Document:

Exhibit 10.30

 

SHIPBUILDING
CONTRACT

 

 

FOR

 

 

THE
CONSTRUCTION AND SALE OF

 

ONE
(1) 6,500 TEU CLASS CONTAINER CARRIER

 

 

HULL
NO. S4004

 

 

BETWEEN

 

 

BOXCARRIER
(NO.4) CORP.

 

 

(AS
BUYER)

 

 

AND

 

 

SUNGDONG
SHIPBUILDING & MARINE ENGINEERING CO., LTD.

 

(AS
BUILDER)

 

 

 

I N D E X

 

	
   

  	
   

  	
  PAGE

  
	
  PREAMBLE

  	
   

  	
  1

  
	
   

  	
   

  	
   

  
	
  ARTICLE     I

  	
  : DESCRIPTION AND CLASS

  	
  2

  
	
   

  	
   

  	
   

  
	
   

  	
  II

  	
  : CONTRACT PRICE

  	
  5

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  III

  	
  : ADJUSTMENT OF THE
  CONTRACT PRICE

  	
  6

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  IV

  	
  : INSPECTION AND
  APPROVAL

  	
  10

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  V

  	
  : MODIFICATIONS,
  CHANGES AND EXTRAS

  	
  15

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  VI

  	
  : TRIALS AND COMPLETION

  	
  18

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  VII

  	
  : DELIVERY

  	
  22

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  VIII

  	
  : DELAYS AND EXTENSIONS
  OF TIME (FORCE MAJEURE)

  	
  25

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  IX

  	
  : WARRANTY OF QUALITY

  	
  28

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  X

  	
  : PAYMENT

  	
  33

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  XI

  	
  : BUYER’S DEFAULT

  	
  38

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  XII

  	
  : BUYER’S SUPPLIES

  	
  41

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  XIII

  	
  : INSURANCE

  	
  43

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  XIV

  	
  : ARBITRATION

  	
  44

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  XV

  	
  : SUCCESSORS AND
  ASSIGNS

  	
  46

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  XVI

  	
  : TAXES AND DUTIES

  	
  47

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  XVII

  	
  : PATENTS, TRADEMARKS
  AND COPYRIGHTS

  	
  48

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  XVIII

  	
  : INTERPRETATION AND
  GOVERNING LAW

  	
  49

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  XIX

  	
  : NOTICE

  	
  50

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  XX

  	
  :EFFECTIVENESS OF THIS
  CONTRACT

  	
  51

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  XXI

  	
  : INTERPRETATION

  	
  52

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  XXII

  	
  :EXCLUSIVENESS

  	
  53

  

 

SCHEDULES

 

EXHIBIT “A”  REFUND GUARANTEE LETTER OF REFUNDMENT
GUARANTEE

 

EXHIBIT “B”  PERFORMANCE GUARANTEE

 

 

SHIPBUILDING
CONTRACT

 

THIS CONTRACT, made on this
26 day of July, 2006 by and between BOXCARRIER (NO.4) CORP. , a corporation
incorporated and existing under the laws of Republic of Liberia with its
registered office at 80 Broad Street, Monrovia, Liberia (hereinafter called the
“BUYER”), the party of the first part and Sungdong Shipbuilding &
Marine Engineering Co., Ltd., a company organized and existing under the laws
of the Republic of Korea, having its registered office at 1609-2, Hwang-li,
Gwangdo-myeon, Tongyoung-si, Gyeongnam, 650-827, Korea (hereinafter called the
“BUILDER”), the party of the second part,

 

W I T N E S S E T H
:

 

In consideration of the
mutual covenants contained herein, the BUILDER agrees to design, build, launch,
equip and complete in accordance with the Sung Dong Shipbuilding &
Marine Engineering Quality Standard one (1) Single Screw Diesel Engine
driven Container VESSEL as described in the Specifications as described in
Article I hereof (hereinafter called the “VESSEL”) at the BUILDER’s yards
in Korea (hereinafter called the “SHIPYARD”) and to deliver and sell the VESSEL
to the BUYER, and the BUYER agrees to accept delivery of and purchase from the
BUILDER the VESSEL, according to the terms and conditions hereinafter set forth
:

 

(End of Preamble)

 

1

 

ARTICLE I :
DESCRIPTION AND CLASS

 

1.                        DESCRIPTION

 

The
VESSEL shall have the BUILDER’s Hull No. S4004 and shall be built,
constructed, equipped and completed in accordance with the specifications
No. SD-DN-6500T.CN.FS-01 dated July 26, 2006 and the general
arrangement plan No. SD-DN-6500T.CN.GA-01 dated July 26, 2006
attached thereto and the ‘Maker List’ No. SD-DN-6500T.CN.ML-01 dated
July 26, 2006 (hereinafter called respectively the “SPECIFICATIONS” and
the “PLAN”) signed by both parties, which shall constitute an integral
part of this CONTRACT although not attached hereto.

 

The
SPECIFICATIONS and the PLAN are intended to explain each other and anything
shown on the PLAN and not stipulated in the SPECIFICATIONS or anything
stipulated in the SPECIFICATIONS and not shown on the PLAN shall be deemed and
considered as if included in both. Should there be any inconsistencies or
contradictions between the SPECIFICATIONS and the PLAN, the SPECIFICATIONS
shall prevail. Should there be any inconsistencies or contradictions between
this CONTRACT and the SPECIFICATIONS, this CONTRACT shall prevail.

 

2.                        BASIC
DIMENSIONS AND PRINCIPAL PARTICULARS OF THE VESSEL

 

(a)                   The
basic dimensions and principal particulars of the VESSEL shall be :

 

	
  Length, overall

  	
  about

  	
  300.0

  	
   

  	
  M

  
	
  Length, between perpendiculars

  	
  286.6

  	
   

  	
  M

  
	
  Breadth, moulded

  	
  40.0

  	
   

  	
  M

  
	
  Depth to Upper Deck, moulded

  	
  24.2

  	
   

  	
  M

  
	
   

  	
   

  	
   

  	
   

  
	
  Design draft, moulded, in seawater of specific
  gravity of 1.025

  	
  12.0

  	
   

  	
  M

  
	
  Scantling draft, moulded, in seawater of specific
  gravity of 1.025

  	
  14.5

  	
   

  	
  M

  
	
   

  	
   

  	
   

  	
   

  
	
  Deadweight guaranteed on the above moulded design
  draft of 12.0 M

  	
  59,000

  	
   

  	
  M/T

  

 

2

 

	
  Deadweight on the above moulded scantling draft of
  14.5 M

  	
  83,300  

  	
   

  	
  M/T

  
	
   

  	
   

  	
   

  	
   

  
	
  Main propulsion engine

  	
  MAN B&W 10K98MC-C

  
	
   

  	
  MCR :

  	
  77,600 PS x 104 RPM

  
	
   

  	
  NCR :

  	
  69,840 PS x 100.4 RPM

  
	
   

  
	
  Speed guaranteed at 12.0meters design draft at the
  condition of clean bottom and in calm and deep sea with main engine
  developing a NCR of 69,840 PS with fifteen per cent (15%) sea margin

  	
   

  	
  25.6 KNOTS

  
	
   

  	
   

  	
   

  
	
  Specific Fuel consumption guaranteed of the main
  engine applying I.S.O. reference conditions to the result of official shop
  test at a MCR of 77,600 PS using marine fuel oil having lower calorific value
  of 10,200 Kcal per Kg.

  	
   

  	
  126.0 gr/BHP.HR

  
							

 

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

 

(b)                  All
other vessels Hull Number S4002, S4003, S4004 and S4005 shall be built as
identical sister ships unless a modification to a design is agreed upon.

 

3.                 CLASSIFICATION,
RULES AND REGULATIONS 

 

(a)            The VESSEL
including its machinery, equipment and outfittings shall be built in compliance
with the rules and regulations of Det Norske Veritas (hereinafter called
the “CLASSIFICATION SOCIETY”), in force as of the date of this CONTRACT, to be
classed and registered as +1A, CONTAINER CARRIER, EO, BIS, TMON, NAUTICUS
(NEWBUILDING) and also to comply with the rules and regulations, in force
as of the date of this CONTRACT, as described in the SPECIFICATIONS. Provided
that the BUILDER shall have an option to declare the CLASSIIFICATION SOCIETY as
either equivalent Lloyd Register of Shipping or Det Norske Veritas within three
(3) month after signing of this CONTRACT.

 

(b)           The BUILDER shall arrange
with the CLASSIFICATION SOCIETY for the assignment by the CLASSIFICATION
SOCIETY of representative(s) to the VESSEL during

 

3

 

construction.
All fees and charges incidental to classification of the VESSEL in compliance
with the above specified rules, regulations and requirements of this CONTRACT
shall be for the account of the BUILDER.

 

(c)            The decision of the
CLASSIFICATION SOCIETY as to whether the VESSEL complies with the regulations
of the CLASSIFICATION SOCIETY shall be final and binding upon the BUILDER and
the BUYER.

 

Details of its notation shall be in
accordance with the SPECIFICATIONS.

 

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

 

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

 

4.                 SUBCONTRACTING

 

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

 

5.                 NATIONALITY
OF THE VESSEL

 

The
VESSEL shall be registered by the BUYER at its own cost and expense under the
laws of either Greece or Cyprus or Bahamas or Marshall Islands or Panama or
Liberia with its home port of either Piraeus or Limassol or Nassau or Majuro or
Panama or Monrovia at the time of its delivery and acceptance hereunder
provided that the BUYER may in its sole discretion declare the VESSEL’S
flag and registration within four (4) months after the signing of the
CONTRACT. In the case that the BUYER declares the VESSEL’S flag and
registration to the Greece, the BUYER should pay the extra cost.

 

(End of Article)

 

4

 

ARTICLE II
: CONTRACT PRICE

 

The contract price of the
VESSEL delivered to the BUYER at the SHIPYARD shall be United States Dollars
Ninety One Million Five Hundred Thousand (US$ 91,500,000) (hereinafter called
the “CONTRACT PRICE”) which shall be paid plus any increases or less any
decreases due to adjustment or modifications, if any, as set forth in this
CONTRACT. The above CONTRACT PRICE shall include payment for services in the
inspection, tests, survey and classification of the VESSEL which will be
rendered by the CLASSIFICATION SOCIETY and shall not include the cost of the
BUYER’s supplies as stipulated in Article XII.

 

The CONTRACT PRICE also
includes all costs and expenses for supplying all necessary drawings as
stipulated in the SPECIFICATIONS except those to be furnished by the BUYER for
the VESSEL in accordance with the SPECIFICATIONS.

 

(End of Article)

 

5

 

ARTICLE III
: ADJUSTMENT OF THE CONTRACT PRICE

 

The CONTRACT PRICE of the
VESSEL shall be adjusted as hereinafter set forth in the event of the following
contingencies. It is hereby understood by both parties that any adjustment of
the CONTRACT PRICE as provided for in this Article is by way of liquidated
damages and not by way of penalty.

 

1.                 DELAYED
DELIVERY

 

(a)            No adjustment shall be made
and the CONTRACT PRICE shall remain unchanged for the first thirty (30) days of
the delay in delivery of the VESSEL [ending as of 12 o’clock midnight Korean
Standard Time on the thirtieth (30th) day of delay] beyond the Delivery Date
calculated as provided in Article VII.1. hereof.

 

(b)           If delivery of the VESSEL is
delayed more than thirty (30) days beyond the date upon which the delivery is
due from the BUILDER under the terms of this CONTRACT, then, beginning at
midnight of the thirtieth (30th) day after such due date, the CONTRACT PRICE of
the VESSEL shall be reduced by U.S. Dollars Twenty Two Thousand only (US$
22,000.-) for each full day of delay.

 

However,
unless the parties agree otherwise, the total amount of deduction from the
CONTRACT PRICE shall not exceed the amount due to cover the delay of one
hundred and eighty (180) days after thirty (30) days of the delay in delivery
of the VESSEL at the rate of deduction as specified hereinabove.

 

(c)            But, if the delay in
delivery of the VESSEL continues for a period of more than two hundred and ten
(210) days beyond the date upon which the delivery is due from the BUILDER
under the terms of this CONTRACT then, in such event, and after such period has
expired, the BUYER may, at its option, rescind this CONTRACT by serving upon
the BUILDER a notice of rescission by facsimile to be confirmed by a registered
letter via airmail directed to the BUILDER at the address given in this
CONTRACT. Such rescission shall be effective as of the date the notice thereof
is received by the BUILDER. If the BUYER has not served the notice of
rescission after the aforementioned two hundred and ten (210) days delay in delivery,
the BUILDER may demand the BUYER to make an election in accordance with
Article VIII.3. hereof.

 

6

 

(d)           For the purpose of this
Article, the delivery of the VESSEL shall be deemed to be delayed when and if
the VESSEL, after taking into full account extension of the Delivery Date or
permissible delays as provided in Article V, VI, VIII, XI or elsewhere in
this CONTRACT, is delivered beyond the date upon which delivery would then be
due under the terms of this CONTRACT.

 

2.                 INSUFFICIENT
SPEED

 

(a)             The CONTRACT PRICE of the
VESSEL shall not be affected or changed, if the actual speed, as determined by
trial runs more fully described in Article VI hereof, is less than the
speed required under the terms of this CONTRACT and the SPECIFICATIONS provided
such deficiency in actual speed is not more than two-tenths (2/10) of a knot
below the guaranteed speed.

 

(b)            However, as for the
deficiency of more than two-tenths (2/10) of a knot in actual speed below the
speed guaranteed under this CONTRACT, the CONTRACT PRICE shall be reduced by
U.S. Dollars Two Hundred Thousand only (U.S.$ 200,000.-) for each full
one-tenth (1/10) of a knot in excess of the said two-tenths (2/10) of a knot of
deficiency in speed [fractions of less than one-tenth (1/10) of a knot shall be
regarded as a full one-tenth (1/10) of a knot]. However, unless the parties
agree otherwise, the total amount of reduction from the CONTRACT PRICE shall
not exceed the amount due to cover the deficiency of one (1) full knot
below the guaranteed speed at the rate of reduction as specified above.

 

(c)            If the deficiency in actual
speed of the VESSEL is more than seven point five-tenths (7.5/10) knot below
the speed guaranteed under this CONTRACT, then the BUYER, at its option, may,
subject to the BUILDER’s right to effect alterations or corrections as provided
in Article VI.5. hereof, rescind this CONTRACT or may accept the
VESSEL at a reduction in the CONTRACT PRICE as above provided for seven point
five-tenths (7.5/10) knot of deficiency only.

 

3.                 EXCESSIVE
FUEL CONSUMPTION

 

(a)            The CONTRACT PRICE shall not
be affected or changed by reason of the fuel consumption of the VESSEL’s main
engine, as determined by the engine manufacturer’s shop trial as per the SPECIFICATIONS
being more than the guaranteed fuel consumption of the VESSEL’s main engine, if
such excess is not more than five per cent (5%) over the guaranteed fuel
consumption.

 

7

 

(b)           However, as for the excess
of more than five per cent (5%) in the actual fuel consumption over the
guaranteed fuel consumption of the VESSEL’s main engine, the CONTRACT PRICE
shall be reduced by U.S. Dollars Two Hundred Thousand only (US$ 200,000.-) for
each full one per cent (1%) increase in fuel consumption in excess of the said
five per cent (5%) increase in fuel consumption [fractions of less than one per
cent (1%) shall be regarded as a full one per cent (1%)]. However, unless the
parties agree otherwise, the total amount of reduction from the CONTRACT PRICE
shall not exceed the amount due to cover the excess of nine per cent (9%) over
the guaranteed fuel consumption of the VESSEL’s main engine at the rate of
reduction as specified above.

 

(c)            If such actual fuel
consumption exceeds the guaranteed fuel consumption of the VESSEL’s main engine
by more than ten per cent (10%), the BUYER, at its option, may, subject to the
BUILDER’s right to effect alterations or corrections as specified in
Article VI.5. hereof, rescind this CONTRACT or may accept the VESSEL
at a reduction in the CONTRACT PRICE as above provided for the nine per cent (9%)
increase only.

 

4.                 DEADWEIGHT
BELOW CONTRACT REQUIREMENTS

 

(a)            The CONTRACT PRICE of the
VESSEL shall not be affected or changed, if actual deadweight, determined as
provided in this CONTRACT and the SPECIFICATIONS, is below the deadweight of 83,300
metric tons on the moulded design draft of 12.0 metres required by this
CONTRACT and the SPECIFICATIONS by an amount of 83,300 metric tons or less.
However, should the deficiency in the actual deadweight of the VESSEL be more
than 830 metric tons below the said required deadweight, then the CONTRACT
PRICE of the VESSEL shall be reduced for each full one (1) metric ton
[fractions of less than one (1) metric ton shall be disregarded] of
decreased deadweight in excess of 830 metric tons by the sum of U.S. Dollars One
Thousand One Hundred only (US$ 1,100.-) per metric ton.

 

However,
unless the parties agree otherwise, the total amount of deduction from the CONTRACT
PRICE shall not exceed the amount due to cover the deficiency of 2,000 metric
tons below the said required deadweight hereinabove.

 

(b)           If the deficiency in the
deadweight of the VESSEL is more than 2,000 metric tons below the said required
deadweight, then the BUYER, at its option, may, subject to the BUILDER’s right
to effect alterations or corrections without the BUYER’s prior

 

8

 

consent
as specified in Article VI.5. hereof, rescind this CONTRACT or may accept
the VESSEL at a reduction in the CONTRACT PRICE as above provided for metric
tons of deficiency only.

 

5.                 EFFECT
OF RESCISSION

 

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

 

(End of Article)

 

9

 

ARTICLE IV
: INSPECTION AND APPROVAL

 

1.                 APPOINTMENT
OF BUYER’S REPRESENTATIVE

 

The
BUYER shall timely despatch to and maintain at the SHIPYARD, at its own cost,
expense and risk, one or more representatives (hereinafter called the “BUYER’S
REPRESENTATIVE”), who shall be duly accredited in writing by the BUYER to
supervise adequately the construction by the BUILDER of the VESSEL, her
equipment and all accessories. Before the commencement of any item of work
under this CONTRACT, the BUILDER shall, whenever reasonably required,
previously exhibit, furnish to, and within the limits of the BUYER’S
REPRESENTATIVE’s authority, secure the approval from the BUYER’S REPRESENTATIVE
of any and all plans and drawings prepared in connection therewith. Upon
appointment of the BUYER’S REPRESENTATIVE, the BUYER shall notify the BUILDER
in writing of the name and the scope of the authority of the BUYER’S
REPRESENTATIVE.

 

2.                 AUTHORITY
OF THE BUYER’S REPRESENTATIVE

 

Such
BUYER’S REPRESENTATIVE shall, at all times during working hours of the
construction until delivery of the VESSEL, have the right to inspect the
VESSEL, her equipment and all accessories, and work in progress, or materials
utilized in connection with the construction of the VESSEL, wherever such work
is being done or such materials are stored, for the purpose of determining that
the VESSEL, her equipment and accessories are being constructed in accordance
with the terms of this CONTRACT and/or the SPECIFICATIONS and the PLAN.

 

The
BUILDER will endeavor to arrange for the inspection by the BUYER’S
REPRESENTATIVE during working hours of the BUILDER. However, such inspection
may be arranged beyond the BUILDER’s normal working hours, including
weekend and/or holiday if this is considered necessary by the BUILDER in order
to meet the BUILDER’s construction schedule, on the condition that the BUILDER
will inform the BUYER’S REPRESENTATIVE at least two (2) days in
advance of such inspection.

 

The
BUYER’S REPRESENTATIVE shall, within the limits of the authority conferred upon
him by the BUYER, make decisions or give advice to the BUILDER on behalf of the
BUYER promptly on all problems arising out of, or in connection with, the
construction of

 

10

 

the
VESSEL and generally act in a reasonable manner with a view to cooperating to
the utmost with the BUILDER in the construction process of the VESSEL.

 

The
decision, approval or advice of the BUYER’S REPRESENTATIVE shall be deemed to
have been given by the BUYER and once given shall not be withdrawn, revoked or
modified except with consent of the BUILDER. Provided that the BUYER’S
REPRESENTATIVE or his assistants shall comply with the foregoing obligations,
no act or omission of the BUYER’S REPRESENTATIVE or his assistants shall, in
any way, diminish the liability of the BUILDER under Article IX (WARRANTY
OF QUALITY). The BUYER’S REPRESENTATIVE shall notify the BUILDER promptly in
writing of his discovery of any construction or materials, which he believes do
not or will not conform to the requirements of the CONTRACT and the SPECIFICATIONS
or the PLAN and likewise advise and consult with the BUILDER on all matters
pertaining to the construction of the VESSEL, as may be required by the
BUILDER, or as he may deem necessary.

 

However,
if the BUYER’S REPRESENTATIVE fails to submit to the BUILDER without delay any
such demand concerning alterations or changes with respect to the construction,
arrangement or outfit of the VESSEL, which the BUYER’S REPRESENTATIVE has
examined, inspected or attended at the test thereof under this CONTRACT or the
SPECIFICATIONS, the BUYER’S REPRESENTATIVE shall be deemed to have approved the
same and shall be precluded from making any demand for alterations, changes, or
complaints with respect thereto at a later date.

 

The
BUILDER shall comply with any such demand which is not contradictory to this
CONTRACT and the SPECIFICATIONS or the PLAN, provided that any and all such
demands by the BUYER’S REPRESENTATIVE with regard to construction, arrangement
and outfit of the VESSEL shall be submitted in writing to the authorised
representative of the BUILDER. The BUILDER shall notify the BUYER’S
REPRESENTATIVE of the names of the persons who are from time to time authorised
by the BUILDER for this purpose.

 

It
is agreed upon between the BUYER and the BUILDER that the modifications,
alterations or changes and other measures necessary to comply with such demand
may be effected at a convenient time and place at the BUILDER’s reasonable
discretion in view of the construction schedule of the VESSEL.

 

In
the event that the BUYER’S REPRESENTATIVE shall advise the BUILDER that he has
discovered or believes the construction or materials do not or will not
conform to the

 

11

 

requirements
of this CONTRACT and the SPECIFICATIONS or the PLAN, and the BUILDER shall not
agree with the views of the BUYER’S REPRESENTATIVE in such respect, either the
BUYER or the BUILDER may, with the agreement of the other party, seek an
opinion of the CLASSIFICATION SOCIETY.

 

3.                 APPROVAL
OF DRAWINGS

 

(a)            The BUILDER shall submit to
the BUYER three (3) copies of each of the plans and drawings to be
submitted to the BUYER for its approval at its address as set forth in
Article XIV hereof. The BUYER shall, within fourteen (14) days after
receipt thereof return to the BUILDER one (1) copy of such plans and
drawings with the approval or comments, if any, of the BUYER. A list of the
plans and drawings to be so submitted to the BUYER shall be mutually agreed
upon between the parties hereto.

 

(b)           When and if the BUYER’S REPRESENTATIVE
shall have been sent by the BUYER to the SHIPYARD in accordance with Paragraph
1 of this Article, the BUILDER may submit the remainder, if any, of the
plans and drawings in the agreed list, to the BUYER’S REPRESENTATIVE for his
approval, unless otherwise agreed upon between the parties hereto.

 

The
BUYER’S REPRESENTATIVE shall, within ten (10) days after receipt thereof,
return to the BUILDER one (1) copy of such plans and drawings with his
approval or comments written thereon, if any. Approval by the BUYER’S
REPRESENTATIVE of the plans and drawings duly submitted to him shall be deemed
to be the approval by the BUYER for all purposes of this CONTRACT.

 

(c)            In the event that the BUYER
or the BUYER’S REPRESENTATIVE shall fail to return the plans and drawings to
the BUILDER within the time limit as hereinabove provided, such plans and
drawings shall be deemed to have been automatically approved without any
comment. In the event the plans and drawings submitted by the BUILDER to the
BUYER or the BUYER’S REPRESENTATIVE in accordance with this Article do not
meet with the BUYER’s or the BUYER’S REPRESENTATIVE’s approval, the matter
may be submitted by either party hereto for determination pursuant to
Article XIV hereof. If the BUYER’s comments on the plans and drawings that
are returned to the BUILDER by the BUYER within the said time limit are not
clearly specified or detailed, the BUILDER shall be entitled to place its own
interpretation on such comments in implementing them.

 

12

 

(d)           Approval of drawings by
Buyers shall not constitute a waiver of Builder’s responsibility to deliver the
vessel in accordance with the Contract and Specifications.

 

4.                 SALARIES
AND EXPENSES

 

All salaries and expenses of the BUYER’S REPRESENTATIVE or
any other person or persons employed by the BUYER hereunder shall be for the
BUYER’s account.

 

5.                 RESPONSIBILITY
OF THE BUILDER

 

(a)            The BUILDER shall provide
the BUYER’S REPRESENTATIVE and his assistants free of charge with suitably
furnished office space at, or in the immediate vicinity of, the SHIPYARD
together with access to telephone and facsimile facilities as may be
necessary to enable the BUYER’S REPRESENTATIVE and his assistants to carry out
their work under this CONTRACT. However, the BUYER shall pay for the telephone
or facsimile facilities used by the BUYER’S REPRESENTATIVE or his assistants.

 

The
BUILDER, its employees, agents and subcontractors, during its working hours
until delivery of the VESSEL, shall arrange for them to have free and ready
access to the VESSEL, her equipment and accessories, and to any other place
(except the areas controlled for the purpose of national security) where work
is being done, or materials are being processed or stored in connection with the
construction of the VESSEL including the premises of sub-contractors.

 

The
BUYER’S REPRESENTATIVE or his assistants or employees shall observe the work’s
rules, regulations and the guidances prevailing at the BUILDER’s and its
sub-contractor’s premises. The BUILDER shall promptly provide to the BUYER’S
REPRESENTATIVE and/or his assistants and shall ensure that its sub-contractors
shall promptly provide all such information as he or they may reasonably
request in connection with the construction of the VESSEL and her engines,
equipment and machinery.

 

(b)           The BUYER’S REPRESENTATIVE
and his assistants shall at all times remain the employees of the BUYER. The
BUILDER shall not be liable to the BUYER or the BUYER’S REPRESENTATIVE or to
his assistants or to the BUYER’s employees or

 

13

 

agents
for personal injuries, including death, during the time they, or any of them,
are on the VESSEL, or within the premises of either the BUILDER or its
sub-contractors, or are otherwise engaged in and about the construction of the
VESSEL, unless, however, such personal injuries, including death, are caused by
the gross negligence of the BUILDER, its sub-contractors, or its or their
employees or agents. The BUILDER shall not be liable to the BUYER for damages
to, or destruction of property of the BUYER or of the BUYER’S REPRESENTATIVE or
his assistants or the BUYER’s employees or agents, unless such damages, loss or
destruction is caused by the gross negligence of the BUILDER, its
sub-contractors, or its or their employees or agents.

 

6.                 RESPONSIBILITY
OF THE BUYER

 

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

 

The BUILDER has the right to request the BUYER to replace any
of the BUYER’S REPRESENTATIVE and/or his assistants who are deemed unsuitable
and unsatisfactory for the proper progress of the VESSEL’s construction. The
BUYER shall investigate the situation by sending its representative(s) to the
SHIPYARD and if the BUYER considers that such BUILDER’s request is justified,
the BUYER shall effect the replacement as soon as conveniently arrangeable.

 

(End of Article)

 

14

 

ARTICLE V :
MODIFICATIONS, CHANGES AND EXTRAS

 

1.                 HOW EFFECTED

 

Any modifications or changes to the SPECIFICATIONS and the
PLAN under which the VESSEL is to be constructed may be made at any time
hereafter by written agreement of the parties hereto. Any modification or
change requested by the BUYER which does not affect the frame-work of the
SPECIFICATIONS shall be agreed to by the BUILDER if the BUYER agrees to
adjustment of the CONTRACT PRICE, deadweight and/or cubic capacity, speed
requirements, the Delivery Date and other terms and conditions of this CONTRACT
reasonably required as a result of such modification or change. The BUILDER has
the right to continue construction of the VESSEL on the basis of the
SPECIFICATIONS and the PLAN until the BUYER has agreed to such adjustments. The
BUILDER shall be entitled to refuse to make any alteration, change or
modification of the SPECIFICATIONS and/or the PLAN requested by the BUYER, if
the BUYER does not agree to the aforesaid adjustments within seven
(7) days of the BUILDER’s notification of the same to the BUYER, or, if,
in the BUILDER’s judgement, the compliance with such request of the BUYER would
cause an unreasonable disruption of the normal working schedule of the
SHIPYARD.

 

The
BUILDER, however, agrees to exert its efforts to accommodate such reasonable
request by the BUYER so that the said change and modification shall be made at
a reasonable cost and within the shortest period of time reasonably possible.
The aforementioned agreement to modify and change the SPECIFICATIONS and the
PLAN may be effected by exchange of letters or facsimiles manifesting the
agreement.

 

The letters and facsimiles exchanged by the parties pursuant
to the foregoing shall constitute an amendment to this CONTRACT and the
SPECIFICATIONS or the PLAN under which the VESSEL shall be built. Upon
consummation of such an agreement to modify and change the SPECIFICATIONS or
the PLAN, the BUILDER shall alter the construction of the VESSEL in accordance
therewith including any addition to, or deduction from, the work to be
performed in connection with such construction.

 

2.                 SUBSTITUTION
OF MATERIAL

 

If
any materials, machinery or equipment required for the construction of the
VESSEL by

 

15

 

the
SPECIFICATIONS and the PLAN or otherwise under this CONTRACT cannot be procured
in time to meet the BUILDER’s construction schedule for the VESSEL, or are
in short supply, or are unreasonably high in price compared with the prevailing
international market price, the BUILDER may supply, subject to the BUYER’s
prior approval, other materials, machinery or equipment of equal quality and
effect capable of meeting the requirements of the CLASSIFICATION SOCIETY and
the rules, regulations and requirements with which the construction of the
VESSEL must comply.

 

3.                 CHANGES
IN RULES AND REGULATIONS

 

If the specified rules and regulations with which the
construction of the VESSEL is required to comply are altered or changed by the
CLASSIFICATION SOCIETY or bodies authorised to make such alterations or
changes, either the BUYER or the BUILDER, upon receipt of due notice thereof,
shall forthwith give notice thereof to the other party in writing. Thereupon,
within fifteen (15) days after giving the notice to the BUILDER or receiving
the notice from the BUILDER, the BUYER shall advise the BUILDER as to the
alterations and changes, if any, to be made on the VESSEL which the BUYER, in
its sole discretion, shall decide. The BUILDER shall not be obliged to comply
with such alterations and/or changes if the BUYER fails to notify the BUILDER
of its decision within the time limit stated above.

 

The
BUILDER shall comply promptly with the said request of the BUYER, provided that
the BUILDER and the BUYER shall first agree to :

 

(a)            any increase or decrease in
the CONTRACT PRICE of the VESSEL that is occasioned by such compliance ;

 

(b)           any extension or advancement
in the Delivery Date of the VESSEL that is occasioned by such compliance ;

 

(c)            any increase or decrease in
the deadweight and/or cubic capacity of the VESSEL, if such compliance results
in any increase or reduction in the deadweight and/or cubic capacity ;

 

(d)           adjustment of the speed
requirements if such compliance results in any increase or reduction in the
speed ; and

 

16

 

(e)            any other alterations in the
terms of this CONTRACT or of the SPECIFICATIONS or the PLAN or both, if such
compliance makes such alterations of the terms necessary.

 

Any
delay in the construction of the VESSEL caused by the BUYER’s delay in making a
decision or agreement as above shall constitute a permissible delay under this
CONTRACT. Such agreement by the BUYER shall be effected in the same manner as
provided above for modification and change of the SPECIFICATIONS and the PLAN.

 

(End of Article)

 

17

 

ARTICLE VI
: TRIALS AND COMPLETION

 

1.                 NOTICE

 

The BUILDER shall notify the BUYER in writing or by facsimile
at least twenty (20) days in advance of the time and place of the trial run of
the VESSEL. Such notice shall specify the place from which the VESSEL will
commence her trial run and approximate date upon which the trial run is
expected to take place. Such date shall be further confirmed by the BUILDER
five (5) days in advance of the trial run in writing or by facsimile.

 

The BUYER’S REPRESENTATIVE, who is to witness the performance
of the VESSEL during such trial run, shall be present at such place on the date
specified in such notice. Should the BUYER’S REPRESENTATIVE fail to be present
after the BUILDER’s due notice to the BUYER as provided above, the BUILDER
shall be entitled to conduct such trial run with the presence of the
representative(s) of the CLASSIFICATION SOCIETY only without the BUYER’S
REPRESENTATIVE being present. In such case, the BUYER shall be obliged to
accept the VESSEL on the basis of a certificate issued by the BUILDER that the
VESSEL, after the trial run, subject to alterations and corrections, if
necessary, has been found to conform with the SPECIFICATIONS and this
CONTRACT and is satisfactory in all respects, provided the BUILDER first makes
such corrections and alterations promptly.

 

2.                 WEATHER
CONDITION

 

In
the event of unfavourable weather on the date specified for the trial run, the
trial run shall take place on the first available day that weather conditions
permit. The parties hereto recognise that the weather conditions in Korean
waters, in which the trial run is to take place, are such that great changes in
weather may arise momentarily and without warning and therefore, it is agreed
that if, during the trial run, the weather should become so unfavourable that
the trial run cannot be continued, then the trial run shall be discontinued and
postponed until the first favourable day next following, unless the BUYER shall
assent to the acceptance of the VESSEL by notification in writing on the basis
of such trial run so far made prior to such change in weather conditions. Any
delay of the trial run caused by such unfavourable weather conditions shall
also operate to extend the Delivery Date of the VESSEL for the period of delay
occasioned by such unfavourable weather conditions.

 

18

 

3.              HOW
CONDUCTED

 

All
expenses in connection with the trials of the VESSEL are to be for the account
of the BUILDER, which, during the trials, is to provide at its own expense the
necessary crew to comply with conditions of safe navigation. The trials shall
be conducted in the manner prescribed in this CONTRACT and the SPECIFICATIONS,
and shall prove fulfilment of the performance requirements for the trials as
set forth in the SPECIFICATIONS.

 

The
BUILDER shall be entitled to conduct preliminary sea trials, during which the
propulsion plant and/or its appurtenance shall be adjusted according to the
BUILDER’s judgement. The BUILDER shall have the right to repeat any trial
whatsoever as it deems necessary.

 

4.                 CONSUMABLE
STORES

 

The BUILDER shall load the VESSEL with the required quantity
of fuel oil, lubricating oil and greases, fresh water, and other stores necessary
to conduct the trials as set forth in the SPECIFICATIONS. The necessary ballast
(fuel oil, fresh water and such other ballast as may be required) to bring
the VESSEL to the trial load draft, as specified in the SPECIFICATIONS, shall
be supplied and paid for by the BUILDER whilst lubricating oil and greases
shall be supplied and paid for by the BUYER within the time advised by the
BUILDER for the conduct of sea trials as well as for use before the delivery of
the VESSEL to the BUYER. The fuel oil as well as lubricating oil and greases
shall be in accordance with the specifications of the main engine and other
machinery and the BUYER shall decide and advise the BUILDER of the supplier’s
name for lubricating oil and greases before the work-commencement of the
VESSEL, provided that the supplier shall be acceptable to the BUILDER and/or
the makers of all the machinery.

 

Any
fuel oil, fresh water or other consumable stores furnished and paid for by the
BUILDER for trial runs remaining on board the VESSEL, at the time of acceptance
of the VESSEL by the BUYER, shall be bought by the BUYER from the BUILDER at
the BUILDER’s purchase price for such supply in Korea and payment by the BUYER
thereof shall be made at the time of delivery of the VESSEL. The BUILDER shall
pay the BUYER at the time of delivery of the VESSEL for the consumed quantity
of any lubricating oil and greases which were furnished and paid for by the
BUYER at the BUYER’s purchase price thereof. The consumed quantity of
lubricating oils and greases shall be calculated on the basis of the difference
between the remaining amount, including the same remaining in the

 

19

 

main
engine, other machinery and their pipes, stern tube and the like, and the
supplied amount.

 

5.                 ACCEPTANCE
OR REJECTION

 

(a)               If, during any sea trial,
any breakdown occurs entailing interruption or irregular performance which can
be repaired on board, the trial shall be continued after such repairs and be
valid in all respects.

 

(b)           However, if, during or after
the trial run, it becomes apparent that the VESSEL or any part of her
equipment requires alterations or corrections which but for this provision
would or might entitle the BUYER to rescind this CONTRACT, the BUILDER shall
notify the BUYER promptly in writing or by facsimile to such effect and shall
simultaneously advise the BUYER of the estimated additional time required for
the necessary alterations or corrections to be made.

 

The
BUYER shall, within five(5) days of receipt from the BUILDER of notice of
completion of such alterations or corrections and after such further trials or
tests as necessary, notify the BUILDER in writing or by facsimile confirmed in
writing of its acceptance, qualified acceptance or rejection of the VESSEL, all
in accordance with the SPECIFICATIONS, the PLAN and this CONTRACT, and shall
not be entitled to reject the VESSEL on such grounds until such time.

 

(c)               Save as above provided, the
BUYER shall, within three(3) days after completion of the trial run, notify
the BUILDER in writing or by facsimile confirmed in writing of its acceptance
of the VESSEL or of the details in respect of which the VESSEL does not
conform to the SPECIFICATIONS or this CONTRACT.

 

If
the BUILDER is in agreement with the BUYER’s determinations as to
non-conformity, the BUILDER shall make such alterations or changes as
may be necessary to correct such non-conformity and shall prove the
fulfilment of this CONTRACT and the SPECIFICATIONS by such tests or trials as
may be necessary.

 

The
BUYER shall, within three (3) days after completion of such tests and/or
trials, notify the BUILDER in writing or by facsimile confirmed in writing of
its acceptance or rejection of the VESSEL.

 

20

 

(d)           However, the BUYER shall not
be entitled to reject the VESSEL by reason of any minor or insubstantial items
judged from the point of view of standard shipbuilding and shipping practice as
not being in conformity with the SPECIFICATIONS, but, in that case, the BUILDER
shall not be released from the obligation to correct and/or remedy such minor
or insubstantial items as soon as practicable after the delivery of the VESSEL.

 

6.                 EFFECT
OF ACCEPTANCE

 

The
BUYER’s written or facsimiled notification of acceptance delivered to the
BUILDER as above provided, shall be final and binding insofar as conformity of
the VESSEL with the SPECIFICATIONS is concerned and shall preclude the BUYER
from refusing formal delivery of the VESSEL as hereinafter provided, if the
BUILDER complies with all conditions of delivery, as herein set forth and
provided that, in the case of qualified acceptance, any matters which were
mentioned in the notice of the qualified acceptance by the BUYER as requiring
correction have been corrected satisfactorily.

 

If the BUYER fails to notify the BUILDER of its acceptance or
rejection of the VESSEL as hereinabove provided, the BUYER shall be deemed to
have accepted the VESSEL. Nothing contained in this Article shall preclude
the BUILDER from exercising any and all rights which the BUILDER has under this
CONTRACT if the BUILDER disagrees with the BUYER’s rejection of the VESSEL or
any reasons given for such rejection, including arbitration provided in
Article XIV hereof.

 

(End of Article)

 

21

 

ARTICLE VII
: DELIVERY

 

1.                 TIME
AND PLACE

 

The
VESSEL shall be delivered by the BUILDER to the BUYER at the SHIPYARD, safely
afloat on or before 31st October, 2009 (hereinafter
called the “DELIVERY DATE”) after completion of satisfactory trials and
acceptance by the BUYER in accordance with the terms of Article VI, except
that, in the event of delays in delivery of the VESSEL by the BUILDER due to
causes which under the terms of this CONTRACT permit extensions of the time for
delivery of the VESSEL, the aforementioned DELIVERY DATE shall be extended
accordingly.

 

It
is hereby agreed that the BUILDER shall have the right to advance the DELIVERY
DATE provided that the BUILDER shall have given to the BUYER written notice of
the new proposed earlier delivery date at least six (6) months before such
new proposed advanced delivery date; and

 

Any
such new proposed earlier delivery date shall be considered as the DELIVERY
DATE for the purpose of this CONTRACT.

 

2.                 WHEN
AND HOW EFFECTED 

 

Provided that the BUYER shall concurrently with delivery of
the VESSEL release to the BUILDER the fifth instalment as set forth in
Article X.2. hereof and shall have fulfilled all of its obligations
provided for in this CONTRACT, delivery of the VESSEL shall be forthwith
effected upon acceptance thereof by the BUYER, as hereinabove provided, by the
concurrent delivery by each of the parties hereto to the other of a PROTOCOL OF
DELIVERY AND ACCEPTANCE acknowledging delivery of the VESSEL by the BUILDER and
acceptance thereof by the BUYER, which PROTOCOL shall be prepared in duplicate
and signed by each of the parties hereto.

 

3.                 DOCUMENTS
TO BE DELIVERED TO THE BUYER

 

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

 

22

 

(a)            PROTOCOL OF TRIALS of the
VESSEL made pursuant to this CONTRACT and the SPECIFICATIONS,

 

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

 

(c)            PROTOCOL OF STORES OF
CONSUMABLE NATURE, such as all fuel oil and fresh water remaining in tanks if
its cost is charged to the BUYER under Article VI.4. hereof,

 

(d)           DRAWINGS AND PLANS
pertaining to the VESSEL as stipulated in the SPECIFICATIONS, which shall be
furnished to the BUYER at no additional cost,

 

(e)            ALL CERTIFICATES required to
be furnished upon delivery of the VESSEL pursuant to this CONTRACT, the
SPECIFICATIONS and the customary shipbuilding practice, including

 

(i)                                 Classification
Certificate

(ii)                              Safety
Construction Certificate

(iii)                           Safety
Equipment Certificate

(iv)                          Safety
Radio Certificate

(v)                             International
Loadline Certificate

(vi)                          International
Tonnage Certificate

(vii)                       BUILDER’s
Certificate

(viii)                    De-ratting
Exemption Certificate

 

However,
it is agreed by the parties that if the Classification Certificate and/or other
certificates are not available at the time of delivery of the VESSEL,
provisional certificates shall be accepted by the BUYER, provided that the
BUILDER shall furnish the BUYER with formal certificates as promptly as
possible after such formal certificates have been issued.

 

(f)              DECLARATION OF WARRANTY of
the BUILDER that the VESSEL is delivered to the BUYER free and clear of any
liens, claims, mortgages, or other encumbrances upon the BUYER’s title thereto,
and in particular, that the VESSEL is absolutely free of all burdens in the
nature of imposts, taxes, or charges imposed by the prefecture or country

 

23

 

of
the port of delivery, as well as of all liabilities of the BUILDER to its
sub-contractors and employees and of all liabilities arising from the operation
of the VESSEL in trial runs, or otherwise, prior to delivery except as
otherwise provided under this CONTRACT.

 

(g)                     COMMERCIAL INVOICE.

 

4.                 TENDER
OF THE VESSEL

 

If
the BUYER fails to take delivery of the VESSEL after completion thereof
according to this CONTRACT and the SPECIFICATIONS, the BUILDER shall have the
right to tender delivery of the VESSEL after compliance with all procedural
requirements as provided above.

 

5.                 TITLE
AND RISK

 

Title
and risk shall pass to the BUYER upon delivery and acceptance of the VESSEL
being effected as stated above and the BUILDER shall be free of all
responsibility or liability whatsoever related with this CONTRACT except for
the warranty of quality contained in Article IX and the obligation to
correct and/or remedy, as provided in Article VI.5.(d), if any, it being
expressly understood that, until such delivery is effected, the VESSEL and
equipment thereof are at the entire risk of the BUILDER including but not
confined to, risks of war, insurrection and seizure by Governments or Authorities,
whether Korean or foreign, and whether at war or at peace. The title to the
BUYER’s supplies as provided in Article XII shall remain with the BUYER
and the BUILDER’s responsibility for such BUYER’s supplies shall be as
described in Article XII.2.

 

6.                 REMOVAL
OF THE VESSEL

 

The BUYER shall take possession of the VESSEL immediately
upon delivery thereof and shall remove the VESSEL from the SHIPYARD within
three (3) days after delivery thereof is effected. Port dues and other
charges levied by the Korean Government Authorities after delivery of the
VESSEL and any other costs related to the removal of the VESSEL shall be borne
by the BUYER.

 

(End of Article)

 

24

 

ARTICLE VIII
: DELAYS AND EXTENSIONS OF TIME (FORCE MAJEURE)

 

1.                 CAUSES
OF DELAY

 

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

 

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

 

2.                 NOTICE
OF DELAYS

 

As
soon as practicably possible after commencement of any delay but not later than
fourteen (14) days on account of which the BUILDER claims that it is entitled
under this CONTRACT to an extension of the DELIVERY DATE of the VESSEL,
excluding delays due to arbitration, the BUILDER shall advise the BUYER in
writing or by facsimile of the date such delay commenced, the reasons thereof
and, if possible, its estimated duration of the probable delay in the delivery
of the VESSEL, and shall supply the BUYER if reasonably available with evidence
to justify the delay claimed. Within fourteen (14) days after such delay ends,
the BUILDER shall likewise advise the BUYER in writing or by

 

25

 

facsimile
of the date that such delay ended, and also, shall specify the period of time
by which the BUILDER claims the DELIVERY DATE should be extended by reason of
such delay. Failure of the BUYER to object to the BUILDER’s notification of any
claim for extension of the date for delivery of the VESSEL within fourteen (14)
days after receipt by the BUYER of such notification shall be deemed to be a
waiver by the BUYER of its right to object to such extension.

 

3.                 RIGHT
TO RESCIND FOR EXCESSIVE DELAY

 

If
the total accumulated time of all permissible and non-permissible delays,
excluding delays due to (i) arbitration under Article XIV,
(ii) the BUYER’s defaults under Article XI, (iii) modifications
and changes under Article V or (iv) delays or defects in the BUYER’s
supplies as stipulated in Article XII, aggregates two hundred and forty
(240) days or more, then, the BUYER may, at any time thereafter, rescind this
CONTRACT by giving a written notice of rescission to the BUILDER. Such
rescission shall be effective as of the date the notice thereof is received by
the BUILDER.

 

If
the BUYER has not served the notice of rescission as provided in the above or
Article III.1. hereof, the BUILDER may, at any time after expiration of
the accumulated time of the delay in delivery, either two hundred and forty
(240) days in case of the delay in this Paragraph or two hundred and ten (210)
days in case of the delay in Article III.1, notify the BUYER of the future
date upon which the BUILDER estimates the VESSEL will be ready for delivery and
demand in writing or by facsimile that the BUYER make an election either to
rescind this CONTRACT or to consent to the delivery of the VESSEL at such
future date, in which case the BUYER shall, within fourteen(14) days after
receipt of such demand, make and notify the BUILDER of such election. If the
BUYER elects to consent to the delivery of the VESSEL at such future date (or
other future date as the parties may agree):

 

(a)            Such future date shall
become the contractual delivery date for the purposes of this CONTRACT and
shall be subject to extension by reason of permissible delays as herein
provided, and

 

(b)           If the VESSEL is not
delivered by such revised contractual delivery date (as extended by reason of
permissible delays), the BUYER shall have the same right of rescission upon the
same terms as provided in the above and Article III. 1.

 

If
the BUYER shall not make an election within fourteen(14) days as provided
hereinabove, the BUYER shall be deemed to have accepted such extension of the
DELIVERY DATE to

 

26

 

the
future delivery date indicated by the BUILDER.

 

4.              DEFINITION
OF PERMISSIBLE DELAYS

 

Delays
on account of the foregoing causes shall be understood to be permissible
delays, and are to be distinguished from non-permissible unauthorised delays on
account of which the CONTRACT PRICE of the VESSEL is subject to adjustment as
provided in Article III hereof.

 

(End of Article)

 

27

 

ARTICLE IX
: WARRANTY OF QUALITY

 

1.                 GUARANTEE
OF MATERIAL AND WORKMANSHIP

 

The BUILDER, for the period of twelve (12) months from the
date of delivery of the VESSEL to the BUYER, guarantees the VESSEL and her
engine and all parts and equipment thereof that are manufactured or furnished
by the BUILDER under this CONTRACT against all defects which are directly due
to faulty design, defective materials, construction miscalculation and/or poor
workmanship, or negligent or other improper acts or omissions on the part of
the BUILDER or its subcontractors provided
such defects have not been caused by perils of the sea, rivers or
navigations, or by normal wear and tear, overloading, improper loading or
stowage, corrosion of the materials other than related to lack of maintenance,
fire, accidents at sea or elsewhere, or by incompetence, mismanagement,
negligence or wilful neglect or any alteration or addition to the VESSEL which
has not previously been approved by the BUILDER.

 

The BUILDER will be responsible for all machinery or parts of
machinery and all constructions which are supplied by sub-contractors and will
guarantee the above mentioned for a period of twelve (12) months on the basis
as laid down in this Paragraph. Upon rectification of an item claimed under this guarantee,
this item shall be covered for further twelve (12) months under the same terms
and conditions. However, this is limited to a maximum of Eighteen (18) months
from Delivery Date.

 

2.                 NOTICE
OF DEFECTS

 

The
BUYER or its duly authorised representative will notify the BUILDER in writing
or by facsimile promptly after discovery of any defect for which a claim is to
be made under this guarantee.

 

The BUYER’s written notice shall include full particulars as
to the nature of the defect and the extent of the damage caused thereby, but
excluding consequential damage as hereinafter provided. The BUILDER will be
under no obligation with respect to this guarantee in respect of any claim for
defects discovered prior to the expiry date of the guarantee, unless notice of
such defects is received by the BUILDER before the expiry date. However,
facsimiled advice received by the BUILDER within seven (7) days after such
expiry date that a claim is forthcoming will be sufficient compliance with the
requirement as to time,

 

28

 

provided that such facsimiled advice shall include at least a
brief description of the defect including the identity of the equipment, extent
of damage, name and number of any replacement part and description of any
remedial work required, and that full particulars are given to the BUILDER not
later than fourteen (14) days after the expiry date.

 

3.                 REMEDY
OF DEFECTS

 

(a)             The BUILDER shall remedy, at
its expense, any defects, against which the VESSEL is guaranteed under this
Article, by making all necessary and reasonably practicable repairs or
replacements at the SHIPYARD or elsewhere as provided for in
(b) hereinbelow.

 

In
such case, the VESSEL shall be taken at the BUYER’s cost and responsibility to
the place selected, ready in all respects for such repairs or replacements and
in any event, the BUILDER shall not be responsible for towage

 

(b)           However, BUYER should
determine and prove if it is commercially and/or operationally impractical
(which shall include, but not be limited to, an emergency) to bring the VESSEL
to the SHIPYARD, the BUYER may cause the necessary repairs or replacements
to be made elsewhere which is deemed by the BUYER with the consent of the
BUILDER which shall not be unreasonably withheld, to be suitable for the
purpose, provided that, in such event, the BUILDER may forward or supply
replacement parts or materials under the terms described in
(c) hereinbelow, unless forwarding or supplying thereof under the terms
described in (c) hereinbelow would impair or delay the operation or
working schedule of the VESSEL. In the event that the BUYER proposes to
cause the necessary repairs or replacements to be made to the VESSEL at any
shipyard or works other than the SHIPYARD, the BUYER shall first (but in all
events as soon as reasonably possible) give the BUILDER notice in writing or by
facsimile of the time and place such repairs will be made, and if the VESSEL is
not thereby delayed, or her operation or working schedule is not thereby
impaired, the BUILDER shall have the right to verify by its own
representative(s) the nature and extent of the defects complained of. The
BUILDER shall, in such case, promptly advise the BUYER by facsimile, after such
examination has been completed, of its acceptance or rejection of the defects
as ones that are covered by the guarantee herein provided. Upon the BUILDER’s
acceptance of the defects as justifying remedy under this Article, or upon
award of the arbitration so determining, the BUILDER shall compensate the BUYER
an amount equal to the actual proven cost of making the same repairs or
replacements.

 

29

 

(c)            In the event that it is
necessary for the BUILDER to forward a replacement for a defective
part under this guarantee, replacement parts shall be shipped to the BUYER
under the terms of CIF port of the country where vessel will be repaired.

 

(d)           The BUILDER reserves the
option to retrieve, at the BUILDER’s cost, any of the replaced equipment/parts
in case defects are remedied in accordance with the provisions in this Article.

 

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

 

4.                 EXTENT
OF THE BUILDER’S LIABILITY

 

(a)            After delivery of the VESSEL
the responsibility of the BUILDER in respect of and/or in connection with the
VESSEL and/or this CONTRACT shall be limited to the extent expressly provided
in the Paragraphs of this Article. Except as expressly provided in the
Paragraphs of this Article, in no circumstances and on no ground whatsoever
shall the BUILDER have any responsibility or liability whatsoever or howsoever
arising in respect of or in connection with the VESSEL or this CONTRACT after
the delivery of the VESSEL. Further, but without in any way limiting the
generality of the foregoing, the BUILDER shall have no liability or
responsibility whatsoever or howsoever arising for or in connection with any
consequential or special losses, damages or expenses (including but not limited
to loss of time, loss of profit or earnings or demurrage directly or indirectly
caused), any pecuniary loss or expense, any liability to any third party or any
fine, compensation, penalty or other payment or sanction incurred by or imposed
upon the BUYER or any other party whatsoever in relation to or in connection
with this CONTRACT or the VESSEL.

 

(b)           The BUILDER shall be under
no obligation with respect to defects in respect of which the BUILDER has not
received notice in accordance with Paragraph 2 of this Article by the
expiry date of the guarantee specified in Paragraph 1, nor in any event shall
the BUILDER be liable for any worsening of the defects after the expiry date of
the guarantee.

 

(c)            The BUILDER shall under no
circumstances be liable for defects in the VESSEL or any part of equipment
thereof caused by perils of the sea, rivers or navigations, or by normal wear
and tear, overloading, improper loading or stowage, corrosion of the

 

30

 

materials
other than related to lack of maintenance, fire, accidents at sea or elsewhere,
or by incompetence, mismanagement, negligence or wilful neglect or any
alteration or addition on the part of the BUYER, its employees or agents
or any other person on or doing work on the VESSEL, including the VESSEL’s
officers, crew and passengers. Likewise, the BUILDER shall not be liable for
defects in the VESSEL or any part of equipment thereof that are due to
repairs carried out by any other than the BUILDER or which have not been
carried out in accordance with the procedure set out in Paragraph 3 (b) of
this Article.

 

(d)           The BUILDER shall not be
obliged to repair, not be liable for, damage to the VESSEL or any part of
the equipment thereof, which after delivery of the VESSEL, is caused other than
by the defects of the nature specified in this Article. The guarantees
contained as hereinabove in this Article replace and exclude any other
liability, guarantee, warranty and/or condition imposed or implied by statute,
common law, custom, contract (including this CONTRACT) or otherwise on the
part of the BUILDER by reason of the construction and sale of the VESSEL
for and to the BUYER or for any other reason whatsoever.

 

5.                       GUARANTEE ENGINEER

 

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

 

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

 

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

 

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

 

While the Guarantee Engineer is on board the VESSEL,
the BUYER shall pay to the BUILDER the sum of United States Dollars Six
Thousand and Five Hundred (US$ 6,500.-) per month as a compensation for a
part of cost and charges to be borne by the BUILDER in connection with
Guarantee Engineer and also shall pay the expenses of his repatriation to

 

31

 

Korea by air upon termination of his service, the
expenses of his communication with the BUILDER incurred in performing his
duties and expenses, if any, of his medical and hospital care in the VESSEL’s
hospital.

 

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

 

(End of Article)

 

32

 

ARTICLE X :
PAYMENT

 

1.                 CURRENCY

 

All
payments under this CONTRACT shall be made in United States Dollars.

 

2.                 TERMS
OF PAYMENT

 

The
payments of the CONTRACT PRICE shall be made as follows :

 

(a)            First Instalment

 

Twenty per cent (20 %) of the CONTRACT PRICE amounting to
U.S.Dollars Eighteen Million Three Hundred Thousand only (US$ 18,300,000.-)
shall be paid within three (3) business days after receipt by the BUYER of
the original of the Refund Guarantee specified in Paragraph 8 of this Article.

 

Under this CONTRACT, in counting the business days, only
Saturdays and Sundays are excepted. When a due date falls on a day when banks
are not open for business in New York, N.Y., U.S.A., such due date shall fall
due upon the first business day next following.

 

(b)           Second Instalment

 

Twenty
per cent (20%) of the CONTRACT PRICE amounting to U.S.Dollars Eighteen Million
Three Hundred Thousand only (US$ 18,300,000.-) shall be paid within three
(3) business days of receipt by the Buyer of a facsimiled advice from the
BUILDER that steel cutting has been commenced.

 

(c)            Third Instalment

 

Ten
per cent (10%) of the CONTRACT PRICE amounting to U.S.Dollars Nine Million One
Hundered Fifty Thousand only (US$ 9,150,000.-) shall be paid within three
(3) business days of receipt by the BUYER of a facsimiled advice from the
BUILDER that the first block of the keel has been laid.

 

33

 

(d)           Fourth Instalment

 

Ten
per cent (10%) of the CONTRACT PRICE amounting to U.S.Dollars Nine Million One
Hundred Fifty Thousand only (US$ 9,150,000-) shall be paid within three
(3) business days of receipt by the BUYER of a facsimiled advice from the
BUILDER that the launching of the VESSEL has been completed.

 

(f)              Fifth
Instalment

 

Forty
per cent (40%) of the CONTRACT PRICE amounting to U.S.Dollars Thirty Six
Million Six Hundred Thousand only (US$ 36,600,000.-) plus or minus any increase
or decrease due to modifications and/or adjustment, if any, arising prior to
delivery of the VESSEL of the CONTRACT PRICE under Articles III and V of this
CONTRACT shall be paid to the BUILDER concurrently with the delivery of the
VESSEL. (The date stipulated for payment of each of the five instalments
mentioned above is hereinafter in this Article and in Article XI
referred to as the “DUE DATE” of that instalment).

 

It is understood and agreed upon by the BUILDER and the BUYER
that all payments under the provisions of this Article shall not be
delayed or withheld by the BUYER due to any dispute or disagreement of
whatsoever nature arising between the BUILDER and the BUYER. Should there be
any dispute in this connection, the matter shall be dealt with in accordance
with the provisions of arbitration in Article XIV hereof. Expenses for
remitting payments and any other expenses connected with such payments shall be
for the account of the BUYER.

 

3.                 DEMAND
FOR PAYMENT

 

At least fourteen (14) days prior to the date of each event
provided in Paragraph 2 of this Article on which any payment shall fall
due hereunder, with the exception of the payment of the first and second instalments,
the BUILDER shall notify the BUYER by facsimile of the date such payment shall
become due.

 

The BUYER shall immediately acknowledge receipt of such
notification by facsimile to the BUILDER, and make payment as set forth in this
Article. If the BUILDER fails to receive the BUYER’s said acknowledgement
within three (3) days after sending the aforementioned notification, the
BUILDER shall promptly facsimile to the BUYER a second notification of similar
import. The BUYER shall immediately acknowledge by facsimile receipt of the

 

34

 

foregoing second notification regardless of whether or not
the first notification was acknowledged as aforesaid.

 

4.                 METHOD
OF PAYMENT

 

(a)           All the pre-delivery
payments and the payment due on delivery in settlement of the CONTRACT PRICE as
provided for in Paragraph 2 of this Article shall be made in U.S. Dollars
on or before the DUE DATE thereof by telegraphic transfer as follows ;

 

(i)                                    The
payment of the first, second, third and fourth instalments shall be made to the
account of the BUILDER with a bank to be duly designated by the BUILDER, in
Korea (the “BUILDER’S BANK”) or any other bank by telegraphic transfer
remittance at least two(2) business days prior to the DUE DATE notified by
the BUILDER.

 

(ii)                                 The
fifth instalment as provided for in Paragraph 2.(f) of this
Article shall be deposited at the BUILDER’S BANK in the name of the Buyer
or, if the BUILDER requires, with any other bank in the name of the Byuer by
telegraphic transfer remittance at least two (2) business days prior to
the scheduled delivery date of the VESSEL notified by the BUILDER, with
instructions that the said instalment is payable to the BUILDER against
presentation by the BUILDER to the BUILDER’S BANK or any other bank, as the
case may be, of a duplicate original copy of the PROTOCOL OF DELIVERY AND
ACCEPTANCE of the VESSEL signed by the BUILDER and the BUYER.

 

(b)           Simultaneously with each of
such payments, the BUYER shall advise the BUILDER of the details of the
payments by facsimile and at the same time, the BUYER shall cause the BUYER’s
remitting Bank to advise the BUILDER’S BANK or any other bank of the details of
such payments by authenticated bank cable or telex.

 

5.                 REFUND
BY THE BUILDER

 

The payments made by the BUYER to the BUILDER prior to
delivery of the VESSEL shall constitute advances to the BUILDER. If the VESSEL
is rejected by the BUYER in accordance with the terms of this CONTRACT, or
except in the case of rescission or rescission of this CONTRACT by the BUILDER
under the provisions of Article XI hereof,

 

35

 

if the BUYER terminates or rescinds this CONTRACT pursuant to
any of the provisions of this CONTRACT specifically permitting the BUYER to do
so, the BUILDER shall forthwith refund to the BUYER, in U.S. Dollars, the full
amount of total sums paid by the BUYER to the BUILDER in advance of delivery
together with interest thereon as herein provided.

 

The transfer and other bank charges of such refund shall be
for the BUILDER’s account. The interest rate of the refund, as above provided,
shall be seven per cent (7%) per annum from the date following the date of
receipt by the BUILDER of the pre-delivery instalment(s) to the date of
remittance by telegraphic transfer of such refund, provided, however, that if
the cancellation of this CONTRACT by the BUYER is based upon delays due to
force majeure or other causes beyond the control of the BUILDER as provided for
in Article VIII hereof, then in such event, the interest rate of refund
shall be reduced to six point five per cent (6.5%) per annum.

 

It is hereby understood by both parties that payment of any
interest provided herein is by way of liquidated damages due to rescission of
this CONTRACT and not by way of compensation for use of money.

 

If, the BUILDER is required to refund to the BUYER the
instalments paid by the BUYER to the BUILDER as provided in this Paragraph, the
BUILDER shall return to the BUYER all of the BUYER’s supplies as stipulated in
Article XII which were not incorporated into the VESSEL and pay to the
BUYER an amount equal to the cost to the BUYER of those supplies incorporated
into the VESSEL.

 

6.                 TOTAL
LOSS

 

If there is a total loss or a constructive total loss of the
VESSEL prior to delivery thereof, the BUILDER shall proceed according to the
option of the Buyer hereto either:

 

(a)            to build another vessel in
place of the VESSEL so lost and deliver it under this CONTRACT to the BUYER,
provided that the parties hereto shall have agreed in writing to a reasonable cost
and time for the construction of such vessel in place of the lost VESSEL; or

 

(b)           to refund to the BUYER the
full amount of the total sums paid by the BUYER to the BUILDER under the
provisions of Paragraph 2 of this Article together with interest thereon
at the rate of six point five per cent (6.5%) per annum from the date following

 

36

 

the
date of receipt by the BUILDER of such pre-delivery instalment(s) to the date
of payment by the BUILDER to the BUYER of the refund.

 

If
the parties hereto fail to reach such agreement within two (2) months
after the VESSEL is determined to be a total loss or constructive total loss,
the provisions of (b) hereinabove shall be applied.

 

7.                 DISCHARGE
OF OBLIGATIONS

 

Such refund as provided in the foregoing Paragraphs 5 and 6
by the BUILDER to the BUYER shall forthwith discharge all the obligations,
duties and liabilities of each of the parties hereto to the other except the
claims of the BUILDER against the BUYER, if any, under this CONTRACT. Any and
all refunds or payments due to the BUYER under this CONTRACT shall be effected
by telegraphic transfer to the account specified by the BUYER.

 

8.                 REFUND
GUARANTEE

 

The
BUILDER shall deliver to the BUYER by hard copy or by SWIFT through the BUYER’s
bank, acceptable to the BUILDER, an assignable letter of guarantee issued by a
Bank acceptable to the Buyer as soon as possible but in any case no later than
Ninety (90) days from the date of this CONTRACT for the refund of the
pre-delivery instalments plus interest as aforesaid to the BUYER under or
pursuant to Paragraph 5 above in the form annexed hereto as
Exhibit “A”. All expenses in issuing and maintaining the letter of
guarantee described in this Paragraph shall be borne by the BUILDER. In case of
SWIFT, the BUYER shall advise the BUILDER of the details of the BUYER’s bank
including the SWIFT address upon execution of this CONTRACT.

 

9.                 PERFORMANCE
GUARANTEE

 

Upon
signing this CONTRACT, the BUYER shall provide the BUILDER with an irrevocable
and Corporate Guarantee pursuant to the Terms and Provisions of this Contract
issued by a Corporate Guarantor acceptable to the BUILDER for the due and
faithful performance by the BUYER of all its liabilities and responsibilities
under the CONTRACT including, but not limited to, the payment of the CONTRACT
PRICE and taking delivery of the VESSEL, in the form annexed hereto as
Exhibit “B”.

 

(End of Article)

 

37

 

ARTICLE XI
: BUYER’S DEFAULT

 

1.                 DEFINITION
OF DEFAULT

 

The
BUYER shall be deemed to be in default under this CONTRACT in the following
cases :

 

(a)            If the first, second, third
and fourth instalment is not paid to the BUILDER within respective Three
(3) banking days of such instalments; or

 

(b)           If the fifth instalment is
not deposited at the BUILDER’S BANK or at the account of the BUILDER with any
other bank in accordance with Article X.4.(a)(ii) hereof or if the
said fifth instalment deposit is not released to the BUILDER against
presentation by the BUILDER of a duplicate original copy of the PROTOCOL OF
DELIVERY AND ACCEPTANCE; or

 

(c)            If the BUYER fails to take
delivery of the VESSEL when the VESSEL is duly tendered for delivery by the
BUILDER within Three (3) banking days under the provisions of
Article VII hereof; or

 

(d)           If and order or an effective
resolution shall be passed for winding up of the BUYER (except for the purpose
of reorganization, merger or amalgamation); or

 

(e)            If the BUYER fails to be in
punctual, due and full compliance with any of its obligations under this
CONTRACT.

 

In case the BUYER is in default of any of its obligations
under this CONTRACT, the BUILDER is entitled to and shall have the following
rights, powers and remedies in addition to such other rights, powers and
remedies as the BUILDER may have elsewhere in this CONTRACT and/or at law,
at equity or otherwise.

 

2.                 EFFECT
OF THE BUYER’S DEFAULT ON OR BEFORE THE DELIVERY OF THE VESSEL

 

If
the BUYER shall be in default as provided in Paragraph 1 above of its
obligations under this CONTRACT, then;

 

38

 

(a)            The DELIVERY DATE of the
VESSEL shall be extended automatically for the actual period of such default
and the BUILDER shall not be obliged to pay any liquidated damages for the
delay in delivery of the VESSEL caused thereby.

 

(b)           The BUYER shall pay to the
BUILDER interest at the rate of seven per cent (7%) per annum in respect of the
instalment(s) in default from the respective DUE DATE to the date of actual
receipt by the BUILDER of the full amount of such instalment(s).

 

(c)            If the BUYER is in default
in payment of any of the instalment(s) due and payable prior to or
simultaneously with the delivery of the VESSEL, the BUILDER shall, in writing
or by facsimile, notify the BUYER to that effect, and the BUYER shall, upon
receipt of such notification, forthwith acknowledge in writing or by facsimile
to the BUILDER that such notification has been received.

 

(d)           If any of the BUYER’s
default continues for a period of ten(10) days after the BUILDER’s
notification to the BUYER of such default, the BUILDER may, at its option,
rescind this CONTRACT by serving upon the BUYER a written notice or a facsimile
notice of rescission confirmed in writing.

 

(e)           In the event of such
rescission by the BUILDER of this CONTRACT due to the BUYER’s default as
provided for in paragraph 1 above, the BUILDER shall be entitled to retain and
apply the instalments already paid by the BUYER to the recovery of the
BUILDER’s loss and damage including, but not being limited to, reasonable
estimated profit due to the BUYER’s default and the rescission of this CONTRACT
and at the same time the BUILDER shall have the full right and power either to
complete or not to complete the VESSEL which is the sole property of the
BUILDER as it deems fit, and to sell the VESSEL at a public or private sale on
such terms and conditions as the BUILDER thinks fit without being answerable
for any loss or damage.

 

The proceeds received by the BUILDER from the sale shall be
applied in addition to the instalment(s) retained by the BUILDER as mentioned
hereinabove as follows : -

 

First,                           in
payment of all reasonable costs and expenses of the sale of the VESSEL,
including interest thereon at seven per cent (7%) per annum from the respective
date of payment of such costs and expenses aforesaid to the date of sale on
account of the BUYER’s default.

 

39

 

Second,           if the VESSEL has been
completed, in or towards satisfaction of the unpaid balance of the CONTRACT
PRICE, to which shall be added the cost of all additional work and extras
agreed by the BUYER including interest thereon at seven per cent (7%) per annum
from the respective DUE DATE of the instalment in default to the date of sale,
or if the VESSEL has not been completed, in or towards satisfaction of the
unpaid amount of the cost incurred by the BUILDER prior to the date of sale on
account of construction of the VESSEL, including work, labour, materials and
reasonably estimated profit which the BUILDER would have been entitled to
receive if the VESSEL had been completed and delivered plus interest thereon at
seven per cent (7%) per annum from the respective DUE DATE of the instalment in
default to the date of sale.

 

Third,                      the
balance of the proceeds, if any, shall belong to the BUYER, and shall forthwith
be paid over to the BUYER by the BUILDER.

 

In the event of the proceeds from the sale together with
instalment(s) retained by the BUILDER being insufficient to pay the BUILDER,
the BUYER shall be liable for the deficiency and shall pay the same to the
BUILDER upon its demand.

 

(End of Article)

 

40

 

ARTICLE XII
: BUYER’S SUPPLIES

 

1.                 RESPONSIBILITY
OF THE BUYER

 

The
BUYER shall, at its own risk, cost and expense, supply all the BUYER’s supplies
as specified in Paragraph 0.16.1 of the SPECIFICATIONS (hereinafter called the
“BUYER’S SUPPLIES”), to the BUILDER at the SHIPYARD in proper condition ready
for installation and in accordance with the time schedule to be furnished
by the BUILDER sixty
(60) days from signing this Contract.

 

In order to facilitate the installation of the BUYER’S
SUPPLIES by the BUILDER, the BUYER shall furnish the BUILDER with the necessary
plans, instruction books, test report and all test certificates required by the
BUILDER and shall cause the representative(s) of the makers of the BUYER’S
SUPPLIES to give the BUILDER any advice, instructions or assistance which the
BUILDER may reasonably require in the installation or adjustment thereof
at the SHIPYARD, all without cost or expense to the BUILDER.

 

The BUYER shall be liable for any expense incurred by the
BUILDER for repair of the BUYER’S SUPPLIES due to defective design or
materials, poor workmanship or performance or due to damage in transit and the
DELIVERY DATE of the VESSEL shall be extended for the period of such repair if
such repair shall affect the delivery of the VESSEL.

 

Commissioning into good order of the BUYER’S SUPPLIES during and
after installation on board shall be made at the BUYER’s expense by the
representative of respective maker or the person designated by the BUYER in
accordance with the BUILDER’s building schedule.

 

Should the BUYER fail to deliver to the BUILDER the BUYER’S
SUPPLIES and the necessary document or advice for such supplies within the time
specified by the BUILDER, the DELIVERY DATE of the VESSEL shall automatically
be extended for the period of such delay if such delay in delivery shall affect
the delivery of the VESSEL. In such event, the BUYER shall pay to the BUILDER
all losses and damages sustained by the BUILDER due to such delay in the
delivery of the BUYER’S SUPPLIES and such payment shall be made upon delivery
of the VESSEL, provided, however, that the BUILDER shall have :

 

41

 

(a)            furnished the BUYER with the
time schedule referred to above, two (2) months prior to installation
of the BUYER’S SUPPLIES and

 

(b)           given the BUYER written
notice of any delay in delivery of the BUYER’S SUPPLIES and the necessary
document or advice for such supplies as soon as the delay occurs which might
give rise to a claim by the BUILDER under this Paragraph.

 

Furthermore, if the delay in delivery of the BUYER’S SUPPLIES
and the necessary document or advice for such supplies should exceed twenty
(20) days from the date specified by the BUILDER, the BUILDER shall be entitled
to proceed with construction of the VESSEL without installation of such items
(regardless of their nature or importance to the BUYER or the VESSEL) in or on
the VESSEL without prejudice to the BUILDER’s right hereinabove provided, and
the BUYER shall accept the VESSEL so completed.

 

2.                 RESPONSIBILITY
OF THE BUILDER

 

The
BUILDER shall be responsible for storing, safekeeping and handling with
reasonable care of the BUYER’S SUPPLIES which the BUILDER is required to
install on board the VESSEL under Paragraph 0.16.1 of the SPECIFICATIONS after
delivery of such supplies to the SHIPYARD, and shall install such supplies on
board the VESSEL at the BUILDER’s expense unless otherwise specified in the
SPECIFICATIONS.

 

However, the BUILDER shall not be responsible for the
quality, performance or efficiency of any equipment included in the BUYER’S
SUPPLIES and is under no obligation with respect to the guarantee of such
equipment against any defects caused by poor quality, performance or efficiency
of the BUYER’S SUPPLIES. If any of the BUYER’S SUPPLIES is lost or damaged
while in the custody of the BUILDER, the BUILDER shall, if the loss or damage
is due to wilful default or negligence on its part, be responsible for such
loss or damage.

 

(End of Article)

 

42

 

ARTICLE XIII
- INSURANCE

 

1.                          EXTENT OF INSURANCE COVERAGE

 

From the time of launching until
delivery of the VESSEL, the BUILDER shall, at its own cost and expense, insure
the VESSEL and all machinery and equipment, appurtenances and outfits,
including the BUYER’s Supplies, built into or installed in or upon the VESSEL, against
all risks under the “Institute Causes for BUILDER’s Risk”, with first
class insurance company or underwriters in.

 

The amount of such insurance coverage
shall, up to the date of delivery of the VESSEL, not be less than the aggregate
amount of all instalments paid by the BUYER to the BUILDER, plus the value of
the BUYER’s Supplies in the custody of the Shipyard.

 

The BUILDER shall provide the copy of corresponding
insurance coverage of the VESSEL to the BUYER.

 

2.                          TERMINATION OF BUILDER’S
OBLIGATION TO INSURE

 

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

 

 

(End
of Article)

 

43

 

ARTICLE XIV:
ARBITRATION

 

1.                 APPOINTMENT
OF THE ARBITRATOR

 

If any dispute or difference shall arise between the parties
hereto concerning any matter or thing herein contained, or the operation or the
design and / or construction of the VESSEL, its machinery and equipment
thereof, or any matter or thing in any way connected with this CONTRACT or the
rights, duties or liabilities of either party under or in connection with this
CONTRACT, then, in every such case, the dispute or difference shall be referred
to arbitration in London by a sole arbitrator. The arbitrator shall be
appointed by agreement within fourteen (14) days of first written notification
of either party to the other of intention to arbitrate such dispute or
difference, or in default of such agreement, upon the application of either of
the parties, by the President for the time being of the London Maritime
Arbitrators Association who shall in making any such appointment have due
regard to the requirement for an expeditious resolution of the dispute and in
particular the availability of any arbitrator so appointed for an early hearing
date.

 

2.                 LAWS
APPLICABLE

 

Any arbitration arising hereunder shall be governed by and
construed in accordance with the Arbitration Act 1996 of England or any
statutory modification or re-enactments thereof for the time being in force.
The award of the arbitrator shall be final and binding upon parties hereto.

 

3.                 PROCEEDINGS

 

In the event of any dispute or difference arising or
occurring prior to delivery to, or acceptance by, the BUYER of the VESSEL being
referred to arbitration, the parties hereby acknowledge that time is of the
essence in obtaining an award from the arbitrator on such dispute or difference
and the parties hereby agree that the arbitration shall be conducted according
to the following timetable:

 

(a)           The claimant in the
arbitration to serve points of claim within fourteen (14) days of the
appointment of the arbitrator.

 

(b)          The respondent in the
arbitration to serve points of defence and points of counterclaim,

 

44

 

if
any, within fourteen (14) days thereafter.

 

(c)        The claimant to serve points
of reply and defence to counterclaim, if any, within seven (7) days
thereafter and the hearing of the arbitration to commence within twelve (12)
weeks of the appointment of the arbitrator.

 

4.                 ALTERATION
OF DELIVERY OF THE VESSEL

 

In the event of the arbitration of any dispute or difference
arising or occurring prior to delivery to, or acceptance by the BUYER of the
VESSEL, the award by the arbitrator shall include a finding as to whether or
not the contractual delivery date of the VESSEL should, as a result of such
dispute, be in any way altered thereby.

 

5.                 NOTICE OF AWARD

 

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

 

6.                 EXPENSES

 

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

 

7.                 ENTRY IN COURT

 

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

 

(End of Article)

 

45

 

ARTICLE XV:
SUCCESSORS AND ASSIGNS

 

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

 

The BUYER is hereby allowed to assign the Contract for the
purposes of financing without BUILDER’S approval. However, the BUYER shall
remain responsible for performance by the assignee, its successors and assigns
of all the BUYER’s obligations, liabilities and responsibilities under this
CONTRACT. It is understood that any expenses or charges incurred due to the
transfer of this CONTRACT shall be for the account of the BUYER. The BUYER is
further allowed to nominate a company controlled by the BUYER to take over the
Contract.

 

The BUILDER shall fully
cooperate in case the BUYER requests UK Tax lease financing arrangements. However,
the BUYER shall remain responsible for performance by the assignee, its
successors and assigns of all the BUYER’s obligations, liabilities and
responsibilities under this CONTRACT. It is understood that any expenses or
charges incurred due to the transfer of this CONTRACT shall be for the account
of the BUYER.

 

The BUILDER shall have the
right to assign this CONTRACT at any time after the effective date hereof,
provided that prior written agreement is obtained from the BUYER.

 

(End of Article)

 

46

 

ARTICLE XVI:
TAXES AND DUTIES

 

1.                 TAXES

 

Unless otherwise expressly provided for in this CONTRACT, all
costs and taxes including stamp duties, if any, incurred in or levied by any
country except Korea in connection with this CONTRACT shall be borne by the
BUYER and corresponding costs and taxes in Korea, before delivery of the
VESSEL, if any, shall be borne by the BUILDER.

 

2.                 DUTIES

 

The BUILDER shall hold the BUYER harmless from any payment of
duty imposed in Korea upon materials or supplies which, under the terms of this
CONTRACT, or amendments thereto, may be supplied by the BUYER from abroad
for the construction of the VESSEL.

 

The BUILDER shall likewise hold the BUYER harmless from any
payment of duty imposed in Korea in connection with materials or supplies for
operation of the VESSEL, including running stores, provisions and supplies
necessary to stock the VESSEL for its operation. This indemnity does not,
however, extend to any items purchased by the BUYER for use in connection with
the VESSEL which are not absolutely required for the construction or operation
of the VESSEL.

 

(End of Article)

 

47

 

ARTICLE XVII:
PATENTS, TRADEMARKS AND COPYRIGHTS

 

1.                 PATENTS,
TRADEMARKS AND COPYRIGHTS

 

Machinery and equipment of the VESSEL, whether made or
furnished by the BUILDER under this CONTRACT, may bear the patent numbers,
trademarks, or trade names of the manufacturers. The BUILDER shall defend and
save harmless the BUYER from all liabilities or claims for or on account of the
use of any patents, copyrights or design of any nature or kind, or for the
infringement thereof including any unpatented invention made or used in the
performance of this CONTRACT and also for any costs and expenses of litigation,
if any in connection therewith. No such liability or responsibility shall be
with the BUILDER with regard to components and/or equipment and/or design
supplied by the BUYER.

 

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

 

2.                 RIGHTS
TO THE SPECIFICATIONS, PLANS, ETC.

 

The
BUILDER retains all rights with respect to the SPECIFICATIONS, plans and
working drawings, technical descriptions, calculations, test results and other
data, information and documents concerning the design and construction of the
VESSEL and the BUYER shall not disclose the same or divulge any information
contained therein to any third parties, including but not limited to any other
shipbuilders, without the prior written consent of the BUILDER, excepting where
it is necessary for usual operation, repair and maintenance of the VESSEL.

 

(End of Article)

 

48

 

ARTICLE XVIII:
INTERPRETATION AND GOVERNING LAW

 

This CONTRACT has been
prepared in English and shall be executed in duplicate and in such number of
additional copies as may be required by either party respectively. The
parties hereto agree that the validity and interpretation of this CONTRACT and
of each Article and part thereof shall be governed by the laws of
England.

 

(End of Article)

 

49

 

ARTICLE XIX
: NOTICE

 

Any and all notices,
requests, demands, instructions, advices and communications in connection with
this CONTRACT shall be written in English, sent by registered air mail or
facsimile and shall be deemed to be given when first received whether by
registered mail or facsimile. They shall be addressed as follows, unless and
until otherwise advised : -

 

	
  To the BUILDER :

  	
  Sungdong Shipbuilding & Marine Engineering Co.,
  Ltd.

  
	
   

  	
  1609-2, Hwang-li,
  Gwangdo-myeon, Tongyoung-si,

  
	
   

  	
  Gyeongnam, Korea

  
	
   

  	
   

  
	
   

  	
  Contract Administration
  Department

  
	
   

  	
  Attn : Mr. S. K. Ahn

  
	
   

  	
  Facsimile: (82) 55 650
  9294

  
	
   

  	
  Telephone: (82) 55 650
  9311

  
	
   

  	
   

  
	
  To
  the BUYER :

  	
  Danaos Shipping Co., Ltd.

  
	
   

  	
  Akti Kondyli 14, 185 45 Piraeus, Greece

  
	
   

  	
  Attn : Mr. Dimitrios
  Vastarouchas

  
	
   

  	
  Facsimile : (30) 210 422
  0855

  
	
   

  	
  Telephone: (30) 210 419
  6529

  

 

The said notices shall
become effective upon receipt of the letter or facsimile communication by the
receiver thereof. Where a notice by facsimile is concerned which is required to
be confirmed by letter, then, unless the CONTRACT or the relevant
Article thereof otherwise requires, the notice shall become effective upon
receipt of the facsimile.

 

(End of Article)

 

50

 

ARTICLE XX
: EFFECTIVENESS OF THIS CONTRACT

 

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

 

(End of Article)

 

51

 

ARTICLE XXI
- INTERPRETATION

 

1.                          LAWS APPLICABLE

 

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

 

2.                          DISCREPANCIES

 

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

 

3.                          ENTIRE AGREEMENT

 

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

 

4.                          AMENDMENTS AND SUPPLEMENTS

 

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

 

The Contract can only be amended in
writing.

 

(End of Article)

 

52

 

ARTICLE XXII
: EXCLUSIVENESS

 

This CONTRACT shall
constitute the only and entire agreement between the parties hereto, and unless
otherwise expressly provided for in this CONTRACT, all other agreements, oral
or written, made and entered into between the parties prior to the execution of
this CONTRACT shall be null and void.

 

(End of Article)

 

53

 

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

 

 

	
  BUYER

  	
  BUILDER

  
	
   

  	
   

  
	
   

  	
   

  
	
  For and on behalf of

  	
  For and on behalf of

  
	
  BOXCARRIER (NO.4) CORP.

  	
  SUNGDONG
  SHIPBUILDING &

  
	
   

  	
  MARINE ENGINEERING
  CO.,LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By

  	
  /s/ John Coustas

  	
   

  	
  By

  	
  /s/ Kwan Hong Yu

  	
   

  
	
  Name: John Coustas

  	
  Name: Kwan Hong Yu

  
	
  Title:

  	
  Title:

  
	
  President & Chief
  Executive Officer

  	
  Chairman & Chief
  Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
  WITNESS : /s/ Heung Chul
  Jung, Attorney-in-fact

  	
  WITNESS: [Illegible]

  
	
   

  	
   

  
						

 

54

 

EXHIBIT “A”

 

LETTER OF
REFUNDMENT GUARANTEE

 

Gentlemen
:

 

We
hereby issue our letter of guarantee
no.             in
favour of                   
(hereinafter called the “BUYER”) for account of
                  
(hereinafter called the “BUILDER”) as follows in consideration of the
shipbuilding contract dated (hereinafter called the “Contract”) made by and
among the BUYER and the BUILDER for the construction of one(1) single
screw diesel engine driven Container VESSEL having BUILDER’s Hull
No. (hereinafter called the “VESSEL”).

 

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

 

The
amount of this guarantee will be automatically increased, not more than three
times, upon BUILDER’s receipt of the respective instalment: each time by the amount
of instalment of US$ (Say U.S. Dollars), US$.- (Say U.S. Dollars) and US$.-
(Say U.S. Dollars) respectively plus interest thereon as provided in the
Contract, but in any eventuality the amount of this guarantee shall not exceed
the total sum of US$.- (Say U.S. Dollars plus interest thereon at the rate of
Seven (7) percent per annum from the respective dates on which such sums
were paid by the BUYER to the BUILDER to the date of remittance by telegraphic
transfer of the refund. However, in the event of cancellation of the CONTRACT
being based on delays due to force majeure or other causes beyond the control
of the BUILDER, the interest rate of refund shall be reduced to six point five
per cent (6.5%) per annum as provided in Article X of the CONTRACT.

 

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

 

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

 

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

 

1

 

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

 

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

 

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

 

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

 

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

 

 

 

 

 

 

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

 

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

 

2

 

                                                             as
our agents for service of process in connection with any proceedings in such
courts.

 

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

 

IN
WITNESS WHEREOF, we have hereunder set our hands and seal by our duly
authorized representatives this
          day of
               ,
2006.

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  For
  and on behalf of

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
  Name
  :

  
	
   

  	
  Title
  : Attorney-in-Fact

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  For
  and on behalf of

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
  Name
  :

  
	
   

  	
  Title
  : Attorney-in-Fact

  

 

3

 

EXHIBIT “B”

 

 

Date
:             , 2006

 

PERFORMANCE GUARANTEE

 

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

 

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

 

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

 

 

	
  GUARANTOR
  :

  
	
  BY
  :

  	
   

  	
   

  
	
  TITLE :

  
	
  WITNESS
  :

  

 

4Exhibit 10.31

 

SHIPBUILDING
CONTRACT

 

 

FOR

 

 

THE
CONSTRUCTION AND SALE OF

 

ONE
(1) 6,500 TEU CLASS CONTAINER CARRIER

 

 

HULL
NO. S4005

 

 

BETWEEN

 

 

BOXCARRIER
(NO.5) CORP.

 

 

(AS
BUYER)

 

 

AND

 

 

SUNGDONG
SHIPBUILDING & MARINE ENGINEERING CO., LTD.

 

(AS
BUILDER)

 

 

 

I N D E X

 

	
   

  	
   

  	
  PAGE

  
	
  PREAMBLE

  	
   

  	
  1

  
	
   

  	
   

  	
   

  
	
  ARTICLE     I

  	
  : DESCRIPTION AND CLASS

  	
  2

  
	
   

  	
   

  	
   

  
	
   

  	
  II

  	
  : CONTRACT PRICE

  	
  5

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  III

  	
  : ADJUSTMENT OF THE
  CONTRACT PRICE

  	
  6

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  IV

  	
  : INSPECTION AND
  APPROVAL

  	
  10

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  V

  	
  : MODIFICATIONS,
  CHANGES AND EXTRAS

  	
  15

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  VI

  	
  : TRIALS AND COMPLETION

  	
  18

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  VII

  	
  : DELIVERY

  	
  22

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  VIII

  	
  : DELAYS AND EXTENSIONS
  OF TIME (FORCE MAJEURE)

  	
  25

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  IX

  	
  : WARRANTY OF QUALITY

  	
  28

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  X

  	
  : PAYMENT

  	
  33

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  XI

  	
  : BUYER’S DEFAULT

  	
  38

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  XII

  	
  : BUYER’S SUPPLIES

  	
  41

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  XIII

  	
  : INSURANCE

  	
  43

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  XIV

  	
  : ARBITRATION

  	
  44

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  XV

  	
  : SUCCESSORS AND
  ASSIGNS

  	
  46

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  XVI

  	
  : TAXES AND DUTIES

  	
  47

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  XVII

  	
  : PATENTS, TRADEMARKS
  AND COPYRIGHTS

  	
  48

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  XVIII

  	
  : INTERPRETATION AND
  GOVERNING LAW

  	
  49

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  XIX

  	
  : NOTICE

  	
  50

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  XX

  	
  :EFFECTIVENESS OF THIS
  CONTRACT

  	
  51

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  XXI

  	
  : INTERPRETATION

  	
  52

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  XXII

  	
  :EXCLUSIVENESS

  	
  53

  

 

SCHEDULES

 

EXHIBIT “A”  REFUND GUARANTEE LETTER OF REFUNDMENT
GUARANTEE

 

EXHIBIT “B”  PERFORMANCE GUARANTEE

 

 

SHIPBUILDING
CONTRACT

 

THIS CONTRACT, made on this
26 day of July, 2006 by and between BOXCARRIER (NO.5) CORP. , a corporation
incorporated and existing under the laws of Republic of Liberia with its
registered office at 80 Broad Street, Monrovia, Liberia (hereinafter called the
“BUYER”), the party of the first part and Sungdong Shipbuilding &
Marine Engineering Co., Ltd., a company organized and existing under the laws
of the Republic of Korea, having its registered office at 1609-2, Hwang-li,
Gwangdo-myeon, Tongyoung-si, Gyeongnam, 650-827, Korea (hereinafter called the
“BUILDER”), the party of the second part,

 

W I T N E S S E T H
:

 

In consideration of the
mutual covenants contained herein, the BUILDER agrees to design, build, launch,
equip and complete in accordance with the Sung Dong Shipbuilding &
Marine Engineering Quality Standard one (1) Single Screw Diesel Engine
driven Container VESSEL as described in the Specifications as described in
Article I hereof (hereinafter called the “VESSEL”) at the BUILDER’s yards
in Korea (hereinafter called the “SHIPYARD”) and to deliver and sell the VESSEL
to the BUYER, and the BUYER agrees to accept delivery of and purchase from the
BUILDER the VESSEL, according to the terms and conditions hereinafter set forth
:

 

(End of Preamble)

 

1

 

ARTICLE I :
DESCRIPTION AND CLASS

 

1.                        DESCRIPTION

 

The
VESSEL shall have the BUILDER’s Hull No. S4005 and shall be built,
constructed, equipped and completed in accordance with the specifications
No. SD-DN-6500T.CN.FS-01 dated July 26, 2006 and the general
arrangement plan No. SD-DN-6500T.CN.GA-01 dated July 26, 2006
attached thereto and the ‘Maker List’ No. SD-DN-6500T.CN.ML-01 dated
July 26, 2006 (hereinafter called respectively the “SPECIFICATIONS” and
the “PLAN”) signed by both parties, which shall constitute an integral
part of this CONTRACT although not attached hereto.

 

The
SPECIFICATIONS and the PLAN are intended to explain each other and anything
shown on the PLAN and not stipulated in the SPECIFICATIONS or anything
stipulated in the SPECIFICATIONS and not shown on the PLAN shall be deemed and
considered as if included in both. Should there be any inconsistencies or
contradictions between the SPECIFICATIONS and the PLAN, the SPECIFICATIONS
shall prevail. Should there be any inconsistencies or contradictions between
this CONTRACT and the SPECIFICATIONS, this CONTRACT shall prevail.

 

2.                        BASIC
DIMENSIONS AND PRINCIPAL PARTICULARS OF THE VESSEL

 

(a)                   The
basic dimensions and principal particulars of the VESSEL shall be :

 

	
  Length, overall

  	
  about

  	
  300.0

  	
   

  	
  M

  
	
  Length, between perpendiculars

  	
  286.6

  	
   

  	
  M

  
	
  Breadth, moulded

  	
  40.0

  	
   

  	
  M

  
	
  Depth to Upper Deck, moulded

  	
  24.2

  	
   

  	
  M

  
	
   

  	
   

  	
   

  	
   

  
	
  Design draft, moulded, in seawater of specific
  gravity of 1.025

  	
  12.0

  	
   

  	
  M

  
	
  Scantling draft, moulded, in seawater of specific
  gravity of 1.025

  	
  14.5

  	
   

  	
  M

  
	
   

  	
   

  	
   

  	
   

  
	
  Deadweight guaranteed on the above moulded design
  draft of 12.0 M

  	
  59,000

  	
   

  	
  M/T

  

 

2

 

	
  Deadweight on the above moulded scantling draft of
  14.5 M

  	
  83,300  

  	
   

  	
  M/T

  
	
   

  	
   

  	
   

  	
   

  
	
  Main propulsion engine

  	
  MAN B&W 10K98MC-C

  
	
   

  	
  MCR :

  	
  77,600 PS x 104 RPM

  
	
   

  	
  NCR :

  	
  69,840 PS x 100.4 RPM

  
	
   

  
	
  Speed guaranteed at 12.0meters design draft at the
  condition of clean bottom and in calm and deep sea with main engine
  developing a NCR of 69,840 PS with fifteen per cent (15%) sea margin

  	
   

  	
  25.6 KNOTS

  
	
   

  	
   

  	
   

  
	
  Specific Fuel consumption guaranteed of the main
  engine applying I.S.O. reference conditions to the result of official shop
  test at a MCR of 77,600 PS using marine fuel oil having lower calorific value
  of 10,200 Kcal per Kg.

  	
   

  	
  126.0 gr/BHP.HR

  
							

 

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

 

(b)                  All
other vessels Hull Number S4002, S4003, S4004 and S4005 shall be built as
identical sister ships unless a modification to a design is agreed upon.

 

3.                 CLASSIFICATION,
RULES AND REGULATIONS 

 

(a)            The VESSEL
including its machinery, equipment and outfittings shall be built in compliance
with the rules and regulations of Det Norske Veritas (hereinafter called
the “CLASSIFICATION SOCIETY”), in force as of the date of this CONTRACT, to be
classed and registered as +1A, CONTAINER CARRIER, EO, BIS, TMON, NAUTICUS
(NEWBUILDING) and also to comply with the rules and regulations, in force
as of the date of this CONTRACT, as described in the SPECIFICATIONS. Provided
that the BUILDER shall have an option to declare the CLASSIIFICATION SOCIETY as
either equivalent Lloyd Register of Shipping or Det Norske Veritas within three
(3) month after signing of this CONTRACT.

 

(b)           The BUILDER shall arrange
with the CLASSIFICATION SOCIETY for the assignment by the CLASSIFICATION
SOCIETY of representative(s) to the VESSEL during

 

3

 

construction.
All fees and charges incidental to classification of the VESSEL in compliance
with the above specified rules, regulations and requirements of this CONTRACT
shall be for the account of the BUILDER.

 

(c)            The decision of the
CLASSIFICATION SOCIETY as to whether the VESSEL complies with the regulations
of the CLASSIFICATION SOCIETY shall be final and binding upon the BUILDER and
the BUYER.

 

Details of its notation shall be in
accordance with the SPECIFICATIONS.

 

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

 

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

 

4.                 SUBCONTRACTING

 

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

 

5.                 NATIONALITY
OF THE VESSEL

 

The
VESSEL shall be registered by the BUYER at its own cost and expense under the
laws of either Greece or Cyprus or Bahamas or Marshall Islands or Panama or
Liberia with its home port of either Piraeus or Limassol or Nassau or Majuro or
Panama or Monrovia at the time of its delivery and acceptance hereunder
provided that the BUYER may in its sole discretion declare the VESSEL’S
flag and registration within four (4) months after the signing of the
CONTRACT. In the case that the BUYER declares the VESSEL’S flag and
registration to the Greece, the BUYER should pay the extra cost.

 

(End of Article)

 

4

 

ARTICLE II
: CONTRACT PRICE

 

The contract price of the
VESSEL delivered to the BUYER at the SHIPYARD shall be United States Dollars
Ninety One Million Five Hundred Thousand (US$ 91,500,000) (hereinafter called
the “CONTRACT PRICE”) which shall be paid plus any increases or less any
decreases due to adjustment or modifications, if any, as set forth in this
CONTRACT. The above CONTRACT PRICE shall include payment for services in the
inspection, tests, survey and classification of the VESSEL which will be
rendered by the CLASSIFICATION SOCIETY and shall not include the cost of the
BUYER’s supplies as stipulated in Article XII.

 

The CONTRACT PRICE also
includes all costs and expenses for supplying all necessary drawings as
stipulated in the SPECIFICATIONS except those to be furnished by the BUYER for
the VESSEL in accordance with the SPECIFICATIONS.

 

(End of Article)

 

5

 

ARTICLE III
: ADJUSTMENT OF THE CONTRACT PRICE

 

The CONTRACT PRICE of the
VESSEL shall be adjusted as hereinafter set forth in the event of the following
contingencies. It is hereby understood by both parties that any adjustment of
the CONTRACT PRICE as provided for in this Article is by way of liquidated
damages and not by way of penalty.

 

1.                 DELAYED
DELIVERY

 

(a)            No adjustment shall be made
and the CONTRACT PRICE shall remain unchanged for the first thirty (30) days of
the delay in delivery of the VESSEL [ending as of 12 o’clock midnight Korean
Standard Time on the thirtieth (30th) day of delay] beyond the Delivery Date
calculated as provided in Article VII.1. hereof.

 

(b)           If delivery of the VESSEL is
delayed more than thirty (30) days beyond the date upon which the delivery is
due from the BUILDER under the terms of this CONTRACT, then, beginning at
midnight of the thirtieth (30th) day after such due date, the CONTRACT PRICE of
the VESSEL shall be reduced by U.S. Dollars Twenty Two Thousand only (US$
22,000.-) for each full day of delay.

 

However,
unless the parties agree otherwise, the total amount of deduction from the
CONTRACT PRICE shall not exceed the amount due to cover the delay of one
hundred and eighty (180) days after thirty (30) days of the delay in delivery
of the VESSEL at the rate of deduction as specified hereinabove.

 

(c)            But, if the delay in
delivery of the VESSEL continues for a period of more than two hundred and ten
(210) days beyond the date upon which the delivery is due from the BUILDER
under the terms of this CONTRACT then, in such event, and after such period has
expired, the BUYER may, at its option, rescind this CONTRACT by serving upon
the BUILDER a notice of rescission by facsimile to be confirmed by a registered
letter via airmail directed to the BUILDER at the address given in this
CONTRACT. Such rescission shall be effective as of the date the notice thereof
is received by the BUILDER. If the BUYER has not served the notice of
rescission after the aforementioned two hundred and ten (210) days delay in delivery,
the BUILDER may demand the BUYER to make an election in accordance with
Article VIII.3. hereof.

 

6

 

(d)           For the purpose of this
Article, the delivery of the VESSEL shall be deemed to be delayed when and if
the VESSEL, after taking into full account extension of the Delivery Date or
permissible delays as provided in Article V, VI, VIII, XI or elsewhere in
this CONTRACT, is delivered beyond the date upon which delivery would then be
due under the terms of this CONTRACT.

 

2.                 INSUFFICIENT
SPEED

 

(a)             The CONTRACT PRICE of the
VESSEL shall not be affected or changed, if the actual speed, as determined by
trial runs more fully described in Article VI hereof, is less than the
speed required under the terms of this CONTRACT and the SPECIFICATIONS provided
such deficiency in actual speed is not more than two-tenths (2/10) of a knot
below the guaranteed speed.

 

(b)            However, as for the
deficiency of more than two-tenths (2/10) of a knot in actual speed below the
speed guaranteed under this CONTRACT, the CONTRACT PRICE shall be reduced by
U.S. Dollars Two Hundred Thousand only (U.S.$ 200,000.-) for each full
one-tenth (1/10) of a knot in excess of the said two-tenths (2/10) of a knot of
deficiency in speed [fractions of less than one-tenth (1/10) of a knot shall be
regarded as a full one-tenth (1/10) of a knot]. However, unless the parties
agree otherwise, the total amount of reduction from the CONTRACT PRICE shall
not exceed the amount due to cover the deficiency of one (1) full knot
below the guaranteed speed at the rate of reduction as specified above.

 

(c)            If the deficiency in actual
speed of the VESSEL is more than seven point five-tenths (7.5/10) knot below
the speed guaranteed under this CONTRACT, then the BUYER, at its option, may,
subject to the BUILDER’s right to effect alterations or corrections as provided
in Article VI.5. hereof, rescind this CONTRACT or may accept the
VESSEL at a reduction in the CONTRACT PRICE as above provided for seven point
five-tenths (7.5/10) knot of deficiency only.

 

3.                 EXCESSIVE
FUEL CONSUMPTION

 

(a)            The CONTRACT PRICE shall not
be affected or changed by reason of the fuel consumption of the VESSEL’s main
engine, as determined by the engine manufacturer’s shop trial as per the SPECIFICATIONS
being more than the guaranteed fuel consumption of the VESSEL’s main engine, if
such excess is not more than five per cent (5%) over the guaranteed fuel
consumption.

 

7

 

(b)           However, as for the excess
of more than five per cent (5%) in the actual fuel consumption over the
guaranteed fuel consumption of the VESSEL’s main engine, the CONTRACT PRICE
shall be reduced by U.S. Dollars Two Hundred Thousand only (US$ 200,000.-) for
each full one per cent (1%) increase in fuel consumption in excess of the said
five per cent (5%) increase in fuel consumption [fractions of less than one per
cent (1%) shall be regarded as a full one per cent (1%)]. However, unless the
parties agree otherwise, the total amount of reduction from the CONTRACT PRICE
shall not exceed the amount due to cover the excess of nine per cent (9%) over
the guaranteed fuel consumption of the VESSEL’s main engine at the rate of
reduction as specified above.

 

(c)            If such actual fuel
consumption exceeds the guaranteed fuel consumption of the VESSEL’s main engine
by more than ten per cent (10%), the BUYER, at its option, may, subject to the
BUILDER’s right to effect alterations or corrections as specified in
Article VI.5. hereof, rescind this CONTRACT or may accept the VESSEL
at a reduction in the CONTRACT PRICE as above provided for the nine per cent (9%)
increase only.

 

4.                 DEADWEIGHT
BELOW CONTRACT REQUIREMENTS

 

(a)            The CONTRACT PRICE of the
VESSEL shall not be affected or changed, if actual deadweight, determined as
provided in this CONTRACT and the SPECIFICATIONS, is below the deadweight of 83,300
metric tons on the moulded design draft of 12.0 metres required by this
CONTRACT and the SPECIFICATIONS by an amount of 83,300 metric tons or less.
However, should the deficiency in the actual deadweight of the VESSEL be more
than 830 metric tons below the said required deadweight, then the CONTRACT
PRICE of the VESSEL shall be reduced for each full one (1) metric ton
[fractions of less than one (1) metric ton shall be disregarded] of
decreased deadweight in excess of 830 metric tons by the sum of U.S. Dollars One
Thousand One Hundred only (US$ 1,100.-) per metric ton.

 

However,
unless the parties agree otherwise, the total amount of deduction from the CONTRACT
PRICE shall not exceed the amount due to cover the deficiency of 2,000 metric
tons below the said required deadweight hereinabove.

 

(b)           If the deficiency in the
deadweight of the VESSEL is more than 2,000 metric tons below the said required
deadweight, then the BUYER, at its option, may, subject to the BUILDER’s right
to effect alterations or corrections without the BUYER’s prior

 

8

 

consent
as specified in Article VI.5. hereof, rescind this CONTRACT or may accept
the VESSEL at a reduction in the CONTRACT PRICE as above provided for metric
tons of deficiency only.

 

5.                 EFFECT
OF RESCISSION

 

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

 

(End of Article)

 

9

 

ARTICLE IV
: INSPECTION AND APPROVAL

 

1.                 APPOINTMENT
OF BUYER’S REPRESENTATIVE

 

The
BUYER shall timely despatch to and maintain at the SHIPYARD, at its own cost,
expense and risk, one or more representatives (hereinafter called the “BUYER’S
REPRESENTATIVE”), who shall be duly accredited in writing by the BUYER to
supervise adequately the construction by the BUILDER of the VESSEL, her
equipment and all accessories. Before the commencement of any item of work
under this CONTRACT, the BUILDER shall, whenever reasonably required,
previously exhibit, furnish to, and within the limits of the BUYER’S
REPRESENTATIVE’s authority, secure the approval from the BUYER’S REPRESENTATIVE
of any and all plans and drawings prepared in connection therewith. Upon
appointment of the BUYER’S REPRESENTATIVE, the BUYER shall notify the BUILDER
in writing of the name and the scope of the authority of the BUYER’S
REPRESENTATIVE.

 

2.                 AUTHORITY
OF THE BUYER’S REPRESENTATIVE

 

Such
BUYER’S REPRESENTATIVE shall, at all times during working hours of the
construction until delivery of the VESSEL, have the right to inspect the
VESSEL, her equipment and all accessories, and work in progress, or materials
utilized in connection with the construction of the VESSEL, wherever such work
is being done or such materials are stored, for the purpose of determining that
the VESSEL, her equipment and accessories are being constructed in accordance
with the terms of this CONTRACT and/or the SPECIFICATIONS and the PLAN.

 

The
BUILDER will endeavor to arrange for the inspection by the BUYER’S
REPRESENTATIVE during working hours of the BUILDER. However, such inspection
may be arranged beyond the BUILDER’s normal working hours, including
weekend and/or holiday if this is considered necessary by the BUILDER in order
to meet the BUILDER’s construction schedule, on the condition that the BUILDER
will inform the BUYER’S REPRESENTATIVE at least two (2) days in
advance of such inspection.

 

The
BUYER’S REPRESENTATIVE shall, within the limits of the authority conferred upon
him by the BUYER, make decisions or give advice to the BUILDER on behalf of the
BUYER promptly on all problems arising out of, or in connection with, the
construction of

 

10

 

the
VESSEL and generally act in a reasonable manner with a view to cooperating to
the utmost with the BUILDER in the construction process of the VESSEL.

 

The
decision, approval or advice of the BUYER’S REPRESENTATIVE shall be deemed to
have been given by the BUYER and once given shall not be withdrawn, revoked or
modified except with consent of the BUILDER. Provided that the BUYER’S
REPRESENTATIVE or his assistants shall comply with the foregoing obligations,
no act or omission of the BUYER’S REPRESENTATIVE or his assistants shall, in
any way, diminish the liability of the BUILDER under Article IX (WARRANTY
OF QUALITY). The BUYER’S REPRESENTATIVE shall notify the BUILDER promptly in
writing of his discovery of any construction or materials, which he believes do
not or will not conform to the requirements of the CONTRACT and the SPECIFICATIONS
or the PLAN and likewise advise and consult with the BUILDER on all matters
pertaining to the construction of the VESSEL, as may be required by the
BUILDER, or as he may deem necessary.

 

However,
if the BUYER’S REPRESENTATIVE fails to submit to the BUILDER without delay any
such demand concerning alterations or changes with respect to the construction,
arrangement or outfit of the VESSEL, which the BUYER’S REPRESENTATIVE has
examined, inspected or attended at the test thereof under this CONTRACT or the
SPECIFICATIONS, the BUYER’S REPRESENTATIVE shall be deemed to have approved the
same and shall be precluded from making any demand for alterations, changes, or
complaints with respect thereto at a later date.

 

The
BUILDER shall comply with any such demand which is not contradictory to this
CONTRACT and the SPECIFICATIONS or the PLAN, provided that any and all such
demands by the BUYER’S REPRESENTATIVE with regard to construction, arrangement
and outfit of the VESSEL shall be submitted in writing to the authorised
representative of the BUILDER. The BUILDER shall notify the BUYER’S
REPRESENTATIVE of the names of the persons who are from time to time authorised
by the BUILDER for this purpose.

 

It
is agreed upon between the BUYER and the BUILDER that the modifications,
alterations or changes and other measures necessary to comply with such demand
may be effected at a convenient time and place at the BUILDER’s reasonable
discretion in view of the construction schedule of the VESSEL.

 

In
the event that the BUYER’S REPRESENTATIVE shall advise the BUILDER that he has
discovered or believes the construction or materials do not or will not
conform to the

 

11

 

requirements
of this CONTRACT and the SPECIFICATIONS or the PLAN, and the BUILDER shall not
agree with the views of the BUYER’S REPRESENTATIVE in such respect, either the
BUYER or the BUILDER may, with the agreement of the other party, seek an
opinion of the CLASSIFICATION SOCIETY.

 

3.                 APPROVAL
OF DRAWINGS

 

(a)            The BUILDER shall submit to
the BUYER three (3) copies of each of the plans and drawings to be
submitted to the BUYER for its approval at its address as set forth in
Article XIV hereof. The BUYER shall, within fourteen (14) days after
receipt thereof return to the BUILDER one (1) copy of such plans and
drawings with the approval or comments, if any, of the BUYER. A list of the
plans and drawings to be so submitted to the BUYER shall be mutually agreed
upon between the parties hereto.

 

(b)           When and if the BUYER’S REPRESENTATIVE
shall have been sent by the BUYER to the SHIPYARD in accordance with Paragraph
1 of this Article, the BUILDER may submit the remainder, if any, of the
plans and drawings in the agreed list, to the BUYER’S REPRESENTATIVE for his
approval, unless otherwise agreed upon between the parties hereto.

 

The
BUYER’S REPRESENTATIVE shall, within ten (10) days after receipt thereof,
return to the BUILDER one (1) copy of such plans and drawings with his
approval or comments written thereon, if any. Approval by the BUYER’S
REPRESENTATIVE of the plans and drawings duly submitted to him shall be deemed
to be the approval by the BUYER for all purposes of this CONTRACT.

 

(c)            In the event that the BUYER
or the BUYER’S REPRESENTATIVE shall fail to return the plans and drawings to
the BUILDER within the time limit as hereinabove provided, such plans and
drawings shall be deemed to have been automatically approved without any
comment. In the event the plans and drawings submitted by the BUILDER to the
BUYER or the BUYER’S REPRESENTATIVE in accordance with this Article do not
meet with the BUYER’s or the BUYER’S REPRESENTATIVE’s approval, the matter
may be submitted by either party hereto for determination pursuant to
Article XIV hereof. If the BUYER’s comments on the plans and drawings that
are returned to the BUILDER by the BUYER within the said time limit are not
clearly specified or detailed, the BUILDER shall be entitled to place its own
interpretation on such comments in implementing them.

 

12

 

(d)           Approval of drawings by
Buyers shall not constitute a waiver of Builder’s responsibility to deliver the
vessel in accordance with the Contract and Specifications.

 

4.                 SALARIES
AND EXPENSES

 

All salaries and expenses of the BUYER’S REPRESENTATIVE or
any other person or persons employed by the BUYER hereunder shall be for the
BUYER’s account.

 

5.                 RESPONSIBILITY
OF THE BUILDER

 

(a)            The BUILDER shall provide
the BUYER’S REPRESENTATIVE and his assistants free of charge with suitably
furnished office space at, or in the immediate vicinity of, the SHIPYARD
together with access to telephone and facsimile facilities as may be
necessary to enable the BUYER’S REPRESENTATIVE and his assistants to carry out
their work under this CONTRACT. However, the BUYER shall pay for the telephone
or facsimile facilities used by the BUYER’S REPRESENTATIVE or his assistants.

 

The
BUILDER, its employees, agents and subcontractors, during its working hours
until delivery of the VESSEL, shall arrange for them to have free and ready
access to the VESSEL, her equipment and accessories, and to any other place
(except the areas controlled for the purpose of national security) where work
is being done, or materials are being processed or stored in connection with the
construction of the VESSEL including the premises of sub-contractors.

 

The
BUYER’S REPRESENTATIVE or his assistants or employees shall observe the work’s
rules, regulations and the guidances prevailing at the BUILDER’s and its
sub-contractor’s premises. The BUILDER shall promptly provide to the BUYER’S
REPRESENTATIVE and/or his assistants and shall ensure that its sub-contractors
shall promptly provide all such information as he or they may reasonably
request in connection with the construction of the VESSEL and her engines,
equipment and machinery.

 

(b)           The BUYER’S REPRESENTATIVE
and his assistants shall at all times remain the employees of the BUYER. The
BUILDER shall not be liable to the BUYER or the BUYER’S REPRESENTATIVE or to
his assistants or to the BUYER’s employees or

 

13

 

agents
for personal injuries, including death, during the time they, or any of them,
are on the VESSEL, or within the premises of either the BUILDER or its
sub-contractors, or are otherwise engaged in and about the construction of the
VESSEL, unless, however, such personal injuries, including death, are caused by
the gross negligence of the BUILDER, its sub-contractors, or its or their
employees or agents. The BUILDER shall not be liable to the BUYER for damages
to, or destruction of property of the BUYER or of the BUYER’S REPRESENTATIVE or
his assistants or the BUYER’s employees or agents, unless such damages, loss or
destruction is caused by the gross negligence of the BUILDER, its
sub-contractors, or its or their employees or agents.

 

6.                 RESPONSIBILITY
OF THE BUYER

 

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

 

The BUILDER has the right to request the BUYER to replace any
of the BUYER’S REPRESENTATIVE and/or his assistants who are deemed unsuitable
and unsatisfactory for the proper progress of the VESSEL’s construction. The
BUYER shall investigate the situation by sending its representative(s) to the
SHIPYARD and if the BUYER considers that such BUILDER’s request is justified,
the BUYER shall effect the replacement as soon as conveniently arrangeable.

 

(End of Article)

 

14

 

ARTICLE V :
MODIFICATIONS, CHANGES AND EXTRAS

 

1.                 HOW EFFECTED

 

Any modifications or changes to the SPECIFICATIONS and the
PLAN under which the VESSEL is to be constructed may be made at any time
hereafter by written agreement of the parties hereto. Any modification or
change requested by the BUYER which does not affect the frame-work of the
SPECIFICATIONS shall be agreed to by the BUILDER if the BUYER agrees to
adjustment of the CONTRACT PRICE, deadweight and/or cubic capacity, speed
requirements, the Delivery Date and other terms and conditions of this CONTRACT
reasonably required as a result of such modification or change. The BUILDER has
the right to continue construction of the VESSEL on the basis of the
SPECIFICATIONS and the PLAN until the BUYER has agreed to such adjustments. The
BUILDER shall be entitled to refuse to make any alteration, change or
modification of the SPECIFICATIONS and/or the PLAN requested by the BUYER, if
the BUYER does not agree to the aforesaid adjustments within seven
(7) days of the BUILDER’s notification of the same to the BUYER, or, if,
in the BUILDER’s judgement, the compliance with such request of the BUYER would
cause an unreasonable disruption of the normal working schedule of the
SHIPYARD.

 

The
BUILDER, however, agrees to exert its efforts to accommodate such reasonable
request by the BUYER so that the said change and modification shall be made at
a reasonable cost and within the shortest period of time reasonably possible.
The aforementioned agreement to modify and change the SPECIFICATIONS and the
PLAN may be effected by exchange of letters or facsimiles manifesting the
agreement.

 

The letters and facsimiles exchanged by the parties pursuant
to the foregoing shall constitute an amendment to this CONTRACT and the
SPECIFICATIONS or the PLAN under which the VESSEL shall be built. Upon
consummation of such an agreement to modify and change the SPECIFICATIONS or
the PLAN, the BUILDER shall alter the construction of the VESSEL in accordance
therewith including any addition to, or deduction from, the work to be
performed in connection with such construction.

 

2.                 SUBSTITUTION
OF MATERIAL

 

If
any materials, machinery or equipment required for the construction of the
VESSEL by

 

15

 

the
SPECIFICATIONS and the PLAN or otherwise under this CONTRACT cannot be procured
in time to meet the BUILDER’s construction schedule for the VESSEL, or are
in short supply, or are unreasonably high in price compared with the prevailing
international market price, the BUILDER may supply, subject to the BUYER’s
prior approval, other materials, machinery or equipment of equal quality and
effect capable of meeting the requirements of the CLASSIFICATION SOCIETY and
the rules, regulations and requirements with which the construction of the
VESSEL must comply.

 

3.                 CHANGES
IN RULES AND REGULATIONS

 

If the specified rules and regulations with which the
construction of the VESSEL is required to comply are altered or changed by the
CLASSIFICATION SOCIETY or bodies authorised to make such alterations or
changes, either the BUYER or the BUILDER, upon receipt of due notice thereof,
shall forthwith give notice thereof to the other party in writing. Thereupon,
within fifteen (15) days after giving the notice to the BUILDER or receiving
the notice from the BUILDER, the BUYER shall advise the BUILDER as to the
alterations and changes, if any, to be made on the VESSEL which the BUYER, in
its sole discretion, shall decide. The BUILDER shall not be obliged to comply
with such alterations and/or changes if the BUYER fails to notify the BUILDER
of its decision within the time limit stated above.

 

The
BUILDER shall comply promptly with the said request of the BUYER, provided that
the BUILDER and the BUYER shall first agree to :

 

(a)            any increase or decrease in
the CONTRACT PRICE of the VESSEL that is occasioned by such compliance ;

 

(b)           any extension or advancement
in the Delivery Date of the VESSEL that is occasioned by such compliance ;

 

(c)            any increase or decrease in
the deadweight and/or cubic capacity of the VESSEL, if such compliance results
in any increase or reduction in the deadweight and/or cubic capacity ;

 

(d)           adjustment of the speed
requirements if such compliance results in any increase or reduction in the
speed ; and

 

16

 

(e)            any other alterations in the
terms of this CONTRACT or of the SPECIFICATIONS or the PLAN or both, if such
compliance makes such alterations of the terms necessary.

 

Any
delay in the construction of the VESSEL caused by the BUYER’s delay in making a
decision or agreement as above shall constitute a permissible delay under this
CONTRACT. Such agreement by the BUYER shall be effected in the same manner as
provided above for modification and change of the SPECIFICATIONS and the PLAN.

 

(End of Article)

 

17

 

ARTICLE VI
: TRIALS AND COMPLETION

 

1.                 NOTICE

 

The BUILDER shall notify the BUYER in writing or by facsimile
at least twenty (20) days in advance of the time and place of the trial run of
the VESSEL. Such notice shall specify the place from which the VESSEL will
commence her trial run and approximate date upon which the trial run is
expected to take place. Such date shall be further confirmed by the BUILDER
five (5) days in advance of the trial run in writing or by facsimile.

 

The BUYER’S REPRESENTATIVE, who is to witness the performance
of the VESSEL during such trial run, shall be present at such place on the date
specified in such notice. Should the BUYER’S REPRESENTATIVE fail to be present
after the BUILDER’s due notice to the BUYER as provided above, the BUILDER
shall be entitled to conduct such trial run with the presence of the
representative(s) of the CLASSIFICATION SOCIETY only without the BUYER’S
REPRESENTATIVE being present. In such case, the BUYER shall be obliged to
accept the VESSEL on the basis of a certificate issued by the BUILDER that the
VESSEL, after the trial run, subject to alterations and corrections, if
necessary, has been found to conform with the SPECIFICATIONS and this
CONTRACT and is satisfactory in all respects, provided the BUILDER first makes
such corrections and alterations promptly.

 

2.                 WEATHER
CONDITION

 

In
the event of unfavourable weather on the date specified for the trial run, the
trial run shall take place on the first available day that weather conditions
permit. The parties hereto recognise that the weather conditions in Korean
waters, in which the trial run is to take place, are such that great changes in
weather may arise momentarily and without warning and therefore, it is agreed
that if, during the trial run, the weather should become so unfavourable that
the trial run cannot be continued, then the trial run shall be discontinued and
postponed until the first favourable day next following, unless the BUYER shall
assent to the acceptance of the VESSEL by notification in writing on the basis
of such trial run so far made prior to such change in weather conditions. Any
delay of the trial run caused by such unfavourable weather conditions shall
also operate to extend the Delivery Date of the VESSEL for the period of delay
occasioned by such unfavourable weather conditions.

 

18

 

3.              HOW
CONDUCTED

 

All
expenses in connection with the trials of the VESSEL are to be for the account
of the BUILDER, which, during the trials, is to provide at its own expense the
necessary crew to comply with conditions of safe navigation. The trials shall
be conducted in the manner prescribed in this CONTRACT and the SPECIFICATIONS,
and shall prove fulfilment of the performance requirements for the trials as
set forth in the SPECIFICATIONS.

 

The
BUILDER shall be entitled to conduct preliminary sea trials, during which the
propulsion plant and/or its appurtenance shall be adjusted according to the
BUILDER’s judgement. The BUILDER shall have the right to repeat any trial
whatsoever as it deems necessary.

 

4.                 CONSUMABLE
STORES

 

The BUILDER shall load the VESSEL with the required quantity
of fuel oil, lubricating oil and greases, fresh water, and other stores necessary
to conduct the trials as set forth in the SPECIFICATIONS. The necessary ballast
(fuel oil, fresh water and such other ballast as may be required) to bring
the VESSEL to the trial load draft, as specified in the SPECIFICATIONS, shall
be supplied and paid for by the BUILDER whilst lubricating oil and greases
shall be supplied and paid for by the BUYER within the time advised by the
BUILDER for the conduct of sea trials as well as for use before the delivery of
the VESSEL to the BUYER. The fuel oil as well as lubricating oil and greases
shall be in accordance with the specifications of the main engine and other
machinery and the BUYER shall decide and advise the BUILDER of the supplier’s
name for lubricating oil and greases before the work-commencement of the
VESSEL, provided that the supplier shall be acceptable to the BUILDER and/or
the makers of all the machinery.

 

Any
fuel oil, fresh water or other consumable stores furnished and paid for by the
BUILDER for trial runs remaining on board the VESSEL, at the time of acceptance
of the VESSEL by the BUYER, shall be bought by the BUYER from the BUILDER at
the BUILDER’s purchase price for such supply in Korea and payment by the BUYER
thereof shall be made at the time of delivery of the VESSEL. The BUILDER shall
pay the BUYER at the time of delivery of the VESSEL for the consumed quantity
of any lubricating oil and greases which were furnished and paid for by the
BUYER at the BUYER’s purchase price thereof. The consumed quantity of
lubricating oils and greases shall be calculated on the basis of the difference
between the remaining amount, including the same remaining in the

 

19

 

main
engine, other machinery and their pipes, stern tube and the like, and the
supplied amount.

 

5.                 ACCEPTANCE
OR REJECTION

 

(a)               If, during any sea trial,
any breakdown occurs entailing interruption or irregular performance which can
be repaired on board, the trial shall be continued after such repairs and be
valid in all respects.

 

(b)           However, if, during or after
the trial run, it becomes apparent that the VESSEL or any part of her
equipment requires alterations or corrections which but for this provision
would or might entitle the BUYER to rescind this CONTRACT, the BUILDER shall
notify the BUYER promptly in writing or by facsimile to such effect and shall
simultaneously advise the BUYER of the estimated additional time required for
the necessary alterations or corrections to be made.

 

The
BUYER shall, within five(5) days of receipt from the BUILDER of notice of
completion of such alterations or corrections and after such further trials or
tests as necessary, notify the BUILDER in writing or by facsimile confirmed in
writing of its acceptance, qualified acceptance or rejection of the VESSEL, all
in accordance with the SPECIFICATIONS, the PLAN and this CONTRACT, and shall
not be entitled to reject the VESSEL on such grounds until such time.

 

(c)               Save as above provided, the
BUYER shall, within three(3) days after completion of the trial run, notify
the BUILDER in writing or by facsimile confirmed in writing of its acceptance
of the VESSEL or of the details in respect of which the VESSEL does not
conform to the SPECIFICATIONS or this CONTRACT.

 

If
the BUILDER is in agreement with the BUYER’s determinations as to
non-conformity, the BUILDER shall make such alterations or changes as
may be necessary to correct such non-conformity and shall prove the
fulfilment of this CONTRACT and the SPECIFICATIONS by such tests or trials as
may be necessary.

 

The
BUYER shall, within three (3) days after completion of such tests and/or
trials, notify the BUILDER in writing or by facsimile confirmed in writing of
its acceptance or rejection of the VESSEL.

 

20

 

(d)           However, the BUYER shall not
be entitled to reject the VESSEL by reason of any minor or insubstantial items
judged from the point of view of standard shipbuilding and shipping practice as
not being in conformity with the SPECIFICATIONS, but, in that case, the BUILDER
shall not be released from the obligation to correct and/or remedy such minor
or insubstantial items as soon as practicable after the delivery of the VESSEL.

 

6.                 EFFECT
OF ACCEPTANCE

 

The
BUYER’s written or facsimiled notification of acceptance delivered to the
BUILDER as above provided, shall be final and binding insofar as conformity of
the VESSEL with the SPECIFICATIONS is concerned and shall preclude the BUYER
from refusing formal delivery of the VESSEL as hereinafter provided, if the
BUILDER complies with all conditions of delivery, as herein set forth and
provided that, in the case of qualified acceptance, any matters which were
mentioned in the notice of the qualified acceptance by the BUYER as requiring
correction have been corrected satisfactorily.

 

If the BUYER fails to notify the BUILDER of its acceptance or
rejection of the VESSEL as hereinabove provided, the BUYER shall be deemed to
have accepted the VESSEL. Nothing contained in this Article shall preclude
the BUILDER from exercising any and all rights which the BUILDER has under this
CONTRACT if the BUILDER disagrees with the BUYER’s rejection of the VESSEL or
any reasons given for such rejection, including arbitration provided in
Article XIV hereof.

 

(End of Article)

 

21

 

ARTICLE VII
: DELIVERY

 

1.                 TIME
AND PLACE

 

The
VESSEL shall be delivered by the BUILDER to the BUYER at the SHIPYARD, safely
afloat on or before 31st December, 2009 (hereinafter called the
“DELIVERY DATE”) after completion of satisfactory trials and acceptance by the
BUYER in accordance with the terms of Article VI, except that, in the
event of delays in delivery of the VESSEL by the BUILDER due to causes which
under the terms of this CONTRACT permit extensions of the time for delivery of
the VESSEL, the aforementioned DELIVERY DATE shall be extended accordingly.

 

It
is hereby agreed that the BUILDER shall have the right to advance the DELIVERY
DATE provided that the BUILDER shall have given to the BUYER written notice of
the new proposed earlier delivery date at least six (6) months before such
new proposed advanced delivery date; and

 

Any
such new proposed earlier delivery date shall be considered as the DELIVERY
DATE for the purpose of this CONTRACT.

 

2.                 WHEN
AND HOW EFFECTED 

 

Provided that the BUYER shall concurrently with delivery of
the VESSEL release to the BUILDER the fifth instalment as set forth in
Article X.2. hereof and shall have fulfilled all of its obligations
provided for in this CONTRACT, delivery of the VESSEL shall be forthwith
effected upon acceptance thereof by the BUYER, as hereinabove provided, by the
concurrent delivery by each of the parties hereto to the other of a PROTOCOL OF
DELIVERY AND ACCEPTANCE acknowledging delivery of the VESSEL by the BUILDER and
acceptance thereof by the BUYER, which PROTOCOL shall be prepared in duplicate
and signed by each of the parties hereto.

 

3.                 DOCUMENTS
TO BE DELIVERED TO THE BUYER

 

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

 

22

 

(a)            PROTOCOL OF TRIALS of the
VESSEL made pursuant to this CONTRACT and the SPECIFICATIONS,

 

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

 

(c)            PROTOCOL OF STORES OF
CONSUMABLE NATURE, such as all fuel oil and fresh water remaining in tanks if
its cost is charged to the BUYER under Article VI.4. hereof,

 

(d)           DRAWINGS AND PLANS
pertaining to the VESSEL as stipulated in the SPECIFICATIONS, which shall be
furnished to the BUYER at no additional cost,

 

(e)            ALL CERTIFICATES required to
be furnished upon delivery of the VESSEL pursuant to this CONTRACT, the
SPECIFICATIONS and the customary shipbuilding practice, including

 

(i)                                 Classification
Certificate

(ii)                              Safety
Construction Certificate

(iii)                           Safety
Equipment Certificate

(iv)                          Safety
Radio Certificate

(v)                             International
Loadline Certificate

(vi)                          International
Tonnage Certificate

(vii)                       BUILDER’s
Certificate

(viii)                    De-ratting
Exemption Certificate

 

However,
it is agreed by the parties that if the Classification Certificate and/or other
certificates are not available at the time of delivery of the VESSEL,
provisional certificates shall be accepted by the BUYER, provided that the
BUILDER shall furnish the BUYER with formal certificates as promptly as
possible after such formal certificates have been issued.

 

(f)              DECLARATION OF WARRANTY of
the BUILDER that the VESSEL is delivered to the BUYER free and clear of any
liens, claims, mortgages, or other encumbrances upon the BUYER’s title thereto,
and in particular, that the VESSEL is absolutely free of all burdens in the
nature of imposts, taxes, or charges imposed by the prefecture or country

 

23

 

of
the port of delivery, as well as of all liabilities of the BUILDER to its
sub-contractors and employees and of all liabilities arising from the operation
of the VESSEL in trial runs, or otherwise, prior to delivery except as
otherwise provided under this CONTRACT.

 

(g)                     COMMERCIAL INVOICE.

 

4.                 TENDER
OF THE VESSEL

 

If
the BUYER fails to take delivery of the VESSEL after completion thereof
according to this CONTRACT and the SPECIFICATIONS, the BUILDER shall have the
right to tender delivery of the VESSEL after compliance with all procedural
requirements as provided above.

 

5.                 TITLE
AND RISK

 

Title
and risk shall pass to the BUYER upon delivery and acceptance of the VESSEL
being effected as stated above and the BUILDER shall be free of all
responsibility or liability whatsoever related with this CONTRACT except for
the warranty of quality contained in Article IX and the obligation to
correct and/or remedy, as provided in Article VI.5.(d), if any, it being
expressly understood that, until such delivery is effected, the VESSEL and
equipment thereof are at the entire risk of the BUILDER including but not
confined to, risks of war, insurrection and seizure by Governments or
Authorities, whether Korean or foreign, and whether at war or at peace. The
title to the BUYER’s supplies as provided in Article XII shall remain with
the BUYER and the BUILDER’s responsibility for such BUYER’s supplies shall be
as described in Article XII.2.

 

6.                 REMOVAL
OF THE VESSEL

 

The BUYER shall take possession of the VESSEL immediately
upon delivery thereof and shall remove the VESSEL from the SHIPYARD within
three (3) days after delivery thereof is effected. Port dues and other
charges levied by the Korean Government Authorities after delivery of the
VESSEL and any other costs related to the removal of the VESSEL shall be borne
by the BUYER.

 

(End of Article)

 

24

 

ARTICLE VIII
: DELAYS AND EXTENSIONS OF TIME (FORCE MAJEURE)

 

1.                 CAUSES
OF DELAY

 

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

 

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

 

2.                 NOTICE
OF DELAYS

 

As
soon as practicably possible after commencement of any delay but not later than
fourteen (14) days on account of which the BUILDER claims that it is entitled
under this CONTRACT to an extension of the DELIVERY DATE of the VESSEL,
excluding delays due to arbitration, the BUILDER shall advise the BUYER in
writing or by facsimile of the date such delay commenced, the reasons thereof
and, if possible, its estimated duration of the probable delay in the delivery
of the VESSEL, and shall supply the BUYER if reasonably available with evidence
to justify the delay claimed. Within fourteen (14) days after such delay ends,
the BUILDER shall likewise advise the BUYER in writing or by

 

25

 

facsimile
of the date that such delay ended, and also, shall specify the period of time
by which the BUILDER claims the DELIVERY DATE should be extended by reason of
such delay. Failure of the BUYER to object to the BUILDER’s notification of any
claim for extension of the date for delivery of the VESSEL within fourteen (14)
days after receipt by the BUYER of such notification shall be deemed to be a
waiver by the BUYER of its right to object to such extension.

 

3.                 RIGHT
TO RESCIND FOR EXCESSIVE DELAY

 

If
the total accumulated time of all permissible and non-permissible delays,
excluding delays due to (i) arbitration under Article XIV,
(ii) the BUYER’s defaults under Article XI, (iii) modifications
and changes under Article V or (iv) delays or defects in the BUYER’s
supplies as stipulated in Article XII, aggregates two hundred and forty
(240) days or more, then, the BUYER may, at any time thereafter, rescind this
CONTRACT by giving a written notice of rescission to the BUILDER. Such
rescission shall be effective as of the date the notice thereof is received by
the BUILDER.

 

If
the BUYER has not served the notice of rescission as provided in the above or
Article III.1. hereof, the BUILDER may, at any time after expiration of
the accumulated time of the delay in delivery, either two hundred and forty
(240) days in case of the delay in this Paragraph or two hundred and ten (210)
days in case of the delay in Article III.1, notify the BUYER of the future
date upon which the BUILDER estimates the VESSEL will be ready for delivery and
demand in writing or by facsimile that the BUYER make an election either to
rescind this CONTRACT or to consent to the delivery of the VESSEL at such
future date, in which case the BUYER shall, within fourteen(14) days after
receipt of such demand, make and notify the BUILDER of such election. If the
BUYER elects to consent to the delivery of the VESSEL at such future date (or
other future date as the parties may agree):

 

(a)            Such future date shall
become the contractual delivery date for the purposes of this CONTRACT and
shall be subject to extension by reason of permissible delays as herein
provided, and

 

(b)           If the VESSEL is not
delivered by such revised contractual delivery date (as extended by reason of
permissible delays), the BUYER shall have the same right of rescission upon the
same terms as provided in the above and Article III. 1.

 

If
the BUYER shall not make an election within fourteen(14) days as provided
hereinabove, the BUYER shall be deemed to have accepted such extension of the
DELIVERY DATE to

 

26

 

the
future delivery date indicated by the BUILDER.

 

4.              DEFINITION
OF PERMISSIBLE DELAYS

 

Delays
on account of the foregoing causes shall be understood to be permissible
delays, and are to be distinguished from non-permissible unauthorised delays on
account of which the CONTRACT PRICE of the VESSEL is subject to adjustment as
provided in Article III hereof.

 

(End of Article)

 

27

 

ARTICLE IX
: WARRANTY OF QUALITY

 

1.                 GUARANTEE
OF MATERIAL AND WORKMANSHIP

 

The BUILDER, for the period of twelve (12) months from the
date of delivery of the VESSEL to the BUYER, guarantees the VESSEL and her
engine and all parts and equipment thereof that are manufactured or furnished
by the BUILDER under this CONTRACT against all defects which are directly due
to faulty design, defective materials, construction miscalculation and/or poor
workmanship, or negligent or other improper acts or omissions on the part of
the BUILDER or its subcontractors provided
such defects have not been caused by perils of the sea, rivers or
navigations, or by normal wear and tear, overloading, improper loading or
stowage, corrosion of the materials other than related to lack of maintenance,
fire, accidents at sea or elsewhere, or by incompetence, mismanagement,
negligence or wilful neglect or any alteration or addition to the VESSEL which
has not previously been approved by the BUILDER.

 

The BUILDER will be responsible for all machinery or parts of
machinery and all constructions which are supplied by sub-contractors and will
guarantee the above mentioned for a period of twelve (12) months on the basis
as laid down in this Paragraph. Upon rectification of an item claimed under this guarantee,
this item shall be covered for further twelve (12) months under the same terms
and conditions. However, this is limited to a maximum of Eighteen (18) months
from Delivery Date.

 

2.                 NOTICE
OF DEFECTS

 

The
BUYER or its duly authorised representative will notify the BUILDER in writing
or by facsimile promptly after discovery of any defect for which a claim is to
be made under this guarantee.

 

The BUYER’s written notice shall include full particulars as
to the nature of the defect and the extent of the damage caused thereby, but
excluding consequential damage as hereinafter provided. The BUILDER will be
under no obligation with respect to this guarantee in respect of any claim for
defects discovered prior to the expiry date of the guarantee, unless notice of
such defects is received by the BUILDER before the expiry date. However,
facsimiled advice received by the BUILDER within seven (7) days after such
expiry date that a claim is forthcoming will be sufficient compliance with the
requirement as to time,

 

28

 

provided that such facsimiled advice shall include at least a
brief description of the defect including the identity of the equipment, extent
of damage, name and number of any replacement part and description of any
remedial work required, and that full particulars are given to the BUILDER not
later than fourteen (14) days after the expiry date.

 

3.                 REMEDY
OF DEFECTS

 

(a)             The BUILDER shall remedy, at
its expense, any defects, against which the VESSEL is guaranteed under this
Article, by making all necessary and reasonably practicable repairs or
replacements at the SHIPYARD or elsewhere as provided for in
(b) hereinbelow.

 

In
such case, the VESSEL shall be taken at the BUYER’s cost and responsibility to
the place selected, ready in all respects for such repairs or replacements and
in any event, the BUILDER shall not be responsible for towage

 

(b)           However, BUYER should
determine and prove if it is commercially and/or operationally impractical
(which shall include, but not be limited to, an emergency) to bring the VESSEL
to the SHIPYARD, the BUYER may cause the necessary repairs or replacements
to be made elsewhere which is deemed by the BUYER with the consent of the
BUILDER which shall not be unreasonably withheld, to be suitable for the
purpose, provided that, in such event, the BUILDER may forward or supply
replacement parts or materials under the terms described in
(c) hereinbelow, unless forwarding or supplying thereof under the terms
described in (c) hereinbelow would impair or delay the operation or
working schedule of the VESSEL. In the event that the BUYER proposes to
cause the necessary repairs or replacements to be made to the VESSEL at any
shipyard or works other than the SHIPYARD, the BUYER shall first (but in all
events as soon as reasonably possible) give the BUILDER notice in writing or by
facsimile of the time and place such repairs will be made, and if the VESSEL is
not thereby delayed, or her operation or working schedule is not thereby
impaired, the BUILDER shall have the right to verify by its own
representative(s) the nature and extent of the defects complained of. The
BUILDER shall, in such case, promptly advise the BUYER by facsimile, after such
examination has been completed, of its acceptance or rejection of the defects
as ones that are covered by the guarantee herein provided. Upon the BUILDER’s
acceptance of the defects as justifying remedy under this Article, or upon
award of the arbitration so determining, the BUILDER shall compensate the BUYER
an amount equal to the actual proven cost of making the same repairs or
replacements.

 

29

 

(c)            In the event that it is
necessary for the BUILDER to forward a replacement for a defective
part under this guarantee, replacement parts shall be shipped to the BUYER
under the terms of CIF port of the country where vessel will be repaired.

 

(d)           The BUILDER reserves the
option to retrieve, at the BUILDER’s cost, any of the replaced equipment/parts
in case defects are remedied in accordance with the provisions in this Article.

 

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

 

4.                 EXTENT
OF THE BUILDER’S LIABILITY

 

(a)            After delivery of the VESSEL
the responsibility of the BUILDER in respect of and/or in connection with the
VESSEL and/or this CONTRACT shall be limited to the extent expressly provided
in the Paragraphs of this Article. Except as expressly provided in the
Paragraphs of this Article, in no circumstances and on no ground whatsoever
shall the BUILDER have any responsibility or liability whatsoever or howsoever
arising in respect of or in connection with the VESSEL or this CONTRACT after
the delivery of the VESSEL. Further, but without in any way limiting the
generality of the foregoing, the BUILDER shall have no liability or
responsibility whatsoever or howsoever arising for or in connection with any
consequential or special losses, damages or expenses (including but not limited
to loss of time, loss of profit or earnings or demurrage directly or indirectly
caused), any pecuniary loss or expense, any liability to any third party or any
fine, compensation, penalty or other payment or sanction incurred by or imposed
upon the BUYER or any other party whatsoever in relation to or in connection
with this CONTRACT or the VESSEL.

 

(b)           The BUILDER shall be under
no obligation with respect to defects in respect of which the BUILDER has not
received notice in accordance with Paragraph 2 of this Article by the
expiry date of the guarantee specified in Paragraph 1, nor in any event shall
the BUILDER be liable for any worsening of the defects after the expiry date of
the guarantee.

 

(c)            The BUILDER shall under no
circumstances be liable for defects in the VESSEL or any part of equipment
thereof caused by perils of the sea, rivers or navigations, or by normal wear
and tear, overloading, improper loading or stowage, corrosion of the

 

30

 

materials
other than related to lack of maintenance, fire, accidents at sea or elsewhere,
or by incompetence, mismanagement, negligence or wilful neglect or any
alteration or addition on the part of the BUYER, its employees or agents
or any other person on or doing work on the VESSEL, including the VESSEL’s
officers, crew and passengers. Likewise, the BUILDER shall not be liable for
defects in the VESSEL or any part of equipment thereof that are due to
repairs carried out by any other than the BUILDER or which have not been
carried out in accordance with the procedure set out in Paragraph 3 (b) of
this Article.

 

(d)           The BUILDER shall not be
obliged to repair, not be liable for, damage to the VESSEL or any part of
the equipment thereof, which after delivery of the VESSEL, is caused other than
by the defects of the nature specified in this Article. The guarantees
contained as hereinabove in this Article replace and exclude any other
liability, guarantee, warranty and/or condition imposed or implied by statute, common
law, custom, contract (including this CONTRACT) or otherwise on the
part of the BUILDER by reason of the construction and sale of the VESSEL
for and to the BUYER or for any other reason whatsoever.

 

5.                       GUARANTEE ENGINEER

 

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

 

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

 

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

 

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

 

While the Guarantee Engineer is on board the VESSEL,
the BUYER shall pay to the BUILDER the sum of United States Dollars Six
Thousand and Five Hundred (US$ 6,500.-) per month as a compensation for a
part of cost and charges to be borne by the BUILDER in connection with
Guarantee Engineer and also shall pay the expenses of his repatriation to

 

31

 

Korea by air upon termination of his service, the
expenses of his communication with the BUILDER incurred in performing his
duties and expenses, if any, of his medical and hospital care in the VESSEL’s
hospital.

 

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

 

(End of Article)

 

32

 

ARTICLE X :
PAYMENT

 

1.                 CURRENCY

 

All
payments under this CONTRACT shall be made in United States Dollars.

 

2.                 TERMS
OF PAYMENT

 

The
payments of the CONTRACT PRICE shall be made as follows :

 

(a)            First Instalment

 

Twenty per cent (20 %) of the CONTRACT PRICE amounting to
U.S.Dollars Eighteen Million Three Hundred Thousand only (US$ 18,300,000.-)
shall be paid within three (3) business days after receipt by the BUYER of
the original of the Refund Guarantee specified in Paragraph 8 of this Article.

 

Under this CONTRACT, in counting the business days, only
Saturdays and Sundays are excepted. When a due date falls on a day when banks
are not open for business in New York, N.Y., U.S.A., such due date shall fall
due upon the first business day next following.

 

(b)           Second Instalment

 

Twenty
per cent (20%) of the CONTRACT PRICE amounting to U.S.Dollars Eighteen Million
Three Hundred Thousand only (US$ 18,300,000.-) shall be paid within three
(3) business days of receipt by the Buyer of a facsimiled advice from the
BUILDER that steel cutting has been commenced.

 

(c)            Third Instalment

 

Ten
per cent (10%) of the CONTRACT PRICE amounting to U.S.Dollars Nine Million One
Hundered Fifty Thousand only (US$ 9,150,000.-) shall be paid within three
(3) business days of receipt by the BUYER of a facsimiled advice from the BUILDER
that the first block of the keel has been laid.

 

33

 

(d)           Fourth Instalment

 

Ten
per cent (10%) of the CONTRACT PRICE amounting to U.S.Dollars Nine Million One
Hundred Fifty Thousand only (US$ 9,150,000-) shall be paid within three
(3) business days of receipt by the BUYER of a facsimiled advice from the
BUILDER that the launching of the VESSEL has been completed.

 

(f)              Fifth
Instalment

 

Forty
per cent (40%) of the CONTRACT PRICE amounting to U.S.Dollars Thirty Six
Million Six Hundred Thousand only (US$ 36,600,000.-) plus or minus any increase
or decrease due to modifications and/or adjustment, if any, arising prior to
delivery of the VESSEL of the CONTRACT PRICE under Articles III and V of this
CONTRACT shall be paid to the BUILDER concurrently with the delivery of the
VESSEL. (The date stipulated for payment of each of the five instalments
mentioned above is hereinafter in this Article and in Article XI
referred to as the “DUE DATE” of that instalment).

 

It is understood and agreed upon by the BUILDER and the BUYER
that all payments under the provisions of this Article shall not be
delayed or withheld by the BUYER due to any dispute or disagreement of
whatsoever nature arising between the BUILDER and the BUYER. Should there be
any dispute in this connection, the matter shall be dealt with in accordance
with the provisions of arbitration in Article XIV hereof. Expenses for
remitting payments and any other expenses connected with such payments shall be
for the account of the BUYER.

 

3.                 DEMAND
FOR PAYMENT

 

At least fourteen (14) days prior to the date of each event
provided in Paragraph 2 of this Article on which any payment shall fall
due hereunder, with the exception of the payment of the first and second instalments,
the BUILDER shall notify the BUYER by facsimile of the date such payment shall
become due.

 

The BUYER shall immediately acknowledge receipt of such
notification by facsimile to the BUILDER, and make payment as set forth in this
Article. If the BUILDER fails to receive the BUYER’s said acknowledgement
within three (3) days after sending the aforementioned notification, the
BUILDER shall promptly facsimile to the BUYER a second notification of similar
import. The BUYER shall immediately acknowledge by facsimile receipt of the

 

34

 

foregoing second notification regardless of whether or not
the first notification was acknowledged as aforesaid.

 

4.                 METHOD
OF PAYMENT

 

(a)           All the pre-delivery
payments and the payment due on delivery in settlement of the CONTRACT PRICE as
provided for in Paragraph 2 of this Article shall be made in U.S. Dollars
on or before the DUE DATE thereof by telegraphic transfer as follows ;

 

(i)                                    The
payment of the first, second, third and fourth instalments shall be made to the
account of the BUILDER with a bank to be duly designated by the BUILDER, in
Korea (the “BUILDER’S BANK”) or any other bank by telegraphic transfer
remittance at least two(2) business days prior to the DUE DATE notified by
the BUILDER.

 

(ii)                                 The
fifth instalment as provided for in Paragraph 2.(f) of this
Article shall be deposited at the BUILDER’S BANK in the name of the Buyer
or, if the BUILDER requires, with any other bank in the name of the Byuer by
telegraphic transfer remittance at least two (2) business days prior to
the scheduled delivery date of the VESSEL notified by the BUILDER, with
instructions that the said instalment is payable to the BUILDER against
presentation by the BUILDER to the BUILDER’S BANK or any other bank, as the
case may be, of a duplicate original copy of the PROTOCOL OF DELIVERY AND
ACCEPTANCE of the VESSEL signed by the BUILDER and the BUYER.

 

(b)           Simultaneously with each of
such payments, the BUYER shall advise the BUILDER of the details of the
payments by facsimile and at the same time, the BUYER shall cause the BUYER’s
remitting Bank to advise the BUILDER’S BANK or any other bank of the details of
such payments by authenticated bank cable or telex.

 

5.                 REFUND
BY THE BUILDER

 

The payments made by the BUYER to the BUILDER prior to
delivery of the VESSEL shall constitute advances to the BUILDER. If the VESSEL
is rejected by the BUYER in accordance with the terms of this CONTRACT, or
except in the case of rescission or rescission of this CONTRACT by the BUILDER
under the provisions of Article XI hereof,

 

35

 

if the BUYER terminates or rescinds this CONTRACT pursuant to
any of the provisions of this CONTRACT specifically permitting the BUYER to do
so, the BUILDER shall forthwith refund to the BUYER, in U.S. Dollars, the full
amount of total sums paid by the BUYER to the BUILDER in advance of delivery
together with interest thereon as herein provided.

 

The transfer and other bank charges of such refund shall be
for the BUILDER’s account. The interest rate of the refund, as above provided,
shall be seven per cent (7%) per annum from the date following the date of
receipt by the BUILDER of the pre-delivery instalment(s) to the date of
remittance by telegraphic transfer of such refund, provided, however, that if
the cancellation of this CONTRACT by the BUYER is based upon delays due to
force majeure or other causes beyond the control of the BUILDER as provided for
in Article VIII hereof, then in such event, the interest rate of refund
shall be reduced to six point five per cent (6.5%) per annum.

 

It is hereby understood by both parties that payment of any
interest provided herein is by way of liquidated damages due to rescission of
this CONTRACT and not by way of compensation for use of money.

 

If, the BUILDER is required to refund to the BUYER the
instalments paid by the BUYER to the BUILDER as provided in this Paragraph, the
BUILDER shall return to the BUYER all of the BUYER’s supplies as stipulated in
Article XII which were not incorporated into the VESSEL and pay to the
BUYER an amount equal to the cost to the BUYER of those supplies incorporated
into the VESSEL.

 

6.                 TOTAL
LOSS

 

If there is a total loss or a constructive total loss of the
VESSEL prior to delivery thereof, the BUILDER shall proceed according to the
option of the Buyer hereto either:

 

(a)            to build another vessel in
place of the VESSEL so lost and deliver it under this CONTRACT to the BUYER,
provided that the parties hereto shall have agreed in writing to a reasonable cost
and time for the construction of such vessel in place of the lost VESSEL; or

 

(b)           to refund to the BUYER the
full amount of the total sums paid by the BUYER to the BUILDER under the
provisions of Paragraph 2 of this Article together with interest thereon
at the rate of six point five per cent (6.5%) per annum from the date following

 

36

 

the
date of receipt by the BUILDER of such pre-delivery instalment(s) to the date
of payment by the BUILDER to the BUYER of the refund.

 

If
the parties hereto fail to reach such agreement within two (2) months
after the VESSEL is determined to be a total loss or constructive total loss,
the provisions of (b) hereinabove shall be applied.

 

7.                 DISCHARGE
OF OBLIGATIONS

 

Such refund as provided in the foregoing Paragraphs 5 and 6
by the BUILDER to the BUYER shall forthwith discharge all the obligations,
duties and liabilities of each of the parties hereto to the other except the
claims of the BUILDER against the BUYER, if any, under this CONTRACT. Any and
all refunds or payments due to the BUYER under this CONTRACT shall be effected
by telegraphic transfer to the account specified by the BUYER.

 

8.                 REFUND
GUARANTEE

 

The
BUILDER shall deliver to the BUYER by hard copy or by SWIFT through the BUYER’s
bank, acceptable to the BUILDER, an assignable letter of guarantee issued by a
Bank acceptable to the Buyer as soon as possible but in any case no later than
Ninety (90) days from the date of this CONTRACT for the refund of the
pre-delivery instalments plus interest as aforesaid to the BUYER under or
pursuant to Paragraph 5 above in the form annexed hereto as
Exhibit “A”. All expenses in issuing and maintaining the letter of
guarantee described in this Paragraph shall be borne by the BUILDER. In case of
SWIFT, the BUYER shall advise the BUILDER of the details of the BUYER’s bank
including the SWIFT address upon execution of this CONTRACT.

 

9.                 PERFORMANCE
GUARANTEE

 

Upon
signing this CONTRACT, the BUYER shall provide the BUILDER with an irrevocable
and Corporate Guarantee pursuant to the Terms and Provisions of this Contract
issued by a Corporate Guarantor acceptable to the BUILDER for the due and
faithful performance by the BUYER of all its liabilities and responsibilities
under the CONTRACT including, but not limited to, the payment of the CONTRACT
PRICE and taking delivery of the VESSEL, in the form annexed hereto as
Exhibit “B”.

 

(End of Article)

 

37

 

ARTICLE XI
: BUYER’S DEFAULT

 

1.                 DEFINITION
OF DEFAULT

 

The
BUYER shall be deemed to be in default under this CONTRACT in the following
cases :

 

(a)            If the first, second, third
and fourth instalment is not paid to the BUILDER within respective Three
(3) banking days of such instalments; or

 

(b)           If the fifth instalment is
not deposited at the BUILDER’S BANK or at the account of the BUILDER with any
other bank in accordance with Article X.4.(a)(ii) hereof or if the
said fifth instalment deposit is not released to the BUILDER against
presentation by the BUILDER of a duplicate original copy of the PROTOCOL OF
DELIVERY AND ACCEPTANCE; or

 

(c)            If the BUYER fails to take
delivery of the VESSEL when the VESSEL is duly tendered for delivery by the
BUILDER within Three (3) banking days under the provisions of
Article VII hereof; or

 

(d)           If and order or an effective
resolution shall be passed for winding up of the BUYER (except for the purpose
of reorganization, merger or amalgamation); or

 

(e)            If the BUYER fails to be in
punctual, due and full compliance with any of its obligations under this
CONTRACT.

 

In case the BUYER is in default of any of its obligations
under this CONTRACT, the BUILDER is entitled to and shall have the following
rights, powers and remedies in addition to such other rights, powers and
remedies as the BUILDER may have elsewhere in this CONTRACT and/or at law,
at equity or otherwise.

 

2.                 EFFECT
OF THE BUYER’S DEFAULT ON OR BEFORE THE DELIVERY OF THE VESSEL

 

If
the BUYER shall be in default as provided in Paragraph 1 above of its
obligations under this CONTRACT, then;

 

38

 

(a)            The DELIVERY DATE of the
VESSEL shall be extended automatically for the actual period of such default
and the BUILDER shall not be obliged to pay any liquidated damages for the
delay in delivery of the VESSEL caused thereby.

 

(b)           The BUYER shall pay to the
BUILDER interest at the rate of seven per cent (7%) per annum in respect of the
instalment(s) in default from the respective DUE DATE to the date of actual
receipt by the BUILDER of the full amount of such instalment(s).

 

(c)            If the BUYER is in default
in payment of any of the instalment(s) due and payable prior to or
simultaneously with the delivery of the VESSEL, the BUILDER shall, in writing
or by facsimile, notify the BUYER to that effect, and the BUYER shall, upon
receipt of such notification, forthwith acknowledge in writing or by facsimile
to the BUILDER that such notification has been received.

 

(d)           If any of the BUYER’s
default continues for a period of ten(10) days after the BUILDER’s
notification to the BUYER of such default, the BUILDER may, at its option,
rescind this CONTRACT by serving upon the BUYER a written notice or a facsimile
notice of rescission confirmed in writing.

 

(e)           In the event of such
rescission by the BUILDER of this CONTRACT due to the BUYER’s default as
provided for in paragraph 1 above, the BUILDER shall be entitled to retain and
apply the instalments already paid by the BUYER to the recovery of the BUILDER’s
loss and damage including, but not being limited to, reasonable estimated
profit due to the BUYER’s default and the rescission of this CONTRACT and at
the same time the BUILDER shall have the full right and power either to
complete or not to complete the VESSEL which is the sole property of the
BUILDER as it deems fit, and to sell the VESSEL at a public or private sale on
such terms and conditions as the BUILDER thinks fit without being answerable
for any loss or damage.

 

The proceeds received by the BUILDER from the sale shall be
applied in addition to the instalment(s) retained by the BUILDER as mentioned
hereinabove as follows : -

 

First,                           in
payment of all reasonable costs and expenses of the sale of the VESSEL,
including interest thereon at seven per cent (7%) per annum from the respective
date of payment of such costs and expenses aforesaid to the date of sale on
account of the BUYER’s default.

 

39

 

Second,           if the VESSEL has been
completed, in or towards satisfaction of the unpaid balance of the CONTRACT
PRICE, to which shall be added the cost of all additional work and extras
agreed by the BUYER including interest thereon at seven per cent (7%) per annum
from the respective DUE DATE of the instalment in default to the date of sale,
or if the VESSEL has not been completed, in or towards satisfaction of the
unpaid amount of the cost incurred by the BUILDER prior to the date of sale on
account of construction of the VESSEL, including work, labour, materials and
reasonably estimated profit which the BUILDER would have been entitled to
receive if the VESSEL had been completed and delivered plus interest thereon at
seven per cent (7%) per annum from the respective DUE DATE of the instalment in
default to the date of sale.

 

Third,                      the
balance of the proceeds, if any, shall belong to the BUYER, and shall forthwith
be paid over to the BUYER by the BUILDER.

 

In the event of the proceeds from the sale together with
instalment(s) retained by the BUILDER being insufficient to pay the BUILDER,
the BUYER shall be liable for the deficiency and shall pay the same to the
BUILDER upon its demand.

 

(End of Article)

 

40

 

ARTICLE XII
: BUYER’S SUPPLIES

 

1.                 RESPONSIBILITY
OF THE BUYER

 

The
BUYER shall, at its own risk, cost and expense, supply all the BUYER’s supplies
as specified in Paragraph 0.16.1 of the SPECIFICATIONS (hereinafter called the
“BUYER’S SUPPLIES”), to the BUILDER at the SHIPYARD in proper condition ready
for installation and in accordance with the time schedule to be furnished
by the BUILDER sixty
(60) days from signing this Contract.

 

In order to facilitate the installation of the BUYER’S
SUPPLIES by the BUILDER, the BUYER shall furnish the BUILDER with the necessary
plans, instruction books, test report and all test certificates required by the
BUILDER and shall cause the representative(s) of the makers of the BUYER’S
SUPPLIES to give the BUILDER any advice, instructions or assistance which the
BUILDER may reasonably require in the installation or adjustment thereof
at the SHIPYARD, all without cost or expense to the BUILDER.

 

The BUYER shall be liable for any expense incurred by the
BUILDER for repair of the BUYER’S SUPPLIES due to defective design or
materials, poor workmanship or performance or due to damage in transit and the
DELIVERY DATE of the VESSEL shall be extended for the period of such repair if
such repair shall affect the delivery of the VESSEL.

 

Commissioning into good order of the BUYER’S SUPPLIES during
and after installation on board shall be made at the BUYER’s expense by the
representative of respective maker or the person designated by the BUYER in
accordance with the BUILDER’s building schedule.

 

Should the BUYER fail to deliver to the BUILDER the BUYER’S
SUPPLIES and the necessary document or advice for such supplies within the time
specified by the BUILDER, the DELIVERY DATE of the VESSEL shall automatically
be extended for the period of such delay if such delay in delivery shall affect
the delivery of the VESSEL. In such event, the BUYER shall pay to the BUILDER
all losses and damages sustained by the BUILDER due to such delay in the
delivery of the BUYER’S SUPPLIES and such payment shall be made upon delivery
of the VESSEL, provided, however, that the BUILDER shall have :

 

41

 

(a)            furnished the BUYER with the
time schedule referred to above, two (2) months prior to installation
of the BUYER’S SUPPLIES and

 

(b)           given the BUYER written
notice of any delay in delivery of the BUYER’S SUPPLIES and the necessary
document or advice for such supplies as soon as the delay occurs which might
give rise to a claim by the BUILDER under this Paragraph.

 

Furthermore, if the delay in delivery of the BUYER’S SUPPLIES
and the necessary document or advice for such supplies should exceed twenty
(20) days from the date specified by the BUILDER, the BUILDER shall be entitled
to proceed with construction of the VESSEL without installation of such items
(regardless of their nature or importance to the BUYER or the VESSEL) in or on
the VESSEL without prejudice to the BUILDER’s right hereinabove provided, and
the BUYER shall accept the VESSEL so completed.

 

2.                 RESPONSIBILITY
OF THE BUILDER

 

The
BUILDER shall be responsible for storing, safekeeping and handling with
reasonable care of the BUYER’S SUPPLIES which the BUILDER is required to
install on board the VESSEL under Paragraph 0.16.1 of the SPECIFICATIONS after
delivery of such supplies to the SHIPYARD, and shall install such supplies on
board the VESSEL at the BUILDER’s expense unless otherwise specified in the
SPECIFICATIONS.

 

However, the BUILDER shall not be responsible for the
quality, performance or efficiency of any equipment included in the BUYER’S
SUPPLIES and is under no obligation with respect to the guarantee of such
equipment against any defects caused by poor quality, performance or efficiency
of the BUYER’S SUPPLIES. If any of the BUYER’S SUPPLIES is lost or damaged
while in the custody of the BUILDER, the BUILDER shall, if the loss or damage
is due to wilful default or negligence on its part, be responsible for such
loss or damage.

 

(End of Article)

 

42

 

ARTICLE XIII
- INSURANCE

 

1.                          EXTENT OF INSURANCE COVERAGE

 

From the time of launching until
delivery of the VESSEL, the BUILDER shall, at its own cost and expense, insure
the VESSEL and all machinery and equipment, appurtenances and outfits,
including the BUYER’s Supplies, built into or installed in or upon the VESSEL,
against all risks under the “Institute Causes for BUILDER’s Risk”, with first
class insurance company or underwriters in.

 

The amount of such insurance coverage
shall, up to the date of delivery of the VESSEL, not be less than the aggregate
amount of all instalments paid by the BUYER to the BUILDER, plus the value of
the BUYER’s Supplies in the custody of the Shipyard.

 

The BUILDER shall provide the copy of corresponding
insurance coverage of the VESSEL to the BUYER.

 

2.                          TERMINATION OF BUILDER’S
OBLIGATION TO INSURE

 

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

 

 

(End
of Article)

 

43

 

ARTICLE XIV:
ARBITRATION

 

1.                 APPOINTMENT
OF THE ARBITRATOR

 

If any dispute or difference shall arise between the parties
hereto concerning any matter or thing herein contained, or the operation or the
design and / or construction of the VESSEL, its machinery and equipment
thereof, or any matter or thing in any way connected with this CONTRACT or the
rights, duties or liabilities of either party under or in connection with this
CONTRACT, then, in every such case, the dispute or difference shall be referred
to arbitration in London by a sole arbitrator. The arbitrator shall be
appointed by agreement within fourteen (14) days of first written notification
of either party to the other of intention to arbitrate such dispute or
difference, or in default of such agreement, upon the application of either of
the parties, by the President for the time being of the London Maritime
Arbitrators Association who shall in making any such appointment have due
regard to the requirement for an expeditious resolution of the dispute and in
particular the availability of any arbitrator so appointed for an early hearing
date.

 

2.                 LAWS
APPLICABLE

 

Any arbitration arising hereunder shall be governed by and
construed in accordance with the Arbitration Act 1996 of England or any
statutory modification or re-enactments thereof for the time being in force.
The award of the arbitrator shall be final and binding upon parties hereto.

 

3.                 PROCEEDINGS

 

In the event of any dispute or difference arising or
occurring prior to delivery to, or acceptance by, the BUYER of the VESSEL being
referred to arbitration, the parties hereby acknowledge that time is of the
essence in obtaining an award from the arbitrator on such dispute or difference
and the parties hereby agree that the arbitration shall be conducted according
to the following timetable:

 

(a)           The claimant in the
arbitration to serve points of claim within fourteen (14) days of the
appointment of the arbitrator.

 

(b)          The respondent in the
arbitration to serve points of defence and points of counterclaim,

 

44

 

if
any, within fourteen (14) days thereafter.

 

(c)        The claimant to serve points
of reply and defence to counterclaim, if any, within seven (7) days
thereafter and the hearing of the arbitration to commence within twelve (12)
weeks of the appointment of the arbitrator.

 

4.                 ALTERATION
OF DELIVERY OF THE VESSEL

 

In the event of the arbitration of any dispute or difference
arising or occurring prior to delivery to, or acceptance by the BUYER of the
VESSEL, the award by the arbitrator shall include a finding as to whether or
not the contractual delivery date of the VESSEL should, as a result of such
dispute, be in any way altered thereby.

 

5.                 NOTICE OF AWARD

 

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

 

6.                 EXPENSES

 

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

 

7.                 ENTRY IN COURT

 

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

 

(End of Article)

 

45

 

ARTICLE XV:
SUCCESSORS AND ASSIGNS

 

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

 

The BUYER is hereby allowed to assign the Contract for the
purposes of financing without BUILDER’S approval. However, the BUYER shall
remain responsible for performance by the assignee, its successors and assigns
of all the BUYER’s obligations, liabilities and responsibilities under this
CONTRACT. It is understood that any expenses or charges incurred due to the
transfer of this CONTRACT shall be for the account of the BUYER. The BUYER is
further allowed to nominate a company controlled by the BUYER to take over the
Contract.

 

The BUILDER shall fully
cooperate in case the BUYER requests UK Tax lease financing arrangements. However,
the BUYER shall remain responsible for performance by the assignee, its
successors and assigns of all the BUYER’s obligations, liabilities and
responsibilities under this CONTRACT. It is understood that any expenses or
charges incurred due to the transfer of this CONTRACT shall be for the account
of the BUYER.

 

The BUILDER shall have the
right to assign this CONTRACT at any time after the effective date hereof,
provided that prior written agreement is obtained from the BUYER.

 

(End of Article)

 

46

 

ARTICLE XVI:
TAXES AND DUTIES

 

1.                 TAXES

 

Unless otherwise expressly provided for in this CONTRACT, all
costs and taxes including stamp duties, if any, incurred in or levied by any
country except Korea in connection with this CONTRACT shall be borne by the
BUYER and corresponding costs and taxes in Korea, before delivery of the
VESSEL, if any, shall be borne by the BUILDER.

 

2.                 DUTIES

 

The BUILDER shall hold the BUYER harmless from any payment of
duty imposed in Korea upon materials or supplies which, under the terms of this
CONTRACT, or amendments thereto, may be supplied by the BUYER from abroad
for the construction of the VESSEL.

 

The BUILDER shall likewise hold the BUYER harmless from any
payment of duty imposed in Korea in connection with materials or supplies for
operation of the VESSEL, including running stores, provisions and supplies
necessary to stock the VESSEL for its operation. This indemnity does not,
however, extend to any items purchased by the BUYER for use in connection with
the VESSEL which are not absolutely required for the construction or operation
of the VESSEL.

 

(End of Article)

 

47

 

ARTICLE XVII:
PATENTS, TRADEMARKS AND COPYRIGHTS

 

1.                 PATENTS,
TRADEMARKS AND COPYRIGHTS

 

Machinery and equipment of the VESSEL, whether made or
furnished by the BUILDER under this CONTRACT, may bear the patent numbers,
trademarks, or trade names of the manufacturers. The BUILDER shall defend and
save harmless the BUYER from all liabilities or claims for or on account of the
use of any patents, copyrights or design of any nature or kind, or for the
infringement thereof including any unpatented invention made or used in the
performance of this CONTRACT and also for any costs and expenses of litigation,
if any in connection therewith. No such liability or responsibility shall be
with the BUILDER with regard to components and/or equipment and/or design
supplied by the BUYER.

 

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

 

2.                 RIGHTS
TO THE SPECIFICATIONS, PLANS, ETC.

 

The
BUILDER retains all rights with respect to the SPECIFICATIONS, plans and
working drawings, technical descriptions, calculations, test results and other
data, information and documents concerning the design and construction of the
VESSEL and the BUYER shall not disclose the same or divulge any information
contained therein to any third parties, including but not limited to any other
shipbuilders, without the prior written consent of the BUILDER, excepting where
it is necessary for usual operation, repair and maintenance of the VESSEL.

 

(End of Article)

 

48

 

ARTICLE XVIII:
INTERPRETATION AND GOVERNING LAW

 

This CONTRACT has been
prepared in English and shall be executed in duplicate and in such number of
additional copies as may be required by either party respectively. The
parties hereto agree that the validity and interpretation of this CONTRACT and
of each Article and part thereof shall be governed by the laws of
England.

 

(End of Article)

 

49

 

ARTICLE XIX
: NOTICE

 

Any and all notices,
requests, demands, instructions, advices and communications in connection with
this CONTRACT shall be written in English, sent by registered air mail or
facsimile and shall be deemed to be given when first received whether by
registered mail or facsimile. They shall be addressed as follows, unless and
until otherwise advised : -

 

	
  To the BUILDER :

  	
  Sungdong Shipbuilding & Marine Engineering Co.,
  Ltd.

  
	
   

  	
  1609-2, Hwang-li,
  Gwangdo-myeon, Tongyoung-si,

  
	
   

  	
  Gyeongnam, Korea

  
	
   

  	
   

  
	
   

  	
  Contract Administration
  Department

  
	
   

  	
  Attn : Mr. S. K. Ahn

  
	
   

  	
  Facsimile: (82) 55 650
  9294

  
	
   

  	
  Telephone: (82) 55 650
  9311

  
	
   

  	
   

  
	
  To
  the BUYER :

  	
  Danaos Shipping Co., Ltd.

  
	
   

  	
  Akti Kondyli 14, 185 45 Piraeus, Greece

  
	
   

  	
  Attn : Mr. Dimitrios
  Vastarouchas

  
	
   

  	
  Facsimile : (30) 210 422
  0855

  
	
   

  	
  Telephone: (30) 210 419
  6529

  

 

The said notices shall
become effective upon receipt of the letter or facsimile communication by the
receiver thereof. Where a notice by facsimile is concerned which is required to
be confirmed by letter, then, unless the CONTRACT or the relevant
Article thereof otherwise requires, the notice shall become effective upon
receipt of the facsimile.

 

(End of Article)

 

50

 

ARTICLE XX
: EFFECTIVENESS OF THIS CONTRACT

 

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

 

(End of Article)

 

51

 

ARTICLE XXI
- INTERPRETATION

 

1.                          LAWS APPLICABLE

 

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

 

2.                          DISCREPANCIES

 

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

 

3.                          ENTIRE AGREEMENT

 

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

 

4.                          AMENDMENTS AND SUPPLEMENTS

 

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

 

The Contract can only be amended in
writing.

 

(End of Article)

 

52

 

ARTICLE XXII
: EXCLUSIVENESS

 

This CONTRACT shall
constitute the only and entire agreement between the parties hereto, and unless
otherwise expressly provided for in this CONTRACT, all other agreements, oral
or written, made and entered into between the parties prior to the execution of
this CONTRACT shall be null and void.

 

(End of Article)

 

53

 

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

 

 

	
  BUYER

  	
  BUILDER

  
	
   

  	
   

  
	
   

  	
   

  
	
  For and on behalf of

  	
  For and on behalf of

  
	
  BOXCARRIER (NO.5) CORP.

  	
  SUNGDONG
  SHIPBUILDING &

  
	
   

  	
  MARINE ENGINEERING
  CO.,LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By

  	
  /s/ John Coustas

  	
   

  	
  By

  	
  /s/ Kwan Hong Yu

  	
   

  
	
  Name: John Coustas

  	
  Name: Kwan Hong Yu

  
	
  Title:

  	
  Title:

  
	
  President & Chief
  Executive Officer

  	
  Chairman & Chief
  Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
  WITNESS : /s/ Huong Chul
  Jung, Attorney-in-fact

  	
  WITNESS: [Illegible]

  
						

 

54

 

EXHIBIT “A”

 

LETTER OF
REFUNDMENT GUARANTEE

 

Gentlemen
:

 

We
hereby issue our letter of guarantee
no.             in
favour of                   
(hereinafter called the “BUYER”) for account of
                  
(hereinafter called the “BUILDER”) as follows in consideration of the
shipbuilding contract dated (hereinafter called the “Contract”) made by and
among the BUYER and the BUILDER for the construction of one(1) single
screw diesel engine driven Container VESSEL having BUILDER’s Hull
No. (hereinafter called the “VESSEL”).

 

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

 

The
amount of this guarantee will be automatically increased, not more than three
times, upon BUILDER’s receipt of the respective instalment: each time by the
amount of instalment of US$ (Say U.S. Dollars), US$.- (Say U.S. Dollars) and US$.-
(Say U.S. Dollars) respectively plus interest thereon as provided in the
Contract, but in any eventuality the amount of this guarantee shall not exceed
the total sum of US$.- (Say U.S. Dollars plus interest thereon at the rate of
Seven (7) percent per annum from the respective dates on which such sums
were paid by the BUYER to the BUILDER to the date of remittance by telegraphic
transfer of the refund. However, in the event of cancellation of the CONTRACT
being based on delays due to force majeure or other causes beyond the control
of the BUILDER, the interest rate of refund shall be reduced to six point five
per cent (6.5%) per annum as provided in Article X of the CONTRACT.

 

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

 

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

 

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

 

1

 

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

 

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

 

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

 

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

 

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

 

 

 

 

 

 

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

 

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

 

2

 

                                                             as
our agents for service of process in connection with any proceedings in such
courts.

 

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

 

IN
WITNESS WHEREOF, we have hereunder set our hands and seal by our duly authorized
representatives this           day
of
               ,
2006.

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  For
  and on behalf of

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
  Name
  :

  
	
   

  	
  Title
  : Attorney-in-Fact

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  For
  and on behalf of

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
  Name
  :

  
	
   

  	
  Title
  : Attorney-in-Fact

  

 

3

 

EXHIBIT “B”

 

 

Date
:             , 2006

 

PERFORMANCE GUARANTEE

 

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

 

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

 

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

 

 

	
  GUARANTOR
  :

  
	
  BY
  :

  	
   

  	
   

  
	
  TITLE :

  
	
  WITNESS
  :

  

 

4

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