Document:

<PAGE>
                                                                     Exhibit 4.2

                                 AMENDMENT NO. 2

                                       TO

                                 LOAN AGREEMENT
                             DATED DECEMBER 24, 2003
                                 PROVIDING FOR A
                                SECURED TERM LOAN
                              OF UP TO $115,000,000

                         CROWLEY MARINE SERVICES, INC.,
                                  as Borrower,

                                       AND

      The Banks and Financial Institutions listed on Schedule 1 to the Loan
                              Agreement, as Lenders

                                       AND

                                DNB NOR BANK ASA,
                       acting through its New York branch,
                  as Administrative Agent and Security Trustee

                                       AND

                          CROWLEY MARITIME CORPORATION,
                                  as Guarantor

                                  June 30, 2004

                        AMENDMENT NO. 2 TO LOAN AGREEMENT

            THIS AMENDMENT NO. 2 TO LOAN AGREEMENT (this "Amendment") is made as
of the 30th day of June, 2004 by and among (i) CROWLEY MARINE SERVICES, INC., a
corporation organized and existing under the laws of the State of Delaware (the
"Borrower"), (ii) CROWLEY MARITIME CORPORATION, a corporation organized and
existing under the laws of the State of Delaware, as guarantor (the "Guarantor"
and together with
<PAGE>
the Borrower, the "Loan Parties"), (iii) the banks and financial institutions
whose names and addresses are set out in Schedule 1 to the Loan Agreement
(together with any assignee pursuant to Section 9.07 of the Loan Agreement, the
"Lenders", and each a "Lender"), (iv) DnB NOR Bank ASA (formerly known as Den
norske Bank ASA), acting through its New York branch, as administrative agent
for the Lenders (in such capacity the "Administrative Agent") and as security
trustee for the Lenders (in such capacity the "Security Trustee"), and amends
and is supplemental to the Loan Agreement dated December 24, 2003, as amended by
that certain Amendment No. 1 to Loan Agreement dated as of March 15, 2004, made
by and among (1) the Borrower, (2) the Guarantor, (3) the Lenders, (4) the
Administrative Agent and (5) the Security Trustee (collectively, the "Loan
Agreement").

                                WITNESSETH THAT:

            WHEREAS, pursuant to the Loan Agreement, the Lenders made available
to the Borrower a secured term loan in the amount of up to U.S.$115,000,000 (the
"Loan") the proceeds of which were utilized as provided therein;

            WHEREAS, the Loan Parties have requested, and the Lenders have
agreed to amend certain provisions of the Loan Agreement as set forth herein;

            NOW, THEREFORE, in consideration of the premises and such other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged by the parties, it is hereby agreed as follows:

            1. Definitions. Unless otherwise defined herein, words and
expressions defined in the Loan Agreement shall bear the same meanings when used
herein.

            2. Representations and Warranties. Each of the Loan Parties hereby
reaffirms, as of the date hereof, each and every representation and warranty
made thereby in the Loan Agreement, the Note and the Security Documents (updated
mutatis mutandis).

            3. No Defaults. Each of the Loan Parties hereby represents and
warrants that as of the date hereof there exists no Event of Default or any
condition which, with the giving of notice or passage of time, or both, would
constitute an Event of Default.

            4. Performance of Covenants. Each of the Loan Parties hereby
reaffirms that it has duly performed and observed the covenants and undertakings
set forth in the Loan Agreement and the Security Documents to which it is a
party, on its part to be performed, and covenants and undertakes to continue to
duly perform and observe such covenants and undertakings, as amended hereby, so
long as the Loan Agreement shall remain in effect.

            5. Amendment to the Loan Agreement. Subject to the terms and
conditions of this Amendment, the Loan Agreement is hereby amended and
supplemented as follows:

(a)   Section 1.1 is amended by inserting the following definition of "EBITDAR"
      immediately following the definition of "EBITDA" and before the definition
      of "Eligible Assistance":

                                       2
<PAGE>
                        ""EBITDAR" means the operating income plus the sum of
                        (a) depreciation expense, (b) amortization expense and
                        (c) rent or lease expense (reduced by an amount equal to
                        25% of the first year of time charter commitments used
                        in the Total Debt calculation), in each case, as
                        reflected in the "Consolidated Statement of Operations"
                        of CMC prepared in accordance with GAAP; provided that
                        EBITDAR shall be calculated on a rolling basis for the
                        four fiscal quarters most recently ended."

(b)   Section 1.1 is further amended by inserting the following definition of
      "Total Debt" immediately following the definition of "Title XI
      Subsidiaries" and before the definition of "Vessels":

                        ""Total Debt" means, as to CMC and its Consolidated
                        Subsidiaries at any time, the aggregate sum of (a) all
                        Indebtedness (as reflected on the Consolidated balance
                        sheet of CMC), (b) future lease commitments (as such
                        future lease commitments are presented in CMC's most
                        recent annual consolidated financial statements that are
                        available at the end of the period delivered to the
                        Lenders pursuant to Section 5.01(a)(i) or in such other
                        statement or report that is publicly disclosed)
                        discounted at a rate of 10% and (c) all Guaranty
                        Obligations valued at the full amount of the underlying
                        obligation (as reflected in the footnote to the
                        consolidated balance sheet of CMC) and other contingent
                        liabilities. For purposes of calculating Total Debt, the
                        total future payments under leases constituting time
                        charters, to be reported by the CMC pursuant to Section
                        5.01(a), shall be reduced by 25% prior to application of
                        the discount referred to in clause (b) above."

(c)   Section 5.03(a) is amended and restated in its entirety as follows:

                        "(a) Total Debt to EBITDAR Ratio. Maintain, at the end
                        of each fiscal quarter of the Guarantor, a ratio of
                        Total Debt to EBITDAR for the four fiscal quarters ended
                        as of the end of such quarter not greater than the ratio
                        set forth below for each period set forth below:

<TABLE>
<CAPTION>
                     ------------------------------------------
                       FOR EACH FISCAL
                     QUARTER DURING THE      TOTAL DEBT/EBITDAR
                     FISCAL YEAR ENDING            RATIO
                         DECEMBER 31
                     ------------------------------------------
<S>                                          <C>
                            2004                 3.25:1.00
                     ------------------------------------------
                            2005                 3.25:1.00
                     ------------------------------------------
                     2006 and thereafter         3.00:1.00
                     ------------------------------------------
</TABLE>

                                       3
<PAGE>
(d)   Section 5.03(c) is amended and restated in its entirety as follows:

                        "(c) Consolidated Net Worth. Maintain a Consolidated Net
                        Worth, as measured at the end of each fiscal quarter, in
                        an amount not less than the sum of One Hundred and
                        Seventy Five Million Dollars ($175,000,000) plus 25% of
                        all positive net income of CMC (on a consolidated basis)
                        earned after December 31, 2003 plus 50% of all net
                        proceeds from the sale of any equity interest in the
                        Guarantor or any of the Subsidiaries to any Person other
                        than the Guarantor or any of the Subsidiaries."

            6. No Other Amendment. All other terms and conditions of the Loan
Agreement shall remain in full force and effect and the Loan Agreement shall be
read and construed as if the terms of this Amendment were included therein by
way of addition or substitution, as the case may be.

            7. Other Documents. By the execution and delivery of this Amendment,
the Loan Parties hereby consent and agree that all references in the Note and
the Security Documents to the Loan Agreement shall be deemed to refer to the
Loan Agreement as further amended by this Amendment.

            8. Governing Law. This Amendment shall be governed by and construed
in accordance with the laws of the State of New York.

            9. Counterparts. This Amendment may be executed in as many
counterparts as may be deemed necessary or convenient, and by the different
parties hereto on separate counterparts each of which, when so executed, shall
be deemed to be an original but all such counterparts shall constitute but one
and the same agreement.

            10. Headings; Amendment. In this Amendment, Section headings are
inserted for convenience of reference only and shall be ignored in the
interpretation of this Amendment. This agreement cannot be amended other than by
written agreement signed by the parties hereto.

                                       4
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has executed this Amendment by
its duly authorized representative on the day and year first above written.

                                    CROWLEY MARINE SERVICES, INC.,
                                    as Borrower

                                    By /s/ Albert M. Marucco
                                       ---------------------
                                       Name: Albert M. Marucco
                                       Title: Vice President and Treasurer

                                    CROWLEY MARITIME CORPORATION,
                                    as Guarantor

                                    By /s/ Albert M. Marucco
                                       ---------------------
                                       Name: Albert M. Marucco
                                       Title: Vice President and Treasurer

                                    DNB NOR BANK ASA, acting through its New
                                    York Branch, as Administrative Agent,
                                    Security Trustee and Lender

                                    By /s/ Barbara Gronquist
                                       ---------------------
                                       Name: Barbara Gronquist
                                       Title: Senior Vice President

                                    By /s/ Nikolai A. Nachamkin
                                       ------------------------
                                       Name: Nikolai A. Nachamkin
                                       Title: First Vice President

                                       5
<PAGE>
                                    DVB BANK AG
                                    as  Lender

                                    By /s/ Gorm Eikemo
                                       ---------------
                                       Name: Gorm Eikemo
                                       Title: VP

                                    By /s/ Richard E. Jansen
                                       ---------------------
                                       Name: Richard E. Jansen
                                       Title: VP

                                    RBS LOMBARD, INC.
                                    as  Lender

                                    By /s/ Maureen Carr
                                       ------------------
                                       Name: Maureen Carr
                                       Title: V.P.

                                    FORTIS CAPITAL CORP.
                                    as  Lender

                                    By /s/ Svein Engh
                                       ----------------
                                       Name: Svein Engh
                                       Title: Managing Director

                                    By /s/ Chr.Tobias Backer
                                       ---------------------
                                       Name: Chr.Tobias Backer
                                       Title: Vice President

                                       6
<PAGE>
                                    NORDEA BANK NORGE ASA,
                                    GRAND CAYMAN BRANCH
                                    as  Lender

                                    By /s/ Hans Chr. Kjelsrud
                                       ----------------------
                                       Name: Hans Chr. Kjelsrud
                                       Title: Senior Vice President

                                    By /s/ Alison B. Barber
                                       --------------------
                                       Name: Alison B. Barber
                                       Title: Vice President

                                       7<PAGE>
                                                                               .
                                                                               .
                                                                               .
                                                                    Exhibit 10.1

Contract:      CROWLEY VMS                                Contract Date: 06/2/04
Description:   Twin Screw Ocean Tugs (2) and ATB Barges (2)

Page 1 of 2

<TABLE>
<CAPTION>
Article No.         Title                                                        Page Number
-----------         -----                                                        -----------
<S>                 <C>                                                          <C>
                    Contract Effective Date                                           1
Article I           Description of the Unit; Options for Additional Units            1-4
Article II          Price and Payment                                                4-7
Article III         Time and Conditions of Delivery and Acceptance; Title            7-10
Article IV          Changes in the Plans and Specifications                         10-11
Article V           Liquidated Damages                                                11
Article VI          Owner Furnished Equipment                                       11-12
Article VII         Inspection By Owner's Representative                              12
Article VIII        Force Majeure                                                   12-14
Article IX          Warranty                                                        14-17
Article X           Performance Warranty                                            17-18
Article XI          Insurance                                                       18-20
Article XII         Builder Guarantee                                               20-21
Article XIII        Liability and Indemnity                                         21-22
Article XIV         No Consequential Damages                                          23
Article XV          Prohibition of Liens                                            23-24
Article XVI         Taxes                                                             24
Article XVII        Patents                                                           24
Article XVIII       Use of the Plans and Specifications                               25
Article XIX         Bankruptcy                                                        25
Article XX          Events of Default                                               26-29
Article XXI         Notices                                                         29-30
Article XXII        Construction                                                      30
Article XXIII       Choice of Law and Dispute Resolution                              31
Article XXIV        Assignment                                                        31
Article XXV         Parent Guarantees                                                 32
Article XXVI        Preliminary Production Schedule                                   32
Article XXVII       Cooperation with Owner's Lender                                   32
Article XXVIII      Miscellaneous                                                     32
                    SIGNATURE PAGE                                                    33
</TABLE>

Contract -- Final

                                      -1-
<PAGE>
Contract:      CROWLEY VMS                                Contract Date: 06/2/04
Description:   Twin Screw Ocean Tugs (2) and ATB Barges (2)

<TABLE>
<S>                 <C>                                                          <C>
Exhibit A-1         Description of Vessel  (TUG)                                      34
Exhibit A-2         Description of Vessel  (BARGE)                                  35-36
Exhibit B-1         Tug Specifications                                            Attachment
Exhibit B-2         Barge Specifications                                          Attachment
Exhibit C-1         Outboard Profile & Arrangement Drawing - TUG                  Attachment
Exhibit C-2         Outboard Profile & Arrangement Drawing - BARGE                Attachment
Exhibit D           VTHM Delivery and Acceptance Certificate (QMS 303-2)          Attachment
Exhibit E           VTHM Change Order Form (QMS 303-7)                            Attachment
Exhibit F           Parent Guaranty                                               Attachment
Exhibit G           Guaranty                                                      Attachment
Exhibit H           Speed Requirements                                            Attachment
Exhibit I           Inspection Release Form (QMS 307-2 carbon duplicate)          Attachment
</TABLE>

Contract -- Final

                                      -2-
<PAGE>
                          VESSEL CONSTRUCTION CONTRACT

        THIS VESSEL CONSTRUCTION CONTRACT (the "Contract") entered into as of
this second day of May, 2004, 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").

                              W I T N E S S E T H:

ARTICLE I - DESCRIPTION OF THE UNIT; OPTIONS FOR ADDITIONAL UNITS:

        (a)    Description of the Unit

        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, two (2) 127' x 42' x 22'
Twin Screw Ocean Tugs and two (2) 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 Exhibits "A-1" and "A-2", and which shall be
constructed in accordance with this Contract, those specifications listed on
attached Exhibits "B-1" and "B-2" and the Plans and Drawings listed on the
attached Exhibits "C-1" and "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. 1" and "Unit No. 2" or "Units 1 and 2" 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,
Exhibits A-1 and A-2, Specifications listed on Exhibits B-1 and B-2, Plans and
Drawings listed on Exhibits C-1 and C-2, any Change Orders executed pursuant to
Article IV hereof and amendments in writing properly signed by the parties.

Contract -- Final

                                      -3-
<PAGE>
        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
Unit under the supervision and survey of the American Bureau of Shipping so that
on delivery the tug Vessel achieves the class notation ABS +A1 Towing Vessel
+AMS and the barge Vessel achieves the class notation ABS +A1 Oil 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
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.

Contract -- Final

                                      -4-
<PAGE>
        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.

         (b) Options to Purchase Additional Units

         Owner shall have the option to require Builder to design, engineer,
build, launch, equip, outfit, complete and deliver up to two (2) additional
Units (the Units to be numbered Unit No. 3 and Unit No. 4 consecutively). Each
option shall be exercised separately in accordance with this paragraph (b) by
Owner in writing in accordance with the following schedule:

        Unit No. 3:   Within 365 days of execution of this Contract.

        Unit No. 4:   Within 547 days of execution of this Contract.

        (i) The option for Unit No. 4 may be exercised only if Owner has
        exercised its option for Unit No. 3. If Builder intends to enter into a
        contract with another party involving the use of the Builder's yard
        capacity necessary for the construction of the option Unit(s) ("Yard
        Space") during the last 3 months of Owner's option period that would
        impact the potential delivery under any yet unexercised option(s) (a
        "Third Party Contract"), then Builder shall give Owner notice in writing
        of its intent to enter into such Third Party Contract. Such notice shall
        indicate the expected extension of the Stipulated Delivery Date, as
        hereinafter defined, of the option Unit(s) that will result in the event
        the Third Party Contract is executed. If Owner does not notify Builder
        in writing within ten (10) business days after receipt of Builder's
        notice, of its intent to exercise the next available option, irrevocably
        commit to exercise such option, and provide the Down Payment for such
        option, then (1) Builder shall have the right to use the Yard Space in
        connection with the Third Party Contract, and (2) in the event Owner
        subsequently exercises its next available option, Builder shall be
        entitled

Contract -- Final

                                      -5-
<PAGE>
         to an extension of the Stipulated Delivery Date for such Unit(s) for
         each day the Yard Space is unavailable due to the performance by
         Builder of the Third Party Contract.

        (ii) To the extent available, the place of construction for each option
        Vessel shall be the same as the place of construction for the initial
        Vessels. If such place of construction is not available for any option
        Vessel, Builder and Owner shall mutually agree on one of Builder's other
        shipyards.

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 FIVE MILLION FOUR
HUNDRED SEVENTY FIVE THOUSAND FIVE HUNDRED THIRTY THREE DOLLARS AND NO CENTS
($35,475,533) (hereinafter called the "Contract Price") each for Unit No. 1 and
Unit No. 2. The portion of the Contract Price attributable to each Vessel
(hereinafter called the "Assigned Value") is contained in Exhibits A-1 and A-2
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
Exhibits A-1 and A-2. 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 of the business transactions described in or

Contract -- Final

                                      -6-
<PAGE>
contemplated by this Contract. The Contract Price for Units 1 and 2 includes the
cargo heating systems for those Units only.

        Owner may elect to build one or two additional Units that are offered by
Builder as Options in accordance with the following Contract Prices:

       Unit No. 3      THIRTY TWO MILLION TWO HUNDRED TWENTY FIVE THOUSAND THREE
                       HUNDRED SIXTY EIGHT DOLLARS AND NO CENTS ($32,225,368.00)
                       plus actual cost increases or decreases for labor and
                       material as compared to such costs for Unit No. 1. The
                       difference, if any, shall be determined by a joint audit
                       between Owner and Builder. The Contract Price shall be
                       adjusted, as appropriate, for such increases or
                       decreases. For purposes of determining the appropriate
                       increase or decrease, an index of $700/ton for steel
                       shall be used.

       Unit No. 4      THIRTY TWO MILLION FORTY EIGHT THOUSAND FOUR HUNDRED
                       DOLLARS AND NO CENTS ($32,048,400.00) plus actual cost
                       increases or decreases for labor and material as compared
                       to such costs for Unit No. 1. The difference, if any,
                       shall be determined by a joint audit between Owner and
                       Builder. The Contract Price shall be adjusted, as
                       appropriate, for such increases or decreases. For
                       purposes of determining the appropriate increase or
                       decrease, an index of $700/ton for steel shall be used.

        In the event Owner elects to have additional Units constructed, payments
for the Assigned Value of each optional Unit are to be made based on the
progress of each Vessel in accordance with the Payment Schedules set forth in
Exhibits A-1 and A-2.

        The Contract Prices for option Units 3 and 4, set forth above, do not
include a cargo heating system. In the event that a cargo heating system is
directed by Owner to be added to Unit No. 3 and/or Unit No. 4 at the time of
Owner's election to exercise the Unit's Option(s), the Contract Price per Unit
shall increase by NINE HUNDRED SEVENTY THREE THOUSAND SIX HUNDRED THIRTEEN
DOLLARS AND NO CENTS ($973,613.00) plus actual cost increases or decreases for
labor and material as compared to such costs for Unit No. 1. The difference, if
any, shall be determined by a joint audit between Owner and Builder. The
Contract Price shall be adjusted, as appropriate, for such increases or
decreases.

Contract -- Final

                                      -7-
<PAGE>
        In the event that a Crude Oil Washing System (COW System) is directed by
Owner to be added to Unit No. 3 and/or Unit No. 4 at the time of Owner's
election to exercise the Unit's Option(s), the Contract Price per Unit shall
increase by either $ 1,376,780.00 for the heated system in accordance with
Owner's barge Vessel specification (Option 1B) including the additional 8
million BTU heater (Heater) or $ 1,228,325.00 for the unheated system (Option
1A) without the additional Heater and associated equipment plus actual
documented cost increases or decreases for labor and material as compared to the
Builder's estimate. The difference, if any, shall be determined by a joint audit
between Owner and Builder. The Contract Price shall be adjusted, as appropriate,
for such increases or decreases.

        In the event the Down Payment for each Vessel, as required by Exhibits
A-1 and A-2, 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 Exhibits A-1 and A-2) 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 Exhibits A-1 and A-2, 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

Contract -- Final

                                      -8-
<PAGE>
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 Exhibits A-1
and A-2.

        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, Exhibits A-1 and A-2, 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 Exhibits A-1 and A-2, (the "Place of Delivery") by the Stipulated
Delivery Dates (as defined in Exhibits A-1 and A-2). 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.

        In the event Owner exercises its option for construction of Unit Nos. 3
and 4, Exhibits A-1 and A-2 for each Unit shall be adjusted as is necessary to
comply with the price requirements in Article II and the delivery date
requirements set forth below. Such exhibits for each optional Unit shall provide
for the following Stipulated Delivery Dates:

Contract -- Final

                                      -9-
<PAGE>
       Unit No. 3      Twenty months from exercise of the option for Unit No. 3
                       and receipt of Down Payment or six (6) months after the
                       delivery of Unit No. 2, whichever is longer.

       Unit No. 4      Twenty months from exercise of the option for Unit No. 4
                       and receipt of Down Payment or six (6) months after the
                       delivery of Unit No. 3, whichever is longer.

        The Stipulated Delivery Dates for Unit Nos. 3 and 4 may be extended in
accordance with the terms and conditions of this Contract including, but not
limited to, Builder's right to extend the Stipulated Delivery Dates under
Article I (b)(i).

        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;

        (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.

Contract -- Final

                                      -10-
<PAGE>
        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.

        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".

        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 sha1l 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

Contract -- Final

                                      -11-
<PAGE>
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 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

Contract -- Final

                                      -12-
<PAGE>
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 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
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

Contract -- Final

                                      -13-
<PAGE>
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 fifth
day following the Stipulated Delivery Date:

<TABLE>
<S>                            <C>
        Day 6 through    15 -   $1,000/day
        Day 16 through   35 -  $10,000/day
        Day 36 through  120 -  $12,500/day
        Day 121 through 150 -  $20,750/day
</TABLE>

        In no event shall the liquidated damages payable hereunder exceed
$1,900,000. 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 the event completion and delivery
of a Unit is delayed more than one hundred fifty (150) 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.

Contract -- Final

                                      -14-
<PAGE>
        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 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,

Contract -- Final

                                      -15-
<PAGE>
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.

        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, including any optional
Units exercised by Owner affected thereby, shall be extended by a period equal
to the period of such delay

Contract -- Final

                                      -16-
<PAGE>
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 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

Contract -- Final

                                      -17-
<PAGE>
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 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's 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

Contract -- Final

                                      -18-
<PAGE>
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 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

Contract -- Final

                                      -19-
<PAGE>
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 MERCHANTABILITY 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:

               (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.

               (ii)   If the Unit's maximum speed, as determined in accordance
                      with Exhibit "H" and after Builder has made adjustments to

Contract -- Final

                                      -20-
<PAGE>
                      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 8,600 US Gallons of
               No. 2 Marine Diesel fuel (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, 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 fuel performance
               curves 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

Contract -- Final

                                      -21-
<PAGE>
               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. 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).

Contract -- Final

                                      -22-
<PAGE>
         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 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, including, if
               applicable, any Optional 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

Contract -- Final

                                      -23-
<PAGE>
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

        Within ten (10) business days after execution of this Contract and
Owner's Down Payment for Units 1 and 2, Builder shall procure and provide to
Owner a performance bond and a payment bond from a surety or insurance company
selected by Builder and acceptable to Owner in the combined penal sum of
Seventeen Million Five Hundred Thousand Dollars and No Cents (US$17,500,000.00)
(hereinafter the "Unit Penal Limit") per unit for Units 1 and 2, to secure the
complete performance by Builder of its obligations under this Contract. Upon an
Event of Default of Builder on a Unit as defined in Article XX hereof, Owner
shall be entitled to make a performance bond claim for the affected Unit in an
amount up to the Unit Penal Limit for its actual costs and damages as a result
of the Event of Default. The premium or cost of the performance bonds and
payment bonds shall be for the account of Owner. Each Unit Penal Limit shall
each be reduced to One Million Five Hundred Thousand Dollars and No Cents
(US$1,500,000.00) upon the execution of the Delivery and Acceptance Certificate
for each Unit. Each performance bond and payment bond shall expire and be
released by Owner upon the expiration of the Builder's Warranty Period for each
Unit.

Contract -- Final

                                      -24-
<PAGE>
 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 have been sustained
        by any member of the Builder Group regardless of the cause,

Contract -- Final

                                      -25-
<PAGE>
        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

Contract -- Final

                                      -26-
<PAGE>
OTHER FOR ANY INDIRECT OR CONSEQUENTIAL DAMAGES, INCLUDING WITHOUT LIMITATION
LOSS OF PROFITS OR LOSS OF USE, WHETHER 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

Contract -- Final

                                      -27-
<PAGE>
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 such payment.

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 indemnify, 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 indemnify, 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
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 -- Final

                                      -28-
<PAGE>
        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 any one 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 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.

Contract -- Final

                                      -29-
<PAGE>
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 III (a) through (e) this
            Contract within one hundred fifty (150) days after the Stipulated
            Delivery Date, as adjusted for all allowable Force Majeure
            extensions, as defined in Article VII, all change order extensions
            and any other extension allowable under this Contract.

Contract -- Final

                                      -30-
<PAGE>
        In the event that any one 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.

        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

Contract -- Final

                                      -31-
<PAGE>
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 any one 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.

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

Contract -- Final

                                      -32-
<PAGE>
               (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 US 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 any one 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.

ARTICLE XXI - NOTICES:

Contract -- Final

                                      -33-
<PAGE>
        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. Richard McCreary,
Executive Vice President, VT Halter Marine, Inc., 900 Bayou Casotte Parkway,
Pascagoula, MS 39581 or P.O. Box 1328, Pascagoula, MS 39568.

        Notices to Owner shall be addressed to: Mr. Edward Schlueter, Vice
President, Vessel Management Services, Inc., 1011 S.W. Klickitat Way, Ste. 103,
Seattle, WA 98134. 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, Messrs. Richard McCreary and 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

Contract -- Final

                                      -34-
<PAGE>
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

Contract--Final

                                      -35-
<PAGE>
damages, punitive damages, liquidated damages and warranty, shall not be binding
on the parties hereto.

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.

Contract -- Final

                                      -36-
<PAGE>
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 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:

/s/ Betty Gomez                             VT HALTER MARINE, INC.
-----------------------------

/s/ D. Margaret Gambrell                    By: /s/ Boyd E. King
-----------------------------                   -----------------------------
                                                   BOYD E. KING
                                                   Chief Executive Officer

WITNESSES:                                  BUILDER:

/s/ Betty Gomez                             VT HALTER MARINE, INC.
-----------------------------

/s/ D. Margaret Gambrell                    By: /s/ Richard T. McCreary
-----------------------------                   -----------------------------
                                                   RICHARD T. McCREARY
                                                   Executive Vice President

Contract -- Final

                                      -37-
<PAGE>
WITNESSES:                                  OWNER:

/s/ Virginia L. Clark                       VESSEL MANAGEMENT SERVICES, INC.
-----------------------------

/s/ John Van Buskirk                        By: /s/ Edward J. Schlueter
-----------------------------                   -----------------------------
                                                   EDWARD J. SCHLUETER
                                                   Authorized Agent

Contract -- Final

                                      -38-
<PAGE>
              Exhibits To Vessel Construction Contract Entered Into
              -----------------------------------------------------
                        as of May 2, 2004 by and between
                        --------------------------------
           VT Halter Marine, Inc. and Vessel Management Services, Inc.
           -----------------------------------------------------------

EXHIBIT A-1:  DESCRIPTION OF VESSEL (TUG), PAYMENT SCHEDULE, PLACE OF
              CONSTRUCTION AND DELIVERY DATE OF DELIVERY

EXHIBIT A-2:  DESCRIPTION OF VESSEL (BARGE), PAYMENT SCHEDULE, PLACE OF
              CONSTRUCTION AND DELIVERY DATE OF DELIVERY

EXHIBIT B-1:  TUG SPECIFICATIONS

EXHIBIT B-2:  BARGE SPECIFICATIONS

EXHIBIT C-1:  TUG OUTBOARD PROFILE & ARRANGEMENT DRAWING

EXHIBIT C-1:  BARGE OUTBOARD PROFILE & ARRANGEMENT DRAWING

EXHIBIT D:    VT HALTER MARINE, INC. DELIVERY AND ACCEPTANCE CERTIFICATE

EXHIBIT E:    FORM OF CHANGE ORDER

EXHIBIT F:    RESERVED

EXHIBIT G:    GUARANTY

EXHIBIT H:    SPEED REQUIREMENTS

EXHIBIT I:    INSPECTION RELEASE FORM

<PAGE>
                                   EXHIBIT A-1

HULL NO. 1961 & 1962                                         JOB NO: C173 & C174

        I.     DESCRIPTION OF VESSEL:  (TUG)

               1. The Vessel shall be built in accordance with the following
                  documents:

                  a.  Specifications dated 5/14/04(approved 5/14/04), 2004
                      revised as approved 5/14/2004, attached hereto as Exhibit
                      "B-1".

                  b.  Outboard Profile & Arrangement Dwg. No. A-1 Sheets 1 and 2
                      and Dwg. No. A-2 Sheet 1, dated approved 5/21/2004,
                      attached hereto as Exhibit "C-1".

               2. Vessel No. 1 "Assigned Value" is US$8,955,948.26.
                  Vessel No. 2 "Assigned Value" is US$8,955,948.26.

        II.    PAYMENT SCHEDULE:

<TABLE>
<S>                                                              <C>
1.  Upon Contract Signing (Down Payment)                         $    100,000.00
2.  Upon Performance and Payment Bond tender to Owner            $    345,525.32
3.  Upon Receipt of Approx 150 tons of steel                     $    713,729.74
4.  10% Upon Erection of Engine Room Inner Bottom                $    891,050.65
5.  7.5% Upon Erection of Engine Room Wing Tanks                 $    668,287.98
6.  15% Upon Erection of Bow                                     $  1,336,575.97
7.  12.5% Upon Erection of Stern                                 $  1,113,813.31
8.  10% Upon Erection of Engine Room Main Deck                   $    891,050.65
9.  10% Upon erection of Superstructure                          $    891,050.65
10. 7.5% Upon launching of vessel                                $    668,287.98
11. 5% Upon Completion of Builders Dock Trials                   $    445,525.32
12. 5% Upon Completion of Acceptance Trials (without barge)      $    445,525.32
13. 5% Balance at Delivery of the vessel with Barge              $    445,525.37
</TABLE>

        III.   PLACE OF CONSTRUCTION AND DELIVERY:

               The Vessels will be built at Builder's Jackson County, MS
               Shipyard.

               The Units will be delivered at Builder's shipyard in Pascagoula,
               MS.

        IV.    DATE OF DELIVERY:

               The Stipulated Date of Delivery of Unit No. 1 is twenty-one (21)
               months after receipt of Owner's Down Payment.

Contract -- Final

<PAGE>
               The Stipulated Date of Delivery of Unit No. 2 is twenty-six (26)
               months after receipt of Owner's Down Payment.

Contract -- Final

<PAGE>
                                   EXHIBIT A-2
HULL NO. 1963 & 1964                                         JOB NO: B111 & B112

        I.     DESCRIPTION OF VESSEL:  (BARGE)

               1.     The Vessel shall be built in accordance with the following
                      documents:

                      a.  Specifications dated 5/24/04 (approved 5/24/04), 2004
                          attached hereto as Exhibit "B-2".

                      b.  Outboard Profile & Arrangement Dwg. No. A-1 Sheets 1
                          and 2 and Dwg. No. A-2 Sheet 1, dated approved
                          5/24/2004, attached hereto as Exhibit "C-2".

               2.     Vessel No. 1 "Assigned Value" is US$26,519,584.74.
                      Vessel No. 2 "Assigned Value" is US$26,519,584.74.

        II.    PAYMENT SCHEDULE:

<TABLE>
<S>                                                                          <C>
    1.  Contract Signing (Down Payment)                                      $   100,000.00
    2.  Performance and Payment Bond tender to Owner                         $ 1,219,251.32
    3.  Receipt of 90% of Steel                                              $ 2,773,060.89
    4.  8% Complete NC cutting of piece parts for Mid-ship Mid-body
        Fr.26-1/2 to Fr. 45-1/2                                              $ 2,110,802.12
    5.  7% Complete NC cutting of piece parts for Aft Mid-body
        Fr.45-1/2 to Fr.68                                                   $ 1,846,951.85
    6.  7% Complete NC cutting of piece parts for Stern Module Fr. 68 Aft    $ 1,846,951.85
    7.  8% Complete NC cutting of piece parts for Fwd Mid-body
    8.  Fr.4 to Fr.26-1/2                                                    $ 2,110,802.12
    9.  5% Complete erection of Mid-ship Mid-body Fr.26-1/2 to
        Fr.45-1/2 (not completely welded and excluding main deck).           $ 1,319,251.32
    10. 5% Complete NC cutting of piece parts for Bow Module Fr. 4 Fwd       $ 1,319,251.32
    11. 8% Complete erection of Aft Mid-body Fr.45-1/2 to Fr.68
        (not completely welded and excluding main deck)                      $ 2,110,802.12
    12. 5% Complete erection of Stern Module Fr. 68 Aft
        (not completely welded)                                              $ 1,319,251.32
</TABLE>

Contract -- Final

<PAGE>
<TABLE>
<S>                                                                          <C>
    13. 7% Complete erection of Fwd Mid-body Fr. 4 to Fr. 26-1/2
        (not completely welded and excluding main deck)                      $ 1,846,951.85
    14. 7.5% Complete erection of Bow Module Fr 4 Fwd
        (not completely welded)                                              $ 1,978,876.98
    15. 7.5% Launch                                                          $ 1,978,876.98
</TABLE>

        III.   PLACE OF CONSTRUCTION AND DELIVERY:

               The Vessels will be built at Builder's shipyard in Jackson
               County, MS.

               The Units will be delivered at Builder's shipyard in Pascagoula,
               MS.

        IV.    DATE OF DELIVERY:

               The Stipulated Date of Delivery is of Unit No. 1 is twenty-one
               (21) months after receipt of Owner's initial payment.

               The Stipulated Date of Delivery of Unit No. 2 is twenty-six (26)
               months after receipt of Owner's Down Payment.

Contract -- Final

<PAGE>
                                   EXHIBIT "F"
                              RESERVED EXHIBIT "G"
                                    GUARANTY

        In order to induce VT Halter Marine, Inc. ("Builder") to enter into that
certain Vessel Construction Contract (as amended from time to time, the
"Contract") between Vessel Management Services, Inc. ("Owner") and Builder dated
_______________________, 2004, Crowley Maritime Corporation, a Delaware
corporation ("Guarantor"), represented herein by its duly authorized officer,
hereby unconditionally and irrevocably guarantees to Builder (a) the due,
punctual and full payment by Owner of all amounts of any nature whatsoever
payable by Owner under the Contract (the "Owner Guaranteed Amounts"), as and
when the same shall become due and payable in accordance with the terms of the
Contract and (b) the due, prompt and faithful performance of, and compliance
with, all obligations, covenants, terms, conditions and undertakings of Owner
contained in the Contract (the "Owner Guaranteed Obligations") in accordance
with the respective terms thereof. Such guaranty is an absolute, unconditional,
present and continuing guaranty of payment, performance and compliance. If for
any reason whatsoever Owner shall be in default under the Contract in payment of
any Owner Guaranteed Amounts or in the performance or compliance with any Owner
Guaranteed Obligation and Builder is entitled to exercise its remedies under the
Contract against Owner, then Guarantor shall forthwith pay or cause to be paid
such Owner Guaranteed Amounts to Owner or perform or comply with, or cause to be
performed or complied with, the Owner Guaranteed Obligations.

        IN WITNESS WHEREOF, Guarantor has executed this Guaranty as of the 2nd
day of June, 2004.

                                            CROWLEY MARITIME CORPORATION

                                            /s/ BRUCE LOVE
                                            -------------------------
                                            By:     Bruce Love
                                            Title:  Corporate Secretary

Contract -- Final

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