delivery of the Vessels.

     The Units shall be constructed and completed in a good and workmanlike manner with the use of
good commercial shipyard practices and marine engineering and procedures to meet the applicable
requirements of regulatory bodies as set forth in the Contract Documents, and certificates
evidencing the fact that the Units meet required classifications, shall be furnished by Builder to
Owner.

     The Units are to be documented for full ocean service with coastwise rights under the laws of
the U.S. and are to be designed, constructed, equipped and outfitted by Builder to comply with and
obtain certificates showing compliance with all applicable requirements, as of the Delivery Date,
of the American Bureau of Shipping, U.S. Coast Guard or any other applicable regulatory agencies
referred to in the Contract Documents. The Contractor shall build the Units under the supervision
and survey of the American Bureau of Shipping so that on delivery the Tug Vessels achieve the class
notation ABS XAl Towing Vessel XAMS and the Barge Vessels achieve the class notation
ABS XAl Oil and Chemical Tank Barge SH free of all conditions, notations, qualifications,
recommendations, reservations and restrictions. If any enforced changes in the American Bureau of
Shipping or other applicable classification societies’ rules or in the applicable rules of any
governmental agency are made subsequent to the date of this Contract necessitating alterations or
additions to a Vessel or a Unit, whereby the cost of a Vessel or a Unit is increased, the time
required for completion for a Vessel or a Unit is extended and/or a Vessel or a Unit will not
attain the performance criteria required by Article X, Owner shall authorize, and pay for such
alterations, additional work items, outfit and/or equipment, and shall authorize such additional
time as may be required to meet the enforced changes and the required performance criteria, in
accordance with Article IV (Changes in the Plans and Specifications) hereof. If the parties agree
that such alterations

4

 

or additions do not involve additional time or cost, they shall be completed by Builder as
part of this Contract in accordance with the terms and provisions hereof.

     All classification, certification, testing, survey and other fees and charges payable to the
American Bureau of Shipping and any other third party regulatory bodies required by the Contract in
relation to the construction of the Unit shall be for the account of the Builder.

     Owner shall be solely responsible for ensuring that all Owner Furnished Equipment meets all
applicable classification and regulatory requirements.

ARTICLE II — PRICE AND PAYMENT:

     Owner, in consideration of the true and faithful performance on the part of the Builder,
agrees to pay to Builder the sum of THIRTY EIGHT MILLION TWO HUNDRED THOUSAND DOLLARS AND NO CENTS
($38,200,000) (hereinafter called the “Contract Price”) each for Unit No.HFO-1, Unit No.HFO-2, Unit
No.HFO-3 and Unit No.HFO-4. The portion of the Contract Price attributable to each Vessel
(hereinafter called the “Assigned Value”) is contained in Tug Exhibits A-1-T, A-2-T, A-3-T and
A-4-T, Barge Exhibits A-1-B, A-2-B, A-3-B and A-4-B, for each Unit. Payments for the Assigned Value
are to be made based on the progress of each Vessel in accordance with the Payment Schedules set
forth in Tug Exhibits A-1-T, A-2-T, A-3-T and A-4-T, Barge Exhibits A-1-B, A-2-B, A-3-B and A-4-B.
The Contract Price is a fixed price and may be adjusted only in strict accordance with, and subject
to, the express provisions of this Contract. For the avoidance of doubt, the Contract Price
includes: (i) the cost of the Unit completed in accordance with the requirements of this Contract;
(ii) the cost of all Builder furnished materials and construction work and the cost of all tests
and trials of the Unit to be performed by, or on behalf of, the Builder; (iii) the cost of
procuring the classification notation for the Unit, and of obtaining all certificates and other
documents that are required to be delivered pursuant to this Contract; and (iv) all other costs and
expenses of the Builder as provided for herein or otherwise incurred by the Builder unless
expressly provided for in this Contract as being for the Owner’s account. No commission of any kind
whatsoever is or will be payable (whether directly or indirectly) by or to any person in relation
to or in connection with this Contract or any

5

 

of the business transactions described in or contemplated by this Contract. The Contract Price
for Units 1, 2, 3 and 4 includes the cargo heating systems and Easy Chemical capability for those
Units.

     In the event the Down Payment for each Vessel, as required by Tug Exhibits A-1-T, A-2-T, A-3-T
and A-4-T, Barge Exhibits A-1-B, A-2-B, A-3-B and A-4-B is not tendered to Builder in immediately
available funds by the close of business on the fifth (5th) business day following the
full execution of this Contract, Builder shall have the right to terminate this Contract, in which
event neither party shall have any further liability to the other. In the event Builder chooses not
to terminate this Contract, then the Stipulated Delivery Date (as described in Tug Exhibits A-1-T,
A-2-T, A-3-T and A-4-T, Barge Exhibits A-1-B, A-2-B, A-3-B and A-4-B) shall be extended by one day
for each full business day the Down Payment is delayed beyond the fifth (5th) business
day following execution of this Contract.

     The Builder shall submit to Owner appropriate invoices and/or certificates for the progress
payments for each Vessel in accordance with the Payment Schedule set for in Tug Exhibits A-1-T,
A-2-T, A-3-T and A-4-T, Barge Exhibits A-1-B, A-2-B, A-3-B and A-4-B which shall be due and payable
twenty (20) business days after the receipt of each invoice. Builder may, at it discretion, charge
Owner interest on any amount due hereunder, if not paid within five (5) business days after it is
due, at the per annum rate of 2% over the Chase Manhattan Bank prime rate or the maximum rate
allowed by law, whichever is less, with such interest being due from the date such amount is due
until paid in full. Payments for all Change Orders and all other additional costs mutually agreed
to in accordance with the terms of this Contract but not set forth in the Payment Schedule, less
credits for any deductions, shall be made in accordance with the terms of the negotiated Change
Order and in any event prior to delivery of the Unit or Vessel to which the change order or
additional cost pertains. The Assigned Value must be paid in accordance with the Payment Schedule
set forth in Tug Exhibits A-1-T, A-2-T, A-3-T and A-4-T, Barge Exhibits A-1-B, A-2-B, A-3-B and
A-4-B.

     If any progress payment shall not be made within five (5) business days after it is due in
accordance with the Contract Documents including, but not limited to, Tug Exhibits A-1-T, A-2-T,
A-3-T and A-4-T, Barge Exhibits A-1-B, A-2-B, A-3-B, and A-4-

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B, Builder may, in its sole discretion, suspend or reschedule progress of the work (such right
being in addition to any other right set forth herein or at law or in equity) and Owner shall then
be obligated to pay Builder, in addition to other amounts becoming due hereunder, all documented
direct costs resulting from such suspension or rescheduling of the work. In the event of delay by
Owner in payment of any amount due and payable, Builder shall not be obligated to reschedule
progress of the work as herein authorized, but may pursue any and all remedies at law or in equity
for enforcement of its rights, provided that Owner be given ten (10) days prior written notice
before Owner is considered to be in default.

     The making of any partial payments shall in no way estop Owner from thereafter asserting any
right or remedy accruing to it because of failure of Builder to deliver the completed Units in
accordance with the terms hereof.

ARTICLE III — TIME AND CONDITIONS OF DELIVERY AND ACCEPTANCE; TITLE:

     Builder shall deliver the Units to Owner at a location set forth on the attached Tug Exhibits
A-1-T, A-2-T, A-3-T and A-4-T, Barge Exhibits A-1-B, A-2-B, A-3-B and A-4-B (the “Place of
Delivery”) by the Stipulated Delivery Dates (as defined in Tug Exhibits A-1-T, A-2-T, A-3-T and
A-4-T, Barge Exhibits A-1-B, A-2-B, A-3-B and A-4-B). All costs and expenses of transporting each
Unit to the Place of Delivery shall be borne by and be the obligation of Builder. All costs and
expenses of operating and/or transporting the Units after each has reached the Place of Delivery
and been accepted by Owner shall be borne by and be the obligation of Owner.

     Each Unit shall not be tendered to Owner and Owner shall not be required to accept delivery of
the Unit, unless and until:

	 	(a)	 	The Unit has been completed in accordance with the Contract Documents;
	 
	 	(b)	 	All tests and trials required by the Contract Documents have been
satisfactorily completed, and any defects discovered and damages sustained have been
remedied and repaired excepting any outstanding punch list items that are mutually
agreed to be completed after delivery;

7

 

	 	(c)	 	Builder has delivered to Owner its Notice of final Progress Payment invoice
reflecting completion of construction of the Unit; and
	 
	 	(d)	 	Builder has tendered to Owner a Bill of Sale (CG-1340) for the Unit (if
necessary), a Builder’s Certification and First Transfer of Title (CG-1261), as most
recently revised, and such other documents as may be required by law or by any
regulatory agency of the United States referred to in the Contract Documents
including, but not limited to, American Bureau of Shipping and U.S. Coast Guard, in
order for Owner to document the Unit for full ocean and coastwise service. Any
expenses in connection with the documentation of each Vessel shall be paid by Builder.
	 
	 	(e)	 	The Unit (a) has been cleaned and prepared (in accordance with the Builder’s
usual practice and to its usual standards for vessels of this type) to take on a full
complement of officers and crew, and (b) is in all other respects ready to commence
operations as a liquid bulk articulated tug-barge Unit.

     If all applicable conditions of the Contract Documents have been met by Builder upon delivery
of the Unit to Owner, Owner shall execute a Delivery and Acceptance Certificate concurrent with its
acceptance of the Unit in the form of the attached Exhibit “D” and will pay to Builder the final
Progress Payment invoice including any unpaid balance due, but less (i) any amount in dispute and
as to which notice of arbitration has been given and less (ii) any amounts owed to Owner as
liquidated damages in accordance with this Contract. Progress Payments shall be made by the Owner
to the Builder in accordance with Article II of this contract.

     Within ten (10) business days after tender of delivery of a Unit by Builder to Owner in
compliance with this Article III, Owner will accept delivery of the Unit or Owner will promptly
deliver to Builder a written statement specifying the reasons Owner refused to accept delivery.
Within one (1) business day after receipt of such statement, Builder shall advise Owner in writing
what action it intends to take in response to Owner’s statement. Owner shall not refuse to accept
delivery of a Unit that achieves the Minimum Required Speed of 11.5 knots as measured in accordance
with Exhibit “H” for this reason only.

8

 

     The Delivery and Acceptance Certificate shall acknowledge performance of this Contract by both
parties and shall be conclusive evidence that all the duties and obligations of each of the
parties have been performed except as to (i) minor and insignificant defects set forth in the
Delivery’ and Acceptance Certificate, (ii) latent defects and (iii) items covered by warranty. The
expression “minor and insignificant defects” means defects which: (i) do not and will not adversely
affect the seaworthiness of the Unit; (ii) do not and will not prevent the unrestricted use of the
Unit in its intended service or purpose; (iii) do not and will not adversely affect the operational
efficiency of the Unit; or (iv) do not and will not involve any condition, qualification,
recommendation, reservation or restriction in relation to any certificate issued (or to be issued)
by the American Bureau of Shipping or any regulatory authority or any other specified party that in
the opinion of the Owner (acting in good faith) is or could be material in a commercial or
technical sense. The Builder shall deliver the unit to the owner free and clear of all encumbrances
whatsoever.

     The Builder shall deliver the Unit to the Owner safely afloat alongside a safe and accessible
pier at the Builder’s shipyard where there must be sufficient water for the Unit always to remain
afloat and from where there must be direct, free, unimpeded, safe and lawful access to
international waters. Owner shall be afforded five (5) days free of any wharfage or any other
charge within which to remove the Unit from the point and time of Delivery.

     Subject to this Article and to Article XXIII (Choice of Law and Dispute Resolution), should
Owner fail to accept a Unit within ten (10) business days of the later to occur of (i) Owner’s
receipt of Builder’s final progress payment invoice indicating completion of the Unit in accordance
with the Contract Documents and (ii) delivery of the Unit to Owner in accordance with this Article,
Owner shall be in default of this Contract, and Builder shall have the right to take all necessary
steps to mitigate its damages and protect its rights and interests including, but not limited to,
the right to sue for specific performance of this Contract, or to retain any deposits or other
payments made hereunder. Builder’s exercise of the foregoing remedies, or any other remedies or
rights, shall not be deemed a waiver or release by Builder of any other rights or remedies that
Builder may have at law or in equity, taking into account the terms of this Contract

9

 

including, but not limited to the right to sue for any additional damages, costs, expenses, or
attorneys’ fees incurred by Builder in pursuing relief and recovery of damages or expenses
resulting from Owner’s default.

     Title to all materials, equipment, supplies, and other property incorporated into or purchased
for incorporation into each Vessel shall vest in Owner as and when Builder receives payment from
Owner under this Contract, subject to Builder’s liens and rights at common law, by statute or under
this Contract. Title to Owner Furnished Equipment shall, at all time, remain in Owner
notwithstanding that Builder shall have the risk of loss as provided in Article XIII, Liability and
Indemnity.

ARTICLE IV — CHANGES IN THE PLANS AND SPECIFICATIONS:

     Subject to the requirements of other work then pending in Builder’s yard, Owner has the right
to require any deletions from or additions to the plans and specifications for each Vessel on
giving due notice in writing to Contractor, the dollar amount of any such changes to be agreed upon
in advance by Owner and Builder, and added to, or deducted from, the total Contract Price and
Assigned Value for such Vessel. If any such change shall delay the completion of such Vessel,
Builder shall be allowed a reasonable extension of time of the Stipulated Date of Delivery
sufficient to cover such delay. If any such change shall likely result in such Vessel not attaining
the required performance criteria under Article X, Owner and Builder shall agree on such
modifications of the requested change necessary in order for the Vessel to attain the required
performance criteria before such change is effected. A statement of the increase or decrease to the
Contract Price and Assigned Value, and/or any additional contract time required, as aforesaid,
shall be submitted to Owner by Builder in the form shown on Exhibit “E”, and shall be approved by
Owner in writing before any such change is made. Notwithstanding the foregoing, no change shall be
made in the general dimensions and/or characteristics of any Vessel which would diminish the
capacity of the Vessel to perform as originally intended by the Contract Documents, except by
mutual consent of the parties.

     If the Parties are unable to agree on the adjustment to the Contract Price and Assigned Value,
and/or any additional contract time required by the change directed by the Owner, Builder shall
perform the requested change and Owner shall pay Builder for

10

 

such change on an actual time and direct material cost basis using Builder’s published
“Standard T&M Rates” as the same may be changed from time to time based on Builder’s rates with the
U.S. Government; provided, however, in no event shall the rates charged Owner be less favorable
than Builder’s rates to other customers. Owner shall pay Builder’s invoices for such actual time
and direct material costs for change work in accordance with the payment terms for progress payment
invoices set forth in Article II hereof. All payments made pursuant to this paragraph (i) shall
be subject to future if; adjustment and (ii) shall not constitute a waiver of Owner’s rights under
Article XXIII. The Builder will maintain a daily record of labor, equipment and materials utilized
in time and materials work covered under a change and will present this record to Owner. If, at any
time, a unit price or lump sum basis of compensation can be agreed to for work being performed
under this paragraph, such compensation may be set forth in writing as a change.

ARTICLE V — LIQUIDATED DAMAGES:

     If completion and delivery of a Unit shall be delayed beyond the respective Stipulated
Delivery Date, as adjusted in accordance with the provisions of the Contract hereof, it is agreed
that Owner will suffer damages which are difficult of ascertainment and the parties hereby agree
that Owner shall sustain, and Builder agrees to pay, as liquidated damages an amount in accordance
with the following schedule for each calendar day that actual delivery is delayed beyond the
sixteenth day following the Stipulated Delivery Date:

Day 17 through 26 — $1,000/day

Day 27 through 46 — $l0,000/day

Day 47 through 131 — $12,500/day

Day 132 through 161 — $20,750/day

     In no event shall the liquidated damages payable hereunder exceed $1,900,000 per unit. Owner’s
right to such liquidated damages shall be Owner’s sole and exclusive remedy for damages or loss due
to late delivery of a Unit and Owner specifically waives all other rights or remedies at law or in
equity, for damages or loss due to late delivery of a unit, other than Owner’s right under clause
(a)(iv) of Article XX (Events of Default) in

11

 

the event completion and delivery of a Unit is delayed more than one sixty one (161) days
after the Stipulated Delivery Date (as adjusted in accordance with the terms of this Contract) of
the Unit.

ARTICLE
VI — OWNER FURNISHED EQUIPMENT:

     Within ten (10) business days from the execution of this Contract, Builder shall deliver to
Owner a schedule of dates for the delivery to Builder by Owner of Owner Furnished equipment and
information (the “Schedule of Delivery of Owner Furnished Equipment”).

     If delivery by Owner to the designated shipyard of any of the components of Owner Furnished
Equipment is delayed beyond the respective scheduled dates of delivery shown on the Schedule of
Delivery of Owner Furnished Equipment, it is agreed that the Stipulated Delivery Date of the
affected Unit(s) shall be extended on a day for day basis for each day of delay of such Owner
Furnished Equipment or such other period, whether longer or shorter, as the parties may mutually
agree in writing taking into consideration the degree the Work is actually delayed by the delay of
such Owner Furnished Equipment.

     Owner shall be responsible for all costs of transportation of Owner Furnished Equipment to the
designated shipyard as well as all classification and regulatory certificates. All Owner furnished
equipment arriving at Builder’s yard shall be stored in a secure area allocated to Owner for
storage of equipment and supplies until required by Builder for installation into the Vessels. Such
securing area shall be plainly marked to indicate Owner’s possession and ownership of such
equipment and supplies.

ARTICLE VII — INSPECTION BY OWNER’S REPRESENTATIVE:

     Builder will furnish without additional charge to Owner reasonable space at its yard(s) for
the duly authorized and designated representative(s) of Owner who shall have reasonable access to
the Work of Builder. Owner’s representative(s) shall promptly inspect as required during the
construction process and accept all workmanship and material which is in conformity with the
Contract Documents by executing an inspection release form in the form attached as Exhibit “I” and
shall with equal promptness, reject

12

 

all workmanship and material which does not comply with the Contract Documents, provided that
the acceptance of such workmanship and material by Owner’s representative shall not prejudice the
rights of Owner under the provisions of Article IX (Warranty) and Article III (Time and Conditions
of Delivery and Acceptance), hereof. Interim inspection acceptance by Owner shall be followed by
final inspection acceptance by Owner after final installation and area closeout to ensure that that
final installation and finish are in accordance with the Vessel specifications and regulatory
requirements.

ARTICLE VIII — FORCE MAJEURE:

     All agreements of Builder contained in this Contract respecting the Stipulated Delivery Date
of each Unit shall be subject to extension by reason of Force Majeure, which term is hereby
declared to include all causes whatsoever beyond the reasonable control and without the fault of
the Builder. The parties agree that such causes shall include, but shall not be limited to, the
following: strikes, lockouts, or other industrial disturbances; unavailability or interruptions or
inadequacy of fuel supplies; act of God; actions or inactions of Owner; war, terrorism, preparation
for war, the requirement, urgency or intervention of Naval or Military executives or
other agencies of government; arrests and restraints of rulers and people, blockade, sabotage,
vandalism and malicious mischief, threats of vandalism and bomb scares and insurrection;
landslides, floods, hurricanes, tornadoes, earthquakes; collisions and fires; non-delivery and/or
late delivery of any Owner Furnished Equipment; unavailability or late delivery of Builder
furnished steel if such steel was ordered in a timely manner by Builder and the steel supplier(s)
had accepted the order with stipulated delivery date(s) which subsequently were not met and delays
due to changes authorized by Owner. Rain shall not be considered a Force Majeure event unless (1)
its occurrence requires a shutdown of an affected portion of the Builder’s yard where the work
hereunder is being performed prior to 12:00 noon on a regularly scheduled work day, or (2) on the
day of such rain, the majority of the then remaining work of the Unit includes painting and such
rain or other weather conditions do not permit painting. For each day on which rain meets the
requirements set forth in the preceding sentence, Builder shall be entitled to (1) day’s extension
of the Stipulated Delivery Date.

13

 

     Within thirty (30) days of knowledge of any Force Majeure event which may affect the
Stipulated Delivery Date, the party declaring a Force Majeure extension shall notify the other
party in writing and shall furnish an estimate, if possible, of the probable extent of the delay.
Upon receipt of any such notice, the party receiving the notice shall, within fourteen (14) days,
acknowledge the same in writing and indicate agreement that such delay be treated as a Force
Majeure event, or state any objections, and the reasons therefore, to acceptance of this delay as a
Force Majeure event. If either party fails to notify the other party of a Force Majeure event
within thirty (30) days after knowledge of the event, such party shall be estopped from thereafter
claiming Force Majeure for any period of delay more than thirty (30) days prior to said notice. If
the party receiving the notice should fail to respond within fourteen (14) days, the extension of
time shall be considered approved.

     If the completion of a Unit is delayed by Force Majeure, the Stipulated Delivery Date of that
Unit and all subsequent Units shall be extended by a period equal to the period of such delay or
delays.

     Notwithstanding the foregoing, Owner shall not be excused by reason of Force Majeure for
failing to pay any of Builder’s invoices when due and payable.

ARTICLE IX -WARRANTY:

     During the Builder’s Warranty Period, as hereinafter defined, for each Unit delivered
hereunder, Builder warrants (1) the material, equipment and design (exclusive of Owner Furnished
Equipment), and (2) that all labor and workmanship, including labor and workmanship for the
installation of Owner Furnished Equipment, furnished by Builder shall have been performed in a good
and workmanlike manner and that the Unit(s) are constructed with the use of good commercial
shipyard practices and procedures. The provisions set forth herein as to the liabilities of the
Builder are to apply also to all labor and workmanship furnished by any sub- contractor retained by
Builder for the performance of this Contract.

     Subject to the exceptions set forth below in this Article, Builder shall have no
responsibility whatsoever with respect to any defect, claim, or loss of a Unit or Vessel not
reported in writing to Builder within two (2) years from the Delivery Date (such period

14

 

being hereinafter referred to as the “Builder’s Warranty Period”). Solely for purposes of this
Article IX, “Delivery Date” shall be defined as the earlier of the following: (a) fourteen (14)
days after date of the final invoice from Builder upon completion of the Unit in accordance with
the requirements set forth in Article III (a) through (e) of this Contract, or (b) the date of the
Delivery and Acceptance Certificate of the Unit.

     The Warranty granted to Owner by Builder shall extend only to those claims timely reported in
writing to Builder within such Builder’s Warranty Period. In the event Owner timely notifies
Builder of any claim covered under this Warranty, Builder will make repairs and/or replacement at
its option, at one of Builder’s yards without expense to Builder for transporting the Unit or
Vessel, or any component thereof, to or from that yard; provided, however, that if it is not
practical to have the Unit or Vessel proceed to such yard, Owner may, with prior written consent of
Builder, which consent may not be unreasonably withheld, have such repairs and/or replacement made
elsewhere, and, in such event, Builder shall reimburse Owner a sum equivalent to (i) one hundred
fifty percent (150%) of the amount Builder would have expended at its own yard at Builder’s then
prevailing rates, or (ii) the amount actually expended by Owner, whichever is less. In no event
shall Builder be responsible for any sum in excess of the cost of the repairs and/or replacement as
specified herein. The Builder’s Warranty Period for workmanship on a Unit shall be extended by one
day for each day that any warranted defect or the repair thereof covered hereunder forces the Unit
out of service and unavailable for hire beyond twenty (20) successive calendar days.

     The Builder’s Warranty Period for any equipment or materials purchased by Builder from a
supplier or manufacturer for installation in a Unit and for Builder’s workmanship shall expire upon
the later of (i) one (1) year from the Delivery Date or (ii) the expiration of the manufacturer’s
warranty with respect to such equipment or materials, but in no event later than the two (2) years
from the Delivery Date (such extended expiration date is the “Third Party Warranty Expiration
Date”). To the extent available, on the Third Party Warranty Expiration Date Builder agrees to
transfer and assign to Owner, without warranty of Builder with respect thereto, any remaining
warranties relative to material equipment and/or labor furnished by others. Should Owner

15

 

be required to enforce any such warranty, Builder will cooperate with Owner’s efforts, short
of instituting legal action on Owner’s behalf and/or incurring other legal fees.

     Nothing contained herein shall obligate Builder at any time to repair or replace any Unit or
Vessel, or any component part thereof, to the extent such repair and/or replacement is caused by
the negligent operation or maintenance of the Unit or Vessel, or its equipment, by Owner or Owner’s
agents, employees representatives or any other third party.

     With respect to the paint, Builder warrants that it will purchase paint of good marine quality
with a five (5) year manufacturer and/or supplier’s warranty and that it will apply the paint in
accordance with the manufacturer’s specifications and recommendations. The Builder’s Warranty
Period with respect to the paint applied to each Unit shall be two (2) years from the Delivery Date
(such expiration date is the “Builder’s Paint Warranty Expiration Date”). On the Builder’s Paint
Warranty Expiration Date, Builder agrees to transfer and assign to Owner, without warranty of
Builder with respect thereto, any remaining manufacturer’s or supplier’s warranties relative to the
paint applied to the Unit(s). Should Owner be required to enforce any such warranty, Builder will
cooperate with Owner’s efforts, short of instituting legal action on Owner’s behalf and/or
incurring other legal fees. In consideration of the foregoing warranties with respect to the paint,
Owner agrees to maintain at all times during the paint warranty period, detailed records of all
cargo carried in the Unit(s) and all cleaning, maintenance and repair (whether ordinary or
extraordinary) records with respect to the Unit (collectively, the “Required Records”). The
Builder’s warranty with respect to the paint shall be null and void in the event Owner fails to
maintain the Required Records in accordance with this Article IX.

     For any claim for damages to or loss of a Unit or Vessel, and/or damages to persons and/or
property (including, but not limited to claims, demands, or actions for bodily injury, illness,
disease, death, loss of service, loss of society, maintenance and cure, wages or property) made as
a result of any defect in a Unit or Vessel, or any component parts thereof, after the said
Builder’s Warranty Period, Owner shall have no claim or actions whatsoever against Builder,
regardless of any negligence, tort, fault, strict liability or otherwise of Builder, its employees
or sub-contractors, and Owner

16

 

hereby waives and releases Builder and its employees and subcontractors from and against any
and all liability and any and all damages resulting therefrom, including, but not limited to, for
personal injury, death, property damage, damage to and/or loss of a Unit or Vessel, delay,
demurrage, loss of profits, loss of use, or any other consequential or punitive damages of any
kind, whether such claim is based in contract, negligence, strict liability, or otherwise, arising
out of any defect and/or negligent design, the selection or choice of specifications and/or
materials and/or component parts, manufacture, construction, fabrication, workmanship, labor and/or
installation of equipment, materials and/or components or from any unseaworthy condition or any
other defective condition of a Unit or Vessel, it being specifically understood and agreed that any
such defects reported and/or occurring after the Builder’s Warranty Period and all damages, loss of
profits, demurrages, delay, losses of use or other consequential damage of any kind whatsoever
resulting therefrom, shall not be the responsibility of Builder, but shall be borne exclusively by
Owner; provided, however, Builder understands and agrees that Owner cannot release Builder from or
waive claims made in connection with the above by employees of Owner or by third parties and with
respect to such claims made Owner and Builder expressly reserve all rights, remedies and defenses.

     THIS WARRANTY IS EXPRESSLY IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING
WITHOUT LIMITATION ANY WARRANTY OF MERCHANT ABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OR USE
AND THE REMEDY SET FORTH IN THIS ARTICLE IS OWNER’S SOLE AND EXCLUSIVE REMEDY FOR BREACH OF
WARRANTY AND IS EXPRESSLY IN LIEU OF ALL INDIRECT, SPECIAL, PUNITIVE OR CONSEQUENTIAL DAMAGES.

ARTICLE X — PERFORMANCE WARRANTY:

(a) Speed: The parties recognize that Owner will be damaged by a decrease in Unit speed
below the Guaranteed Speed (as defined below). Because such damages are difficult to
ascertain, the parties agree that, in lieu of any other damages or claims arising in
connection with the speed of the Unit, the following provisions will apply:

17

 

	 	(i)	 	The guaranteed speed of the Unit (calculated in accordance
with Exhibit “H” attached hereto) is twelve (12) knots in a sea up to and
including Beaufort Scale Force 5 (the “Guaranteed Speed”).
	 
	 	(ii)	 	If the Unit’s maximum speed, as determined in accordance with
Exhibit “H”, is less than 11.5 knots, and it is proven that the Owner
furnished engines and gears are performing in accordance with the
manufacturer’s performance curves current at the effective date of this
Contract, Builder shall make any required adjustments to the Unit to achieve a
minimum speed of 11.5 knots (Minimum Required Speed) before tendering the Unit
for Final Acceptance and Delivery.
	 
	 	(iii)	 	If the Unit’s maximum speed, as determined in accordance
with Exhibit “H” and after Builder has made adjustments to the Unit to achieve
speed prior to delivery, is established to be [more than two tenths (2/10 of a
knot below the Guaranteed Speed, Builder shall pay to Owner the sum of FIFTY
THOUSAND DOLLARS AND NO CENTS (US$50,000.00) as liquidated damages, and not as
a penalty, for each one tenth (1/10) of a knot deficiency in excess of the
first two tenths (2/10) of a knot deficiency, or portion thereof (the “Speed
Liquidated Damages”), not to exceed a total of ONE HUNDRED FIFTY THOUSAND
DOLLARS AND NO CENTS (US$150,000.00).

(b) Fuel Consumption: The parties recognize that Owner will be damaged by an increase in
fuel consumption above that which was guaranteed by Builder in the Contract Documents.
Because such damages are difficult to ascertain, the parties agree that, in lieu of any
other damages or claims arising in connection with the fuel consumption of the Unit, the
following provisions shall apply:

	 	(i)	 	The guaranteed total per diem average fuel consumption
for main propulsion power only (calculated in accordance with Exhibit “H”
attached hereto), excluding generators is 7,950 US Gallons Heavy Fuel Oil 380
cSt/50 deg C, and a fuel net calorific heat value of

18

 

	 	 	 	42,700 kilojoules per kilogram, (in accordance with engine manufacturer’s
specifications used for testing and developing performance curves). This
rate of consumption is based on an average speed of twelve (12) knots (or
lesser speed if a speed deficiency cannot be corrected by Builder) in the
average of the optimally ballasted and loaded condition (0.86 specific
gravity cargo) in a Beaufort Scale Force 5 condition.
	 
	 	(ii)	 	If, however, a Unit’s fuel consumption exceeds the guaranteed rate, or the
adjusted rate as necessary for EPA Tier 2 modifications, by more than two hundred (200)
gallons per day and it is proven that the Owner Furnished Engines are performing in
accordance with the engine manufacturer’s published specific fuel consumption value,
including tolerances current at the effective date of this Contract, Builder shall pay
to Owner the sum of TEN THOUSAND DOLLARS AND NO CENTS (US$10,000.00) per each one
percent (1%) above the guaranteed amount Not to exceed FIFTY THOUSAND DOLLARS AND NO
CENTS (US$50,000.00).

Owner’s right to such liquidated damages set forth in this Article shall be Owner’s sole and
exclusive remedy for breach of the Performance Warranties set forth herein.

ARTICLE XI — INSURANCE:

Builder, at its sole cost and expense (including the cost of all deductibles), shall
procure and maintain in force during the entire period of construction, including
launching, trials and demonstrations, until Builder completes entirely its obligations
under this Contract, the following insurance:

	 	a)	 	Workers’ Compensation Insurance, covering applicable statutory benefits in
the State where work is being performed, and Employer’s Liability Insurance in an
amount of
at least ONE MILLION DOLLARS AND NO CENTS (US$1,000,000.00). The policy shall be
endorsed to cover Federal benefits under the U.S.

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	 	 	 	Longshore and Harbor Workers Compensation Act. The policy shall be endorsed for
maritime coverages for bodily injury to, or death of, a master or member of the crew of
the Unit, including transportation, wages and maintenance and cure. This insurance
shall be endorsed to waive certain rights of subrogation against Owner only to the
extent that Builder is obligated to indemnify Owner pursuant to Article XIII (Liability
and

Indemnity).
	 
	 	b)	 	Public Liability Insurance, on a per occurrence basis, endorsed to cover on
the premises operations, physical injury, “in rem” endorsement, watercraft exclusion
deleted (to the extent applicable); with combined limits of at least TEN MILLION
DOLLARS AND NO CENTS (US$10,000,000.00) per occurrence. This insurance shall name
Owner as Additional Assured and waive certain rights of subrogation against Owner and
the Unit, but only to the extent that Builder is obligated to indemnify Owner pursuant
to Article XIII (Liability and Indemnity).
	 
	 	c)	 	Builder shall also provide Builder’s Risk Insurance in an amount at least
equal to the completed Contract Price, including the value of Owner Furnished
Equipment, and financing costs, if any, (provided that Owner shall be responsible for
any incremental premiums relating to the Owner Furnished Equipment and financing
costs). Owner shall provide advance notice to Builder setting forth the dates that
such equipment and materials are to be delivered to Builder’s yard. This insurance
shall also include Protection and Indemnity coverage with combined limits of at least
TEN MILLION DOLLARS AND NO CENTS (US$10,000,000.00) per occurrence. This insurance
shall be on a London Institute Clauses for Builders Risks (1/6/88) or similar form,
and shall include coverage for faulty construction, tests and trials, and automatic
full coverage for Owner Furnished Equipment. This insurance shall name Owner as an
Additional Assured and a Joint Loss Payee, as their interests may appear and shall
waive certain rights of subrogation against Owner and the Unit. Notwithstanding
anything contained in this Contract to the contrary, the Builder’s Risk Insurance
required hereunder shall

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	 	 	 	expire and all risk of loss of each Unit shall transfer to Owner upon the date of the
Delivery and Acceptance Certificate for each Unit.

     The aforesaid policies (i) shall be endorsed to provide Owner with thirty (30) days written
notice prior to cancellation or reduction in coverage required by this Contract, and (ii) shall be
primary to any insurance carried by Owner. If Builder fails to procure or allows to lapse any
policies required under this Article XI and fails to obtain such insurance within five (5) days of
written notice by Owner requesting such insurance, then Owner shall have the right to obtain such
insurance and any expenses incurred by Owner in obtaining such insurance shall be paid by Builder.
Owner’s “extension of benefits” clause shall apply including, but not limited to Owner; Crowley
Maritime Corporation; and any of their affiliates formed or to be formed to own or operate the
Vessels as well as all directors. Officers, employees and agents of said entities. Owner shall
notify Builder with the names of the affiliates formed or to be formed to own or operate the Unit.
Within ten (10) business days of execution of this Contract, Builder shall provide Owner with
Certificates of Insurance. All insurance shall provide that there shall be no recourse against the
Owner or its assignees for the payment of any premiums or commissions and that no cancellation of
the insurance, for any reason whatsoever, shall become effective unless and until ten (10) days
prior written notice has been given by the relevant brokers or insurers to the Owner.

     If Builder fails to timely procure said Certificates of Insurance within thirty (30) days
following the execution of this Contract Owner, upon notice to Builder, shall be entitled to
terminate this Contract and receive a refund of all amounts previously paid to Builder. Owner’s
failure to timely provide such notice to Builder shall constitute a waiver of its rights under this
paragraph.

ARTICLE XII — BUILDER GUARANTEE:

     Upon Delivery and Acceptance of Unit No. 1 under that certain Vessel Construction Contract
dated the second day of June 2004, as amended July 1, 2004, between Builder and Owner (the “Initial
ATB Construction Contract”) and payment of Owner’s Contract Signing Down Payments hereunder for HFO
Units 1, 2, 3 and 4, Builder shall procure and provide to Owner Performance and Payment Bonds, in
the form

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and from a surety or insurance company selected by Builder and acceptable to Owner for the sum
of SEVENTEEN MILLION FIVE HUNDRED THOUSAND AND 00/100 U.S. DOLLARS (US$17,500,000.00) (hereinafter
the “Unit Penal Limit”) to secure HFO Unit No. 1 hereunder. Upon Delivery and Acceptance of Unit
No. 2 under the Initial ATB Construction Contract, Builder shall procure and provide to Owner
equivalent Performance and Payment Bonds, to secure HFO Unit No. 2 hereunder. Upon the execution
of the Delivery and Acceptance Certificate for HFO Unit No. 1 hereunder, Builder shall secure HFO
Unit No. 3 for the Unit Penal Limit in accordance with the terms agreed for HFO Units No. 1 and 2
and, likewise, upon Delivery and Acceptance of HFO Unit 2 hereunder, Builder shall secure HFO Unit
No. 4 equivalently.

     Each such Performance and corresponding Payment Bond for the Unit Penal Limit shall be reduced
to ONE MILLION FIVE HUNDRED THOUSAND 00/100 U.S. DOLLARS (US$l,500,000.00) upon the execution of
the Delivery and Acceptance Certificate for the Unit to which they secure and, thereafter, shall
expire and be released by Owner upon the expiration of the Builder’s Warranty Period for such Unit.
The premium or cost of the Performance and Payment Bonds shall be for the account of Owner.

     These sureties, in the combined penal sum of THIRTY FIVE MILLION AND 00/100 U.S. DOLLARS
(US$35,000,000.00) during the building period of any two Units, along with the bonds covering the
Builder’s Warranty Period for each Unit, shall secure the complete performance by Builder of its
obligations under this Contract.

     In the event of Default of Builder on any Unit as defined in Article XX hereof, Owner shall be
entitled to make a claim for the affected Unit(s) as a result of the Event of Default. Owner and
Builder agree that certain progress payments, as required by Tug Exhibits A-1-T, A-2-T, A-3-T and
A-4-T, Barge Exhibits A-1-B, A-2-B, A-3-B and A-4-B shall be delayed or withheld by Owner (in
accordance with such Exhibits) in the event any Unit secured by Performance and Payment Bonds is
not delivered on schedule; provided, further that no additional milestone payments shall be
invoiced by Builder or paid by Owner unless and until Performance and Payment Bonds are available
and attach to the Unit for which the additional milestone payment(s) otherwise may be due in
accordance with this Contract.

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ARTICLE XIII — LIABILITY AND INDEMNITY:

	(a)	 	Except as otherwise set forth in this Contract and except for risks and liabilities arising
in connection with the acts or omissions of Owner, Owner’s other contractors (except Builder
and its subcontractors), subcontractors, vendors, agents, employees or representative, Builder
will assume all risks and liabilities, during the construction of the Units and until
completion and delivery of each Unit to Owner for all loss or damage occurring to each Unit
and its components, including, without limitation, Owner Furnished Equipment while such
equipment is on Builder’s premises.

	(b)	 	Builder shall indemnify, defend and save harmless Owner, its affiliates, and their officers,
directors, employees and representatives from any and all third party liens, expenses, claims
and demands whatsoever (including costs and attorneys’ fees) against Owner or against the
Vessels in any manner related to the Work to be performed by Builder under this Contract.
Owner shall indemnify, defend and save harmless Builder, its affiliates, and their officers,
directors, employees and representatives from any and all third party liens, expenses, claims
and demands whatsoever (including costs and attorneys’ fees) against Builder or against the
Vessels in any manner related to Owner’s obligations under this Contract or the obligations of
its Builders (except Builder and its subcontractors, vendors, agents, employees and
representatives), subcontractors, vendors, agents employees or representatives.

	(c)	 	To the fullest extent permitted by applicable law, the Builder shall be responsible for and
shall save, indemnify, protect, defend and hold harmless the Owner, its affiliates and their
respective officers, employees, agents or representatives (“Owner Group”) from and against all
liabilities, losses, damages, liens, causes of action, suits, claims, judgments, expenses and
costs (including attorney fees and court costs), of every nature, kind and description that
Builder, its affiliates, subcontractors and their respective officers, employees, agents or
representatives (“Builder Group”) may hereinafter suffer, incur, or pay by reason of bodily
injury, illness, or death, or any loss of or damage to property sustained or purported to

23

 

	 	 	have been sustained by any member of the Builder Group regardless of the cause, including
the negligence (joint, sole or concurrent, active or passive), fault, strict liability,
tort or breach of contract of any member of the Owner Group or unseaworthiness of its
respective vessel(s).

	(d)	 	To the fullest extent permitted by applicable law, the Owner shall be responsible for and
shall save, indemnify, protect, defend and hold harmless the Builder Group from and against
all liabilities, losses, damages, liens, causes of action, suits, claims, judgments, expenses
and costs (including attorney fees and court costs) of every nature, kind and description that
any member of Owner Group may hereinafter suffer, incur, or pay by reason of bodily injury,
illness, or death, or any loss of or damage to property sustained or purported to have been
sustained by any member of the Owner Group regardless of the cause, including the negligence
(joint, sole or concurrent, active or passive), fault, strict liability, tort or breach of
contract of any member of the Builder Group or unseaworthiness of its respective vessel(s).

	(e)	 	Except as provided in Article IX, Owner shall indemnify, defend and save Builder harmless
from and against liabilities of any nature whatsoever (including costs and attorneys fees) to
the extent arising out of or in connection with the acts or omissions of Owner, its agents,
representatives and other contractors (exclusive of Builder and its subcontractors, vendors,
agents, employees and representatives and representatives) relating to possession, ownership,
operation and maintenance of any Unit from and after the time of delivery of the Unit or Owner
in conformance with this Contract.

ARTICLE XIV — NO CONSEQUENTIAL DAMAGES:

     NEITHER OWNER NOR BUILDER, THEIR VESSELS, AFFILIATES AND THEIR OFFICERS, DIRECTORS, EMPLOYEES,
REPRESENTATIVES AND ASSIGNS (INDIVIDUALLY, THE “RELEASED PARTY” AND COLLECTIVELY, THE “RELEASED
PARTIES”) SHALL IN ANY EVENT BE RESPONSIBLE TO THE OTHER FOR ANY INDIRECT OR CONSEQUENTIAL
DAMAGES, INCLUDING WITHOUT LIMITATION LOSS OF PROFITS OR LOSS OF USE, WHETHER

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ARISING IN WHOLE OR IN PART FROM (i) THE ACTIVE OR PASSIVE NEGLIGENCE OF THE RELEASED PARTY,
(ii) THE ACTS OR OMISSIONS OF SUCH RELEASED PARTY FOR WHICH IT IS STRICTLY LIABLE; OR (iii) OTHER
FAULT OF SUCH RELEASED PARTY, INCLUDING WITHOUT LIMITATION BREACH OF THIS CONTRACT, EVEN IF THE
POSSIBILITY OF SUCH DAMAGES IS FORESEEABLE BY SUCH RELEASED PARTY.

ARTICLE XV — PROHIBITION OF LIENS:

Neither Owner nor Builder shall place, allow or create any liens, charges or encumbrances on, or
security interests in or pledges of (herein referred to individually as a “Lien” and collectively
as “Liens”) any Unit, its component parts or any Owner Furnished Equipment; provided Owner may
collaterally assign this Contract and grant a security interest to the U.S. Maritime Administration
(“MARAD”) in connection with MARAD guarantee of Owner’s Title XI bonds issued or to be issued to
finance construction of the Unit, or to any other financial institution. Any Lien so placed,
allowed or created shall be forthwith released by Owner or Builder, as the case may be; provided,
however, that this Article XV shall not apply to inchoate liens for taxes and wages not then due,
or to liens of Builder to secure payment to Builder for amounts then due and payable. If any lien
not so excepted is placed, filed or asserted against a Unit, a Vessel or against any other
materials, equipment, supplies, parts or personal property belonging to Owner or intended for a
Unit or for a Vessel, then Owner or Builder, as the case may be, shall notify the other party of
the existence of same as soon as reasonably possible, and the other shall, within a reasonable
time, cause same to be released or discharged; provided however, that Owner or Builder, as the case
may be, may, in good faith, contest any such liens or the debts to which they may relate, but in
the event of any such contest, Owner or Builder, as the case may be, shall ensure the release of
such liens by bonding or otherwise and shall prevent the existence of such lien or debt from
delaying the work hereunder. Upon either Owner’s or Builder’s failure to do so, the other party
may, in order to prevent a delay in the work hereunder or delivery of the Unit or of clear title,
pay any and all such sums as may be required in order to cause such lien to be released and Owner
or Builder, as the case may be, shall forthwith promptly reimburse the other for

25

 

such payment. Notwithstanding any other provision of this Contract to the contrary, Contractor and
Owner agree that Owner shall have joint title to, and/or contractual third party beneficiary rights
in the materials and the components of each Vessel that are purchased by Contractor in accordance
with the Down Payments, as required by Tug Exhibits A-1-T, A-2-T, A-3-T and A-4-T, Barge Exhibits
A-1-B, A-2-B, A-3-B and A-4-B, until final payment of the full Contract Price and final delivery of
the Vessel to Owner at which time Contractor’s interest shall cease. Provided, further, that
Contractor shall use its best efforts to cause the seller’s of such materials and components
purchased with any Down Payments to acknowledge Owner’s vested interest therein.

ARTICLE XVI — TAXES:

     Any transportation, sales, use or other tax (exclusive of taxes arising out of or in
connection with the making and execution of this Contract the building of the Unit, the importation
of any materials or parts, other than Owner Furnished Equipment, and income tax otherwise payable
by Builder, which shall be the sole responsibility of the Builder) imposed by any governmental
agency, in connection with the construction or delivery of any Unit or any component part thereof,
and any personal property tax which may be levied or imposed with respect to any Unit or any
component part thereof, shall be paid by Owner. Builder agrees that it will not pay any such tax on
behalf of Owner, or concede any liability on behalf of Owner for same, without prior notice to
Owner.

ARTICLE XVII — PATENTS:

     Builder agrees to indemnity, defend (including payment of attorney’s fees and costs), hold and
save harmless Owner against claims of third parties for damage sustained by reason of the
infringement of the patent rights with respect to materials, designs, processes, machinery,
equipment, and hull forms selected and built by Builder in connection with construction of the
Units. Owner agrees to indemnity, defend (including payment of attorney’s fees and costs), hold and
save harmless Builder against claims of third persons for damages sustained by reason of
infringement of patent rights with respect to Owner Furnished Equipment, designs and processes
supplied or specifically

26

 

acquired by Owner or required by any plans and specifications furnished by Owner in connection
with construction of the Units.

ARTICLE XVIII — USE OF THE PLANS AND SPECIFICATIONS:

     Contract Drawings and working drawings with all proprietary rights thereto shall remain the
property of Builder and cannot be used by Owner to build a sister ship without permission from, and
compensation to Builder; provided, however, Builder shall make such Contract Drawings and working
drawings available to Owner at Owner’s request for the purposes of repair and maintenance on the
Unit(s). Builder also agrees not to provide exact details of the Unit arrangement or outfit to,
nor build a duplicate Unit for, any other party without the prior written approval of Owner, which
shall not be unreasonably withheld. No provision of this Article XIX shall allow Builder to claim
ownership of any Owner supplied drawings or data. All plans, designs and engineering and design
data supplied by the Owner to the Builder that are the property of the Owner shall remain the
property of the Owner and such plans, designs and engineering and design data may be used by the
Builder only in such manner as is permitted by this Contract.

ARTICLE XIX — BANKRUPTCY:

     If either party hereto shall be adjudicated a bankrupt or an order appointing a receiver of it
or of the major part of its property shall be made or an order shall be made approving a petition
or answer seeking its reorganization under the Federal Bankruptcy Code, as amended, or either party
shall institute proceedings for voluntary bankruptcy or apply for or consent to the appointment of
a receiver of itself or its property, or shall make an assignment for the benefit of its creditors,
or shall admit in writing its inability to pay its debts generally as they become due, for the
purpose of seeking a reorganization under the Federal Bankruptcy Code, or otherwise, then in anyone
or more of such events, the other party to this Contract shall have the option forthwith to
terminate this Contract to all intent and for all purposes by giving written notice of its
intention so to do, subject, however to all obligations and liabilities of each party under the
Contract Documents, including but not limited to title to the Unit(s) vesting in Owner pursuant to
Article III (Time and Conditions of Delivery and Acceptance; Title). Any termination of this

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Contract made pursuant to the provisions of this Article XIX shall not relieve either party
from any accrued obligations hereunder due and owing at the date of such termination.

ARTICLE XX — EVENTS OF DEFAULT:

	a)	 	Any of the following occurrences shall constitute an event of Default of Builder under this
Contract:

(i) The failure of Builder to perform any of the material covenants, agreements or
undertaking of this Contract on its part to be performed, including, but not
limited to, the failure to make prompt payment for all labor, materials, services
and other charges which are to be paid by Builder under this Contract; provided
Owner shall have given Builder written notice of such failure and Builder (a) shall
not, within ten (10) business days after the date of receipt of such notice have
remedied any payment failure by payment or, in the event of dispute, by the posting
of bond or other adequate security, or (b) shall not, within fifteen (15) business
days after the date of receipt of such a notice, have cured, or shown to Owner’s
satisfaction that it has taken steps sufficient to remedy promptly, any such other
event of default not relating to payment.

(ii) Builder being adjudicated a bankrupt or an order appointing a receiver of it
or of the major part of its property shall be made or an order shall be made
approving a petition or answer seeking its reorganization under the Federal
Bankruptcy Code, as amended, or if Builder should institute proceedings for
voluntary bankruptcy or apply for or consent to the appointment of a receiver of
itself or its property, or shall make an assignment for the benefit of its
creditors, or shall admit in writing its inability to pay its debts generally as
they become due, for the purpose of seeking a reorganization under the Federal
Bankruptcy Code, or otherwise.

(iii) A Unit has not been tendered for delivery in accordance with the requirements
set forth in Article ill (a) through (e) this Contract within one hundred sixty one
(161) days after the Stipulated Delivery Date, as

28

 

adjusted for all allowable Force Majeure extensions, as defined in Article VII, all
change order extensions and any other extension allowable under this Contract.

     In the event that anyone or more of the events of default specified herein shall have
occurred, upon payment to Builder of all progress payments then due to Builder and all costs
incurred to date by Builder in construction of the Unit(s) that are not included in the progress
payments due to Builder, provided that such amounts shall not exceed that percentage of the
Contract Price that is equal to the percentage completion of the construction of the Unit to date
by Builder, Owner shall have right, at its option, to (1) exercise its rights under the terms of
Article XII (BUILDER GUARANTEE) hereof, and (2) terminate this Contract by providing written notice
to Builder and to have the Unit(s) completed by another builder. If so requested by Owner, Builder
shall (a) in the least expensive manner, complete all work required to permit the Vessels to be
safely removed from the Builder’s yard, (b) remove its employees, agents and Builder’s
subcontractors, together with their equipment, from the Vessel(s) and (c) render all necessary
assistance to the Vessels in leaving the Builder’s yard at the earliest moment convenient to
Builder. If the unpaid balance of the Contract Price exceeds Owner’s reasonable auditable costs of
completion, such excess shall be paid to Builder.

     Notwithstanding anything contained in this Contract to the contrary, should Owner terminate
this Contract pursuant to the preceding paragraph, Owner shall have ninety (90) days from such
termination to notify Builder of any defective materials or workmanship which were both (i)
installed or completed by Builder and (ii) represented in the amount paid to Builder upon such
termination. In no event shall Builder be liable to Owner for any sum in excess of the cost of
repairs or replacements of the materials or workmanship, nor shall Builder be obligated to repair
or replace any material or workmanship, where such repair or replacement is caused by Owner, its
other contractors (except Builder), subcontractors or employees. Builder shall have no
responsibility whatsoever for such defective materials or workmanship if Owner does not notify
Builder within the period set forth above in this Article XX. Thereafter, the Builder shall be
relieved of all warranty obligations under this Contract.

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     The rights conferred upon Owner under the terms of this Article XX and elsewhere in this
Contract shall be its sole and exclusive remedies at law or in equity upon the happening of the
events of default specified herein, or upon any failure on the part of Builder to perform the
material undertakings, agreements and covenants on its part to be performed hereunder. Owner’s
failure to exercise the rights conferred upon it hereunder in anyone or more instances of the
occurrence of an event of default as hereinbefore defined, shall not constitute a waiver of all
other rights due to Owner under this Contract.

	 	b)	 	Any of the following occurrences shall constitute an event of default of Owner under
this Contract:

(i) The failure of Owner to perform any of Owner’s material obligations hereunder
including, but not limited to, payment of each of Builder’s Progress Payments, in
accordance with Article II hereof provided Builder shall have given Owner written
notice of such failure and Owner (a) shall not, within ten (10) business days after
the date of receipt of such notice, have remedied any payment failure by payment
or, in the event of dispute, by the posting of bond or other adequate security or
(b) shall not, within fifteen (15) business days after the date of receipt of such
a notice, have cured or shown to Builder’s satisfaction that it has taken steps
sufficient to remedy promptly any such other event of default not relating to
payment.

(ii) Owner being adjudicated a bankrupt or an order appointing a receiver of it or
of the major part of its property shall be made or an order shall be made approving
a petition or answer seeking its reorganization under the Federal Bankruptcy Code,
as amended, or if Builder should institute proceedings for voluntary bankruptcy or
apply for or consent to the appointment of a receiver of itself or its property, or
shall make an assignment for the benefit of its creditors, or shall admit in
writing its inability to pay its debts generally as they become due, for the
purpose of seeking a reorganization under the Federal Bankruptcy Code, or
otherwise.

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In the event one or more of the foregoing events of default of Owner shall have occurred,
Builder may, at its option:

(a) Terminate the Contract, reserving to Builder all rights and claims against
Owner for loss and/or damage, and either sell any Vessel to another party applying
the proceeds of such sale against amounts owed Builder by Owner and other damages
caused by Owner’s default. If the proceeds of such sale do not cover such damages
and sums owed, then Builder may file a legal action against Owner in the applicable
U.S. Federal Court to recover the balance not covered by the proceeds of such sale.
Any proceeds of such sale in excess of amounts owed Builder, including Builder’s
costs of termination and Vessel disposal, shall be paid over to the Owner.

(b) Suspend performance of work unless and until such event of default is cured
by Owner (which right of suspension shall be in addition to any other right which
Builder may have). In the event of suspension, Owner shall pay to Builder all costs
and expenses related to such suspension and the Stipulated Delivery Date of each
affected Unit shall be extended one day for each day of such suspension.

(c) Complete the Unit(s) pursuant to this Contract and tender it for delivery
and full payment as provided herein, reserving to Builder all rights and claims
against Owner for loss and/or damage, or sell the Unit to another party applying
the proceeds as set out in (ii)(a) above.

     The rights conferred upon Builder under the terms of this Article XX and elsewhere in this
Contract shall be its sole and exclusive remedy at law or equity upon the happening of the events
of default specified herein, or upon any default on the part of Owner to perform the material
undertakings, agreements and commitments on its part to be performed hereunder. Builder’s failure
to exercise the rights conferred upon it hereunder in anyone or more instances of the occurrence of
an event of default, as hereinbefore defined, shall not constitute a waiver of all other rights
available to Builder under this Contract.

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ARTICLE XXI — NOTICES:

     Notices required by this Contract to be given by Owner to Builder or to be given Owner by
Builder shall be in writing and will be delivered in person or by registered mail return receipt
requested, or by overnight courier service providing evidence of receipt, to Builder or Owner, or
the designated representative of either, as the case may be.

     Notices to Builder shall be addressed to: Mr. Boyd E. King, Chief Executive Officer, VT Halter
Marine, Inc., 900 Bayou Casotte Parkway, Pascagoula, MS 39581.

     Notices to Owner shall be addressed to: Mr. Edward Schlueter, Vice President, Vessel
Management Services, Inc., 9487 Regency Square Boulevard, Jacksonville, FL 32225. In all matters
relating to this Contract except warranty claims, which are covered by Article IX, Warranty, the
parties will be represented by none other than the following named persons Mr. Edward Schlueter for
the Owner and Mr. Boyd E. King for the Builder.

     Each party agrees that at least one of its named representatives will be available for
consultation during normal working hours. Both parties agree that no one other than the named
individuals shall be considered as an agent of either party for making of admissions or giving of
instructions. Except as herein authorized, no change or modification in this Contract or its
specifications shall be valid or binding on either party unless the same is in writing and signed
by one of the above designated representatives of each party. Any change in the “Contract Price”
resulting from change in specifications shall be agreed upon between Builder and Owner in writing
in advance.

     Any other person may be designated to act for either party upon written notice of such
designation accomplished in accordance with the provisions of this Article.

ARTICLE XXII – CONSTRUCTION:

     The headings of the Articles, sections or other provisions have been inserted as a convenience
for reference only, and are not to be considered in any construction or interpretation of this
Contract. If any discrepancy or conflict exists between the provisions of this Contract, the
Specifications, and the Plans, then to the extent of such discrepancy or conflict only, the
Contract (including the Exhibits) shall prevail, but in all other respects the Specifications and
the Plans shall be in full force and effect. If there is

32

 

any discrepancy or conflict between the Specifications and the Plans, then to the extent of such
discrepancy or conflict only, the Specifications shall prevail but in all other respects the Plans
shall be in full force and effect.

     The Builder shall be responsible for correcting Builder’s errors or deficiencies in Builder
prepared shop or production drawings at no increase in the Contract Price, provided such errors or
deficiencies were not caused by errors in (i) Owner Furnished Equipment, (ii) Owner Furnished
Equipment or other vendor information furnished by the Owner, or (iii) any other designs,
information or processes furnished by the Owner.

ARTICLE XXIII — CHOICE OF LAW AND DISPUTE RESOLUTION:

     This Contract shall be construed and enforced in accordance with the laws of the State of New
York, U.S.A. Disputes arising prior to delivery of a Unit concerning the Specifications, Plans and
Drawings, and other technical disputes related to construction of the Unit shall be resolved by
arbitration as set forth in this Article XXIII. The arbitration shall be in Houston, Texas before
the American Bureau of Shipping (the “Technical Arbitrator”). The Technical Arbitrator shall
promptly arbitrate such dispute, and any expense of the Technical Arbitrator (excluding attorneys’
fees) in connection with the resolution of such technical disputes shall be paid by the party
against which the adverse decision is rendered.

     All other disputes arising out of the Contract or the Work shall be settled by binding
arbitration in Houston, Texas in accordance with the Commercial Arbitration Rules of the American
Arbitration Association, provided, any arbitration instituted pursuant to this Article XXIII shall
be subject to the Federal Rules of Civil Procedure and the Federal Rules of Evidence, including the
provisions of such rules governing production of evidence and discovery. The arbitrators shall be
bound by the provision of this Contract where applicable and shall have no authority to alter any
such provision in any way. Any decision, award or remedy by the arbitrators that is in
contravention of the provisions of this Contract, including but not limited to the limitations on
consequential damages, punitive damages, liquidated damages and warranty, shall not be binding on
the parties hereto.

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ARTICLE XXIV — ASSIGNMENT:

     Subject to the terms and conditions contained herein, this Contract, including all rights
under Article IX, Warranty, the benefit of any payments made to Owner hereunder and title to all
Owner-Furnished Equipment going into the construction of the Vessel, may be assigned by Owner to
any related or affiliated company of Owner.

     An assignment by Owner to any company or entity not affiliated or related to Owner may only be
made after Owner has obtained Builder’s prior written consent, which consent shall not be
unreasonably withheld.

ARTICLE XXV — PARENT GUARANTEES:

     Crowley Maritime Corporation, a Delaware corporation and parent company of Owner, shall
execute a Parent Guaranty of Owner’s obligations in the form attached as Exhibit “G”.

ARTICLE XXVI — PRODUCTION SCHEDULE:

     Within ten (10) days from the receipt of the Down Payment from Owner, Builder shall deliver to
Owner a production schedule (the “Production Schedule”) which includes projected dates of Payment
Schedule events. Should Builder believe that a revision to the Production Schedule is required,
Builder shall have the right to revise the Production Schedule upon notice to Owner.

ARTICLE XXVII — COOPERATION WITH OWNER’S LENDER:

     The Builder agrees to cooperate with the Owner and Owner’s lender(s) in satisfying any
reasonable requirements for the financing of the Units, provided however that the Builder shall not
be obligated to alter any material provisions of this Contract.

ARTICLE XXVIII — MISCELLANEOUS:

     The Contract Documents constitute the entire agreement, and supersede all prior agreements and
understandings, both written and oral, between the parties hereto. The invalidity or
unenforceability of any phrase, sentence, clause or section in this Contract

34

 

shall not affect the validity or enforceability of the remaining portions of this Contract, or
any part thereof.

IN WITNESS WHEREOF, the parties hereto have executed this Contract as of the day and year first
above written.

	 	 	 	 	 
	WITNESSES:	 	BUILDER:
	 
	 	 	 	 
	 	 	VT HALTER MARINE, INC.
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Boyd E. King
	 

	 	 	 	 
	 

	 	 	 	Chief Executive Officer
	 
	 	 	 	 
	WITNESSES:	 	BUILDER:
	 
	 	 	 	 
	 	 	VT HALTER MARINE, INC.
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	By:
	 	/s/ William E. Skinner
	 

	 	 	 	 
	 

	 	 	 	Chief Operating Officer
	 
	 	 	 	 
	WITNESSES:	 	OWNER:
	 
	 	 	 	 
	 	 	VESSEL MANAGEMENT SERVICES, INC.
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Edward J. Schlueter
	 

	 	 	 	 
	 

	 	 	 	Authorized Agent

35

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00093-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00093-of-00352.parquet"}]]