Document:

Shipbuilding Contract and Addendum between Dorchester Maritime Corp.

                                                                                                                                                            Exhibit
    10.4

     

    Pursuant
      to 17 CFR 240.24b-2, confidential information (indicated by [***]) has been
      omitted and has been filed separately with the Securities and Exchange
      Commission pursuant to a Confidential Treatment Application filed with the
      Commission.

     

    

    

    

    SHIPBUILDING
      CONTRACT

    

    FOR

    

    CONSTRUCTION
      OF ONE

    MULTI-PURPOSE
      VESSEL

    

    

    

    

    (HULL
      NO.
      NYHS200722)

    

    

    

    BETWEEN

    

    DORCHESTER
      MARITIME CORP.

    

    AS
      BUYER

    

    

    

    

    AND

    

    

     

    CHINA
      COMMUNICATIONS CONSTRUCTION COMPANY LTD

    

    

    

    

    AND

    

    

    NANTONG
      YAHUA SHIPBUILDING CO., LTD.

    

    

    

    COLLECTIVELY
      AS SELLER

    CONTENTS
      

    

    Page
      No.

    1. ARTICLE
      I - DESCRIPTION AND CLASS

    1.1 DESCRIPTION

    1.2 CLASS
      AND RULES: GENERAL QUALITY STANDARDS

    1.3 PRINCIPAL
      PARTICULARS AND DIMENSIONS OF THE VESSEL

    1.4 GUARANTEED
      SPEED

    1.5 GUARANTEED
      FUEL CONSUMPTION

    1.6 GUARANTEED
      DEADWEIGHT

    1.7 SUBCONTRACTING

    1.8 MAKERS’
      LIST

    1.9 REGISTRATION

    1.10 DESIGN
      OBLIGATIONS

    1.11 SPARE
      PARTS

    2. ARTICLE
      II - CONTRACT PRICE & TERMS OF PAYMENT

    2.1 CONTRACT
      PRICE

    2.2 CURRENCY

    2.3 TERMS
      OF PAYMENT

    2.4 METHOD
      OF PAYMENT

    2.5 PREPAYMENT

    2.6 SECURITY
      FOR PAYMENT OF INSTALMENTS BEFORE DELIVERY

    2.7 REFUNDS

    3. ARTICLE
      III - ADJUSTMENT OF THE CONTRACT PRICE

    3.1 DELIVERY
      DATE

    3.2 SPEED

    3.3 EXCESSIVE
      FUEL CONSUMPTION

    3.4 DEADWEIGHT

    3.5 EFFECT
      OF RESCISSION

    4. ARTICLE
      IV - SUPERVISION AND INSPECTION

    4.1 APPOINTMENT
      OF THE BUYER'S SUPERVISOR

    4.2 APPROVAL
      OF PLANS AND DRAWINGS

    4.3 SUPERVISION
      AND INSPECTION BY THE SUPERVISOR

    4.4 LIABILITY
      OF THE SELLER

    4.5 SALARIES
      AND EXPENSES

    4.6 REPORT
      OF PROGRESS

    4.7 REPLACEMENT
      OF SUPERVISOR

    5. ARTICLE
      V - MODIFICATION, CHANGES AND EXTRAS

    5.1 HOW
      EFFECTED

    5.2 CHANGES
      IN RULES AND REGULATIONS, ETC.

    5.3 SUBSTITUTION
      OF MATERIALS AND/OR EQUIPMENT

    5.4 BUYER'S
      SUPPLIED ITEMS

    6. ARTICLE
      VI - TRIALS

    6.1 NOTICE

    6.2 HOW
      CONDUCTED

    6.3 METHOD
      OF ACCEPTANCE OR REJECTION

    6.4 DISPOSITION
      OF SURPLUS CONSUMABLE STORES

    6.5 EFFECT
      OF ACCEPTANCE

    7. ARTICLE
      VII - DELIVERY

    7.1 TIME
      AND PLACE

    7.2 WHEN
      AND HOW EFFECTED

    7.3 DOCUMENTS
      TO BE DELIVERED TO THE BUYER

    7.4 TITLE
      AND RISK

    7.5 REMOVAL
      OF VESSEL

    7.6 TENDER
      OF THE VESSEL

    8. ARTICLE
      VIII - DELAYS & EXTENSION OF TIME FOR DELIVERY

    8.1 CAUSE
      OF DELAY

    8.2 NOTICE
      OF DELAY

    8.3 DEFINITION
      OF PERMISSIBLE DELAY

    8.4 RIGHT
      TO RESCIND FOR EXCESSIVE DELAY

    9. ARTICLE
      IX - WARRANTY OF QUALITY

    9.1 GUARANTEE
      OF MATERIAL AND WORKMANSHIP

    9.2 NOTICE
      OF DEFECTS

    9.3 REMEDY
      OF DEFECTS

    9.4 EXTENT
      OF THE SELLER'S LIABILITY

    9.5 GUARANTEE
      ENGINEER

    10. ARTICLE
      X - INSOLVENCY OF SELLER: RESCISSION BY THE BUYER

    11. ARTICLE
      XI - BUYER'S DEFAULT

    11.1 DEFINITION
      OF DEFAULT

    11.2 NOTICE
      OF DEFAULT

    11.3 INTEREST
      AND CHARGE

    11.4 DEFAULT
      BEFORE DELIVERY OF THE VESSEL

    11.5 SALE
      OF THE VESSEL

    12. ARTICLE
      XII - INSURANCE

    12.1 EXTENT
      OF INSURANCE COVERAGE

    12.2 APPLICATION
      OF RECOVERED AMOUNT

    12.3 TERMINATION
      OF THE SELLER'S OBLIGATION TO INSURE

    13. ARTICLE
      XIII - DISPUTES AND ARBITRATION

    13.1 PROCEEDINGS

    13.2 ALTERNATIVE
      ARBITRATION BY AGREEMENT

    13.3 NOTICE
      OF AWARD

    13.4 EXPENSES

    13.5 AWARD
      OF ARBITRATION

    13.6 ENTRY
      IN COURT

    13.7 ALTERATION
      OF DELIVERY DATE

    14. ARTICLE
      XIV - RIGHT OF ASSIGNMENT

    15. ARTICLE
      XV - TAXES AND DUTIES

    15.1 TAXES

    15.2 DUTIES

    16. ARTICLE
      XVI - PATENTS, TRADEMARKS AND COPYRIGHTS

    17. ARTICLE
      XVII - NOTICES

    18. ARTICLE
      XVIII - EFFECTIVE DATE OF CONTRACT

    19. ARTICLE
      XIX - INTERPRETATION

    19.1 LAW
      APPLICABLE

    19.2 DISCREPANCIES

    19.3 DEFINITION

    

    Exhibit
      "A":  IRREVOCABLE
      REFUND LETTER OF GUARANTEE FOR THE 1st
      INSTALMENT

    

    Exhibit
      “B”    IRREVOCABLE
      REFUND LETTER OF GUARANTEE FOR THE 2nd,
      3rd
      and
      4th
      INSTALMENTS

    

    Exhibit
      "C":  IRREVOCABLE
      PAYMENT LETTER OF GUARANTEE

    

    Exhibit
      "D": FORM
      OF
      STAGE CERTIFICATE

     

    
      
        
          Shipbuilding
            Contract Hull No. NYHS200722

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
        

      

    

    

    

    SHIPBUILDING
      CONTRACT

    

    FOR

    

    CONSTRUCTION
      OF ONE 

    MULTI-PURPOSE
      VESSEL 

     

    (HULL
      NO.NYHS200722)

    

    

    This
      CONTRACT, entered into this 
      day of
      February 2007 by and between
      DORCHESTER MARITIME CORP.,
      a
      corporation organized and existing under the laws of the Marshall Islands,
      having its registered office at Trust Company Complex, Ajeltake Road, Ajeltake
      Island, Majuro, Marshall Islands MH96960 (hereinafter called the "BUYER")
      on one
      part; and
      CHINA COMMUNICATIONS CONSTRUCTION COMPANY LTD,
      a
      corporation organized and existing under the laws of the People's Republic
      of
      China, having its registered office at No.C88, An Ding Men Wai Street, Beijing
      100011, the People's Republic of China (hereinafter called "CCCC"),and
      NANTONG
      YAHUA SHIPBUILDING CO., LTD.,
      a
      corporation organized and existing under the laws of the People's Republic
      of
      China, having its registered office at 1# Hongzha Road, Jiuweigang, Nantong
      Jiangsu P.C. 226361, the People's Republic of China (hereinafter called the
      "BUILDER")
      on the
      other part, CCCC and the BUILDER being hereinafter collectively called the
      "SELLER".

    

    WITNESSETH

    

    IN
      CONSIDERATION OF the mutual covenants contained herein, the SELLER agrees to
      design, build, launch, equip and complete at the BUILDER's Shipyard at 1#
      Hongzha Road, Jiuweigang, Nantong Jiangsu P.C. 226361, the People's Republic
      of
      China (the “SHIPYARD”)
      and to
      sell and deliver to the BUYER after completion and successful trial one (1)
      multi-purpose vessel as more fully described in Article I hereof, to be
      registered under the flag of Panama and
      the
      BUYER agrees to purchase and take delivery of the aforesaid vessel from the
      SELLER and to pay for the same in accordance with the terms and conditions
      hereinafter set forth.

    

    
      	1.  	
              ARTICLE
                I - DESCRIPTION AND CLASS

            

    

    

    
      	1.1  	
              DESCRIPTION

            

    

    

    The
      vessel (hereinafter called the "VESSEL")
      is a
      multi-purpose vessel, with a scantling draft (moulded) of 10.90 meters and
      with
      the dimensions stated in Article I paragraph 3, of the class described below.
      The VESSEL shall have the BUILDER's Hull No.NYHS200722 and shall be designed,
      constructed, equipped and completed in accordance with the following
      Specifications:

    

    (1) Specification
      for TBS International Multi-Purpose Vessel(Drawing No.SC4461-01-02SM Rev. 1
      December 24, 2006) (the “Technical
      Specification”)
      

    (2) General
      Arrangement (Drawing No.SC4461-010-03 Rev. 1)

    (3) Midship
      Section (Drawing No. SC4461-011-01 Rev. 1)

    (4) Makers
      List for Equipment (Drawing No. SC4461-010-MX Rev.2)

    

    each
      initialled by each of the parties to this Contract on 24 December 2006
      (hereinafter collectively called the "Specifications"),
      and
      forming an integral part hereof. 

    

    
      	1.2  	
              CLASS
                AND RULES: GENERAL QUALITY
                STANDARDS

            

    

    

    The
      VESSEL, including its machinery and equipment, shall be designed and constructed
      in accordance with the rules, regulations and requirements of Lloyd’s Register
      of Shipping (hereinafter called the "Classification Society")
      so as
      to achieve on delivery the following Class notation:- 

    

    LR
      +100A1, STRENGTHENED FOR HEAVY CARGOES, CONTAINER CARGOES ON TWEEN DECK AND
      ON
      UPPER DECK AND ALL HATCH COVERS, +LMC, SCM, *IWS, UMS

    

    The
      VESSEL shall also comply with the rules, regulations and requirements of the
      other regulatory bodies and authorities as fully described in the
      Specifications.

    

    The
      requirements of such regulatory bodies and authorities as fully described in
      the
      Specifications, including those of the Classification Society, are to include
      any rules, regulations and requirements announced but not in effect as at the
      date of this Contract provided they are scheduled to come into effect as
      compulsorily applicable for the VESSEL prior to the Delivery Date specified
      in
      Article 7 hereof. 

    

    The
      VESSEL’s Classification status and certificates are to be clean and free of
      conditions and/or recommendations of Class, without any references in the
      memoranda, other than as permitted in the Specifications.

    

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

    

    All
      fees
      and charges incidental to the Classification Society and to comply with the
      rules, regulations and requirements defined in this Contract as well as
      royalties, if any, payable on account of the construction of the VESSEL shall
      be
      for the account of the SELLER, except as otherwise provided and agreed herein.
      The key plans, materials and workmanship entering into the construction of
      the
      VESSEL shall at all times be subject to inspections and tests in accordance
      with
      the rules and regulations of the Classification Society.

    

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

    

    To
      the
      extent (i) not specified by the Classification Society or other regulatory
      authorities and (ii) not otherwise expressly stated in this Contract or the
      Specifications, all of the works envisaged by this Contract shall be undertaken
      by the SELLER in a good, sound and workmanlike manner in accordance with the
      first-class Chinese shipbuilding and marine engineering standards and practice
      for vessels of the present type, including without limitation such standards
      and
      practice in relation to quality assurance. The VESSEL shall be delivered safely
      afloat at the Shipyard following successful completion of trials and fully
      ready
      to serve its intended purpose.

    

    
      	1.3  	
              PRINCIPAL
                PARTICULARS AND DIMENSIONS OF THE
                VESSEL

            

    

    

    
      	
              (a)

            	
              Hull:

            	 

    

    Length
      overallNot
      to
      exceed [***] m

    Length
      between perpendiculars [***]
      m

    Breadth
      moulded [***]
      m

    Breadth,
      extreme at any point
      Not to
      exceed [***] m

    Depth
      moulded [***]
      m

    Scantling
      draft moulded [***]
      m

    Design
      draft moulded [***]
      m

    

    The
      above
      principal particulars can be changed by mutual agreement between the parties
      according to the final design.

    

    The
      Parties hereby expressly agree that (i) it shall be a condition precedent to
      her
      delivery and acceptance by the BUYER that the VESSEL shall not exceed the
      dimensions for length overall and extreme breadth stated in paragraph (a) of
      this Article and that (ii) the BUYER be entitled in such circumstances to reject
      the VESSEL pursuant to Article 6.3 without prejudice to any of its rights under
      this Agreement. 

    

    
      	
              (b)

            	
              Propelling
                Machinery:

            

    

    

    The
      VESSEL shall be equipped, in accordance with the Specifications, with
      [***].
      

    

    
      	(c)  	
              Lines
                Plan:

            

    

    

    It
      is
      understood and agreed that the lines plan of the VESSEL’s hull will be developed
      following the date of this Agreement. Such development shall be undertaken
      by
      the BUYER at its own cost, including model tests and calculations. The model
      will be made available to the SELLER for final model tests of the propeller
      design. The final model test with design propeller to be SELLER’s
      cost.

    

    
      	1.4  	
              GUARANTEED
                SPEED

            

    

    

    The
      SELLER guarantees that the trial speed at the trial draft after any correction
      undertaken in accordance with paragraph 3.5 of the Technical Specification
      is to
      be not less than the speed as determined by model basin testing in a Chinese
      ship model test facility, at a draft/trim condition corresponding to ballast
      loading condition, at a main engine output of Maximum Continuous Rating (MCR)
      9,480 kW as stipulated in the Specifications, (hereinafter called the
      "GUARANTEED SPEED").
      

    

    
      	1.5  	
              GUARANTEED
                FUEL CONSUMPTION

            

    

    

    The
      SELLER guarantees that the fuel oil consumption of the Main Engine as determined
      by the shop test is not to exceed the consumption as stipulated in Paragraph
      3.6
      of Part I of the Specifications (hereinafter called the "GUARANTEED FUEL CONSUMPTION").
      

    

    
      	1.6  	
              GUARANTEED
                DEADWEIGHT

            

    

    

    The
      SELLER guarantees that the VESSEL is to have a deadweight of not less than
      30,000 metric tons at the design draft moulded of 10.00 meters in sea water
      of
      1.025 specific gravity as defined in the Specifications (hereinafter called
      the
      "Guaranteed
      Deadweight").

     

    The
      actual deadweight of the VESSEL expressed in metric tons shall be based on
      calculations made by the SELLER and checked by the BUYER, and all measurements
      necessary for such calculations shall be performed in the presence of the
      Supervisor or the party authorized by the BUYER. 

    

    Should
      there be any dispute between the SELLER and the BUYER in such calculations
      and/or measurements, the decision of the Classification Society shall be
      final.

    

    
      	1.7  	
              SUBCONTRACTING

            

    

    

    The
      SELLER may, at its sole discretion and responsibility, subcontract any portion
      of the construction work of the VESSEL not exceeding in value United States
      Dollars five hundred thousand (US$500,000.00), but delivery and final assembly
      into the VESSEL of any such work subcontracted shall be at the BUILDER's
      Shipyard. Save in respect of the VESSEL’s block fabrication which may be carried
      out at the BUILDER’s Nikka facility at Nantong’s industrial area for marine
      equipment, the SELLER shall not otherwise be entitled to subcontract any portion
      of the contract work exceeding in value United States Dollars five hundred
      thousand (US$500,000.00) without the written consent of the BUYER, the same
      not
      to be unreasonably withheld. The SELLER shall remain fully responsible for
      such
      subcontracted work under this Contract as if it had undertaken the same.

    

    
      	1.8  	
              MAKERS’
                LIST

            

    

     

    In
      respect of each of the items of materials and equipment to be supplied by the
      subcontractors and suppliers specifically defined in the Makers’ List, the
      SELLER shall be obliged to select one of the subcontractors and suppliers
      therein listed as pre-qualified in respect of such item of materials and
      equipment to supply the same. 

     

    The
      SELLER shall notify the BUYER of its selection of each “Major Supplier” (as
      defined below) and the relevant equipment or system to be provided by the same
      within one hundred and twenty (120) days of the Effective Date of this Contract
      (as such term is hereinafter defined). In addition, the SELLER shall notify
      the
      BUYER of its selection of all the remaining subcontractors and suppliers as
      set
      out in the Makers’ List once such selection has been made. However,
      should the BUYER wish the SELLER to contract with another subcontractor or
      supplier (other than those subcontractors or suppliers notified to the BUYER
      in
      accordance with the aforementioned provisions of this Article), the BUYER shall
      advise the SELLER of its preference within five (5) New York business days
      of
      receipt of such notification from the SELLER. In the event that the BUYER's
      preference involves an increase or decrease in the costs of such item of
      materials and equipment from the costs applicable to the SELLER’s selection, the
      SELLER shall within five (5) New York business days of being so notified by
      the
      BUYER, quote the amount of such cost change to the BUYER who shall have the
      option to notify the SELLER within five (5) New York business days thereafter
      that it insists on its preference, and in such case the amount of the cost
      change shall be added to or subtracted from, as the case may be, the Contract
      Price.
      If the
      BUYER does not make such election within such five (5) New York business day
      period, the BUYER shall be deemed to have accepted the amount of the cost
      increase or decrease, as the case may be, so advised by the SELLER.  

    

    Machinery
      and equipment defined in the Makers’ List may be built in the People’s Republic
      of China according to license agreement of Maker, provided that the machinery
      and equipment is fully guaranteed by the licensor and that the function and
      design is equivalent to the licensor’s product. The technical specification of
      all equipment/materials shall comply with the requirements set forth in the
      Specifications of the VESSEL. If the SELLER or Maker proposes alternative
      equipment specifications, this shall be specifically called to the attention
      of
      the BUYER by the SELLER in writing, including a complete technical specification
      of the alternate equipment to be submitted to the BUYER for approval. Failure
      by
      the SELLER to call BUYER’s attention to proposed alternative equipment
      specifications shall nullify BUYER’s acceptance of the equipment/Maker and shall
      not relieve the SELLER from meeting the equipment requirements given in the
      Specifications. 

    

    For
      the
      purposes of this Article 1.8, “Major Supplier” means each subcontractor or
      supplier identified as such in the Makers’ List.

    

    
      	1.9  	
              REGISTRATION

            

    

    

    The
      VESSEL shall be registered by the BUYER at its own cost and expenses under
      the
      laws of registered nationality at the time of delivery and acceptance thereof.
      

    

    
      	1.10  	
              DESIGN
                OBLIGATIONS

            

    

     

    It
      is
      expressly agreed and understood that the SELLER shall be solely responsible
      for
      all aspects of the design of the VESSEL, whether or not such design has been
      approved by the BUYER and/or the Classification Society, and whether or not
      such
      design derives from drawings, plans calculations or other data supplied by
      the
      BUYER and/or any modification requests from the BUYER. 

    

    The
      BUYER
      shall be entitled to unrestricted use of the design documents of the VESSEL
      as
      listed in the Contract Specifications PART I - GENERAL, SECTION 9 PLANS, ETC.,
      for any purpose. 

    

    
      	1.11  	
              SPARE
                PARTS

            

    

     

    The
      SELLER shall furnish on board the VESSEL at the time of delivery of the VESSEL,
      the spare parts and maintenance tools of the type, and in at least the specified
      quantities, recommended by the makers of the machinery and equipment to which
      they relate and/or required by the Classification Society or other regulatory
      authorities. In the event that the quantity of spare parts and tools
      specifically referred to in the Technical Specification are greater than the
      specified quantities recommended by the makers and/or required by the
      Classification Society, the Seller shall furnish the quantity of spare parts
      and
      tools referred to in the Technical Specification. The cost of the spare parts
      and maintenance tools is included in the Contract Price. 

     

    The
      SELLER shall be responsible at its own cost for receiving, indoor storage,
      handling, bringing on board and storage on the VESSEL of all such spare parts
      and maintenance tools under instruction and supervision of the Supervisor.
      The
      spare parts and maintenance tools furnished by the SELLER shall be properly
      protected against physical decay, corrosion and mechanical damage and shall
      be
      properly listed so that replacements may be readily ordered. 

     

    During
      the guarantee period as more specifically described in Article 9.1, the SELLER
      may, with the prior written approval of the BUYER, use such of the spare parts
      furnished to the VESSEL as the SELLER may require in order to remedy any defects
      against which the VESSEL is guaranteed under Article 9. However, any such spare
      parts so used by the SELLER during this period, shall at the SELLER’s sole cost
      and expense be promptly replaced on board the VESSEL or be paid at BUYER’s
      purchase cost for the same, including any freight costs. 

    

    
      	2.  	
              ARTICLE
                II - CONTRACT PRICE & TERMS OF
                PAYMENT

            

    

    

    
      	2.1  	
              CONTRACT
                PRICE

            

    

     

    The
      purchase price of the VESSEL is United States Dollars thirty-five million four
      hundred and twenty thousand (US$ 35,420,000) only, net receivable by the SELLER
      (hereinafter called the "Contract Price"),
      which
      is exclusive of the cost for the BUYER's supplies as provided in Article V
      hereof, and shall be subject to upward or downward adjustment, if any, as
      hereinafter set forth in this Contract. 

    

    
      	2.2  	
              CURRENCY

            

    

    

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

    

    
      	2.3  	
              TERMS
                OF PAYMENT

            

    

    

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

    

    (a)
      1st
      Instalment:

     

    The
      sum
      of United States Dollars seven million (US$ 7,000,000) only, shall become due
      and payable and be paid by the BUYER within five (5) New York business days
      of
      the later of:

    

    1) 
      the date
      on which the BUYER shall have received (A) the Refund Guarantee in respect
      of
      the 1st
      instalment to be issued by one of (i) Bank
      of
      Communications (Beijing Branch) or (ii) Industrial and Commercial Bank of
China
      (Beijing Branch) in the SELLER’s option (hereafter the ”SELLER’s
      Bank”) together with (B) documentary evidence from the SELLER’s Bank that this
      has been duly registered with the State Administration for Foreign Exchange
      (“SAFE”) as provided in Paragraph 7 of this Article; and

    

    2) the
      date
      on which the BUYER shall have delivered to SELLER an original of the Letter
      of
      Guarantee issued by The Royal Bank of Scotland or other international bank
      acceptable to the SELLER in accordance with Article II, Paragraph 6 hereof.
      

    

    (b)
      2nd
      Instalment:

    

    The
      sum
      of United States Dollars seven million (US$ 7,000,000) only, shall become due
      and payable and be paid within five (5) New York business days of the later
      of

    

    
      	(i)  	
              the
                date specified in Clause 3 of the Overall Agreement between the BUYER’s
                parent company, TBS International Limited, and the SELLER concluded
                on the
                same date as this Contract (the “Overall Agreement”); and
                

            

    

    

    (ii) the
      date
      of receipt by the BUYER of the Refund Guarantee to be issued by the SELLER’s
      Bank in respect of the 2nd,
      3rd
      and
      4th
      instalments, together with documentary evidence from the SELLER’s Bank that this
      has been duly registered with SAFE as provided in Paragraph 7 of this Article.
      

    

    (c)
      3rd
      Instalment:

    

    The
      sum
      of United States Dollars seven million (US$ 7,000,000),
      shall
      become due and payable and be paid within five (5) New York business days of
      the
      receipt by the BUYER of a telefax notice from the SELLER attaching a Stage
      Certificate in the form of the draft attached as Exhibit “D”, countersigned by
      the Classification Surveyor, certifying that the VESSEL’s keel has been laid
      within the meaning of this Article 2.3. 

     

    

    “Keel
      laying”
shall
      for the purposes of this Article be deemed to have taken place when the first
      pre-fabricated hull block has been completed, surveyed, accepted by the
      Classification Society and located in its final position in the building dock
      or
      slipway at the Shipyard.

     

    

    (d)
      4th
      Instalment:

    

    The
      sum
      of United States Dollars seven million (US$ 7,000,000) only, shall become due
      and payable and be paid within five (5) New York business days of the receipt
      by
      the BUYER of a telefax notice from the SELLER attaching a Stage Certificate
      in
      the form of the draft attached as Exhibit “D”, countersigned by the
      Classification Surveyor, certifying that the VESSEL has been successfully
      launched. 

    

    (e)
      5th
      Instalment (Payment upon Delivery of the VESSEL):

    

    The
      sum
      of United States Dollars seven million four hundred and twenty thousand (US$
      7,420,000) only,
      plus
      any
      increase or minus any decrease due to modifications and/or adjustments of the
      Contract Price in accordance with the provisions of the relevant articles
      hereof, shall become due and payable and be paid by the BUYER to the SELLER
      concurrently with the delivery of the VESSEL. 

     

    (f)
      The
      SELLER shall notify the BUYER in writing fourteen (14) New York business days
      in
      advance of the expected due date of payment of the Second, Third, Fourth and
      Fifth Instalments of the Contract Price referred to in Article 2.3.

    

    
      	2.4  	
              METHOD
                OF PAYMENT

            

    

    

    (a)
      1st
      Instalment:

    

    The
      BUYER
      shall remit the amount of this instalment in accordance with Article II,
      Paragraph 3(a) by telegraphic transfer to the account of the SELLER’s bank (the
      account number to be nominated by the SELLER).

    

    (b)
      2nd
      Instalment:

    

    The
      BUYER
      shall remit the amount of this instalment in accordance with Article II,
      Paragraph 3(b) by telegraphic transfer to the account of the SELLER’s bank (the
      account number to be nominated by the SELLER) or
      through other receiving bank to be nominated by the SELLER from time to time
      and
      such nomination shall be notified to the BUYER at least ten (10) New York
      business days prior to the due date for the payment.

    

    (c)
      3rd
      Instalment:

    

    The
      BUYER
      shall remit the amount of this instalment in accordance with the Article II,
      Paragraph 3(c) by telegraphic transfer to the account of the SELLER’s bank (the
      account number to be nominated by the SELLER) or
      through other receiving bank to be nominated by the SELLER from time to time
      and
      such nomination shall be notified to the BUYER at least ten (10) New York
      business days prior to the due date for the payment.

    

    (d)
      4th
      Instalment:

    

    The
      BUYER
      shall remit the amount of this instalment in accordance with Article II,
      Paragraph 3(d) by telegraphic transfer to the account of the SELLER’s bank (the
      account number to be nominated by the SELLER) or
      through other receiving bank to be nominated by the SELLER from time to time
      and
      such nomination shall be notified to the BUYER at least ten (10) New York
      business days prior to the due date for payment.

    

    (e)
      5th
      Instalment (Payable upon Delivery of the VESSEL):

    

    The
      BUYER
      shall, at least three (3) New York business days prior to the scheduled date
      of
      delivery of the VESSEL notified by the SELLER, make a cash deposit in the name
      of the BUYER with the SELLER’s Bank for a period of thirty (30) days and
      covering the amount of this instalment (as adjusted in accordance with the
      provisions of this Contract), with instruction that the said amount shall be
      released to the SELLER against presentation by the SELLER to the said bank,
      of a
      duplicate of the Protocol of Delivery and Acceptance signed by the BUYER's
      authorized representative and the SELLER. Such deposit shall be on terms that
      if
      the duly executed Protocol of Delivery and Acceptance of the VESSEL has not
      been
      submitted to the SELLER’s bank within Twenty (20) New York business Days, the
      deposit shall be returned to the BUYER together with any interest accrued
      thereon. 

     

    
      	2.5  	
              PREPAYMENT

            

    

    

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

    

    
      	2.6  	
              SECURITY
                FOR PAYMENT OF INSTALMENTS BEFORE
                DELIVERY

            

    

    

    The
      BUYER
      shall, on or before 31st
      March
      2007, deliver to the SELLER an irrevocable and unconditional Letter of Guarantee
      in a form annexed hereto as Exhibit "C" in favour of the SELLER issued by the
      Royal Bank of Scotland or other first class international bank acceptable to
      the
      SELLER. This guarantee shall secure the Buyer's obligation for the payment
      of
      2nd,
      3rd
      and 4th
      instalments of the Contract Price. 

    

    
      	2.7  	
              REFUNDS

            

    

    

    All
      payments made by the BUYER prior to the delivery of the VESSEL shall be in
      the
      nature of advance to the SELLER, and in the event this Contract is rescinded
      by
      the BUYER, all in accordance with the specific terms of this Contract permitting
      such rescission, the SELLER shall refund to the BUYER in United States Dollars
      the full amount of all sums already paid by the BUYER to the SELLER under this
      Contract, together with interest (at the rate set out in respective provision
      thereof) from the respective payment date(s) to the date of remittance by
      telegraphic transfer of such refund to the account specified by the BUYER.
      If
      the SELLER is required to refund to the BUYER the instalments paid by the BUYER
      to the SELLER as provided in this Article, the SELLER shall return to the BUYER
      all of the BUYER's supplies as stipulated in Article V which were not
      incorporated in the VESSEL and pay to the BUYER an amount equal to the cost
      to
      the BUYER of those supplies that were incorporated into the VESSEL. As security
      to the BUYER and as a condition precedent to the payment of the 1st
      pre-delivery instalment payable by the BUYER after the date of this Contract
      in
      accordance with Paragraphs 3 and 4 of this Article, the SELLER shall (i) deliver
      to the BUYER a Refund Guarantee for the 1st
      instalment to be issued by the SELLER’s Bank in the form annexed hereto as
      Exhibit "A” and (ii) procure that the SELLER’s Bank shall provide to the BUYER
      satisfactory evidence of registration of the relevant Refund Guarantee with
      SAFE, the BUYER having no obligation to pay the 1st
      pre-delivery instalment until such evidence has been received by the BUYER.
      Further, as security to the BUYER and as a condition precedent to the payment
      of
      the 2nd
      pre-delivery instalment payable by the BUYER in accordance with Paragraphs
      3 and
      4 of this Article, the SELLER shall (i) deliver to the BUYER a Refund Guarantee
      for the 2nd,
      3rd
      and
      4th
      instalments to be issued by the SELLER’s Bank in the form annexed hereto as
      Exhibit "B” and (ii) procure that the SELLER’s Bank shall provide to the BUYER
      satisfactory evidence of registration of the relevant Refund Guarantee with
      SAFE, the BUYER having no obligation to pay the 2nd
      pre-delivery instalment until such evidence has been received by the
      BUYER.

    

    

    
      	3.  	
              ARTICLE
                III - ADJUSTMENT OF THE CONTRACT
                PRICE

            

    

    

    The
      Contract Price of the VESSEL shall be subject to adjustments as hereinafter
      set
      forth. It is hereby understood by both parties that any reduction of the
      Contract Price under this Article is by way of liquidated damages and not by
      way
      of penalty.

    

    
      	3.1  	
              DELIVERY
                DATE

            

    

    

    (a)
      No
      adjustment shall be made, and the Contract Price shall remain unchanged for
      the
      first thirty (30) days of delay in delivery of the VESSEL beyond the Delivery
      Date as defined in Article VII hereof ending at twelve o'clock midnight New
      York
      time on the thirtieth (30th)
      day of
      delay.

    

    (b)
      If
      the delivery of the VESSEL is delayed more than thirty (30) days after the
      date
      as defined in Article VII hereof, then, in such event, beginning at twelve
      o'clock midnight New York time on the thirtieth (30th)
      day
      after the date on which delivery is required under this Contract, the Contract
      Price of the VESSEL shall be reduced by deducting there from the sum of United
      States Dollars two thousand five hundred (US$ 2,500) per day. Unless the parties
      hereto agree otherwise, the total reduction in the Contract Price shall be
      deducted from the Fifth Instalment of the Contract Price and in any event
      (including the event that the BUYER consents to take the VESSEL at the later
      delivery date after the expiration of two hundred and thirty (230) days delay
      of
      delivery as described in Paragraph 1(c) of this Article) shall not be more
      than
      two hundred (200) days at the above specified rate of reduction after the thirty
      (30)days allowance, that is United States Dollars five hundred thousand only
      (US$ 500,000) being the maximum.

    

    (c)
      If
      the delay in the delivery of the VESSEL continues for a period of Two hundred
      and thirty (230) days (being the total of non-permissible delays) after the
      Delivery Date as defined in Article VII, then in such event, the BUYER may,
      at
      its option, rescind this Contract in accordance with the provisions of Article
      X
      of this Contract. The SELLER may at any time after the expiration of the
      aforementioned two hundred and thirty (230) days, if the BUYER has not served
      notice of rescission pursuant to Article X of this Contract, notify the BUYER
      of
      the date upon which the SELLER estimates the VESSEL will be ready for delivery
      and demand in writing that the BUYER makes an election, in which case the BUYER
      shall, within thirty (30) days after such demand is received by the BUYER,
      either notify the SELLER of its decision to rescind this Contract, or consent
      to
      take delivery of the VESSEL at an agreed future date, it being understood and
      agreed by the parties hereto that, if the VESSEL is not delivered by such future
      date, the BUYER shall have the same right of rescission upon the same terms,
      as
      hereinabove provided. 

    

    (d)
      For
      the purpose of this Article, the delivery of the VESSEL shall not be deemed
      delayed and the Contract Price shall not be reduced when and if the Delivery
      Date of the VESSEL is extended by reason of causes and provisions of Articles
      V,
      XI, XII and XIII hereof. The Contract Price shall not be adjusted or reduced
      if
      the delivery of the VESSEL is delayed by reason of permissible delays as defined
      in Article VIII hereof.

    

    
      	3.2  	
              SPEED

            

    

    

    (a)
      The
      Contract Price of the VESSEL shall not be affected nor changed by reason of
      the
      actual speed (as determined by the Trial Run after correction according to
      the
      Specifications) being less than five tenths (5/10) of one knot below the
      Guaranteed Speed.

     

    (b)
      However, commencing with and including a deficiency of five tenths (5/10) of
      one
      knot in actual speed (as determined by the Trial Run after correction according
      to the Specifications) below the Guaranteed Speed as specified in Paragraph
      4,
      Article I of this Contract, the Contract Price shall be reduced as follows:
      

     

     

    In
      case
      of deficiency:

     

    at
      or
      above 0.50 but below 0.60 knot US$ 5,000

    at
      or
      above 0.60 but below 0.70 knot US$ 10,000

    at
      or
      above 0.70 but below 0.80 knot US$ 15,000

    at
      or
      above 0.80 but below 0.90 knot US$ 20,000

    at
      or
      above 0.90 but below 1.00 knot US$ 25,000

    at
      or
      above 1.00 knot US$ 30,000

    

    (c)
      If
      the deficiency in actual speed (as determined by the Trial Run after correction
      according to the Specifications) of the VESSEL upon the Trial Run, is 1.00
      knot
      or more than 1.00 knot below the Guaranteed Speed, then the BUYER may at its
      option reject the VESSEL and rescind this Contract in accordance with provisions
      of Article X of this Contract, or may accept the VESSEL at a reduction in the
      Contract Price as above provided in the maximum amount of United States Dollars
      thirty thousand only (US$ 30,000).

    

    
      	3.3  	
              EXCESSIVE
                FUEL CONSUMPTION

            

    

    

    If
      the
      actual fuel consumption of the Main Engine as determined by shop test in
      manufacturer’s works, as per the Specifications, is greater than the Guaranteed
      Fuel Consumption, as specified and required under the provisions of this
      Contract and the Specifications, the BUYER may reject the Main Engine. The
      SELLER may then, at its option, either (i) rectify the deficiency in the Main
      Engine in order so that it complies with the requirements of the Contract and
      the Specifications or (ii) replace it with a Main Engine that does so comply.
      

    

    
      	3.4  	
              DEADWEIGHT

            

    

    

    (a)
      In
      the event that there is a deficiency in the actual deadweight of the VESSEL
      determined as provided in the Specifications, the Contract Price shall not
      be
      decreased if such deficiency is six hundred (600) metric tons or less below
      the
      Guaranteed Deadweight of thirty thousand (30,000) metric tons at assigned design
      draft. 

    

    (b)
      However, the Contract Price shall be decreased by the sum of United States
      Dollars 600 (US$ 600) for each full metric ton of such deficiency being more
      than six hundred (600) metric tons.

    

    (c)
      In
      the event that there should be a deficiency in the VESSEL's actual deadweight
      which exceeds one thousand (1000) metric tons below the Guaranteed Deadweight,
      the BUYER may, at its option, reject the VESSEL and rescind this Contract in
      accordance with the provisions of Article X of this Contract, or may accept
      the
      VESSEL at a reduction in the Contract Price in the maximum amount of United
      States Dollars two hundred and forty thousand (US$ 240,000).

    

    
      	3.5  	
              EFFECT
                OF RESCISSION

            

    

    

    It
      is
      expressly understood and agreed by the parties hereto that in any case as stated
      herein, if the BUYER rescinds this Contract pursuant to any provision under
      this
      Article, the BUYER, save its rights and remedy set out in Article X hereof,
      shall not be entitled to any liquidated damage or compensation whether described
      above or otherwise.

    

    

    
      	4.  	
              ARTICLE
                IV - SUPERVISION AND
                INSPECTION

            

    

    

    
      	4.1  	
              APPOINTMENT
                OF THE BUYER'S SUPERVISOR

            

    

    

    The
      BUYER
      shall send in good time to and maintain at the BUILDER's Shipyard, at the
      BUYER's own cost and expense, one or more representative(s) who shall be duly
      accredited in writing by the BUYER (such representative(s) being hereinafter
      collectively and individually called the "Supervisor")
      to
      supervise and survey the construction by the SELLER of the VESSEL, her engines
      and accessories. The SELLER hereby warrants that, the necessary visa for the
      Supervisor to enter China will be issued in order on demand and without delay
      provided that the Supervisor meets with the rules, regulations and laws of
      the
      People's Republic of China. The BUYER undertakes to give the SELLER adequate
      notice for the application of visa. 

    

    
      	4.2  	
              APPROVAL
                OF PLANS AND DRAWINGS

            

    

     

    The
      parties hereto shall, within thirty (30) days after the Effective Date of this
      Contract, mutually agree a list of all the plans and drawings, which are to
      be
      sent to the BUYER for approval (herein below called the "LIST").
      The
      plans and drawings specified in the LIST shall be sent to the BUYER, and the
      BUYER shall, within fourteen (14) days after receipt thereof (excluding mailing
      time), return such plans and drawings submitted by the SELLER with approval
      or
      remarks, if any. 

    

    The
      SELLER shall take due note of the BUYER's remarks and amendments (if any) on
      plans and drawings submitted pursuant to this Article and, if such remarks
      or
      amendments are not of such a nature or extent as to constitute modifications
      of
      the Specifications within the meaning of Article V hereof, then the SELLER
      shall
      commence or continue construction of the VESSEL in accordance with the corrected
      or amended plans and drawings. 

    

    Unless
      notification is given to the SELLER by the BUYER of approval or disapproval
      of
      any plans and drawings within the above designated period of time for each
      case,
      the said plans and drawings shall be deemed to have been automatically approved.
      But the SELLER shall
      notify the BUYER by telefax within five (5) days of the elapse of the above
      designated period of time. 

    

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

    

    
      	4.3  	
              SUPERVISION
                AND INSPECTION BY THE SUPERVISOR

            

    

    

    The
      necessary inspection of the VESSEL, its machinery, equipment and outfitting
      shall be carried out by the Classification Society, and/or inspection team
      of
      the SELLER throughout the entire period of construction in order to ensure
      that
      the construction of the VESSEL is duly performed in accordance with the Contract
      and Specifications. 

    

    The
      Supervisor shall have, at all times until delivery of the VESSEL, the right
      to
      attend tests according to the mutually agreed test list and inspect the VESSEL,
      her engines, accessories and materials at the BUILDER's Shipyard, its
      subcontractors or any other place where work is done or materials stored in
      connection with the VESSEL. In the event that the Supervisor discovers any
      construction or material or workmanship which does not or will not conform
      to
      the requirements of this Contract and the Specifications, the Supervisor shall
      promptly give the SELLER a notice in writing as to such nonconformity, upon
      receipt of which the SELLER shall correct such nonconformity if the SELLER
      agrees with the BUYER. However the BUYER undertakes and assures the SELLER
      that
      the Supervisor shall carry out his inspections in accordance with the agreed
      inspection procedure and schedule set out in Part I, Section 11 of the Technical
      Specification and usual international shipbuilding practice and in a way as
      to
      minimize any increase in building costs and delays in the construction of the
      VESSEL. 

    

    The
      inspection and approval by the BUYER or by the BUYER's representative and/or
      the
      Classification Society shall not alter the SELLER's obligation under this
      Contract and shall not relieve the SELLER from the liability under Article
      IX of
      this Contract nor preclude the BUYER from claiming adjustment of the Contract
      Price according to Article III of this Contract unless otherwise mutually
      agreed. The SELLER agrees to furnish free of charge the Supervisor with private
      office space, with lighting, heat and air conditioning; equipped with six (6)
      desks, chairs, filing cabinets, personal lockers, and meeting table and chairs;
      access to toilet facilities maintained by the SELLER; parking spaces and other
      reasonable facilities including separate IDD telephone (1 lines), separate
      IDD
      telefax (1 line) and internet broadband access, according to usual international
      shipbuilding practice at, or in the immediate vicinity of the BUILDER's
      Shipyard. At all times, during the construction of the VESSEL until delivery
      thereof, the Supervisor shall with the assistance of the SELLER be given free
      and ready access to the VESSEL, her engines and accessories, and to any other
      place where the work is being done, or the materials are being processed or
      stored, in connection with the construction of the VESSEL, including the yards,
      workshops, stores of the BUILDER, and the premises of subcontractors of the
      SELLER, who are doing work, or storing materials in connection with the VESSEL's
      construction. The travel expenses for the said access to the SELLER's
      subcontractors shall be for the BUYER's account.

     

    The
      SELLER shall provide the Supervisor with detailed design plans, production
      drawings, schedules and other documents and information for the VESSEL, to
      enable the Supervisor to carry out inspections. 

    

    
      	4.4  	
              LIABILITY
                OF THE SELLER 

            

    

    

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

    

    
      	4.5  	
              SALARIES
                AND EXPENSES

            

    

    

    All
      salaries and expenses of the Supervisor, or any other employees employed by
      the
      BUYER under this Article, shall be for the BUYER's account. The BUYER shall
      also
      be responsible for the costs of all international telephone and telefax
      communications.

    

    
      	4.6  	
              REPORT
                OF PROGRESS

            

    

    

    The
      BUYER
      is entitled to require the SELLER to report the condition of progress as to
      the
      construction of the VESSEL whenever the BUYER requires during the construction
      of the VESSEL.

    

    
      	4.7  	
              REPLACEMENT
                OF SUPERVISOR

            

    

    

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

    

    

    
      	5.  	
              ARTICLE
                V - MODIFICATION, CHANGES AND
                EXTRAS

            

    

    

    
      	5.1  	
              HOW
                EFFECTED

            

    

    

    The
      Specifications and plans in accordance with which the VESSEL is constructed,
      may
      be modified and/or changed at any time hereafter by written agreement of the
      parties hereto, provided that such modifications and/or changes or an
      accumulation thereof will not, in the SELLER's reasonable judgment, adversely
      affect the SELLER's other commitments and provided further that the BUYER shall
      assent to adjustment of the Contract Price, time of delivery of the VESSEL
      and
      other terms of this Contract, if any, as hereinafter provided. Subject to the
      above, the SELLER hereby agrees to exert its best efforts to accommodate such
      reasonable requests by the BUYER so that the said changes and/or modifications
      may be made at a reasonable cost and within the shortest period of time which
      is
      reasonable and possible. Any such agreement for modifications and/or changes
      shall include an agreement as to the increase or decrease, if any, in the
      Contract Price of the VESSEL together with an agreement as to any extension
      or
      reduction in the time of delivery, or any other alterations in this Contract,
      or
      the Specifications occasioned by such modifications and/or changes. The
      Supervisor shall be entitled to negotiate such agreement with the SELLER on
      behalf of the BUYER to the extent of its authority as notified by the BUYER
      to
      the SELLER from time to time in writing. The aforementioned agreement to modify
      and/or to change the Specifications may be effected by an exchange of duly
      authenticated letters or telefax, manifesting such agreement. The letters and
      telefaxes exchanged by the parties hereto pursuant to the foregoing shall
      constitute an amendment of the Specifications under which the VESSEL shall
      be
      built, and such letters and telefaxes shall be deemed to be incorporated into
      this Contract and the Specifications by reference and made a part hereof. Upon
      consummation of the agreement to modify and/or to change the Specifications,
      the
      SELLER shall alter the construction of the VESSEL in accordance therewith,
      including any additions to, or deductions from, the work to be performed in
      connection with such construction. If due to whatever reasons, the parties
      hereto shall fail to agree on the adjustment of the Contract Price or extension
      of time of delivery or modification of any terms of this Contract which are
      necessitated by such modifications and/or changes, then the SELLER shall be
      entitled to refuse to make any such modifications or changes requested by the
      BUYER, if the BUYER does not agree to the aforementioned adjustment within
      a
      reasonable period of the BUYER'S notification of the same to the
      BUYER.

    

    
      	5.2  	
              CHANGES
                IN RULES AND REGULATIONS, ETC.

            

    

    

    (1)
      If,
      after the date of this Contract, any requirements as to the rules and
      regulations as specified in this Contract and the Specifications to which the
      construction of the VESSEL is required to conform, are altered or changed by
      the
      Classification Society or the other regulatory bodies authorized to make such
      alterations or changes, the SELLER and/or the BUYER, upon receipt of the notice
      thereof, shall transmit such information in full to each other in writing,
      whereupon within ten (10) New York business days after receipt of the said
      notice by the BUYER from the SELLER or vice versa, the BUYER shall instruct
      the
      SELLER in writing as to the alterations or changes, if any, to be made in the
      VESSEL which the BUYER, in its sole discretion, shall decide. The SELLER shall
      promptly comply with such alterations or changes, if any in the construction
      of
      the VESSEL, provided that the BUYER shall first agree:

    

    
      	
              (a)

            	
              As
                to any reasonable increase or decrease in the Contract Price of the
                VESSEL
                that is occasioned by the cost for such compliance;
                and/or

            

    

    

    
      	
              (b)

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

            

    

    

    
      	
              (c)

            	
              As
                to any reasonable decrease in the Guaranteed Deadweight and the Guaranteed
                Speed of the VESSEL, if such compliance results in reduced deadweight
                and
                speed; and/or

            

    

    

    
      	
              (d)

            	
              As
                to any other alterations in the terms of this Contract or of the
                Specifications or both, if such compliance makes such alterations
                of the
                terms necessary.

            

    

    

    Agreement
      as to such alterations or changes under this paragraph shall be made in the
      same
      manner as provided above for modifications and/or changes of the Specifications
      and/or plans. 

    

    All
      improvements recommended by the original manufacturers and designers before
      the
      delivery of the VESSEL in the design of the main engine or parts of the VESSEL
      shall be notified by the SELLER to the BUYER. 

     

    (2)
      If,
      due to whatever reasons, the parties shall fail to agree on the adjustment
      of
      the Contract Price or extension of the time for delivery or decrease of the
      Guaranteed Speed and Guaranteed Deadweight or any alternation of the terms
      of
      this Contract, if any, then the SELLER shall be entitled to proceed with the
      construction of the VESSEL in accordance with, and the BUYER shall continue
      to
      be bound by, the terms of this Contract and the Specifications without making
      any such alterations or changes.

    

    
      	5.3  	
              SUBSTITUTION
                OF MATERIALS AND/OR EQUIPMENT

            

    

    

    In
      the
      event that any of the materials and/or equipment required by the Specifications
      or otherwise under this Contract for the construction of the VESSEL cannot
      be
      procured in time to effect delivery of the VESSEL, the SELLER may, provided
      the
      SELLER shall provide adequate evidence and the BUYER so agrees in writing,
      supply other materials and/or equipment of equivalent quality, capable of
      meeting the requirements of the Classification Society and of the rules,
      regulations, requirements and recommendations with which the construction of
      the
      VESSEL must comply. 

    

    
      	5.4  	
              BUYER'S
                SUPPLIED ITEMS

            

    

    

    The
      BUYER
      shall on its own account deliver to the SELLER at BUILDER'S shipyard the BUYER'S
      supplied items as specified in the Specifications in accordance with the time
      schedule to be furnished by the SELLER to meet the building schedule of the
      VESSEL. 

    

    Should
      the BUYER fail to deliver to the SELLER such items within the time specified,
      the delivery of the VESSEL shall be extended for a period of such delay,
      provided such delay in delivery of the BUYER's supplied items shall affect
      the
      delivery of the VESSEL.

     

    If
      the
      delay in delivery of the BUYER's supplied items should exceed thirty (30) days,
      the SELLER shall be entitled to proceed with the construction of the VESSEL
      without installation of such items in or onto the VESSEL, without prejudice
      to
      the SELLER's right hereinabove provided, and the BUYER shall accept the VESSEL
      so completed.

    

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

    

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

    

    

    
      	6.  	
              ARTICLE
                VI - TRIALS

            

    

    

    
      	6.1  	
              NOTICE

            

    

    

    The
      BUYER
      and the Supervisor shall receive from the SELLER at least thirty (30) day
      approximate notice in advance and seven (7) day definite notice in advance
      in
      writing or by telefax confirmed in writing, of the time and place of the
      VESSEL's sea trial as described in the Specifications (hereinafter called the
      "Trial Run")
      and
      the BUYER and the Supervisor shall promptly acknowledge receipt of such notice.
      The BUYER's representatives and/or the Supervisor shall be on board the VESSEL
      to witness such Trial Run, and to check upon the performance of the VESSEL
      during the same. The failure of the BUYER's representatives to be present at
      the
      Trial Run of the VESSEL, after due notice to the BUYER and the Supervisor as
      provided above, shall have the effect to extend the date for delivery of the
      VESSEL by the period of delay caused by such failure to be present. However,
      if
      the Trial Run is delayed more than seven (7) days by reason of the failure
      of
      the BUYER's representatives to be present after receipt of due notice as
      provided above, then in such event, the BUYER shall be deemed to have waived
      its
      right to have its representatives on board the VESSEL during the Trial Run,
      and
      the SELLER may conduct such Trial Run with the presence of the representative
      of
      the Classification Society only without the BUYER's representatives being
      present, and in such case the BUYER shall be obliged to accept the VESSEL on
      the
      basis of a certificate jointly signed by the BUILDER and the Classification
      Society certifying that the VESSEL, after the Trial Run subject to minor
      alterations and corrections if any, to be completed prior to the day of delivery
      to the BUYER as provided in this Article, if any, is found to conform to this
      Contract and the Specifications and is satisfactory in all respects. The SELLER
      hereby warrants that the necessary visa for the BUYER's representatives to
      enter
      China will be issued in order on demand and without delay otherwise the Trial
      Run shall be postponed until after the BUYER's representatives have arrived
      at
      the BUILDER's Shipyard and any delays as a result thereof shall not count as
      a
      permissible delay under Article VIII thereof. However, should the nationalities
      and other personal particulars of the BUYER's representatives be not acceptable
      to the visa issuing authorities in accordance with its best understanding of
      the
      relevant rules, regulations and/or laws of the People's Republic of China then
      prevailing, then the BUYER shall, on the SELLER's telefax demand, effect
      replacement of all or any of them immediately. Otherwise the Delivery Date
      as
      stipulated in Article VII hereof shall be extended by the delays so caused
      by
      the BUYER.

    

    In
      the
      event of unfavorable weather on the date specified for the Trial Run, the same
      shall take place on the first available day thereafter that the weather
      conditions permit. The parties hereto recognize that the weather conditions
      in
      Chinese waters in which the Trial Run is to take place are such that great
      changes in weather may arise momentarily and without warning and, therefore,
      it
      is agreed that if during the Trial Run of the VESSEL, the weather should
      suddenly become unfavorable, as would have precluded the continuance of the
      Trial Run, the Trial Run of the VESSEL shall be discontinued and postponed
      until
      the first favorable day next following, unless the BUYER shall assent by telefax
      and confirm in writing of its acceptance of the VESSEL on the basis of the
      Trial
      Run made prior to such sudden change in weather conditions. In the event that
      the Trial Run is postponed because of unfavorable weather conditions, such
      delay
      shall be regarded as a permissible delay, as specified in Article VIII
      hereof.

    

    
      	6.2  	
              HOW
                CONDUCTED

            

    

    

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

    

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

    

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

    

    
      	6.3  	
              METHOD
                OF ACCEPTANCE OR REJECTION

            

    

    

    (a)
      Upon
      notification by the SELLER of the completion of the Trial Run of the VESSEL
      and
      submission to the BUYER of the detailed written results thereof, the BUYER
      or
      the BUYER's Supervisor shall within six (6) New York business days thereafter,
      notify the SELLER by telefax confirmed in writing of its acceptance of the
      VESSEL if the BUYER agrees that the VESSEL conforms with the requirements of
      this Contract and the Specifications.

    

    (b)
      However, should the VESSEL or any part thereof including its equipment not
      conform to the requirements of this Contract and the Specifications, and the
      BUYER shall give notice of rejection to the SELLER for such reason, then the
      SELLER shall investigate with the Supervisor the cause of failure and proper
      steps shall be taken to remedy the same and shall make whatever corrections
      and
      alterations and/or re-Trial Run or Runs as may be necessary without extra cost
      to the BUYER, and upon notification by the SELLER of completion of such
      alterations or corrections and/or re-Trial or re-Trials and submission to the
      BUYER of the detailed written results thereof the BUYER shall, within six (6)
      New York business days thereafter, again notify the SELLER by telefax confirmed
      in writing of its acceptance of the VESSEL or of the rejection of the VESSEL
      together with the reason therefor. This process shall be repeated until the
      earlier of the BUYER’s acceptance of the VESSEL or the rescission of this
      Contract in accordance with its terms.

    

    (c)
      In
      the event that the BUYER fails to notify the SELLER by telefax confirmed in
      writing of its acceptance or rejection of the VESSEL together with the reason
      therefor within six (6) New York business days period as provided for in the
      above sub-paragraphs (a) and (b), the BUYER shall be deemed to have accepted
      the
      VESSEL.

    

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

    

    (e)
      It is
      agreed that the BUYER shall not be entitled to reject the VESSEL by reason
      of
      any minor or insubstantial defects or deficiencies judged from the point of
      view
      of international shipbuilding standards as not being in conformity with the
      Specifications but in such case the SELLER shall be obliged to remedy such
      defects or deficiencies if any before effecting delivery of the VESSEL to the
      BUYER under this Contract. 

    

    
      	6.4  	
              DISPOSITION
                OF SURPLUS CONSUMABLE STORES

            

    

    

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

    

    The
      BUYER
      shall supply lubricating oil and hydraulic oil for the purpose of the Trial
      Runs
      at its own expense and the SELLER will reimburse the amount of lubricating
      oil
      and hydraulic oil actually consumed for the Trial Run or Trial Runs at the
      BUYER'S actual price at delivery port incurred by the BUYER and payment by
      the
      SELLER shall be effected as provided in Article II 3(e) and 4(e) of this
      Contract. At the time of delivery of the VESSEL in measuring the consumed
      quantity of lube oils and hydraulic oil, the oils remaining in the main engine
      (except for the sump tank), other machinery and their pipes, stern tube and
      the
      like shall be excluded and be considered as consumed.

     

    
      	6.5  	
              EFFECT
                OF ACCEPTANCE

            

    

    

    The
      BUYER's acceptance of the VESSEL by written and telefax notification sent to
      the
      SELLER, in accordance with the provisions set out above, shall be final and
      binding so far as conformity of the VESSEL to this Contract and the
      Specifications is concerned, and shall preclude the BUYER from refusing formal
      delivery by the SELLER of the VESSEL, as hereinafter provided, if the SELLER
      complies with all other procedural requirements for delivery as hereinafter
      set
      forth.

    

    

    
      	7.  	
              ARTICLE
                VII - DELIVERY

            

    

    

    
      	7.1  	
              TIME
                AND PLACE

            

    

    

    The
      VESSEL shall be delivered safely afloat by the SELLER to the BUYER at the
      BUILDER's Shipyard, in accordance with the Specifications and with all the
      Classification and Statutory Certificates and after completion of the Trial
      Run
      (or, as the case may be, re-Trial or re-Trials) and acceptance by the BUYER
      in
      accordance with the provisions of Article VI hereof on the “Hull
      NYHS200722 Delivery Date”
defined
      in the Overall Agreement. Provided however, that, in the event of delays in
      the
      construction of the VESSEL or any performance required under this Contract
      due
      to causes which under the terms of the Contract permit extension of the time
      for
      delivery, the aforementioned time for delivery of the VESSEL shall be extended
      accordingly. 

    

    The
      Hull
      NYHS200722 Delivery Date or such later date to which delivery of the VESSEL
      is
      extended pursuant to the terms of this Contract is hereinafter called the
      "Delivery
      Date".

    

    
      	7.2  	
              WHEN
                AND HOW EFFECTED

            

    

    

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

    

    
      	7.3  	
              DOCUMENTS
                TO BE DELIVERED TO THE BUYER

            

    

    

    The
      acceptance of the VESSEL by the BUYER shall be conditional upon receipt by
      the
      BUYER from the SELLER of authenticated documents, certificates as required
      in
      this Contract and also in the Specifications including but not limited to the
      following (subject to the provision contained in Article V-2 hereof) which
      shall
      accompany the aforementioned Protocol of Delivery and Acceptance: 

    

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

    

    (b)
      PROTOCOL OF INVENTORY of the equipment of the VESSEL including spare parts
      and
      the like, all as specified in the Specifications made by the SELLER and
      confirmed by the Supervisor. The equipment of the VESSEL must follow
      international standard ISO and CB, GB, and first class Chinese shipbuilding
      practice.

    

    (c)
      PROTOCOL OF STORES OF CONSUMABLE NATURE made by the SELLER and confirmed by
      the
      Supervisor referred to under Paragraph 4 of Article VI hereof.

    

    (d)
      FINISHED DRAWINGS AND PLANS pertaining to the VESSEL as stipulated in the
      Specifications (If it is SELLER’s Obligation).

    

    (e)
      PROTOCOL OF DEADWEIGHT AND INCLINING EXPERIMENT, made by the SELLER,
      TRIM
      AND
      STABILITY BOOKLET and LOADING MANUAL, and GRAIN LOADING STABILITY MANUAL, all
      approved by the Classification Society on behalf of the Flag State
      Administration. 

    

    (f)
      ALL
      CERTIFICATES required to be furnished upon delivery of the VESSEL pursuant
      to
      this Contract and the Specifications. Certificates shall be issued by relevant
      Authorities or Classification Society. The VESSEL shall comply with the above
      rules and regulations which are in force at the time of delivery of the VESSEL.
      All the certificates shall be delivered in one (1) original to the VESSEL and
      two (2) copies to the BUYER.

    

    If
      any
      permanent certificate or certificates are unable to be issued at the time of
      delivery of the VESSEL by the Classification Society or any third party other
      than the SELLER, then the provisional certificate or certificates issued by
      the
      Classification Society or such third party shall be furnished by the SELLER
      and
      acceptable to the BUYER provided that permanent certificates shall be furnished
      by the SELLER to the BUYER in any event before the expiry of such provisional
      certificates. 

    

    (g)
      DECLARATION OF WARRANTY issued by the SELLER that the VESSEL is delivered to
      the
      BUYER free and clear of any liens, charges, claims, mortgages, or other
      encumbrances 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 province or country of the port of delivery, as well as of all
      liabilities of the SELLER to its sub-contractors, employees and crews and/or
      all
      liabilities arising from the operation of the VESSEL in Trial Run or Trial
      Runs,
      or otherwise, prior to the delivery of the VESSEL. 

    

    (h)
      COMMERCIAL INVOICE made by the SELLER.

    

    (i)
      BILL
      OF SALE made by the SELLER.

    

    (j)
      BUILDER's certificate.

    

    
      	7.4  	
              TITLE
                AND RISK

            

    

    

    Title
      to
      and risk of the VESSEL shall pass to the BUYER only upon the delivery thereof.
      As stated above, it is expressly understood that, until such delivery is
      effected, the title to the VESSEL, and her equipment, shall remain at all times
      with the SELLER and are at the entire risk of the SELLER. 

    

    
      	7.5  	
              REMOVAL
                OF VESSEL

            

    

    

    The
      BUYER
      shall take possession of the VESSEL immediately upon delivery and acceptance
      thereof, and shall remove the VESSEL from the premises of the BUILDER within
      seven (7) New York business days after delivery and acceptance thereof is
      effected. If the BUYER shall not remove the VESSEL from the premises of the
      BUILDER within the aforesaid seven (7) New York business days, then, in such
      event, without prejudice to the SELLER's right to require the BUYER to remove
      the VESSEL immediately at any time thereafter, the BUYER shall pay to the SELLER
      the reasonable mooring charge of the VESSEL.

    

    
      	7.6  	
              TENDER
                OF THE VESSEL

            

    

    

    If
      the
      BUYER fails to take delivery of the VESSEL after completion thereof according
      to
      this Contract and the Specifications without justified reason, the SELLER shall
      have the right to tender the VESSEL for delivery after compliance with all
      procedural requirements as above provided.

    

    

    
      	8.  	
              ARTICLE
                VIII - DELAYS & EXTENSION OF TIME FOR
                DELIVERY

            

    

    

    
      	8.1  	
              CAUSE
                OF DELAY

            

    

    

    If,
      at
      any time before actual delivery, either the construction of the VESSEL, or
      any
      performance required hereunder as a prerequisite of delivery of the VESSEL,
      is
      delayed due to war, blockade, revolution, insurrection, mobilization, civil
      commotions, riots, national strikes affecting a significant proportion of the
      Chinese shipbuilding industry, sabotage, lockouts, Acts of God, plague or other
      epidemics, quarantines, prolonged failure or restriction of electric current
      from an outside source, freight embargoes, if any, earthquakes, tidal waves,
      typhoons, hurricanes, storms or such other causes beyond the control of the
      BUILDER or of its sub-contractors, as the case may be, which causes will
      considerably affect the BUILDER’S production, or by destruction of the BUILDER
      or works of the BUILDER or its sub-contractors, or of the VESSEL or any part
      thereof, by fire, flood, or other proven causes beyond the control of the SELLER
      or its sub-contractors as the case may be, then, in the event of delay due
      to
      the happening of any of the aforementioned contingencies, the SELLER shall
      not
      be liable for such delay and the time for delivery of the VESSEL under this
      Contract shall be extended without any reduction in the Contract Price for
      a
      period of time which shall not exceed the total accumulated time of all such
      delays, subject nevertheless to the BUYER's right of rescission under Paragraph
      4 of this Article and subject however to all relevant provisions of this
      Contract which authorize and permit extension of the time of delivery of the
      VESSEL. 

    

    
      	8.2  	
              NOTICE
                OF DELAY

            

    

    

    Within
      seven (7) New York business days from the date of commencement of any delay
      on
      account of which the SELLER claims that it is entitled under this Contract
      to an
      extension of the time for delivery of the VESSEL, the SELLER shall advise the
      BUYER by telefax confirmed in writing, of the date such delay commenced, and
      the
      reasons therefor. Likewise within seven (7) New York business days after such
      delay ends, the SELLER shall advise the BUYER in writing or by telefax confirmed
      in writing, of the date such delay ended, and also shall specify the maximum
      period of the time by which the date for delivery of the VESSEL is extended
      by
      reason of such delay. Failure of the BUYER to acknowledge the SELLER's
      notification of any claim for extension of the Delivery Date within thirty
      (30)
      days after receipt by the BUYER of such notification, shall be deemed to be
      a
      waiver by the BUYER of its right to object to such extension. Failure of the
      SELLER to give the BUYER notice of delay as provided in this Article except
      for
      the case of entire power failure or cut-off of the communication facilities
      shall preclude the SELLER from claiming extension of the Delivery Date by reason
      of such failure.

    

    
      	8.3  	
              DEFINITION
                OF PERMISSIBLE DELAY

            

    

    

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

    

    
      	8.4  	
              RIGHT
                TO RESCIND FOR EXCESSIVE DELAY 

            

    

    

    If
      the
      total accumulated time of (i) all permissible delays aggregate to two hundred
      and ten (210) days or more or (ii) all permissible delays and non-permissible
      delays aggregate to two hundred and forty (240) days or more, the BUYER may
      in
      accordance with the provisions set out herein rescind this Contract by serving
      upon the SELLER telefaxed notice of rescissions which shall be confirmed in
      writing, in which event the provisions of Article X of this Contract shall
      apply. Provided, however, that in calculating any periods of non-permissible
      delay for the purposes of this Article 8.4, there shall be excluded delays
      (i)
      due to arbitration as provided for in Article XIII hereof (ii) due to default
      in
      performance by the BUYER (iii) due to delays in delivery of the BUYER's supplied
      items and (iv) due to causes which, under Article V and XI hereof, permit
      extension or postponement of the time for delivery of the VESSEL. 

    

    The
      SELLER may, at any time, after the BUYER’s right to rescind as aforesaid has
      arisen, demand in writing that the BUYER shall make an election, in which case
      the BUYER shall, within thirty (30) days after such demand is received by the
      BUYER either notify the SELLER of its intention to rescind, or consent to an
      extension of the time for delivery to an agreed future date, it being understood
      and agreed by the parties hereto that, if any further delay occurs on account
      of
      causes justifying rescission as specified in this Contract, the BUYER shall
      have
      the same right of rescission upon the same terms as hereinabove
      provided.

    

    

    
      	9.  	
              ARTICLE
                IX - WARRANTY OF QUALITY

            

    

    

    
      	9.1  	
              GUARANTEE
                OF MATERIAL AND WORKMANSHIP

            

    

    

    The
      SELLER, for a period of twelve (12) months following delivery to the BUYER
      of
      the VESSEL, guarantees the VESSEL, her hull and machinery and all parts and
      equipment thereof that are manufactured or furnished or supplied by the SELLER
      and/or its sub-contractors under this Contract including material, equipment
      (however excluding any parts for the VESSEL which have been supplied by or
      on
      behalf of the BUYER) against all defects which are due to defective materials,
      or equipment, errors, miscalculation and/or poor workmanship.

    

    
      	9.2  	
              NOTICE
                OF DEFECTS

            

    

    

    The
      BUYER
      shall notify the SELLER in writing, or by telefax confirmed in writing, as
      promptly as possible, after discovery of any defect or deviations for which
      a
      claim is made under this guarantee. The BUYER's written notice shall describe
      the nature of the defect and the extent of the damage caused thereby. The SELLER
      shall have no obligation under this guarantee for any defects discovered prior
      to the expiry date of the guarantee, unless notice of such defects, is received
      by the SELLER not later than thirty (30) days after such expiry date. Telefaxed
      advice with brief details explaining the nature of such defect and extent of
      damage within thirty (30) days after such expiry date and that a claim is
      forthcoming will be sufficient compliance with the requirements as to time.
      If
      the SELLER becomes aware of defective materials or design or construction within
      the nature of serial defect in respect of the VESSEL or any other vessel built
      by the SELLER, the SELLER shall immediately notify the BUYER in writing and
      by
      fax or by telefax.

    

    
      	9.3  	
              REMEDY
                OF DEFECTS

            

    

    

    The
      SELLER shall remedy at its expense any defects, against which the VESSEL or
      any
      part of the equipment thereof is guaranteed under this Article by making all
      necessary repairs and/or replacement. Such repairs and/or replacement will
      be
      made by the SELLER.

    

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

     

    In
      any
      circumstances as set out below, the SELLER shall immediately pay to the BUYER
      in
      United States Dollars by telegraphic transfer the actual cost for such repairs
      or replacements including forwarding charges, or at the average cost for making
      similar repairs or replacements including forwarding charges as quoted by a
      leading shipyard each in China, Japan, South Korea and Singapore, whichever
      is
      lower:

    

    (a)
      Upon
      the SELLER's acceptance of the defects as justifying remedy under this Article,
      or

    

    (b)
      If
      the SELLER neither accepts nor rejects the defects as above provided, nor
      requests arbitration within thirty (30) days after its receipt of the BUYER's
      notice of defects.

    

    Any
      dispute shall be referred to arbitration in accordance with the provisions
      of
      Article XIII hereof.

    

    
      	9.4  	
              EXTENT
                OF THE SELLER'S LIABILITY

            

    

    

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

    

    The
      SELLER shall be liable to the BUYER for defects and damages caused by any of
      the
      defects specified in Paragraph 1 of this Article provided that such liability
      of
      the SELLER shall be limited to damage occasioned within the guarantee period
      specified in Paragraph 1 above. The SELLER shall not be obligated to repair,
      or
      to be liable for, damages to the VESSEL, or to any part of the equipment
      thereof, due to ordinary wear and tear or caused by the defects other than
      those
      specified in Paragraph 1 above, nor shall there be any SELLER's liability
      hereunder for defects in the VESSEL, or any part of the equipment thereof,
      caused by fire or accidents at sea or elsewhere, or mismanagement, accidents,
      negligence, or wilful neglect, on the part of the BUYER, its employees or agents
      including the VESSEL's officers, crew and passengers, or any persons on or
      doing
      work on the VESSEL other than the SELLER, its employees, agents or
      sub-contractors. Likewise, the SELLER shall not be liable for defects in the
      VESSEL, or the equipment or any part thereof, due to repairs or replacement
      which were made by those other than the SELLER and/or their sub-contractors
      without prior consent of the SELLER.

    

    Upon
      delivery and acceptance of the VESSEL in accordance with the terms of this
      Contract, the SELLER shall thereby and thereupon be released of all
      responsibility and liability whatsoever and howsoever arising under or by virtue
      of this Contract (save in respect of those obligations to the BUYER expressly
      provided for in this Article IX). Neither CCCC nor the BUILDER shall, in any
      circumstances, be liable for any consequential loss or special loss, or expenses
      arising from any cause whatsoever including, without limitation, loss of time,
      loss of profit or earnings or demurrage directly from any commitments of the
      BUYER in connection with the VESSEL.

    

    The
      Guarantee provided in this Article and the obligations and the liabilities
      of
      the SELLER hereunder are exclusive and in lieu of law and the BUYER hereby
      waives all other remedies, warranties, guarantees or liabilities, express or
      implied, arising by law or otherwise on the part of the SELLER. This Guarantee
      shall not be extended, altered or varied except by a written instrument signed
      by the duly authorized representatives of the SELLER and the BUYER.

    

    
      	9.5  	
              GUARANTEE
                ENGINEER

            

    

    

    The
      SELLER shall at the request of the BUYER nominate for BUYER’s acceptance and,
      when judged satisfactory, appoint one or two Guarantee Engineer(s) (the
“Guarantee
      Engineer”)
      to
      serve the VESSEL as the SELLER's representative(s) for a period of six (6)
      months from the delivery of the VESSEL with BUYER'S option up to twelve months
      (12). The BUYER, and its employees, shall give such Guarantee Engineer(s) full
      co-operation in carrying out his/their duties as the representative(s) of the
      SELLER on board the VESSEL. The BUYER shall accord the Guarantee Engineer(s)
      the
      treatment comparable to the VESSEL's Chief Engineer, and shall provide him
      with
      accommodation and subsistence at no cost to the SELLER and/or the Guarantee
      Engineer(s). 

    

    The
      BUYER
      shall pay to the Guarantee Engineer(s) the sum of United States Dollars Two
      Thousand Five Hundred only (US$2,500) per month to cover his/their miscellaneous
      expenses including wages and also the BUYER shall pay the expense of
      repatriation to Shanghai, the People's Republic of China by air upon termination
      of his/their service, the expense of his/their communications with the SELLER
      when made in performance of his/their duties as the Guarantee Engineer(s) and
      the expenses, if any, of his/their medical and hospital care. The BUYER, its
      successor(s) and/or assign(s), shall be liable to and indemnify the SELLER
      and/or the Guarantee Engineer(s) for personal injuries, including death and
      damages to, or loss or destruction of property of the Guarantee Engineer(s),
      if
      such death, injuries, damages, loss and/or destruction were caused by gross
      negligence or wilful misconduct of the BUYER, its successor(s) and/or assign(s)
      or its employees and/or agents.

    

    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.
      

    

    

    
      	10.  	
              ARTICLE
                X - INSOLVENCY OF SELLER: RESCISSION BY THE
                BUYER

            

    

    

    10.1 Insolvency
      of Seller or Seller’s Bank 

    

    In
      addition to its rights of rescission as elsewhere set out in this Contract,
      the
      BUYER shall be entitled to rescind this Contract should any of the following
      events occur:

    

    
      	(a)  	
              The
                filing of a petition or the making of an order or the passing of
                an
                effective resolution for the winding up of either CCCC or the BUILDER
                (other than for the purpose of reconstruction or amalgamation which
                has
                been previously approved in writing by the BUYER), or the appointment
                of a
                receiver of the undertaking or property of either CCCC or the BUILDER,
                or
                the insolvency of or a suspension of payments by either CCCC or the
                BUILDER, or the cessation of the carrying on of business by either
                CCCC or
                the BUILDER, or the making by either CCCC or the BUILDER of any special
                arrangement or composition with their creditors; or any like or similar
                circumstance occurring under the laws of the People’s Republic of China;
                

            

    

    

    
      	(b)  	
              The
                occurrence of any of the events set out in sub-paragraph (a) above
                with
                respect to the SELLER’s Bank, and the failure by the SELLER within
                twenty-one (21) days thereof to substitute the SELLER’s Bank, both as
                regards refund guarantees previously issued and those yet to be issued,
                with an alternative guarantor reasonably acceptable to the BUYER.
                

            

    

    

    10.2 Rescission
      By The Buyer

    

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

    

    (b)
      Thereupon the SELLER shall refund in United States Dollars immediately to the
      BUYER the full amount of all sums paid by the BUYER to the SELLER on account
      of
      the VESSEL, unless the SELLER disputes the BUYER's rescission by instituting
      arbitration in accordance with Article XIII. If the BUYER's rescission of this
      Contract is disputed by the SELLER by instituting arbitration as aforesaid,
      then
      no refund shall be made by the SELLER, and the BUYER shall not be entitled
      to
      demand repayment from the SELLER’s Bank, until the arbitration award between the
      BUYER and the SELLER or, in case of appeal or appeals by the SELLER on the
      arbitration award or any court orders, by the final court order, which shall
      be
      in favour of the BUYER, declaring the BUYER's rescission justified, is made
      and
      delivered to the SELLER by the arbitration tribunal or final competent London
      Court having jurisdiction on the dispute. In the event the SELLER is obligated
      to make refundment, the SELLER shall pay the BUYER interest in United States
      Dollars at the rate of five percent (5%) if the rescission of this Contract
      is
      exercised by the BUYER in accordance with the provision of Paragraph 4 of
      Article VIII or/by the events described in Article III 1(c), 2(c), 3(c) or
      4(c)
      hereof computed from the respective dates when such sums were received by the
      SELLER’s Bank pursuant to Article II 4(b), 4(c) or 4(d) from the BUYER to the
      date of remittance by telegraphic transfer of such refund to the BUYER by the
      SELLER, however in the event of total loss as described in Article XII of this
      Contract, then, no interest will be paid on the amount required herein to be
      refunded to the BUYER. 

    

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

    

    

    
      	11.  	
              ARTICLE
                XI - BUYER'S DEFAULT

            

    

    

    
      	11.1  	
              DEFINITION
                OF DEFAULT

            

    

    

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

    

    (a)
      The
      BUYER fails to pay the Second or Third or Fourth Instalment to the SELLER when
      any such instalment becomes due and payable under the provisions of Article
      II
      hereof and provided that the BUYER shall have received the SELLER's demand
      for
      payment in accordance with Article II hereof; or 

    

    (b)
      The
      BUYER fails to pay the Fifth Instalment to the SELLER in accordance with
      Paragraph 3(e) and 4(e) of Article II hereof provided that the BUYER shall
      have
      received the SELLER's demand

    for
      payment in accordance with Article II hereof; or

    

    (c)
      The
      BUYER fails to take delivery of the VESSEL, when the VESSEL is duly tendered
      for
      delivery by the SELLER under the provisions of Article VII hereof.

    

    
      	11.2  	
              NOTICE
                OF DEFAULT

            

    

    

    If
      the
      BUYER is in default of payment or in performance of its obligations as provided
      hereinabove, the SELLER shall notify the BUYER to that effect by telefax after
      the date of occurrence of the default as per Paragraph 1 of this Article and
      the
      BUYER shall forthwith acknowledge by telefax to the SELLER that such
      notification has been received. In case the BUYER does not give the aforesaid
      telefax acknowledgment to the SELLER within three (3) New York business days
      it
      shall be deemed that such notification has been duly received by the
      BUYER.

    

    
      	11.3  	
              INTEREST
                AND CHARGE

            

    

    

    (a)
      If
      the BUYER is in default of payment as to any instalment as provided in Paragraph
      1 (a) and/or 1 (b) of this Article, the BUYER shall pay interest on such
      instalment at the rate of five percent (5%) per annum until the date of the
      payment of the full amount, including all aforesaid interest. In case the BUYER
      shall fail to take delivery of the VESSEL when required to as provided in
      Paragraph 1 (c) of this Article, the BUYER shall be deemed in default of payment
      of the 5th Instalment and shall pay interest thereon at the same rate as
      aforesaid from and including the day on which the VESSEL is tendered for
      delivery by the SELLER, as provided in Article VII Paragraph 6
      hereof.

    

    (b)
      In
      any event of default by the BUYER under 1 (a) or 1 (b) or 1 (c) above, the
      BUYER
      shall also pay all reasonable costs, charges and expenses incurred by the SELLER
      in consequence of such default.

    

    
      	11.4  	
              DEFAULT
                BEFORE DELIVERY OF THE VESSEL

            

    

    

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

    

    (b)
      If
      any such default as defined in Paragraph 1 (a) or 1 (b) or 1 (c) of this Article
      committed by the BUYER continues for a period of fifteen (15) New York business
      days starting from the date the BUYER receives the SELLER’s notice of default
      referred to in Article XI paragraph 2, then, the SELLER shall have all of the
      following rights and remedies:

    

    (i)
      The
      SELLER may, at its option, rescind this Contract, provided that the SELLER
      has
      notified the BUYER of such default pursuant to Paragraph 2 of this Article,
      by
      giving notice of such effect to the BUYER by telefax confirmed in writing.
      Upon
      receipt by the BUYER of such telefax notice of rescission, all of the BUYER's
      Supplies shall forthwith become the sole property of the SELLER, and the VESSEL
      and all its equipment and machinery shall be at the sole disposal of the SELLER
      for sale or otherwise; and

    

    (ii)
      In
      the event of such rescission of this Contract, the SELLER shall be entitled
      to
      retain any instalment or instalments of the Contract Price paid by the BUYER
      to
      the SELLER on account of this Contract.

    

    
      	11.5  	
              SALE
                OF THE VESSEL

            

    

    

    (a)
      In
      the event of rescission of this Contract as above provided, the SELLER shall
      have full right and power either to complete or not to complete the VESSEL
      as it
      deems fit, and to sell the VESSEL at a public or private sale on such terms
      and
      conditions as the SELLER thinks fit without being answerable for any loss or
      damage occasioned to the BUYER thereby.

    

    In
      the
      case of sale of the VESSEL, the SELLER shall give telefax or written notice
      to
      the BUYER.

    

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

    

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

    

    (d)
      In
      either of the above events of sale, if the proceeds of sale exceed the total
      of
      the amounts to which such proceeds are to be applied as aforesaid, the SELLER
      shall promptly pay the excesses to the BUYER without interest, provided, however
      that the amount of each payment to the BUYER shall in no event exceed the total
      amount of instalments already paid by the BUYER and the cost of the BUYER's
      supplies, if any.

    

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

    

    

    
      	12.  	
              ARTICLE
                XII - INSURANCE

            

    

    

    
      	12.1  	
              EXTENT
                OF INSURANCE COVERAGE

            

    

    

    From
      the
      time of keel-laying of the first section of the VESSEL until the VESSEL is
      completed, delivered to and accepted by the BUYER, the SELLER shall, at its
      own
      cost and expense, keep the VESSEL and all machinery, materials, equipment,
      appurtenances and outfit, delivered to the SELLER for the VESSEL or built into,
      or installed in or upon the VESSEL, including the BUYER's Supplies, fully
      insured with the first class Chinese insurance companies on insurance terms
      no
      narrower than the Institute of London Underwriters’ Builders' Risks Clauses.

    The
      amount of such insurance coverage shall, up to the date of delivery of the
      VESSEL, be in an amount at least equal to, but not limited to, the aggregate
      of
      the payments made by the BUYER to the SELLER including the value of the BUYER's
      Supplies. The policy referred to hereinabove shall be taken out in the name
      of
      the SELLER and all losses under such policy shall be payable to the SELLER.
      The
      SELLER shall send the BUYER a copy of the insurance policy and/or confirmation
      of the insurance coverage for the VESSEL as soon as possible after the
      Keel-Laying of the VESSEL has been carried out.

    

    
      	12.2  	
              APPLICATION
                OF RECOVERED AMOUNT

            

    

    

    (a)
      Partial Loss:

    

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

    

    (b)
      Total
      Loss:

    

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

    

    (i)
      By
      mutual agreement between the parties hereto, proceed in accordance with the
      terms of this Contract, in which case the amount recovered under said insurance
      policy shall be applied to the reconstruction and/or repair of the VESSEL's
      damages and/or reinstallation of BUYER's supplies without additional expenses
      to
      the BUYER, provided the parties hereto shall have first agreed in writing as
      to
      such reasonable extension of the Delivery Date and adjustment of other terms
      of
      this Contract including the Contract Price as may be necessary for the
      completion of such reconstruction; or

    

    (ii)
      If
      due to whatever reasons the parties fail to agree on the above, then refund
      immediately to the BUYER the amount of all instalments paid to the SELLER under
      this Contract without interest together with recovered amount for BUYER's
      supplies onboard, whereupon this Contract shall be deemed to be cancelled and
      all rights, duties, liabilities and obligations of each of the parties to the
      other shall terminate forthwith.

    

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

    

    
      	12.3  	
              TERMINATION
                OF THE SELLER'S OBLIGATION TO
                INSURE

            

    

    

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

    

    

    
      	13.  	
              ARTICLE
                XIII - DISPUTES AND
                ARBITRATION

            

    

    

    
      	13.1  	
              PROCEEDINGS

            

    

    

    In
      the
      event of any dispute between the parties hereto as to any matter arising out
      of
      or relating to this Contract or any stipulation herein or with respect thereto
      which cannot be settled by the parties themselves, such dispute shall be
      resolved by arbitration in London, England in accordance with the laws of
      England. Either party may demand arbitration of any such disputes by giving
      written notice to the other party. Any demand for arbitration by either party
      hereto shall state the name of the arbitrator appointed by such party and shall
      also state specifically the question or questions as to which such party is
      demanding arbitration. Within twenty (20) days after receipt of notice of such
      demand for arbitration, the other party shall in turn appoint a second
      arbitrator. The two arbitrators thus appointed shall thereupon select a third
      arbitrator, and the three arbitrators so named shall constitute the board of
      arbitration (hereinafter called the "Arbitration
      Board")
      for
      the settlement of such dispute.

    

    In
      the
      event however, that said other party should fail to appoint a second arbitrator
      as aforesaid within twenty (20) days following receipt of notice of demand
      of
      arbitration, it is agreed that such party shall thereby be deemed to have
      accepted and appointed as its own arbitrator the one already appointed by the
      party demanding arbitration, and the arbitration shall proceed forthwith before
      this sole arbitrator, who alone, in such event, shall constitute the Arbitration
      Board. And in the further event that the two arbitrators appointed respectively
      by the parties hereto as aforesaid should be unable to reach agreement on the
      appointment of the third arbitrator within twenty (20) days from the date on
      which the second arbitrator is appointed, either party of the said two
      arbitrators may apply to any court in England or other official organization
      in
      England having jurisdiction in such matter to appoint the third arbitrator.
      The
      award of the arbitration, made by the sole arbitrator or by the majority of
      the
      three arbitrators as the case may be, unless appealed by either parties, shall
      be final, conclusive and binding upon the parties hereto.

    

    
      	13.2  	
              ALTERNATIVE
                ARBITRATION BY AGREEMENT

            

    

    

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

    

    
      	13.3  	
              NOTICE
                OF AWARD

            

    

    

    Notice
      of
      any award shall immediately be given in writing or by telefax confirmed in
      writing to the SELLER and the BUYER.

    

    
      	13.4  	
              EXPENSES

            

    

    

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

    

    
      	13.5  	
              AWARD
                OF ARBITRATION

            

    

    

    Award
      of
      arbitration, unless appealed by either parties, shall be final and binding
      upon
      the parties concerned.

    

    
      	13.6  	
              ENTRY
                IN COURT

            

    

    

    Judgment
      on any award may be entered in any court of competent jurisdiction.

    

    
      	13.7  	
              ALTERATION
                OF DELIVERY DATE

            

    

    

    In
      the
      event that any dispute or difference is referred either to arbitration or to
      an
      expert, the arbitration tribunal or expert, as the case may be, shall, where
      the
      dispute requires, include a finding as to whether or not the Delivery Date
      of
      the VESSEL should, as a result of such dispute, be in any way altered thereby.
      

    

    

    
      	14.  	
              ARTICLE
                XIV - RIGHT OF ASSIGNMENT

            

    

    

    14.1  The
      BUYER
      shall be entitled to assign any and all of its rights under this Contract for
      the purposes of obtaining finance, to which assignment(s) the BUILDER hereby
      consents.

    

    14.2  Subject
      to paragraph 1 of this Article, the BUYER may assign this Contract to a third
      party only and always subject to a prior written consent of the SELLER which
      consent shall not be unreasonably withheld by the SELLER, provided that all
      of
      the SELLER’S rights under this contract are protected by the terms of such
      assignment. 

    

    

    
      	15.  	
              ARTICLE
                XV - TAXES AND DUTIES

            

    

    

    
      	15.1  	
              TAXES

            

    

    

    All
      costs
      for taxes including stamp duties and import licence fees, if any, incurred
      in
      connection with this Contract in the People's Republic of China shall be borne
      by the SELLER. Any taxes and/or duties imposed upon those items or services
      procured by the SELLER in the People's Republic of China or elsewhere for the
      construction of the VESSEL, including export licence fees, shall be borne by
      the
      SELLER.

    

    
      	15.2  	
              DUTIES

            

    

    

    The
      SELLER shall indemnify the BUYER for, and hold it harmless against, any duties,
      including import and export licence fees, imposed in the People's Republic
      of
      China upon materials and equipment which under the terms of this Contract and/or
      the Specifications will, or may be, supplied by the BUYER from the abroad for
      installation in the VESSEL as well as any duties imposed in the People's
      Republic of China upon running stores, provisions and supplies furnished by
      the
      BUYER from abroad to be stocked on board the VESSEL and also from the payment
      of
      export duties, if any, to be imposed upon the VESSEL as a whole or upon any
      of
      its parts or equipment.

    

    

    
      	16.  	
              ARTICLE
                XVI - PATENTS, TRADEMARKS AND
                COPYRIGHTS

            

    

    

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

    

    Nothing
      contained herein shall be construed as transferring any patent or trademark
      rights or copyright in equipment covered by this Contract, and all such rights
      are hereby expressly reserved to the true and lawful owners thereof.
      Notwithstanding any provisions contained herein to the contrary, the SELLER's
      obligation under this Article should not be terminated by the passage of any
      specified period of time.

    

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

    

    

    
      	17.  	
              ARTICLE
                XVII - NOTICES

            

    

    

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

    

    To
      the
      BUYER 

    Suite
      306

    Commerce
      Building

    One
      Chancery Lane

    Hamilton
      HM12

    Bermuda

     

      Telefax
      No. :441-295-4957

     

    with
      copy to:

    

    TBS
      Shipping Services Inc.

    612
      Grassy Sprain Road

    Yonkers,
      New York 10710

    USA
      

    

    Attention:
      Joseph E. Royce

    

    Telefax
      No. : 914-961-0567 

    

    To
      CCCC

    

    CHINA
      COMMUNICATIONS CONSTRUCTION COMPANY LTD. 

    c/o.
      CCCC
      SHANGHAI EQUIPMENT ENGINEERING CO., LTD

    12
      Floor,
      3456 Pu Dong Nan Road, Shanghai 200125 China

     

      Telefax
      No. : +8621
      5089 0068

    

     with
      copy to the BUILDER:

    NANTONG
      YAHUA SHIPBUILDING CO., LTD.

    1#
      Hongzha Road, Jiuweigang, Nantong Jiangsu P.C. 226361, China

     

    Telefax
      No. : +86513
      8556 0018

    

    Any
      notices and communications sent by CCCC or the BUILDER alone to the BUYER shall
      be deemed as having being sent by both CCCC and the BUILDER. 

    

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

    

    Any
      and
      all notices, requests, demands, instructions, advice and communications in
      connection with this Contract shall be deemed to be given at, and shall become
      effective from, the time when the same is delivered to the address of the party
      to be served, provided, however, that registered airmail shall be deemed to
      be
      delivered ten (10) days after the date of dispatch, express courier service
      shall be deemed to be delivered five (5) days after the date of dispatch, and
      telefax acknowledged by the answerbacks shall be deemed to be delivered upon
      dispatch. Any and all notices, communications, Specifications and drawings
      in
      connection with this Contract shall be written in the English language and
      each
      party hereto shall have no obligation to translate them into any other language.
      

    

    

    
      	18.  	
              ARTICLE
                XVIII - EFFECTIVE DATE OF
                CONTRACT

            

    

    

    This
      Contract shall not become effective and shall have no effect whatsoever, with
      no
      party being liable to the other for any loss or damage, unless and until all
      the
      following conditions are completely fulfilled and satisfied, latest by
      31st
      March
      2007: 

    

    (1) Due
      execution of this Contract by each of the BUYER, CCCC and the BUILDER comprising
      of (i) the signing of this Contract by duly authorised representatives of each
      party and (ii) the stamping of this Contract through the placement of each
      party’s corporate chop; 

    

    (2) Receipt
      by the BUYER of (i) the Refund Guarantee for the First Instalment issued by
      the
      SELLER’s Bank and (ii) documentary evidence from the SELLER’s Bank that this has
      been duly registered with SAFE; and 

    

    (3) Receipt
      by the SELLER of (a) the First Instalment in accordance with Paragraph 3(a)
      and
      4(a) of Article II of this Contract and (b) an original of the Letter of
      Guarantee issued by The Royal Bank of Scotland or other international bank
      acceptable to the Seller in accordance with Article II Paragraph 6(a)
      hereof.

    

    For
      the
      purpose of this Contract, the “Effective Date” means the date on which this
      Contract becomes effective in accordance with the provisions of this Article
      XVIII. 

    

    

    
      	19.  	
              ARTICLE
                XIX - INTERPRETATION

            

    

    

    
      	19.1  	
              LAW
                APPLICABLE

            

    

    

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

    

    
      	19.2  	
              DISCREPANCIES

            

    

    

    All
      general language or requirements embodied in the Specifications are intended
      to
      amplify, explain and implement the requirements of this Contract. However,
      in
      the event that any language or requirements so embodied in the Specifications
      permit an interpretation inconsistent with any provision of this Contract,
      then
      in each and every such event the applicable provisions of this Contract shall
      govern. The Technical Specification and plans (which comprise the
      Specifications) are also intended to explain each other, and anything shown
      on
      the plans and not stipulated in the Technical Specification or stipulated in
      the
      Technical Specification and not shown on the plans, shall be deemed and
      considered as if embodied in both. In the event of conflict between the
      Technical Specification and plans, the Technical Specification shall
      govern.

    

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

    

    
      	19.3  	
              DEFINITION

            

    

    

    In
      absence of stipulation of “New York business day(s)", all references to "day" or
      "days" shall be taken as "calendar day" or "calendar days". 

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

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

    

    

    THE
      BUYER: DORCHESTER MARITIME CORP. 

    

    

    

    By
      :
      _/s/
      Martin Levin_______________________

     

    Name
      :
      Martin Levin 

    Title
      :  Director
      - New Shipbuilding Projects

    Witness
      :

    

    

    

    

    

    CCCC
      : CHINA COMMUNICATIONS CONSTRUCTION COMPANY LTD. 

    

    

    

    

    By
      :
      _______________/s/____________________

     

    Name
      :

    Title
      : 

    Witness
      :
      CCCC SHANGHAI EQUIPMENT ENGINEERING CO., LTD

    

    

    

    

    

    

    THE
      BUILDER: NANTONG YAHUA SHIPBUILDING CO., LTD.

    

    

    

    

    By
      :
      _______________/s/__________________

    

    Name
      :

    Title
      :

    Witness
      :

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    Exhibit
      "A" : 

    

    REFUND
      LETTER OF GUARANTEE

    FOR
      THE 1st
      INSTALMENT (DRAFT)

    

    To:
      DORCHESTER
      MARITIME CORP.

    Trust
      Company Complex

    Ajeltake
      Road

    Ajeltake
      Island

    Majuro

    Marshall
      Islands MH96960

    Date:
      

    

    Dear
      Sirs,

    

    Irrevocable
      Letter of Guarantee No.

    

    

    1.
      At the
      request of CHINA COMMUNICATION CONSTRUCTION COMPANY LTD and NANTONG YAHUA
      SHIPBUILDING CO., LTD. (hereinafter collectively called the "SELLER")
      and in
      consideration of your entering in to the shipbuilding contract concluded by
      and
      amongst you and the SELLER dated February 2007 for the construction of one
      (1)
      multi-purpose vessel (the “VESSEL”)
      to be
      designated as Hull No. NYHS200722 (hereinafter called the "Contract"),
      we,
      the undersigned, do hereby irrevocably guarantee repayment to you by the SELLER
      of a total amount of United States Dollars seven million(US$
      7,000,000),representing the 1st
      instalment of the Contract Price of the VESSEL (the “Instalment”),
      that
      you are to pay to the SELLER under the Contract prior to the delivery of the
      VESSEL, if and when the same or any part thereof becomes repayable to you from
      the SELLER in accordance with the terms of the Contract. Should the SELLER
      fail
      to make such repayment, we shall pay you the amount the SELLER ought to pay
      together with interest at the rate of zero percent (0%) per annum if the
      rescission of the Contract is exercised by you for the total loss in accordance
      with the Article XII and X of the Contract or together with an interest at
      the
      rate of five percent (5%) per annum if the rescission of the Contract is
      exercised by you for delay in accordance with the provisions of Article VIII
      of
      the Contract or by the events described in Article III 1(c), 2(c), 3(c) or
      4(c)
      of the Contract within thirty (30) business days after our receipt of a simple
      written demand from you for repayment confirming that the SELLER has refused
      and/or has failed to refund the BUYER in breach of the relevant Article of
      the
      Contract. 

    

    2.
      However, in the event of any dispute between you and the SELLER as to whether
      the SELLER is liable to repay the Instalment paid by you and such dispute is
      submitted either by the SELLER or by you for arbitration in accordance with
      Article XIII of the Contract, we shall be entitled to withhold and defer payment
      until the arbitration award is granted. We shall not be obligated to make any
      payment to you unless the arbitration award orders the SELLER to make repayment
      and any right of appeal available to the SELLER under English law is waived
      or
      is not exercised by the SELLER in accordance with English law. Provided further
      that in the event an application is successfully made for leave to appeal,
      our
      liability to make payment hereunder shall be conditional upon the final
      determination in your favour of the matters in respect of which leave to appeal
      has been granted. Our obligation to make payment hereunder of the principal
      amount guaranteed and interest thereon shall arise immediately upon our
      receiving of a certified copy of such relevant award and shall be to the extent
      the arbitration award (or any court judgment) orders but not exceeding the
      aggregate amount of this guarantee plus the interest as described
      above.

    

    3.
      The
      said repayment shall be made by us in United States Dollars. All payments by
      us
      under this Letter of Guarantee shall be made without any set-off or counterclaim
      and without deduction or withholding for or on account of any taxes, duties,
      or
      charges whatsoever unless we are compelled by law to deduct or withhold the
      same. In the latter event we shall make the minimum deduction or withholding
      permitted and will pay such additional amounts as may be necessary in order
      that
      the net amount received by you after such deductions or withholdings shall
      equal
      the amount which would have been received had no such deduction or withholding
      been required to be made.

     

    4.
      This
      Letter of Guarantee shall become effective from the time of the actual receipt
      by the SELLER of the payment of the Instalment of the Contract Price from you
      or
      on your behalf or from your parent company as your guarantor or pursuant to
      any
      Payment Guarantee issued by your bank. However, our liability under this Letter
      of Guarantee shall be limited to the above mentioned amount actually paid to
      the
      SELLER, together with interest calculated, as described above at five percent
      (5%) or, zero percent (0%) per annum, as the case may be for the period
      commencing with the date of receipt by the SELLER of the said Instalment to
      the
      date of repayment thereof.

    

    5.
      This
      Letter of Guarantee shall remain in force until (i) the VESSEL has been
      delivered to and accepted by you or (ii) refund has been made by the SELLER
      or
      ourselves or  (iii) 31st
      July
      2010, whichever
      occurs earlier. However, in the event that by 31st
      July
      2010 (i) the Vessel has not been delivered to and accepted by you or (ii) refund
      has not been made by the SELLER or ourselves then, the validity of this Letter
      of Guarantee shall be automatically extended until 31st
      January
      2012. Notwithstanding the foregoing, if arbitration or appeal proceedings exist
      between you and the SELLER for such matter as described above, then the validity
      of this Letter of Guarantee shall be automatically extended until the date
      falling on the sixtieth (60th) calendar day after the final arbitration award
      or
      final court order is granted.

    

    6.
      Our
      liability hereunder shall not be affected by any alteration to, or variation
      of,
      the terms of the Contract you may hereafter agree with the SELLER. We hereby
      agree that this Letter of Guarantee shall be construed as a continuing and
      unconditional guarantee of payment and without regard to the validity or
      unenforceability of any other agreement or instrument (including the Contract)
      and without regard to defence, set-off or counterclaim, or any other
      circumstance whatsoever which might constitute an equitable or legal discharge
      of our obligation hereunder. No action or failure to act on your part shall
      relieve us of any of our obligation hereunder. 

    

    7.
      We
      hereby confirm that you may assign this Letter of Guarantee to your financiers
      by way of security. No other assignment of your rights under this Letter of
      Guarantee shall be permissible without our prior written consent, such consent
      not to be unreasonably withheld. In any event, the right for making a demand
      under this Letter of Guarantee shall exclusively remain with you. 

    

    8.
      This
      Letter of Guarantee is governed by the laws of England and is subject to the
      exclusive jurisdiction of the English Courts. For the purpose of any proceedings
      hereunder, we irrevocably appoint the following as our agent for service of
      process: [   ].

    

    For
      The
      _______ Bank 

    (Stamp
      & Signature) 

    

    Name
      :

    Title
      :

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Exhibit
      "B" : 

    

    REFUND
      LETTER OF GUARANTEE

    FOR
      THE 2nd,
      3rd
      AND 4th
      INSTALMENTS (DRAFT)

    

    To:
      DORCHESTER MARITIME CORP.

    Trust
      Company Complex

    Ajeltake
      Road

    Ajeltake
      Island

    Majuro

    Marshall
      Islands MH96960

    

    Date:
      

    Dear
      Sirs,

    

    Irrevocable
      Letter of Guarantee No.

    

    1.
      At the
      request of CHINA COMMUNICATION CONSTRUCTION COMPANY LTD and NANTONG YAHUA
      SHIPBUILDING CO., LTD. (hereinafter collectively called the "SELLER")
      and in
      consideration of your entering into the shipbuilding contract concluded by
      and
      amongst you, and the SELLER dated February 2007 for the construction of one
      (1)
      multi-purpose vessel (the “VESSEL”)
      to be
      designated as Hull No. NYHS200722 (hereinafter called the "Contract"),
      we,
      the undersigned, do hereby irrevocably guarantee repayment to you by the SELLER
      of a total amount of United States Dollars twenty one million (US$
      21,000,000),representing United States Dollars seven million (US$ 7,000,000)
      for
      the 2ndinstalment
      of the Contract Price of the VESSEL, United States Dollars seven million (US$
      7,000,000) for the 3rd
      instalment of the Contract Price of the VESSEL and United States Dollars seven
      million (US$ 7,000,000) for the 4th
      instalment of the Contract Price of the VESSEL (the “Instalments”
and
      each, an “Instalment”),
      that
      you are to pay to the SELLER under the Contract prior to the delivery of the
      VESSEL, if and when the same or any part thereof becomes repayable to you from
      the SELLER in accordance with the terms of the Contract. Should the SELLER
      fail
      to make such repayment, we shall pay you the amount the SELLER ought to pay
      together with interest at the rate of zero percent (0%) per annum if the
      rescission of the Contract is exercised by you for the total loss in accordance
      with the Article XII and X of the Contract or together with an interest at
      the
      rate of five percent (5%) per annum if the rescission of the Contract is
      exercised by you for delay in accordance with the provisions of Article VIII
      of
      the Contract or by the events described in Article III 1(c), 2(c), 3(c) or
      4(c)
      of the Contract within thirty (30) business days after our receipt of a simple
      written demand from you for repayment confirming that the SELLER has refused
      and/or has failed to refund the BUYER in breach of the relevant Article of
      the
      Contract. 

    

    2.
      However, in the event of any dispute between you and the SELLER as to whether
      the SELLER is liable to repay an Instalment or Instalments paid by you and
      such
      dispute is submitted either by the SELLER or by you for arbitration in
      accordance with Article XIII of the Contract, we shall be entitled to withhold
      and defer payment until the arbitration award is granted. We shall not be
      obligated to make any payment to you unless the arbitration award orders the
      SELLER to make repayment and any right of appeal available to the SELLER under
      English law is waived or is not exercised by the SELLER in accordance with
      English law. Provided further that in the event an application is successfully
      made for leave to appeal, our liability to make payment hereunder shall be
      conditional upon the final determination in your favour of the matters in
      respect of which leave to appeal has been granted. Our obligation to make
      payment hereunder of the principal amount guaranteed and interest thereon shall
      arise immediately upon our receiving of a certified copy of such relevant award
      and shall be to the extent the arbitration award (or any court judgment) orders
      but not exceeding the aggregate amount of this guarantee plus the interest
      as
      described above.

    

    3.
      The
      said repayment shall be made by us in United States Dollars. All payments by
      us
      under this Letter of Guarantee shall be made without any set-off or counterclaim
      and without deduction or withholding for or on account of any taxes, duties,
      or
      charges whatsoever unless we are compelled by law to deduct or withhold the
      same. In the latter event we shall make the minimum deduction or withholding
      permitted and will pay such additional amounts as may be necessary in order
      that
      the net amount received by you after such deductions or withholdings shall
      equal
      the amount which would have been received had no such deduction or withholding
      been required to be made.

     

    4.
      This
      Letter of Guarantee shall become effective from the time of the actual receipt
      by the SELLER of the payment of the 2nd
      Instalment of the Contract Price from you or on your behalf or from your parent
      company as your guarantor or pursuant to any Payment Guarantee issued by your
      bank. However, our liability under this Letter of Guarantee shall be limited
      to
      the above mentioned amount actually paid to the SELLER, together with interest
      calculated, as described above at five percent (5%) or, zero percent (0%) per
      annum, as the case may be for the period commencing with the date of receipt
      by
      the SELLER of the respective Instalment to the date of repayment thereof.

    

    5.
      This
      Letter of Guarantee shall remain in force until (i) the VESSEL has been
      delivered to and accepted by you or (ii) refund has been made by the SELLER
      or
      ourselves or (iii) 31st
      July
      2010, whichever
      occurs earlier. However, in the event that by 31st
      July
      2010 (i) the Vessel has not been delivered to and accepted by you or (ii) refund
      has not been made by the SELLER or ourselves then, the validity of this Letter
      of Guarantee shall be automatically extended until 31st
      January
      2012. Notwithstanding the foregoing, if arbitration or appeal proceedings exist
      between you and the SELLER for such matter as described above, then the validity
      of this Letter of Guarantee shall be automatically extended until the date
      falling on the sixtieth (60th) calendar day after the final arbitration award
      or
      final court order is granted.

    

    6.
      Our
      liability hereunder shall not be affected by any alteration to, or variation
      of,
      the terms of the Contract you may hereafter agree with the SELLER. We hereby
      agree that this Letter of Guarantee shall be construed as a continuing and
      unconditional guarantee of payment and without regard to the validity or
      unenforceability of any other agreement or instrument (including the Contract)
      and without regard to defence, set-off or counterclaim, or any other
      circumstance whatsoever which might constitute an equitable or legal discharge
      of our obligation hereunder. No action or failure to act on your part shall
      relieve us of any of our obligation hereunder. 

    

    7.
      We
      hereby confirm that you may assign this Letter of Guarantee to your financiers
      by way of security. No other assignment of your rights under this Letter of
      Guarantee shall be permissible without our prior written consent, such consent
      not to be unreasonably withheld. In any event, the right for making a demand
      under this Letter of Guarantee shall exclusively remain with you. 

    

    8.
      This
      Letter of Guarantee is governed by the laws of England and is subject to the
      exclusive jurisdiction of the English Courts. For the purpose of any proceedings
      hereunder, we irrevocably appoint the following as our agent for service of
      process: [   ].

    

    For
      The
      _______ Bank 

    (Stamp
      & Signature) 

    

    Name
      :

    Title
      :

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    Exhibit
      "C" 

    

    IRREVOCABLE
      PAYMENT LETTER OF GUARANTEE

    FOR
      THE 2nd
      , 3rd
      and 4th
      INSTALMENTS (DRAFT)

    

    From:
      The
      Royal Bank of Scotland

    

    To: China
      Communications Construction Company Ltd. (“CCCC”); 

    

     

    

     

    Date:
      

    

    Dear
      Sirs,

    

    1.
      In
      consideration of your entering into a Shipbuilding Con-tract dated February
      2007
      (the “Shipbuilding
      Contract”)
      with
      Nantong Yahua Shipbuilding Co., Ltd. of 1# Hongzha Road, Jiuweigang, Nantong,
      Jiangsu P.C. 226361 (the “BUILDER”)
      and
      DORCHESTER Maritime Corp. of Trust Company Complex, Ajeltake Road, Ajeltake
      Island, Majuro, Marshall Islands MH96960 as the buyer (the “BUYER”)
      for
      the construction of one (1) multi-purpose vessel known as the Builder’s Hull
      No.NYHS200722(the “VESSEL"),
      we,
The
      Royal Bank of Scotland
      of [ ],
      hereby IRREVOCABLY, ABSOLUTELY and UNCONDITIONALLY guaran-tee, as the primary
      obligor and not merely as the surety, the due and punctual payment by the BUYER,
      as and when the same shall fall due, of each and all of the 2nd, 3rd
      and
      4th
      instalments
      (the “Instalments”
and
      each, an “Instalment”)
      of the
      Contract Price amounting to a total sum of United States Dollars twenty one
      million (US$ 21,000,000) as specified in (2) below, being part of a total
      Contract Price of United States Dollars thirty five million four hundred and
      twenty thousand (US$ 35,420,000). Terms used herein shall bear the same meaning
      as in the Shipbuilding Contract, a copy of which has been provided to us.

    

    2.
      The
      Instalments guaranteed hereunder, pursuant to the terms of the Shipbuilding
      Contract, comprise:-

    

    
      	(a)  	
              the
                2nd Instalment in the amount of U.S. Dollars seven million only (US$
                7,000,000) payable by the BUYER within five (5) New York business
                days of
                the receipt by the BUYER of (i) the Refund Guarantee issued by the
                SELLER’s Bank in respect of the 2nd,
                3rd
                and 4th
                Instalments together with documentary evidence that this has been
                duly
                registered with the State Administration for Foreign Exchange (“SAFE”) and
                (ii) a telefax notice attaching the Stage Certificate issued by you
                and
                the BUILDER in the form of the draft attached as Appendix A to the
                Overall
                Agreement, countersigned by the Classification Surveyor, certifying
                that
                the steel cutting of the first plate of the VESSEL in the BUILDER’s
                Shipyard has commenced, 

            

    

    

    
      	(b)  	
              the
                3rd Instalment in the amount of U.S. Dollars seven million only (US$
                7,000,000) payable by the BUYER within five (5) New York business
                days of
                the receipt by the BUYER of a telefax notice attaching the Stage
                Certificate issued by you and the BUILDER in the form of the draft
                attached as Exhibit D to the Shipbuilding Contract, countersigned
                by the
                Classification Society, certifying that the VESSEL’s keel has been laid
                within the meaning of Article 2.3 of the Shipbuilding Contract;
                and

            

    

    

    
      	(c)  	
              the
                4th Instalment in the amount of U.S. Dollars seven million only (USD
                7,000,000) payable by the BUYER within five (5) New York business
                days of
                the receipt by the BUYER of a telefax notice attaching the Stage
                Certificate issued by you and the BUILDER in the form of the draft
                attached as Exhibit D to the Shipbuilding Contract, countersigned
                by the
                Classification Surveyor, certifying that the VESSEL has been successfully
                launched.

            

    

    

    

    PROVIDED
      HOWEVER that it is expressly understood and agreed that our maximum liability
      under this Letter of Guarantee shall at all times be limited to the aggregate
      of:

    

    (a)
      the
      lesser of (i) United States Dollars fourteen million (USD 14 million) and (ii)
      the difference between the Contract Price and an amount corresponding to the
      aggregate of each Instalment payment made from time to time by the BUYER to
      the
      SELLER under the Shipbuilding Contract; and 

    

    (b)
      interest thereon as specified in paragraph 3 below.

    

    For
      the
      avoidance of doubt, our liability under this Letter of Guarantee shall be
      limited to United States Dollars fourteen million (USD 14 million) plus interest
      thereon as specified in paragraph 3 below until such time as the BUYER pays
      the
      3rd
      instalment of the Contract Price of the VESSEL, which shall reduce our liability
      under this Letter of Guarantee to United States Dollars seven million (USD
      7
      million) plus interest. Our liability shall remain at United States Dollars
      seven million (USD 7 million) plus interest until the payment by the BUYER
      of
      the 4th
      instalment of the Contract Price, whereupon we shall have no further liability
      to you under this Letter of Guarantee whatsoever. 

    

    3.
      We
      also IRREVOCABLY, ABSOLUTELY and UNCONDITIONALLY guarantee, as primary obligor
      and not merely as surety, the due and punctual payment by the BUYER of interest
      on each In-stalment guaranteed hereunder at the rate of five percent (5%) per
      annum from and including the first day after the date this Instalment fell
      due
      under the Shipbuilding Contract until the date of full payment by us of such
      amount guaranteed hereunder. 

    

    4.
      In the
      event that the BUYER fails to punctually pay any Instalment guaranteed hereunder
      or the BUYER fails to pay any interest thereon, and such default continues
      for a
      period of fifteen (15) calendar days from the date of notice thereof from
      yourselves to the BUYER, then, upon receipt by us of your first written demand,
      we shall pay to you or your Assignee duly notified in your demand, within
      fifteen (15) calendar days all unpaid 2nd,
      3rd
      and
      4th
      Instalments, together with the interest as specified in paragraph (3) hereof,
      without requesting you to take any or further action, procedure or step against
      the BUYER or with respect to any other security which you may hold, provided
      that:

    

    (a)
      Your
      demand is accompanied by an original of the relevant Stage Certificate(s)
      referred to in paragraph 2 above, issued in compliance with the Stage
      Certificate formalities stated in the Overall Agreement or Shipbuilding
      Contract, as the case may be; and

    

    (b)
      Your
      demand is made not earlier than 20 days after receipt by us of a valid Refund
      Guarantee duly registered with SAFE in respect of each Instalment claimed under
      your demand, issued in compliance with the requirements of the Shipbuilding
      Contract.

    

    5.
      Any
      payment by us under this Letter of Guarantee shall be made in United States
      Dollars by telegraphic transfer to , as receiving bank nominated by you for
      credit to the account of you with [Bank
      of
      Communications (Beijing Branch)][Industrial and Commercial Bank of China
      (Beijing Branch)], the People's Republic of China or through such other
      receiving bank to be nominated in writing by you from time to time, in favour
      of
      you or your Assignee.

    

    6.
      Our
      obligations under this Letter of Guarantee shall not be affected or prejudiced
      by any dispute between you as the SELLER and the BUYER under the Shipbuilding
      Contract or by the BUILDER's delay in the construction and/or delivery of the
      VESSEL due to whatever causes or by any variation or extension of their terms
      thereof or by any security or other indemnity now or hereafter held by you
      in
      respect thereof, or by any time or indulgence granted by you or any other person
      in connection therewith, or by any invalidity or unenforceability of the terms
      thereof.

    

    7.
      Any
      claim or demand shall be in writing signed by one of your officers and may
      be
      served on us for the attention of the Letter of Guarantee Department either
      by
      authenticated SWIFT message via [Bank
      of
      Communications (Beijing Branch)][Industrial and Commercial Bank of China
      (Beijing Branch)], or by hand, or by post and if sent by post to [ ] (or such
      other address as we may notify to you in writing).

    

    8.
      This
      Letter of Guarantee shall come into full force and effect upon delivery to
      you
      of this Letter of Guarantee and shall continue in force and effect until the
      earliest of the following:

    

    (a)
      the
      date on which the VESSEL is delivered to and accepted by the BUYER; or

    

    (b)
      the
      date on which full payment of the 2nd, 3rd
      and
      4th
      Instalments together with the aforesaid interest shall have been made to you
      by
      the BUYER or ourselves, whichever first occurs; or

    

    (c)
      the
      date on which the Shipbuilding Contract has been rescinded in compliance with
      its terms; or

    

    
      	(d)  	
              31st
                January 2010. 

            

    

    

    However,
      in the event that by 31st
      January
      2010 (i) the Vessel has not been successfully launched or (ii) the full payment
      of the 2nd,
      3rd
      and
      4th
      Instalments together with interest has not been made to you by the BUYER or
      ourselves or (iii) the Shipbuilding Contract has not been rescinded in
      compliance with its terms, then the validity of this Letter of Guarantee shall
      be automatically extended until 31st
      January
      2011. 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    9.
      All
      payments by us under this Letter of Guarantee shall be made without any set-off
      or counterclaim and without deduction or withholding for or on account of any
      taxes, duties, or charges whatsoever unless we are compelled by law to deduct
      or
      withhold the same. In the latter event we shall make the minimum deduction
      or
      withholding permitted and will pay such additional amounts as may be necessary
      in order that the net amount received by you after such deductions or
      withholdings shall equal the amount which would have been received had no such
      deduction or withholding been required to be made.

    

    10.
      We
      hereby confirm that you may assign this Letter of Guarantee to your financiers
      by way of security. No other assignment of your rights under this Letter of
      Guarantee shall be permissible without our prior written consent, such consent
      not to be unreasonably withheld. In any event, the right for making a demand
      under this Letter of Guarantee shall exclusively remain with you. The
      term
“Assignee”
where
      used in this Letter of Guarantee shall be construed by reference to this
      paragraph 11. 

    

    11.
      This
      Letter of Guarantee shall be construed in accordance with and governed by the
      laws of England. We hereby submit to the exclusive jurisdiction of the English
      courts for the purposes of any legal action or proceedings in connection with
      this Letter of Guarantee.

    

    12.
      As
      soon as this Letter of Guarantee expires as aforesaid, you shall return the
      same
      to us without any request or demand from us.

    

    IN
      WITNESS WHEREOF, we have caused this Letter of Guarantee to be executed and
      delivered by our duly authorized representative the day and year above
      written.

     

    

    

    Very
      Truly Yours,

    

    For
      The
      Royal Bank of Scotland

     

    By:
      _________________________

    (Signature
      & Stamp)

    Name
      :

    Title
      :

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    

    EXHIBIT
      “D” - FORM OF STAGE CERTIFICATE

    

    

    [insert
      date]

    

    DORCHESTER
      MARITIME CORP. 

    

    c/o
      TBS
      SHIPPING SERVICES INC.

    612
      Grassy Sprain Road

    Yonkers

    New
      York
      10710

    USA

    

    For
      the
      attention of Joseph E. Royce

    

    Fax
      no:
914-961-0567

    

    

    Gentlemen:

    

    Hull
      No. NYHS200722 under a Shipbuilding Contract dated 

          
      February 2007, made between yourselves and ourselves

    

    We
      hereby
      certify in connection with the building of the above VESSEL:-

    

    

    [that
      the
      VESSEL’s keel has been laid in accordance with the meaning of Article 2.3 of the
      Contract]

    [that
      the
      VESSEL has been successfully launched].

    

     

    For
      and
      on behalf of

    China
      Communications Construction Company Ltd. and Nantong Yahua Shipbuilding Co.,
      Ltd.

    as
      the
      SELLER 

    

    ................................ 

    Dated
      [
      ] 

    

     

    For
      and
      on behalf of 

    Lloyd’s
      Register

    As
      Classification Society

    

    ................................

    Dated
      [
      ]

     

     

    

      ADDENDUM
        No.1

      

      to
        a
Shipbuilding
        Contract
        dated
        24th
        February
        2007

      

      BETWEEN

      

      	1.  	
              CHINA
                COMMUNICATIONS CONSTRUCTION COMPANY LTD of
                No. C88, An Ding Men Wai Street, Beijing100011, the People’s Republic
                of China (hereinafter called "the Seller"),
                and

            

      

      	2.  	
              NANTONG
                YAHUA SHIPBUILDING CO., LTD of
                1# Hongzah Road, Jiuweigang, Nantong Jiangsu P.C. 226361, the People’s
                Republic of China (hereinafter called "the Builder"),
                and

            

      

      	3.  	
              DORCHESTER
                MARITIME CORP. of
                Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall
                Islands (hereinafter called "the Buyer")

            

      

      WHEREAS

      

      	I.  	
              The
                Seller, the Builder and the Buyer (together the “Parties”) entered into a
                Shipbuilding Contract dated 24 February 2007 (the “Building Contract”) in
                respect of one multi-purpose vessel carrying the Builder’s hull number
                NYHS200722; and

            

      

      	II.  	
              The
                Parties now wish to amend the Building Contract to rectify a typographical
                error which was detected after execution of the Building
                Contract.

            

      

      NOW
        THEREFORE
        the
        Parties agree as follows:

      

      	(A)  	
              Exhibit
                B of the Building Contract “Refund Letter of Guarantee for the
                2nd,
                3rd
                and 4th
                Instalments” is amended by deleting the figures and words “shall be
                automatically extended until 1st
                January 2012” in paragraph 5. and replacing them with the figures and
                words “shall be automatically extended until 31st
                January 2012”;
                and 

            

      

      	(B)  	
              All
                other terms and conditions of the Building Contract shall remain
                unaltered
                and in full force and effect.

            

      

      Dated
        this 21st day of March 2007

      

      

      

      

      ___________/s/__________________  ____________/s/_______________

      CHINA
        COMMUNICATIONS   NANTONG
        YAHUA

      CONSTRUCTION
        COMPANY LTD  SHIPBUILDING
        CO. LTD

      By:       By:

      

      

      

      _/s/
        Martin D. Levin__________________

      DORCHESTER
        MARITIME CORP.

      By:
        Martin D. Levin

      
        Director
          - New Shipbuilding ProjectsShipbuilding Contract and Addendum between Longwoods Maritime Corp.

                                                                                                                                                              Exhibit
    10.5

     

    Pursuant
      to 17 CFR 240.24b-2, confidential information (indicated by [***]) has been
      omitted and has been filed separately with the Securities and Exchange
      Commission pursuant to a Confidential Treatment Application filed with the
      Commission.

     

    

    

    

    SHIPBUILDING
      CONTRACT

    

    FOR

    

    CONSTRUCTION
      OF ONE

    MULTI-PURPOSE
      VESSEL

    

    

    

    

    (HULL
      NO.
      NYHS200723)

    

    

    

    BETWEEN

    

    LONGWOOD
      MARITIME CORP.

    

    AS
      BUYER

    

    

    

    

    AND

    

    

     

    CHINA
      COMMUNICATIONS CONSTRUCTION COMPANY LTD

    

    

    

    

    AND

    

    

    NANTONG
      YAHUA SHIPBUILDING CO., LTD.

    

    

    

    COLLECTIVELY
      AS SELLER

    CONTENTS
      

    

    Page
      No.

    1. ARTICLE
      I - DESCRIPTION AND CLASS

    1.1 DESCRIPTION

    1.2 CLASS
      AND RULES: GENERAL QUALITY STANDARDS

    1.3 PRINCIPAL
      PARTICULARS AND DIMENSIONS OF THE VESSEL

    1.4 GUARANTEED
      SPEED

    1.5 GUARANTEED
      FUEL CONSUMPTION

    1.6 GUARANTEED
      DEADWEIGHT

    1.7 SUBCONTRACTING

    1.8 MAKERS’
      LIST

    1.9 REGISTRATION

    1.10 DESIGN
      OBLIGATIONS

    1.11 SPARE
      PARTS

    2. ARTICLE
      II - CONTRACT PRICE & TERMS OF PAYMENT

    2.1 CONTRACT
      PRICE

    2.2 CURRENCY

    2.3 TERMS
      OF PAYMENT

    2.4 METHOD
      OF PAYMENT

    2.5 PREPAYMENT

    2.6 SECURITY
      FOR PAYMENT OF INSTALMENTS BEFORE DELIVERY

    2.7 REFUNDS

    2.8 STEEL
      CUTTING

    3. ARTICLE
      III - ADJUSTMENT OF THE CONTRACT PRICE

    3.1 DELIVERY
      DATE

    3.2 SPEED

    3.3 EXCESSIVE
      FUEL CONSUMPTION

    3.4 DEADWEIGHT

    3.5 EFFECT
      OF RESCISSION

    4. ARTICLE
      IV - SUPERVISION AND INSPECTION

    4.1 APPOINTMENT
      OF THE BUYER'S SUPERVISOR

    4.2 APPROVAL
      OF PLANS AND DRAWINGS

    4.3 SUPERVISION
      AND INSPECTION BY THE SUPERVISOR

    4.4 LIABILITY
      OF THE SELLER

    4.5 SALARIES
      AND EXPENSES

    4.6 REPORT
      OF PROGRESS

    4.7 REPLACEMENT
      OF SUPERVISOR

    5. ARTICLE
      V - MODIFICATION, CHANGES AND EXTRAS

    5.1 HOW
      EFFECTED

    5.2 CHANGES
      IN RULES AND REGULATIONS, ETC.

    5.3 SUBSTITUTION
      OF MATERIALS AND/OR EQUIPMENT

    5.4 BUYER'S
      SUPPLIED ITEMS

    6. ARTICLE
      VI - TRIALS

    6.1 NOTICE

    6.2 HOW
      CONDUCTED

    6.3 METHOD
      OF ACCEPTANCE OR REJECTION

    6.4 DISPOSITION
      OF SURPLUS CONSUMABLE STORES

    6.5 EFFECT
      OF ACCEPTANCE

    7. ARTICLE
      VII - DELIVERY

    7.1 TIME
      AND PLACE

    7.2 WHEN
      AND HOW EFFECTED

    7.3 DOCUMENTS
      TO BE DELIVERED TO THE BUYER

    7.4 TITLE
      AND RISK

    7.5 REMOVAL
      OF VESSEL

    7.6 TENDER
      OF THE VESSEL

    8. ARTICLE
      VIII - DELAYS & EXTENSION OF TIME FOR DELIVERY

    8.1 CAUSE
      OF DELAY

    8.2 NOTICE
      OF DELAY

    8.3 DEFINITION
      OF PERMISSIBLE DELAY

    8.4 RIGHT
      TO RESCIND FOR EXCESSIVE DELAY

     9. ARTICLE
      IX - WARRANTY OF QUALITY

    9.1 GUARANTEE
      OF MATERIAL AND WORKMANSHIP

    9.2 NOTICE
      OF DEFECTS

    9.3 REMEDY
      OF DEFECTS

    9.4 EXTENT
      OF THE SELLER'S LIABILITY

    9.5 GUARANTEE
      ENGINEER

    10. ARTICLE
      X - INSOLVENCY OF SELLER: RESCISSION BY THE BUYER

    11. ARTICLE
      XI - BUYER'S DEFAULT

    11.1 DEFINITION
      OF DEFAULT

    11.2 NOTICE
      OF DEFAULT

    11.3 INTEREST
      AND CHARGE

    11.4 DEFAULT
      BEFORE DELIVERY OF THE VESSEL

    11.5 SALE
      OF THE VESSEL

    12. ARTICLE
      XII - INSURANCE

    12.1 EXTENT
      OF INSURANCE COVERAGE

    12.2 APPLICATION
      OF RECOVERED AMOUNT

    12.3 TERMINATION
      OF THE SELLER'S OBLIGATION TO INSURE

    13. ARTICLE
      XIII - DISPUTES AND ARBITRATION

    13.1 PROCEEDINGS

    13.2 ALTERNATIVE
      ARBITRATION BY AGREEMENT

    13.3 NOTICE
      OF AWARD

    13.4 EXPENSES

    13.5 AWARD
      OF ARBITRATION

    13.6 ENTRY
      IN COURT

    13.7 ALTERATION
      OF DELIVERY DATE

    14. ARTICLE
      XIV - RIGHT OF ASSIGNMENT

    15. ARTICLE
      XV - TAXES AND DUTIES

    15.1 TAXES

    15.2 DUTIES

    16. ARTICLE
      XVI - PATENTS, TRADEMARKS AND COPYRIGHTS

    17. ARTICLE
      XVII - NOTICES

    18. ARTICLE
      XVIII - EFFECTIVE DATE OF CONTRACT

    19. ARTICLE
      XIX - INTERPRETATION

    19.1 LAW
      APPLICABLE

    19.2 DISCREPANCIES

    19.3 DEFINITION

    

    Exhibit
      "A":  IRREVOCABLE
      REFUND LETTER OF GUARANTEE FOR THE 1st
      INSTALMENT

    

    Exhibit
      “B”    IRREVOCABLE
      REFUND LETTER OF GUARANTEE FOR THE 2nd,
      3rd
      and
      4th
      INSTALMENTS

    

    Exhibit
      "C":  IRREVOCABLE
      PAYMENT LETTER OF GUARANTEE

    

    Exhibit
      "D": FORM
      OF
      STAGE CERTIFICATE

     

    
      
        
          Shipbuilding
            Contract Hull No. NYHS200723

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
        

      

    

    

    

    SHIPBUILDING
      CONTRACT

    

    FOR

    

    CONSTRUCTION
      OF ONE 

    MULTI-PURPOSE
      VESSEL 

     

    (HULL
      NO.NYHS200723)

    

    

    This
      CONTRACT, entered into this day
      of
      February 2007 by and between
      LONGWOOD MARITIME CORP.,
      a
      corporation organized and existing under the laws of the Marshall Islands,
      having its registered office at Trust Company Complex, Ajeltake Road, Ajeltake
      Island, Majuro, Marshall Islands MH96960 (hereinafter called the "BUYER")
      on one
      part; and
      CHINA COMMUNICATIONS CONSTRUCTION COMPANY LTD,
      a
      corporation organized and existing under the laws of the People's Republic
      of
      China, having its registered office at No.C88, An Ding Men Wai Street, Beijing
      100011, the People's Republic of China (hereinafter called "CCCC"),and
      NANTONG
      YAHUA SHIPBUILDING CO., LTD.,
      a
      corporation organized and existing under the laws of the People's Republic
      of
      China, having its registered office at 1# Hongzha Road, Jiuweigang, Nantong
      Jiangsu P.C. 226361, the People's Republic of China (hereinafter called the
      "BUILDER")
      on the
      other part, CCCC and the BUILDER being hereinafter collectively called the
      "SELLER".

    

    WITNESSETH

    

    IN
      CONSIDERATION OF the mutual covenants contained herein, the SELLER agrees to
      design, build, launch, equip and complete at the BUILDER's Shipyard at 1#
      Hongzha Road, Jiuweigang, Nantong Jiangsu P.C. 226361, the People's Republic
      of
      China (the “SHIPYARD”)
      and to
      sell and deliver to the BUYER after completion and successful trial one (1)
      multi-purpose vessel as more fully described in Article I hereof, to be
      registered under the flag of Panama and
      the
      BUYER agrees to purchase and take delivery of the aforesaid vessel from the
      SELLER and to pay for the same in accordance with the terms and conditions
      hereinafter set forth.

    

    
      	1.  	
              ARTICLE
                I - DESCRIPTION AND CLASS

            

    

    

    
      	1.1  	
              DESCRIPTION

            

    

    

    The
      vessel (hereinafter called the "VESSEL")
      is a
      multi-purpose vessel, with a scantling draft (moulded) of 10.90 meters and
      with
      the dimensions stated in Article I paragraph 3, of the class described below.
      The VESSEL shall have the BUILDER's Hull No.NYHS200723 and shall be designed,
      constructed, equipped and completed in accordance with the following
      Specifications:

    

    (1) Specification
      for TBS International Multi-Purpose Vessel(Drawing No.SC4461-01-02SM Rev. 1
      December 24, 2006) (the “Technical
      Specification”)
      

    (2) General
      Arrangement (Drawing No.SC4461-010-03 Rev. 1)

    (3) Midship
      Section (Drawing No. SC4461-011-01 Rev. 1)

    (4) Makers
      List for Equipment (Drawing No. SC4461-010-MX Rev.2)

    

    each
      initialled by each of the parties to this Contract on 24 December 2006
      (hereinafter collectively called the "Specifications"),
      and
      forming an integral part hereof. 

    

    
      	1.2  	
              CLASS
                AND RULES: GENERAL QUALITY
                STANDARDS

            

    

    

    The
      VESSEL, including its machinery and equipment, shall be designed and constructed
      in accordance with the rules, regulations and requirements of Lloyd’s Register
      of Shipping (hereinafter called the "Classification Society")
      so as
      to achieve on delivery the following Class notation:- 

    

    LR
      +100A1, STRENGTHENED FOR HEAVY CARGOES, CONTAINER CARGOES ON TWEEN DECK AND
      ON
      UPPER DECK AND ALL HATCH COVERS, +LMC, SCM, *IWS, UMS

    

    The
      VESSEL shall also comply with the rules, regulations and requirements of the
      other regulatory bodies and authorities as fully described in the
      Specifications.

    

    The
      requirements of such regulatory bodies and authorities as fully described in
      the
      Specifications, including those of the Classification Society, are to include
      any rules, regulations and requirements announced but not in effect as at the
      date of this Contract provided they are scheduled to come into effect as
      compulsorily applicable for the VESSEL prior to the Delivery Date specified
      in
      Article 7 hereof. 

    

    The
      VESSEL’s Classification status and certificates are to be clean and free of
      conditions and/or recommendations of Class, without any references in the
      memoranda, other than as permitted in the Specifications.

    

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

    

    All
      fees
      and charges incidental to the Classification Society and to comply with the
      rules, regulations and requirements defined in this Contract as well as
      royalties, if any, payable on account of the construction of the VESSEL shall
      be
      for the account of the SELLER, except as otherwise provided and agreed herein.
      The key plans, materials and workmanship entering into the construction of
      the
      VESSEL shall at all times be subject to inspections and tests in accordance
      with
      the rules and regulations of the Classification Society.

    

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

    

    To
      the
      extent (i) not specified by the Classification Society or other regulatory
      authorities and (ii) not otherwise expressly stated in this Contract or the
      Specifications, all of the works envisaged by this Contract shall be undertaken
      by the SELLER in a good, sound and workmanlike manner in accordance with the
      first-class Chinese shipbuilding and marine engineering standards and practice
      for vessels of the present type, including without limitation such standards
      and
      practice in relation to quality assurance. The VESSEL shall be delivered safely
      afloat at the Shipyard following successful completion of trials and fully
      ready
      to serve its intended purpose.

    

    
      	1.3  	
              PRINCIPAL
                PARTICULARS AND DIMENSIONS OF THE
                VESSEL

            

    

    

    
      	
              (a)

            	
              Hull:

            	 

    

    Length
      overallNot
      to
      exceed [***] m

    Length
      between perpendiculars [***]
      m

    Breadth
      moulded [***]
      m

    Breadth,
      extreme at any point
      Not to
      exceed [***] m

    Depth
      moulded [***]
      m

    Scantling
      draft moulded [***]
      m

    Design
      draft moulded [***]
      m

    

    The
      above
      principal particulars can be changed by mutual agreement between the parties
      according to the final design.

    

    The
      Parties hereby expressly agree that (i) it shall be a condition precedent to
      her
      delivery and acceptance by the BUYER that the VESSEL shall not exceed the
      dimensions for length overall and extreme breadth stated in paragraph (a) of
      this Article and that (ii) the BUYER be entitled in such circumstances to reject
      the VESSEL pursuant to Article 6.3 without prejudice to any of its rights under
      this Agreement. 

    

    
      	
              (b)

            	
              Propelling
                Machinery:

            

    

    

    The
      VESSEL shall be equipped, in accordance with the Specifications, with
[***].
      

    

    
      	(c)  	
              Lines
                Plan:

            

    

    

    It
      is
      understood and agreed that the lines plan of the VESSEL’s hull will be developed
      following the date of this Agreement. Such development shall be undertaken
      by
      the BUYER at its own cost, including model tests and calculations. The model
      will be made available to the SELLER for final model tests of the propeller
      design. The final model test with design propeller to be SELLER’s
      cost.

    

    
      	1.4  	
              GUARANTEED
                SPEED

            

    

    

    The
      SELLER guarantees that the trial speed at the trial draft after any correction
      undertaken in accordance with paragraph 3.5 of the Technical Specification
      is to
      be not less than the speed as determined by model basin testing in a Chinese
      ship model test facility, at a draft/trim condition corresponding to ballast
      loading condition, at a main engine output of Maximum Continuous Rating (MCR)
      9,480 kW as stipulated in the Specifications, (hereinafter called the
      "GUARANTEED SPEED").
      

    

    
      	1.5  	
              GUARANTEED
                FUEL CONSUMPTION

            

    

    

    The
      SELLER guarantees that the fuel oil consumption of the Main Engine as determined
      by the shop test is not to exceed the consumption as stipulated in Paragraph
      3.6
      of Part I of the Specifications (hereinafter called the "GUARANTEED FUEL CONSUMPTION").
      

    

    
      	1.6  	
              GUARANTEED
                DEADWEIGHT

            

    

    

    The
      SELLER guarantees that the VESSEL is to have a deadweight of not less than
      30,000 metric tons at the design draft moulded of 10.00 meters in sea water
      of
      1.025 specific gravity as defined in the Specifications (hereinafter called
      the
      "Guaranteed
      Deadweight").

     

    The
      actual deadweight of the VESSEL expressed in metric tons shall be based on
      calculations made by the SELLER and checked by the BUYER, and all measurements
      necessary for such calculations shall be performed in the presence of the
      Supervisor or the party authorized by the BUYER. 

    

    Should
      there be any dispute between the SELLER and the BUYER in such calculations
      and/or measurements, the decision of the Classification Society shall be
      final.

    

    
      	1.7  	
              SUBCONTRACTING

            

    

    

    The
      SELLER may, at its sole discretion and responsibility, subcontract any portion
      of the construction work of the VESSEL not exceeding in value United States
      Dollars five hundred thousand (US$500,000.00), but delivery and final assembly
      into the VESSEL of any such work subcontracted shall be at the BUILDER's
      Shipyard. Save in respect of the VESSEL’s block fabrication which may be carried
      out at the BUILDER’s Nikka facility at Nantong’s industrial area for marine
      equipment, the SELLER shall not otherwise be entitled to subcontract any portion
      of the contract work exceeding in value United States Dollars five hundred
      thousand (US$500,000.00) without the written consent of the BUYER, the same
      not
      to be unreasonably withheld. The SELLER shall remain fully responsible for
      such
      subcontracted work under this Contract as if it had undertaken the same.

    

    
      	1.8  	
              MAKERS’
                LIST

            

    

     

    In
      respect of each of the items of materials and equipment to be supplied by the
      subcontractors and suppliers specifically defined in the Makers’ List, the
      SELLER shall be obliged to select one of the subcontractors and suppliers
      therein listed as pre-qualified in respect of such item of materials and
      equipment to supply the same. 

     

    The
      SELLER shall notify the BUYER of its selection of each “Major Supplier” (as
      defined below) and the relevant equipment or system to be provided by the same
      within one hundred and twenty (120) days of the Effective Date of this Contract
      (as such term is hereinafter defined). In addition, the SELLER shall notify
      the
      BUYER of its selection of all the remaining subcontractors and suppliers as
      set
      out in the Makers’ List once such selection has been made. However,
      should the BUYER wish the SELLER to contract with another subcontractor or
      supplier (other than those subcontractors or suppliers notified to the BUYER
      in
      accordance with the aforementioned provisions of this Article), the BUYER shall
      advise the SELLER of its preference within five (5) New York business days
      of
      receipt of such notification from the SELLER. In the event that the BUYER's
      preference involves an increase or decrease in the costs of such item of
      materials and equipment from the costs applicable to the SELLER’s selection, the
      SELLER shall within five (5) New York business days of being so notified by
      the
      BUYER, quote the amount of such cost change to the BUYER who shall have the
      option to notify the SELLER within five (5) New York business days thereafter
      that it insists on its preference, and in such case the amount of the cost
      change shall be added to or subtracted from, as the case may be, the Contract
      Price.
      If the
      BUYER does not make such election within such five (5) New York business day
      period, the BUYER shall be deemed to have accepted the amount of the cost
      increase or decrease, as the case may be, so advised by the SELLER.  

    

    Machinery
      and equipment defined in the Makers’ List may be built in the People’s Republic
      of China according to license agreement of Maker, provided that the machinery
      and equipment is fully guaranteed by the licensor and that the function and
      design is equivalent to the licensor’s product. The technical specification of
      all equipment/materials shall comply with the requirements set forth in the
      Specifications of the VESSEL. If the SELLER or Maker proposes alternative
      equipment specifications, this shall be specifically called to the attention
      of
      the BUYER by the SELLER in writing, including a complete technical specification
      of the alternate equipment to be submitted to the BUYER for approval. Failure
      by
      the SELLER to call BUYER’s attention to proposed alternative equipment
      specifications shall nullify BUYER’s acceptance of the equipment/Maker and shall
      not relieve the SELLER from meeting the equipment requirements given in the
      Specifications. 

    

    For
      the
      purposes of this Article 1.8, “Major Supplier” means each subcontractor or
      supplier identified as such in the Makers’ List.

    

    
      	1.9  	
              REGISTRATION

            

    

    

    The
      VESSEL shall be registered by the BUYER at its own cost and expenses under
      the
      laws of registered nationality at the time of delivery and acceptance thereof.
      

    

    
      	1.10  	
              DESIGN
                OBLIGATIONS

            

    

     

    It
      is
      expressly agreed and understood that the SELLER shall be solely responsible
      for
      all aspects of the design of the VESSEL, whether or not such design has been
      approved by the BUYER and/or the Classification Society, and whether or not
      such
      design derives from drawings, plans calculations or other data supplied by
      the
      BUYER and/or any modification requests from the BUYER. 

    

    The
      BUYER
      shall be entitled to unrestricted use of the design documents of the VESSEL
      as
      listed in the Contract Specifications PART I - GENERAL, SECTION 9 PLANS, ETC.,
      for any purpose. 

    

    
      	1.11  	
              SPARE
                PARTS

            

    

     

    The
      SELLER shall furnish on board the VESSEL at the time of delivery of the VESSEL,
      the spare parts and maintenance tools of the type, and in at least the specified
      quantities, recommended by the makers of the machinery and equipment to which
      they relate and/or required by the Classification Society or other regulatory
      authorities. In the event that the quantity of spare parts and tools
      specifically referred to in the Technical Specification are greater than the
      specified quantities recommended by the makers and/or required by the
      Classification Society, the Seller shall furnish the quantity of spare parts
      and
      tools referred to in the Technical Specification. The cost of the spare parts
      and maintenance tools is included in the Contract Price. 

     

    The
      SELLER shall be responsible at its own cost for receiving, indoor storage,
      handling, bringing on board and storage on the VESSEL of all such spare parts
      and maintenance tools under instruction and supervision of the Supervisor.
      The
      spare parts and maintenance tools furnished by the SELLER shall be properly
      protected against physical decay, corrosion and mechanical damage and shall
      be
      properly listed so that replacements may be readily ordered. 

     

    During
      the guarantee period as more specifically described in Article 9.1, the SELLER
      may, with the prior written approval of the BUYER, use such of the spare parts
      furnished to the VESSEL as the SELLER may require in order to remedy any defects
      against which the VESSEL is guaranteed under Article 9. However, any such spare
      parts so used by the SELLER during this period, shall at the SELLER’s sole cost
      and expense be promptly replaced on board the VESSEL or be paid at BUYER’s
      purchase cost for the same, including any freight costs. 

    

    
      	2.  	
              ARTICLE
                II - CONTRACT PRICE & TERMS OF
                PAYMENT

            

    

    

    
      	2.1  	
              CONTRACT
                PRICE

            

    

     

    The
      purchase price of the VESSEL is United States Dollars thirty-five million four
      hundred and twenty thousand (US$ 35,420,000) only, net receivable by the SELLER
      (hereinafter called the "Contract Price"),
      which
      is exclusive of the cost for the BUYER's supplies as provided in Article V
      hereof, and shall be subject to upward or downward adjustment, if any, as
      hereinafter set forth in this Contract. 

    

    
      	2.2  	
              CURRENCY

            

    

    

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

    

    
      	2.3  	
              TERMS
                OF PAYMENT

            

    

    

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

    

    (a)
      1st
      Instalment:

     

    The
      sum
      of United States Dollars seven million (US$ 7,000,000) only, shall become due
      and payable and be paid by the BUYER within five (5) New York business days
      of
      the later of:

    

    1) 
      the date
      on which the BUYER shall have received (A) the Refund Guarantee in respect
      of
      the 1st
      instalment to be issued by one of (i) Bank
      of
      Communications (Beijing Branch) or (ii) Industrial and Commercial Bank of
China
      (Beijing Branch) in the SELLER’s option (hereafter the ”SELLER’s
      Bank”) together with (B) documentary evidence from the SELLER’s Bank that this
      has been duly registered with the State Administration for Foreign Exchange
      (“SAFE”) as provided in Paragraph 7 of this Article; and

    

    2) the
      date
      on which the BUYER shall have delivered to SELLER an original of the Letter
      of
      Guarantee issued by The Royal Bank of Scotland or other international bank
      acceptable to the SELLER in accordance with Article II, Paragraph 6 hereof.
      

    

    (b)
      2nd
      Instalment:

    

    The
      sum
      of United States Dollars seven million (US$ 7,000,000) only, shall become due
      and payable and be paid within five (5) New York business days of the later
      of

    

    
      	(i)  	
              the
                date specified in Clause 3 of the Overall Agreement between the BUYER’s
                parent company, TBS International Limited, and the SELLER concluded
                on the
                same date as this Contract (the “Overall Agreement”); and
                

            

    

    

    (ii) the
      date
      of receipt by the BUYER of the Refund Guarantee to be issued by the SELLER’s
      Bank in respect of the 2nd,
      3rd
      and
      4th
      instalments, together with documentary evidence from the SELLER’s Bank that this
      has been duly registered with SAFE as provided in Paragraph 7 of this Article.
      

    

    (c)
      3rd
      Instalment:

    

    The
      sum
      of United States Dollars seven million (US$ 7,000,000),
      shall
      become due and payable and be paid within five (5) New York business days of
      the
      receipt by the BUYER of a telefax notice from the SELLER attaching a Stage
      Certificate in the form of the draft attached as Exhibit “D”, countersigned by
      the Classification Surveyor, certifying that the VESSEL’s keel has been laid
      within the meaning of this Article 2.3. 

     

    

     

    “Keel
      laying”
shall
      for the purposes of this Article be deemed to have taken place when the first
      pre-fabricated hull block has been completed, surveyed, accepted by the
      Classification Society and located in its final position in the building dock
      or
      slipway at the Shipyard.

     

    

    (d)
      4th
      Instalment:

    

    The
      sum
      of United States Dollars seven million (US$ 7,000,000) only, shall become due
      and payable and be paid within five (5) New York business days of the receipt
      by
      the BUYER of a telefax notice from the SELLER attaching a Stage Certificate
      in
      the form of the draft attached as Exhibit “D”, countersigned by the
      Classification Surveyor, certifying that the VESSEL has been successfully
      launched. 

    

    (e)
      5th
      Instalment (Payment upon Delivery of the VESSEL):

    

    The
      sum
      of United States Dollars seven million four hundred and twenty thousand (US$
      7,420,000) only,
      plus
      any
      increase or minus any decrease due to modifications and/or adjustments of the
      Contract Price in accordance with the provisions of the relevant articles
      hereof, shall become due and payable and be paid by the BUYER to the SELLER
      concurrently with the delivery of the VESSEL. 

     

    (f)
      The
      SELLER shall notify the BUYER in writing fourteen (14) New York business days
      in
      advance of the expected due date of payment of the Second, Third, Fourth and
      Fifth Instalments of the Contract Price referred to in Article 2.3.

    

    
      	2.4  	
              METHOD
                OF PAYMENT

            

    

    

    (a)
      1st
      Instalment:

    

    The
      BUYER
      shall remit the amount of this instalment in accordance with Article II,
      Paragraph 3(a) by telegraphic transfer to the account of the SELLER’s bank (the
      account number to be nominated by the SELLER).

    

    (b)
      2nd
      Instalment:

    

    The
      BUYER
      shall remit the amount of this instalment in accordance with Article II,
      Paragraph 3(b) by telegraphic transfer to the account of the SELLER’s bank (the
      account number to be nominated by the SELLER) or
      through other receiving bank to be nominated by the SELLER from time to time
      and
      such nomination shall be notified to the BUYER at least ten (10) New York
      business days prior to the due date for the payment.

    

    (c)
      3rd
      Instalment:

    

    The
      BUYER
      shall remit the amount of this instalment in accordance with the Article II,
      Paragraph 3(c) by telegraphic transfer to the account of the SELLER’s bank (the
      account number to be nominated by the SELLER) or
      through other receiving bank to be nominated by the SELLER from time to time
      and
      such nomination shall be notified to the BUYER at least ten (10) New York
      business days prior to the due date for the payment.

    

    (d)
      4th
      Instalment:

    

    The
      BUYER
      shall remit the amount of this instalment in accordance with Article II,
      Paragraph 3(d) by telegraphic transfer to the account of the SELLER’s bank (the
      account number to be nominated by the SELLER) or
      through other receiving bank to be nominated by the SELLER from time to time
      and
      such nomination shall be notified to the BUYER at least ten (10) New York
      business days prior to the due date for payment.

    

    (e)
      5th
      Instalment (Payable upon Delivery of the VESSEL):

    

    The
      BUYER
      shall, at least three (3) New York business days prior to the scheduled date
      of
      delivery of the VESSEL notified by the SELLER, make a cash deposit in the name
      of the BUYER with the SELLER’s Bank for a period of thirty (30) days and
      covering the amount of this instalment (as adjusted in accordance with the
      provisions of this Contract), with instruction that the said amount shall be
      released to the SELLER against presentation by the SELLER to the said bank,
      of a
      duplicate of the Protocol of Delivery and Acceptance signed by the BUYER's
      authorized representative and the SELLER. Such deposit shall be on terms that
      if
      the duly executed Protocol of Delivery and Acceptance of the VESSEL has not
      been
      submitted to the SELLER’s bank within Twenty (20) New York business Days, the
      deposit shall be returned to the BUYER together with any interest accrued
      thereon. 

     

    
      	2.5  	
              PREPAYMENT

            

    

    

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

    

    
      	2.6  	
              SECURITY
                FOR PAYMENT OF INSTALMENTS BEFORE
                DELIVERY

            

    

    

    The
      BUYER
      shall, on or before 31st
      March
      2007, deliver to the SELLER an irrevocable and unconditional Letter of Guarantee
      in a form annexed hereto as Exhibit "C" in favour of the SELLER issued by the
      Royal Bank of Scotland or other first class international bank acceptable to
      the
      SELLER. This guarantee shall secure the Buyer's obligation for the payment
      of
      2nd,
      3rd
      and 4th
      instalments of the Contract Price. 

    

    
      	2.7  	
              REFUNDS

            

    

    

    All
      payments made by the BUYER prior to the delivery of the VESSEL shall be in
      the
      nature of advance to the SELLER, and in the event this Contract is rescinded
      by
      the BUYER, all in accordance with the specific terms of this Contract permitting
      such rescission, the SELLER shall refund to the BUYER in United States Dollars
      the full amount of all sums already paid by the BUYER to the SELLER under this
      Contract, together with interest (at the rate set out in respective provision
      thereof) from the respective payment date(s) to the date of remittance by
      telegraphic transfer of such refund to the account specified by the BUYER.
      If
      the SELLER is required to refund to the BUYER the instalments paid by the BUYER
      to the SELLER as provided in this Article, the SELLER shall return to the BUYER
      all of the BUYER's supplies as stipulated in Article V which were not
      incorporated in the VESSEL and pay to the BUYER an amount equal to the cost
      to
      the BUYER of those supplies that were incorporated into the VESSEL. As security
      to the BUYER and as a condition precedent to the payment of the 1st
      pre-delivery instalment payable by the BUYER after the date of this Contract
      in
      accordance with Paragraphs 3 and 4 of this Article, the SELLER shall (i) deliver
      to the BUYER a Refund Guarantee for the 1st
      instalment to be issued by the SELLER’s Bank in the form annexed hereto as
      Exhibit "A” and (ii) procure that the SELLER’s Bank shall provide to the BUYER
      satisfactory evidence of registration of the relevant Refund Guarantee with
      SAFE, the BUYER having no obligation to pay the 1st
      pre-delivery instalment until such evidence has been received by the BUYER.
      Further, as security to the BUYER and as a condition precedent to the payment
      of
      the 2nd
      pre-delivery instalment payable by the BUYER in accordance with Paragraphs
      3 and
      4 of this Article, the SELLER shall (i) deliver to the BUYER a Refund Guarantee
      for the 2nd,
      3rd
      and
      4th
      instalments to be issued by the SELLER’s Bank in the form annexed hereto as
      Exhibit "B” and (ii) procure that the SELLER’s Bank shall provide to the BUYER
      satisfactory evidence of registration of the relevant Refund Guarantee with
      SAFE, the BUYER having no obligation to pay the 2nd
      pre-delivery instalment until such evidence has been received by the
      BUYER.

    

    
      	2.8  	
              STEEL
                CUTTING

            

    

    

    The
      SELLER hereby agrees that immediately the steel cutting of the VESSEL has
      commenced, it shall send to the BUYER a telefax notice attaching a Stage
      Certificate in the form of the draft attached as Exhibit “D”, countersigned by
      the Classification Surveyor, certifying that the steel cutting of the first
      steel plate of the VESSEL in the SHIPYARD has commenced. 

    

    

    
      	3.  	
              ARTICLE
                III - ADJUSTMENT OF THE CONTRACT
                PRICE

            

    

    

    The
      Contract Price of the VESSEL shall be subject to adjustments as hereinafter
      set
      forth. It is hereby understood by both parties that any reduction of the
      Contract Price under this Article is by way of liquidated damages and not by
      way
      of penalty.

    

    
      	3.1  	
              DELIVERY
                DATE

            

    

    

    (a)
      No
      adjustment shall be made, and the Contract Price shall remain unchanged for
      the
      first thirty (30) days of delay in delivery of the VESSEL beyond the Delivery
      Date as defined in Article VII hereof ending at twelve o'clock midnight New
      York
      time on the thirtieth (30th)
      day of
      delay.

    

    (b)
      If
      the delivery of the VESSEL is delayed more than thirty (30) days after the
      date
      as defined in Article VII hereof, then, in such event, beginning at twelve
      o'clock midnight New York time on the thirtieth (30th)
      day
      after the date on which delivery is required under this Contract, the Contract
      Price of the VESSEL shall be reduced by deducting there from the sum of United
      States Dollars two thousand five hundred (US$ 2,500) per day. Unless the parties
      hereto agree otherwise, the total reduction in the Contract Price shall be
      deducted from the Fifth Instalment of the Contract Price and in any event
      (including the event that the BUYER consents to take the VESSEL at the later
      delivery date after the expiration of two hundred and thirty (230) days delay
      of
      delivery as described in Paragraph 1(c) of this Article) shall not be more
      than
      two hundred (200) days at the above specified rate of reduction after the thirty
      (30)days allowance, that is United States Dollars five hundred thousand only
      (US$ 500,000) being the maximum.

    

    (c)
      If
      the delay in the delivery of the VESSEL continues for a period of Two hundred
      and thirty (230) days (being the total of non-permissible delays) after the
      Delivery Date as defined in Article VII, then in such event, the BUYER may,
      at
      its option, rescind this Contract in accordance with the provisions of Article
      X
      of this Contract. The SELLER may at any time after the expiration of the
      aforementioned two hundred and thirty (230) days, if the BUYER has not served
      notice of rescission pursuant to Article X of this Contract, notify the BUYER
      of
      the date upon which the SELLER estimates the VESSEL will be ready for delivery
      and demand in writing that the BUYER makes an election, in which case the BUYER
      shall, within thirty (30) days after such demand is received by the BUYER,
      either notify the SELLER of its decision to rescind this Contract, or consent
      to
      take delivery of the VESSEL at an agreed future date, it being understood and
      agreed by the parties hereto that, if the VESSEL is not delivered by such future
      date, the BUYER shall have the same right of rescission upon the same terms,
      as
      hereinabove provided. 

    

    (d)
      For
      the purpose of this Article, the delivery of the VESSEL shall not be deemed
      delayed and the Contract Price shall not be reduced when and if the Delivery
      Date of the VESSEL is extended by reason of causes and provisions of Articles
      V,
      XI, XII and XIII hereof. The Contract Price shall not be adjusted or reduced
      if
      the delivery of the VESSEL is delayed by reason of permissible delays as defined
      in Article VIII hereof.

    

     

    
      	3.2  	
              SPEED

            

    

    

    (a)
      The
      Contract Price of the VESSEL shall not be affected nor changed by reason of
      the
      actual speed (as determined by the Trial Run after correction according to
      the
      Specifications) being less than five tenths (5/10) of one knot below the
      Guaranteed Speed.

     

    (b)
      However, commencing with and including a deficiency of five tenths (5/10) of
      one
      knot in actual speed (as determined by the Trial Run after correction according
      to the Specifications) below the Guaranteed Speed as specified in Paragraph
      4,
      Article I of this Contract, the Contract Price shall be reduced as follows:
      

     

     

    In
      case
      of deficiency:

     

    at
      or
      above 0.50 but below 0.60 knot US$ 5,000

    at
      or
      above 0.60 but below 0.70 knot US$ 10,000

    at
      or
      above 0.70 but below 0.80 knot US$ 15,000

    at
      or
      above 0.80 but below 0.90 knot US$ 20,000

    at
      or
      above 0.90 but below 1.00 knot US$ 25,000

    at
      or
      above 1.00 knot US$ 30,000

    

    (c)
      If
      the deficiency in actual speed (as determined by the Trial Run after correction
      according to the Specifications) of the VESSEL upon the Trial Run, is 1.00
      knot
      or more than 1.00 knot below the Guaranteed Speed, then the BUYER may at its
      option reject the VESSEL and rescind this Contract in accordance with provisions
      of Article X of this Contract, or may accept the VESSEL at a reduction in the
      Contract Price as above provided in the maximum amount of United States Dollars
      thirty thousand only (US$ 30,000).

    

    
      	3.3  	
              EXCESSIVE
                FUEL CONSUMPTION

            

    

    

    If
      the
      actual fuel consumption of the Main Engine as determined by shop test in
      manufacturer’s works, as per the Specifications, is greater than the Guaranteed
      Fuel Consumption, as specified and required under the provisions of this
      Contract and the Specifications, the BUYER may reject the Main Engine. The
      SELLER may then, at its option, either (i) rectify the deficiency in the Main
      Engine in order so that it complies with the requirements of the Contract and
      the Specifications or (ii) replace it with a Main Engine that does so comply.
      

    

    
      	3.4  	
              DEADWEIGHT

            

    

    

    (a)
      In
      the event that there is a deficiency in the actual deadweight of the VESSEL
      determined as provided in the Specifications, the Contract Price shall not
      be
      decreased if such deficiency is six hundred (600) metric tons or less below
      the
      Guaranteed Deadweight of thirty thousand (30,000) metric tons at assigned design
      draft. 

    

    (b)
      However, the Contract Price shall be decreased by the sum of United States
      Dollars 600 (US$ 600) for each full metric ton of such deficiency being more
      than six hundred (600) metric tons.

    

    (c)
      In
      the event that there should be a deficiency in the VESSEL's actual deadweight
      which exceeds one thousand (1000) metric tons below the Guaranteed Deadweight,
      the BUYER may, at its option, reject the VESSEL and rescind this Contract in
      accordance with the provisions of Article X of this Contract, or may accept
      the
      VESSEL at a reduction in the Contract Price in the maximum amount of United
      States Dollars two hundred and forty thousand (US$ 240,000).

    

    
      	3.5  	
              EFFECT
                OF RESCISSION

            

    

    

    It
      is
      expressly understood and agreed by the parties hereto that in any case as stated
      herein, if the BUYER rescinds this Contract pursuant to any provision under
      this
      Article, the BUYER, save its rights and remedy set out in Article X hereof,
      shall not be entitled to any liquidated damage or compensation whether described
      above or otherwise.

    

    

    
      	4.  	
              ARTICLE
                IV - SUPERVISION AND
                INSPECTION

            

    

    

    
      	4.1  	
              APPOINTMENT
                OF THE BUYER'S SUPERVISOR

            

    

    

    The
      BUYER
      shall send in good time to and maintain at the BUILDER's Shipyard, at the
      BUYER's own cost and expense, one or more representative(s) who shall be duly
      accredited in writing by the BUYER (such representative(s) being hereinafter
      collectively and individually called the "Supervisor")
      to
      supervise and survey the construction by the SELLER of the VESSEL, her engines
      and accessories. The SELLER hereby warrants that, the necessary visa for the
      Supervisor to enter China will be issued in order on demand and without delay
      provided that the Supervisor meets with the rules, regulations and laws of
      the
      People's Republic of China. The BUYER undertakes to give the SELLER adequate
      notice for the application of visa. 

    

    
      	4.2  	
              APPROVAL
                OF PLANS AND DRAWINGS

            

    

     

    The
      parties hereto shall, within thirty (30) days after the Effective Date of this
      Contract, mutually agree a list of all the plans and drawings, which are to
      be
      sent to the BUYER for approval (herein below called the "LIST").
      The
      plans and drawings specified in the LIST shall be sent to the BUYER, and the
      BUYER shall, within fourteen (14) days after receipt thereof (excluding mailing
      time), return such plans and drawings submitted by the SELLER with approval
      or
      remarks, if any. 

    

    The
      SELLER shall take due note of the BUYER's remarks and amendments (if any) on
      plans and drawings submitted pursuant to this Article and, if such remarks
      or
      amendments are not of such a nature or extent as to constitute modifications
      of
      the Specifications within the meaning of Article V hereof, then the SELLER
      shall
      commence or continue construction of the VESSEL in accordance with the corrected
      or amended plans and drawings. 

    

    Unless
      notification is given to the SELLER by the BUYER of approval or disapproval
      of
      any plans and drawings within the above designated period of time for each
      case,
      the said plans and drawings shall be deemed to have been automatically approved.
      But the SELLER shall
      notify the BUYER by telefax within five (5) days of the elapse of the above
      designated period of time. 

    

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

    

    
      	4.3  	
              SUPERVISION
                AND INSPECTION BY THE SUPERVISOR

            

    

    

    The
      necessary inspection of the VESSEL, its machinery, equipment and outfitting
      shall be carried out by the Classification Society, and/or inspection team
      of
      the SELLER throughout the entire period of construction in order to ensure
      that
      the construction of the VESSEL is duly performed in accordance with the Contract
      and Specifications. 

    

    The
      Supervisor shall have, at all times until delivery of the VESSEL, the right
      to
      attend tests according to the mutually agreed test list and inspect the VESSEL,
      her engines, accessories and materials at the BUILDER's Shipyard, its
      subcontractors or any other place where work is done or materials stored in
      connection with the VESSEL. In the event that the Supervisor discovers any
      construction or material or workmanship which does not or will not conform
      to
      the requirements of this Contract and the Specifications, the Supervisor shall
      promptly give the SELLER a notice in writing as to such nonconformity, upon
      receipt of which the SELLER shall correct such nonconformity if the SELLER
      agrees with the BUYER. However the BUYER undertakes and assures the SELLER
      that
      the Supervisor shall carry out his inspections in accordance with the agreed
      inspection procedure and schedule set out in Part I, Section 11 of the Technical
      Specification and usual international shipbuilding practice and in a way as
      to
      minimize any increase in building costs and delays in the construction of the
      VESSEL. 

    

    The
      inspection and approval by the BUYER or by the BUYER's representative and/or
      the
      Classification Society shall not alter the SELLER's obligation under this
      Contract and shall not relieve the SELLER from the liability under Article
      IX of
      this Contract nor preclude the BUYER from claiming adjustment of the Contract
      Price according to Article III of this Contract unless otherwise mutually
      agreed. The SELLER agrees to furnish free of charge the Supervisor with private
      office space, with lighting, heat and air conditioning; equipped with six (6)
      desks, chairs, filing cabinets, personal lockers, and meeting table and chairs;
      access to toilet facilities maintained by the SELLER; parking spaces and other
      reasonable facilities including separate IDD telephone (1 lines), separate
      IDD
      telefax (1 line) and internet broadband access, according to usual international
      shipbuilding practice at, or in the immediate vicinity of the BUILDER's
      Shipyard. At all times, during the construction of the VESSEL until delivery
      thereof, the Supervisor shall with the assistance of the SELLER be given free
      and ready access to the VESSEL, her engines and accessories, and to any other
      place where the work is being done, or the materials are being processed or
      stored, in connection with the construction of the VESSEL, including the yards,
      workshops, stores of the BUILDER, and the premises of subcontractors of the
      SELLER, who are doing work, or storing materials in connection with the VESSEL's
      construction. The travel expenses for the said access to the SELLER's
      subcontractors shall be for the BUYER's account.

     

    The
      SELLER shall provide the Supervisor with detailed design plans, production
      drawings, schedules and other documents and information for the VESSEL, to
      enable the Supervisor to carry out inspections. 

    

    
      	4.4  	
              LIABILITY
                OF THE SELLER 

            

    

    

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

    

    
      	4.5  	
              SALARIES
                AND EXPENSES

            

    

    

    All
      salaries and expenses of the Supervisor, or any other employees employed by
      the
      BUYER under this Article, shall be for the BUYER's account. The BUYER shall
      also
      be responsible for the costs of all international telephone and telefax
      communications.

    

    
      	4.6  	
              REPORT
                OF PROGRESS

            

    

    

    The
      BUYER
      is entitled to require the SELLER to report the condition of progress as to
      the
      construction of the VESSEL whenever the BUYER requires during the construction
      of the VESSEL.

    

    
      	4.7  	
              REPLACEMENT
                OF SUPERVISOR

            

    

    

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

    

    

    
      	5.  	
              ARTICLE
                V - MODIFICATION, CHANGES AND
                EXTRAS

            

    

    

    
      	5.1  	
              HOW
                EFFECTED

            

    

    

    The
      Specifications and plans in accordance with which the VESSEL is constructed,
      may
      be modified and/or changed at any time hereafter by written agreement of the
      parties hereto, provided that such modifications and/or changes or an
      accumulation thereof will not, in the SELLER's reasonable judgment, adversely
      affect the SELLER's other commitments and provided further that the BUYER shall
      assent to adjustment of the Contract Price, time of delivery of the VESSEL
      and
      other terms of this Contract, if any, as hereinafter provided. Subject to the
      above, the SELLER hereby agrees to exert its best efforts to accommodate such
      reasonable requests by the BUYER so that the said changes and/or modifications
      may be made at a reasonable cost and within the shortest period of time which
      is
      reasonable and possible. Any such agreement for modifications and/or changes
      shall include an agreement as to the increase or decrease, if any, in the
      Contract Price of the VESSEL together with an agreement as to any extension
      or
      reduction in the time of delivery, or any other alterations in this Contract,
      or
      the Specifications occasioned by such modifications and/or changes. The
      Supervisor shall be entitled to negotiate such agreement with the SELLER on
      behalf of the BUYER to the extent of its authority as notified by the BUYER
      to
      the SELLER from time to time in writing. The aforementioned agreement to modify
      and/or to change the Specifications may be effected by an exchange of duly
      authenticated letters or telefax, manifesting such agreement. The letters and
      telefaxes exchanged by the parties hereto pursuant to the foregoing shall
      constitute an amendment of the Specifications under which the VESSEL shall
      be
      built, and such letters and telefaxes shall be deemed to be incorporated into
      this Contract and the Specifications by reference and made a part hereof. Upon
      consummation of the agreement to modify and/or to change the Specifications,
      the
      SELLER shall alter the construction of the VESSEL in accordance therewith,
      including any additions to, or deductions from, the work to be performed in
      connection with such construction. If due to whatever reasons, the parties
      hereto shall fail to agree on the adjustment of the Contract Price or extension
      of time of delivery or modification of any terms of this Contract which are
      necessitated by such modifications and/or changes, then the SELLER shall be
      entitled to refuse to make any such modifications or changes requested by the
      BUYER, if the BUYER does not agree to the aforementioned adjustment within
      a
      reasonable period of the BUYER'S notification of the same to the
      BUYER.

    

    
      	5.2  	
              CHANGES
                IN RULES AND REGULATIONS, ETC.

            

    

    

    (1)
      If,
      after the date of this Contract, any requirements as to the rules and
      regulations as specified in this Contract and the Specifications to which the
      construction of the VESSEL is required to conform, are altered or changed by
      the
      Classification Society or the other regulatory bodies authorized to make such
      alterations or changes, the SELLER and/or the BUYER, upon receipt of the notice
      thereof, shall transmit such information in full to each other in writing,
      whereupon within ten (10) New York business days after receipt of the said
      notice by the BUYER from the SELLER or vice versa, the BUYER shall instruct
      the
      SELLER in writing as to the alterations or changes, if any, to be made in the
      VESSEL which the BUYER, in its sole discretion, shall decide. The SELLER shall
      promptly comply with such alterations or changes, if any in the construction
      of
      the VESSEL, provided that the BUYER shall first agree:

    

    
      	
              (a)

            	
              As
                to any reasonable increase or decrease in the Contract Price of the
                VESSEL
                that is occasioned by the cost for such compliance;
                and/or

            

    

    

    
      	
              (b)

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

            

    

    

    
      	
              (c)

            	
              As
                to any reasonable decrease in the Guaranteed Deadweight and the Guaranteed
                Speed of the VESSEL, if such compliance results in reduced deadweight
                and
                speed; and/or

            

    

    

    
      	
              (d)

            	
              As
                to any other alterations in the terms of this Contract or of the
                Specifications or both, if such compliance makes such alterations
                of the
                terms necessary.

            

    

    

    Agreement
      as to such alterations or changes under this paragraph shall be made in the
      same
      manner as provided above for modifications and/or changes of the Specifications
      and/or plans. 

    

    All
      improvements recommended by the original manufacturers and designers before
      the
      delivery of the VESSEL in the design of the main engine or parts of the VESSEL
      shall be notified by the SELLER to the BUYER. 

     

    (2)
      If,
      due to whatever reasons, the parties shall fail to agree on the adjustment
      of
      the Contract Price or extension of the time for delivery or decrease of the
      Guaranteed Speed and Guaranteed Deadweight or any alternation of the terms
      of
      this Contract, if any, then the SELLER shall be entitled to proceed with the
      construction of the VESSEL in accordance with, and the BUYER shall continue
      to
      be bound by, the terms of this Contract and the Specifications without making
      any such alterations or changes.

    

    
      	5.3  	
              SUBSTITUTION
                OF MATERIALS AND/OR EQUIPMENT

            

    

    

    In
      the
      event that any of the materials and/or equipment required by the Specifications
      or otherwise under this Contract for the construction of the VESSEL cannot
      be
      procured in time to effect delivery of the VESSEL, the SELLER may, provided
      the
      SELLER shall provide adequate evidence and the BUYER so agrees in writing,
      supply other materials and/or equipment of equivalent quality, capable of
      meeting the requirements of the Classification Society and of the rules,
      regulations, requirements and recommendations with which the construction of
      the
      VESSEL must comply. 

    

    
      	5.4  	
              BUYER'S
                SUPPLIED ITEMS

            

    

    

    The
      BUYER
      shall on its own account deliver to the SELLER at BUILDER'S shipyard the BUYER'S
      supplied items as specified in the Specifications in accordance with the time
      schedule to be furnished by the SELLER to meet the building schedule of the
      VESSEL. 

    

    Should
      the BUYER fail to deliver to the SELLER such items within the time specified,
      the delivery of the VESSEL shall be extended for a period of such delay,
      provided such delay in delivery of the BUYER's supplied items shall affect
      the
      delivery of the VESSEL.

     

    If
      the
      delay in delivery of the BUYER's supplied items should exceed thirty (30) days,
      the SELLER shall be entitled to proceed with the construction of the VESSEL
      without installation of such items in or onto the VESSEL, without prejudice
      to
      the SELLER's right hereinabove provided, and the BUYER shall accept the VESSEL
      so completed.

    

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

    

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

    

    

    
      	6.  	
              ARTICLE
                VI - TRIALS

            

    

    

    
      	6.1  	
              NOTICE

            

    

    

    The
      BUYER
      and the Supervisor shall receive from the SELLER at least thirty (30) day
      approximate notice in advance and seven (7) day definite notice in advance
      in
      writing or by telefax confirmed in writing, of the time and place of the
      VESSEL's sea trial as described in the Specifications (hereinafter called the
      "Trial Run")
      and
      the BUYER and the Supervisor shall promptly acknowledge receipt of such notice.
      The BUYER's representatives and/or the Supervisor shall be on board the VESSEL
      to witness such Trial Run, and to check upon the performance of the VESSEL
      during the same. The failure of the BUYER's representatives to be present at
      the
      Trial Run of the VESSEL, after due notice to the BUYER and the Supervisor as
      provided above, shall have the effect to extend the date for delivery of the
      VESSEL by the period of delay caused by such failure to be present. However,
      if
      the Trial Run is delayed more than seven (7) days by reason of the failure
      of
      the BUYER's representatives to be present after receipt of due notice as
      provided above, then in such event, the BUYER shall be deemed to have waived
      its
      right to have its representatives on board the VESSEL during the Trial Run,
      and
      the SELLER may conduct such Trial Run with the presence of the representative
      of
      the Classification Society only without the BUYER's representatives being
      present, and in such case the BUYER shall be obliged to accept the VESSEL on
      the
      basis of a certificate jointly signed by the BUILDER and the Classification
      Society certifying that the VESSEL, after the Trial Run subject to minor
      alterations and corrections if any, to be completed prior to the day of delivery
      to the BUYER as provided in this Article, if any, is found to conform to this
      Contract and the Specifications and is satisfactory in all respects. The SELLER
      hereby warrants that the necessary visa for the BUYER's representatives to
      enter
      China will be issued in order on demand and without delay otherwise the Trial
      Run shall be postponed until after the BUYER's representatives have arrived
      at
      the BUILDER's Shipyard and any delays as a result thereof shall not count as
      a
      permissible delay under Article VIII thereof. However, should the nationalities
      and other personal particulars of the BUYER's representatives be not acceptable
      to the visa issuing authorities in accordance with its best understanding of
      the
      relevant rules, regulations and/or laws of the People's Republic of China then
      prevailing, then the BUYER shall, on the SELLER's telefax demand, effect
      replacement of all or any of them immediately. Otherwise the Delivery Date
      as
      stipulated in Article VII hereof shall be extended by the delays so caused
      by
      the BUYER.

    

    In
      the
      event of unfavorable weather on the date specified for the Trial Run, the same
      shall take place on the first available day thereafter that the weather
      conditions permit. The parties hereto recognize that the weather conditions
      in
      Chinese waters in which the Trial Run is to take place are such that great
      changes in weather may arise momentarily and without warning and, therefore,
      it
      is agreed that if during the Trial Run of the VESSEL, the weather should
      suddenly become unfavorable, as would have precluded the continuance of the
      Trial Run, the Trial Run of the VESSEL shall be discontinued and postponed
      until
      the first favorable day next following, unless the BUYER shall assent by telefax
      and confirm in writing of its acceptance of the VESSEL on the basis of the
      Trial
      Run made prior to such sudden change in weather conditions. In the event that
      the Trial Run is postponed because of unfavorable weather conditions, such
      delay
      shall be regarded as a permissible delay, as specified in Article VIII
      hereof.

    

    
      	6.2  	
              HOW
                CONDUCTED

            

    

    

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

    

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

    

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

    

    
      	6.3  	
              METHOD
                OF ACCEPTANCE OR REJECTION

            

    

    

    (a)
      Upon
      notification by the SELLER of the completion of the Trial Run of the VESSEL
      and
      submission to the BUYER of the detailed written results thereof, the BUYER
      or
      the BUYER's Supervisor shall within six (6) New York business days thereafter,
      notify the SELLER by telefax confirmed in writing of its acceptance of the
      VESSEL if the BUYER agrees that the VESSEL conforms with the requirements of
      this Contract and the Specifications.

    

    (b)
      However, should the VESSEL or any part thereof including its equipment not
      conform to the requirements of this Contract and the Specifications, and the
      BUYER shall give notice of rejection to the SELLER for such reason, then the
      SELLER shall investigate with the Supervisor the cause of failure and proper
      steps shall be taken to remedy the same and shall make whatever corrections
      and
      alterations and/or re-Trial Run or Runs as may be necessary without extra cost
      to the BUYER, and upon notification by the SELLER of completion of such
      alterations or corrections and/or re-Trial or re-Trials and submission to the
      BUYER of the detailed written results thereof the BUYER shall, within six (6)
      New York business days thereafter, again notify the SELLER by telefax confirmed
      in writing of its acceptance of the VESSEL or of the rejection of the VESSEL
      together with the reason therefor. This process shall be repeated until the
      earlier of the BUYER’s acceptance of the VESSEL or the rescission of this
      Contract in accordance with its terms.

    

    (c)
      In
      the event that the BUYER fails to notify the SELLER by telefax confirmed in
      writing of its acceptance or rejection of the VESSEL together with the reason
      therefor within six (6) New York business days period as provided for in the
      above sub-paragraphs (a) and (b), the BUYER shall be deemed to have accepted
      the
      VESSEL.

    

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

    

    (e)
      It is
      agreed that the BUYER shall not be entitled to reject the VESSEL by reason
      of
      any minor or insubstantial defects or deficiencies judged from the point of
      view
      of international shipbuilding standards as not being in conformity with the
      Specifications but in such case the SELLER shall be obliged to remedy such
      defects or deficiencies if any before effecting delivery of the VESSEL to the
      BUYER under this Contract. 

    

    
      	6.4  	
              DISPOSITION
                OF SURPLUS CONSUMABLE STORES

            

    

    

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

    

    The
      BUYER
      shall supply lubricating oil and hydraulic oil for the purpose of the Trial
      Runs
      at its own expense and the SELLER will reimburse the amount of lubricating
      oil
      and hydraulic oil actually consumed for the Trial Run or Trial Runs at the
      BUYER'S actual price at delivery port incurred by the BUYER and payment by
      the
      SELLER shall be effected as provided in Article II 3(e) and 4(e) of this
      Contract. At the time of delivery of the VESSEL in measuring the consumed
      quantity of lube oils and hydraulic oil, the oils remaining in the main engine
      (except for the sump tank), other machinery and their pipes, stern tube and
      the
      like shall be excluded and be considered as consumed.

     

    
      	6.5  	
              EFFECT
                OF ACCEPTANCE

            

    

    

    The
      BUYER's acceptance of the VESSEL by written and telefax notification sent to
      the
      SELLER, in accordance with the provisions set out above, shall be final and
      binding so far as conformity of the VESSEL to this Contract and the
      Specifications is concerned, and shall preclude the BUYER from refusing formal
      delivery by the SELLER of the VESSEL, as hereinafter provided, if the SELLER
      complies with all other procedural requirements for delivery as hereinafter
      set
      forth.

    

    

    
      	7.  	
              ARTICLE
                VII - DELIVERY

            

    

    

    
      	7.1  	
              TIME
                AND PLACE

            

    

    

    The
      VESSEL shall be delivered safely afloat by the SELLER to the BUYER at the
      BUILDER's Shipyard, in accordance with the Specifications and with all the
      Classification and Statutory Certificates and after completion of the Trial
      Run
      (or, as the case may be, re-Trial or re-Trials) and acceptance by the BUYER
      in
      accordance with the provisions of Article VI hereof on the “Hull
      NYHS200723 Delivery Date”
defined
      in the Overall Agreement. Provided however, that, in the event of delays in
      the
      construction of the VESSEL or any performance required under this Contract
      due
      to causes which under the terms of the Contract permit extension of the time
      for
      delivery, the aforementioned time for delivery of the VESSEL shall be extended
      accordingly. 

    

    The
      Hull
      NYHS200723 Delivery Date or such later date to which delivery of the VESSEL
      is
      extended pursuant to the terms of this Contract is hereinafter called the
      "Delivery
      Date".

    

    
      	7.2  	
              WHEN
                AND HOW EFFECTED

            

    

    

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

    

    
      	7.3  	
              DOCUMENTS
                TO BE DELIVERED TO THE BUYER

            

    

    

    The
      acceptance of the VESSEL by the BUYER shall be conditional upon receipt by
      the
      BUYER from the SELLER of authenticated documents, certificates as required
      in
      this Contract and also in the Specifications including but not limited to the
      following (subject to the provision contained in Article V-2 hereof) which
      shall
      accompany the aforementioned Protocol of Delivery and Acceptance: 

    

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

    

    (b)
      PROTOCOL OF INVENTORY of the equipment of the VESSEL including spare parts
      and
      the like, all as specified in the Specifications made by the SELLER and
      confirmed by the Supervisor. The equipment of the VESSEL must follow
      international standard ISO and CB, GB, and first class Chinese shipbuilding
      practice.

    

    (c)
      PROTOCOL OF STORES OF CONSUMABLE NATURE made by the SELLER and confirmed by
      the
      Supervisor referred to under Paragraph 4 of Article VI hereof.

    

    (d)
      FINISHED DRAWINGS AND PLANS pertaining to the VESSEL as stipulated in the
      Specifications (If it is SELLER’s Obligation).

    

    (e)
      PROTOCOL OF DEADWEIGHT AND INCLINING EXPERIMENT, made by the SELLER,
      TRIM
      AND
      STABILITY BOOKLET and LOADING MANUAL, and GRAIN LOADING STABILITY MANUAL, all
      approved by the Classification Society on behalf of the Flag State
      Administration. 

    

    (f)
      ALL
      CERTIFICATES required to be furnished upon delivery of the VESSEL pursuant
      to
      this Contract and the Specifications. Certificates shall be issued by relevant
      Authorities or Classification Society. The VESSEL shall comply with the above
      rules and regulations which are in force at the time of delivery of the VESSEL.
      All the certificates shall be delivered in one (1) original to the VESSEL and
      two (2) copies to the BUYER.

    

    If
      any
      permanent certificate or certificates are unable to be issued at the time of
      delivery of the VESSEL by the Classification Society or any third party other
      than the SELLER, then the provisional certificate or certificates issued by
      the
      Classification Society or such third party shall be furnished by the SELLER
      and
      acceptable to the BUYER provided that permanent certificates shall be furnished
      by the SELLER to the BUYER in any event before the expiry of such provisional
      certificates. 

    

    (g)
      DECLARATION OF WARRANTY issued by the SELLER that the VESSEL is delivered to
      the
      BUYER free and clear of any liens, charges, claims, mortgages, or other
      encumbrances 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 province or country of the port of delivery, as well as of all
      liabilities of the SELLER to its sub-contractors, employees and crews and/or
      all
      liabilities arising from the operation of the VESSEL in Trial Run or Trial
      Runs,
      or otherwise, prior to the delivery of the VESSEL. 

    

    (h)
      COMMERCIAL INVOICE made by the SELLER.

    

    (i)
      BILL
      OF SALE made by the SELLER.

    

    (j)
      BUILDER's certificate.

    

    
      	7.4  	
              TITLE
                AND RISK

            

    

    

    Title
      to
      and risk of the VESSEL shall pass to the BUYER only upon the delivery thereof.
      As stated above, it is expressly understood that, until such delivery is
      effected, the title to the VESSEL, and her equipment, shall remain at all times
      with the SELLER and are at the entire risk of the SELLER. 

    

    
      	7.5  	
              REMOVAL
                OF VESSEL

            

    

    

    The
      BUYER
      shall take possession of the VESSEL immediately upon delivery and acceptance
      thereof, and shall remove the VESSEL from the premises of the BUILDER within
      seven (7) New York business days after delivery and acceptance thereof is
      effected. If the BUYER shall not remove the VESSEL from the premises of the
      BUILDER within the aforesaid seven (7) New York business days, then, in such
      event, without prejudice to the SELLER's right to require the BUYER to remove
      the VESSEL immediately at any time thereafter, the BUYER shall pay to the SELLER
      the reasonable mooring charge of the VESSEL.

    

    
      	7.6  	
              TENDER
                OF THE VESSEL

            

    

    

    If
      the
      BUYER fails to take delivery of the VESSEL after completion thereof according
      to
      this Contract and the Specifications without justified reason, the SELLER shall
      have the right to tender the VESSEL for delivery after compliance with all
      procedural requirements as above provided.

    

    

    
      	8.  	
              ARTICLE
                VIII - DELAYS & EXTENSION OF TIME FOR
                DELIVERY

            

    

    

    
      	8.1  	
              CAUSE
                OF DELAY

            

    

    

    If,
      at
      any time before actual delivery, either the construction of the VESSEL, or
      any
      performance required hereunder as a prerequisite of delivery of the VESSEL,
      is
      delayed due to war, blockade, revolution, insurrection, mobilization, civil
      commotions, riots, national strikes affecting a significant proportion of the
      Chinese shipbuilding industry, sabotage, lockouts, Acts of God, plague or other
      epidemics, quarantines, prolonged failure or restriction of electric current
      from an outside source, freight embargoes, if any, earthquakes, tidal waves,
      typhoons, hurricanes, storms or such other causes beyond the control of the
      BUILDER or of its sub-contractors, as the case may be, which causes will
      considerably affect the BUILDER’S production, or by destruction of the BUILDER
      or works of the BUILDER or its sub-contractors, or of the VESSEL or any part
      thereof, by fire, flood, or other proven causes beyond the control of the SELLER
      or its sub-contractors as the case may be, then, in the event of delay due
      to
      the happening of any of the aforementioned contingencies, the SELLER shall
      not
      be liable for such delay and the time for delivery of the VESSEL under this
      Contract shall be extended without any reduction in the Contract Price for
      a
      period of time which shall not exceed the total accumulated time of all such
      delays, subject nevertheless to the BUYER's right of rescission under Paragraph
      4 of this Article and subject however to all relevant provisions of this
      Contract which authorize and permit extension of the time of delivery of the
      VESSEL. 

    

    
      	8.2  	
              NOTICE
                OF DELAY

            

    

    

    Within
      seven (7) New York business days from the date of commencement of any delay
      on
      account of which the SELLER claims that it is entitled under this Contract
      to an
      extension of the time for delivery of the VESSEL, the SELLER shall advise the
      BUYER by telefax confirmed in writing, of the date such delay commenced, and
      the
      reasons therefor. Likewise within seven (7) New York business days after such
      delay ends, the SELLER shall advise the BUYER in writing or by telefax confirmed
      in writing, of the date such delay ended, and also shall specify the maximum
      period of the time by which the date for delivery of the VESSEL is extended
      by
      reason of such delay. Failure of the BUYER to acknowledge the SELLER's
      notification of any claim for extension of the Delivery Date within thirty
      (30)
      days after receipt by the BUYER of such notification, shall be deemed to be
      a
      waiver by the BUYER of its right to object to such extension. Failure of the
      SELLER to give the BUYER notice of delay as provided in this Article except
      for
      the case of entire power failure or cut-off of the communication facilities
      shall preclude the SELLER from claiming extension of the Delivery Date by reason
      of such failure.

    

    
      	8.3  	
              DEFINITION
                OF PERMISSIBLE DELAY

            

    

    

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

    

    
      	8.4  	
              RIGHT
                TO RESCIND FOR EXCESSIVE DELAY 

            

    

    

    If
      the
      total accumulated time of (i) all permissible delays aggregate to two hundred
      and ten (210) days or more or (ii) all permissible delays and non-permissible
      delays aggregate to two hundred and thirty (230) days or more, the BUYER may
      in
      accordance with the provisions set out herein rescind this Contract by serving
      upon the SELLER telefaxed notice of rescissions which shall be confirmed in
      writing, in which event the provisions of Article X of this Contract shall
      apply. Provided, however, that in calculating any periods of non-permissible
      delay for the purposes of this Article 8.4, there shall be excluded delays
      (i)
      due to arbitration as provided for in Article XIII hereof (ii) due to default
      in
      performance by the BUYER (iii) due to delays in delivery of the BUYER's supplied
      items and (iv) due to causes which, under Article V and XI hereof, permit
      extension or postponement of the time for delivery of the VESSEL. 

    

    The
      SELLER may, at any time, after the BUYER’s right to rescind as aforesaid has
      arisen, demand in writing that the BUYER shall make an election, in which case
      the BUYER shall, within thirty (30) days after such demand is received by the
      BUYER either notify the SELLER of its intention to rescind, or consent to an
      extension of the time for delivery to an agreed future date, it being understood
      and agreed by the parties hereto that, if any further delay occurs on account
      of
      causes justifying rescission as specified in this Contract, the BUYER shall
      have
      the same right of rescission upon the same terms as hereinabove
      provided.

    

    

    
      	9.  	
              ARTICLE
                IX - WARRANTY OF QUALITY

            

    

    

    
      	9.1  	
              GUARANTEE
                OF MATERIAL AND WORKMANSHIP

            

    

    

    The
      SELLER, for a period of twelve (12) months following delivery to the BUYER
      of
      the VESSEL, guarantees the VESSEL, her hull and machinery and all parts and
      equipment thereof that are manufactured or furnished or supplied by the SELLER
      and/or its sub-contractors under this Contract including material, equipment
      (however excluding any parts for the VESSEL which have been supplied by or
      on
      behalf of the BUYER) against all defects which are due to defective materials,
      or equipment, errors, miscalculation and/or poor workmanship.

    

    
      	9.2  	
              NOTICE
                OF DEFECTS

            

    

    

    The
      BUYER
      shall notify the SELLER in writing, or by telefax confirmed in writing, as
      promptly as possible, after discovery of any defect or deviations for which
      a
      claim is made under this guarantee. The BUYER's written notice shall describe
      the nature of the defect and the extent of the damage caused thereby. The SELLER
      shall have no obligation under this guarantee for any defects discovered prior
      to the expiry date of the guarantee, unless notice of such defects, is received
      by the SELLER not later than thirty (30) days after such expiry date. Telefaxed
      advice with brief details explaining the nature of such defect and extent of
      damage within thirty (30) days after such expiry date and that a claim is
      forthcoming will be sufficient compliance with the requirements as to time.
      If
      the SELLER becomes aware of defective materials or design or construction within
      the nature of serial defect in respect of the VESSEL or any other vessel built
      by the SELLER, the SELLER shall immediately notify the BUYER in writing and
      by
      fax or by telefax.

    

    
      	9.3  	
              REMEDY
                OF DEFECTS

            

    

    

    The
      SELLER shall remedy at its expense any defects, against which the VESSEL or
      any
      part of the equipment thereof is guaranteed under this Article by making all
      necessary repairs and/or replacement. Such repairs and/or replacement will
      be
      made by the SELLER.

    

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

     

    In
      any
      circumstances as set out below, the SELLER shall immediately pay to the BUYER
      in
      United States Dollars by telegraphic transfer the actual cost for such repairs
      or replacements including forwarding charges, or at the average cost for making
      similar repairs or replacements including forwarding charges as quoted by a
      leading shipyard each in China, Japan, South Korea and Singapore, whichever
      is
      lower:

    

    (a)
      Upon
      the SELLER's acceptance of the defects as justifying remedy under this Article,
      or

    

    (b)
      If
      the SELLER neither accepts nor rejects the defects as above provided, nor
      requests arbitration within thirty (30) days after its receipt of the BUYER's
      notice of defects.

    

    Any
      dispute shall be referred to arbitration in accordance with the provisions
      of
      Article XIII hereof.

    

    
      	9.4  	
              EXTENT
                OF THE SELLER'S LIABILITY

            

    

    

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

    

    The
      SELLER shall be liable to the BUYER for defects and damages caused by any of
      the
      defects specified in Paragraph 1 of this Article provided that such liability
      of
      the SELLER shall be limited to damage occasioned within the guarantee period
      specified in Paragraph 1 above. The SELLER shall not be obligated to repair,
      or
      to be liable for, damages to the VESSEL, or to any part of the equipment
      thereof, due to ordinary wear and tear or caused by the defects other than
      those
      specified in Paragraph 1 above, nor shall there be any SELLER's liability
      hereunder for defects in the VESSEL, or any part of the equipment thereof,
      caused by fire or accidents at sea or elsewhere, or mismanagement, accidents,
      negligence, or wilful neglect, on the part of the BUYER, its employees or agents
      including the VESSEL's officers, crew and passengers, or any persons on or
      doing
      work on the VESSEL other than the SELLER, its employees, agents or
      sub-contractors. Likewise, the SELLER shall not be liable for defects in the
      VESSEL, or the equipment or any part thereof, due to repairs or replacement
      which were made by those other than the SELLER and/or their sub-contractors
      without prior consent of the SELLER.

    

    Upon
      delivery and acceptance of the VESSEL in accordance with the terms of this
      Contract, the SELLER shall thereby and thereupon be released of all
      responsibility and liability whatsoever and howsoever arising under or by virtue
      of this Contract (save in respect of those obligations to the BUYER expressly
      provided for in this Article IX). Neither CCCC nor the BUILDER shall, in any
      circumstances, be liable for any consequential loss or special loss, or expenses
      arising from any cause whatsoever including, without limitation, loss of time,
      loss of profit or earnings or demurrage directly from any commitments of the
      BUYER in connection with the VESSEL.

    

    The
      Guarantee provided in this Article and the obligations and the liabilities
      of
      the SELLER hereunder are exclusive and in lieu of law and the BUYER hereby
      waives all other remedies, warranties, guarantees or liabilities, express or
      implied, arising by law or otherwise on the part of the SELLER. This Guarantee
      shall not be extended, altered or varied except by a written instrument signed
      by the duly authorized representatives of the SELLER and the BUYER.

    

    
      	9.5  	
              GUARANTEE
                ENGINEER

            

    

    

    The
      SELLER shall at the request of the BUYER nominate for BUYER’s acceptance and,
      when judged satisfactory, appoint one or two Guarantee Engineer(s) (the
“Guarantee
      Engineer”)
      to
      serve the VESSEL as the SELLER's representative(s) for a period of six (6)
      months from the delivery of the VESSEL with BUYER'S option up to twelve months
      (12). The BUYER, and its employees, shall give such Guarantee Engineer(s) full
      co-operation in carrying out his/their duties as the representative(s) of the
      SELLER on board the VESSEL. The BUYER shall accord the Guarantee Engineer(s)
      the
      treatment comparable to the VESSEL's Chief Engineer, and shall provide him
      with
      accommodation and subsistence at no cost to the SELLER and/or the Guarantee
      Engineer(s). 

    

    The
      BUYER
      shall pay to the Guarantee Engineer(s) the sum of United States Dollars Two
      Thousand Five Hundred only (US$2,500) per month to cover his/their miscellaneous
      expenses including wages and also the BUYER shall pay the expense of
      repatriation to Shanghai, the People's Republic of China by air upon termination
      of his/their service, the expense of his/their communications with the SELLER
      when made in performance of his/their duties as the Guarantee Engineer(s) and
      the expenses, if any, of his/their medical and hospital care. The BUYER, its
      successor(s) and/or assign(s), shall be liable to and indemnify the SELLER
      and/or the Guarantee Engineer(s) for personal injuries, including death and
      damages to, or loss or destruction of property of the Guarantee Engineer(s),
      if
      such death, injuries, damages, loss and/or destruction were caused by gross
      negligence or wilful misconduct of the BUYER, its successor(s) and/or assign(s)
      or its employees and/or agents.

    

    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.
      

    

    

    
      	10.  	
              ARTICLE
                X - INSOLVENCY OF SELLER: RESCISSION BY THE
                BUYER

            

    

    

    10.1 Insolvency
      of Seller or Seller’s Bank 

    

    In
      addition to its rights of rescission as elsewhere set out in this Contract,
      the
      BUYER shall be entitled to rescind this Contract should any of the following
      events occur:

    

    
      	(a)  	
              The
                filing of a petition or the making of an order or the passing of
                an
                effective resolution for the winding up of either CCCC or the BUILDER
                (other than for the purpose of reconstruction or amalgamation which
                has
                been previously approved in writing by the BUYER), or the appointment
                of a
                receiver of the undertaking or property of either CCCC or the BUILDER,
                or
                the insolvency of or a suspension of payments by either CCCC or the
                BUILDER, or the cessation of the carrying on of business by either
                CCCC or
                the BUILDER, or the making by either CCCC or the BUILDER of any special
                arrangement or composition with their creditors; or any like or similar
                circumstance occurring under the laws of the People’s Republic of China;
                

            

    

    

    
      	(b)  	
              The
                occurrence of any of the events set out in sub-paragraph (a) above
                with
                respect to the SELLER’s Bank, and the failure by the SELLER within
                twenty-one (21) days thereof to substitute the SELLER’s Bank, both as
                regards refund guarantees previously issued and those yet to be issued,
                with an alternative guarantor reasonably acceptable to the BUYER.
                

            

    

    

    10.2 Rescission
      By The Buyer

    

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

    

    (b)
      Thereupon the SELLER shall refund in United States Dollars immediately to the
      BUYER the full amount of all sums paid by the BUYER to the SELLER on account
      of
      the VESSEL, unless the SELLER disputes the BUYER's rescission by instituting
      arbitration in accordance with Article XIII. If the BUYER's rescission of this
      Contract is disputed by the SELLER by instituting arbitration as aforesaid,
      then
      no refund shall be made by the SELLER, and the BUYER shall not be entitled
      to
      demand repayment from the SELLER’s Bank, until the arbitration award between the
      BUYER and the SELLER or, in case of appeal or appeals by the SELLER on the
      arbitration award or any court orders, by the final court order, which shall
      be
      in favour of the BUYER, declaring the BUYER's rescission justified, is made
      and
      delivered to the SELLER by the arbitration tribunal or final competent London
      Court having jurisdiction on the dispute. In the event the SELLER is obligated
      to make refundment, the SELLER shall pay the BUYER interest in United States
      Dollars at the rate of five percent (5%) if the rescission of this Contract
      is
      exercised by the BUYER in accordance with the provision of Paragraph 4 of
      Article VIII or/by the events described in Article III 1(c), 2(c), 3(c) or
      4(c)
      hereof computed from the respective dates when such sums were received by the
      SELLER’s Bank pursuant to Article II 4(b), 4(c) or 4(d) from the BUYER to the
      date of remittance by telegraphic transfer of such refund to the BUYER by the
      SELLER, however in the event of total loss as described in Article XII of this
      Contract, then, no interest will be paid on the amount required herein to be
      refunded to the BUYER. 

    

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

    

    

    
      	11.  	
              ARTICLE
                XI - BUYER'S DEFAULT

            

    

    

    
      	11.1  	
              DEFINITION
                OF DEFAULT

            

    

    

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

    

    (a)
      The
      BUYER fails to pay the Second or Third or Fourth Instalment to the SELLER when
      any such instalment becomes due and payable under the provisions of Article
      II
      hereof and provided that the BUYER shall have received the SELLER's demand
      for
      payment in accordance with Article II hereof; or 

    

    (b)
      The
      BUYER fails to pay the Fifth Instalment to the SELLER in accordance with
      Paragraph 3(e) and 4(e) of Article II hereof provided that the BUYER shall
      have
      received the SELLER's demand

    for
      payment in accordance with Article II hereof; or

    

    (c)
      The
      BUYER fails to take delivery of the VESSEL, when the VESSEL is duly tendered
      for
      delivery by the SELLER under the provisions of Article VII hereof.

    

    
      	11.2  	
              NOTICE
                OF DEFAULT

            

    

    

    If
      the
      BUYER is in default of payment or in performance of its obligations as provided
      hereinabove, the SELLER shall notify the BUYER to that effect by telefax after
      the date of occurrence of the default as per Paragraph 1 of this Article and
      the
      BUYER shall forthwith acknowledge by telefax to the SELLER that such
      notification has been received. In case the BUYER does not give the aforesaid
      telefax acknowledgment to the SELLER within three (3) New York business days
      it
      shall be deemed that such notification has been duly received by the
      BUYER.

    

    
      	11.3  	
              INTEREST
                AND CHARGE

            

    

    

    (a)
      If
      the BUYER is in default of payment as to any instalment as provided in Paragraph
      1 (a) and/or 1 (b) of this Article, the BUYER shall pay interest on such
      instalment at the rate of five percent (5%) per annum until the date of the
      payment of the full amount, including all aforesaid interest. In case the BUYER
      shall fail to take delivery of the VESSEL when required to as provided in
      Paragraph 1 (c) of this Article, the BUYER shall be deemed in default of payment
      of the 5th Instalment and shall pay interest thereon at the same rate as
      aforesaid from and including the day on which the VESSEL is tendered for
      delivery by the SELLER, as provided in Article VII Paragraph 6
      hereof.

    

    (b)
      In
      any event of default by the BUYER under 1 (a) or 1 (b) or 1 (c) above, the
      BUYER
      shall also pay all reasonable costs, charges and expenses incurred by the SELLER
      in consequence of such default.

    

    
      	11.4  	
              DEFAULT
                BEFORE DELIVERY OF THE VESSEL

            

    

    

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

    

    (b)
      If
      any such default as defined in Paragraph 1 (a) or 1 (b) or 1 (c) of this Article
      committed by the BUYER continues for a period of fifteen (15) New York business
      days starting from the date the BUYER receives the SELLER’s notice of default
      referred to in Article XI paragraph 2, then, the SELLER shall have all of the
      following rights and remedies:

    

    (i)
      The
      SELLER may, at its option, rescind this Contract, provided that the SELLER
      has
      notified the BUYER of such default pursuant to Paragraph 2 of this Article,
      by
      giving notice of such effect to the BUYER by telefax confirmed in writing.
      Upon
      receipt by the BUYER of such telefax notice of rescission, all of the BUYER's
      Supplies shall forthwith become the sole property of the SELLER, and the VESSEL
      and all its equipment and machinery shall be at the sole disposal of the SELLER
      for sale or otherwise; and

    

    (ii)
      In
      the event of such rescission of this Contract, the SELLER shall be entitled
      to
      retain any instalment or instalments of the Contract Price paid by the BUYER
      to
      the SELLER on account of this Contract.

    

    
      	11.5  	
              SALE
                OF THE VESSEL

            

    

    

    (a)
      In
      the event of rescission of this Contract as above provided, the SELLER shall
      have full right and power either to complete or not to complete the VESSEL
      as it
      deems fit, and to sell the VESSEL at a public or private sale on such terms
      and
      conditions as the SELLER thinks fit without being answerable for any loss or
      damage occasioned to the BUYER thereby.

    

    In
      the
      case of sale of the VESSEL, the SELLER shall give telefax or written notice
      to
      the BUYER.

    

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

    

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

    

    (d)
      In
      either of the above events of sale, if the proceeds of sale exceed the total
      of
      the amounts to which such proceeds are to be applied as aforesaid, the SELLER
      shall promptly pay the excesses to the BUYER without interest, provided, however
      that the amount of each payment to the BUYER shall in no event exceed the total
      amount of instalments already paid by the BUYER and the cost of the BUYER's
      supplies, if any.

    

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

    

    

    
      	12.  	
              ARTICLE
                XII - INSURANCE

            

    

    

    
      	12.1  	
              EXTENT
                OF INSURANCE COVERAGE

            

    

    

    From
      the
      time of keel-laying of the first section of the VESSEL until the VESSEL is
      completed, delivered to and accepted by the BUYER, the SELLER shall, at its
      own
      cost and expense, keep the VESSEL and all machinery, materials, equipment,
      appurtenances and outfit, delivered to the SELLER for the VESSEL or built into,
      or installed in or upon the VESSEL, including the BUYER's Supplies, fully
      insured with the first class Chinese insurance companies on insurance terms
      no
      narrower than the Institute of London Underwriters’ Builders' Risks Clauses.

    The
      amount of such insurance coverage shall, up to the date of delivery of the
      VESSEL, be in an amount at least equal to, but not limited to, the aggregate
      of
      the payments made by the BUYER to the SELLER including the value of the BUYER's
      Supplies. The policy referred to hereinabove shall be taken out in the name
      of
      the SELLER and all losses under such policy shall be payable to the SELLER.
      The
      SELLER shall send the BUYER a copy of the insurance policy and/or confirmation
      of the insurance coverage for the VESSEL as soon as possible after the
      Keel-Laying of the VESSEL has been carried out.

    

    
      	12.2  	
              APPLICATION
                OF RECOVERED AMOUNT

            

    

    

    (a)
      Partial Loss:

    

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

    

    (b)
      Total
      Loss:

    

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

    

    (i)
      By
      mutual agreement between the parties hereto, proceed in accordance with the
      terms of this Contract, in which case the amount recovered under said insurance
      policy shall be applied to the reconstruction and/or repair of the VESSEL's
      damages and/or reinstallation of BUYER's supplies without additional expenses
      to
      the BUYER, provided the parties hereto shall have first agreed in writing as
      to
      such reasonable extension of the Delivery Date and adjustment of other terms
      of
      this Contract including the Contract Price as may be necessary for the
      completion of such reconstruction; or

    

    (ii)
      If
      due to whatever reasons the parties fail to agree on the above, then refund
      immediately to the BUYER the amount of all instalments paid to the SELLER under
      this Contract without interest together with recovered amount for BUYER's
      supplies onboard, whereupon this Contract shall be deemed to be cancelled and
      all rights, duties, liabilities and obligations of each of the parties to the
      other shall terminate forthwith.

    

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

    

    
      	12.3  	
              TERMINATION
                OF THE SELLER'S OBLIGATION TO
                INSURE

            

    

    

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

    

    

    
      	13.  	
              ARTICLE
                XIII - DISPUTES AND
                ARBITRATION

            

    

    

    
      	13.1  	
              PROCEEDINGS

            

    

    

    In
      the
      event of any dispute between the parties hereto as to any matter arising out
      of
      or relating to this Contract or any stipulation herein or with respect thereto
      which cannot be settled by the parties themselves, such dispute shall be
      resolved by arbitration in London, England in accordance with the laws of
      England. Either party may demand arbitration of any such disputes by giving
      written notice to the other party. Any demand for arbitration by either party
      hereto shall state the name of the arbitrator appointed by such party and shall
      also state specifically the question or questions as to which such party is
      demanding arbitration. Within twenty (20) days after receipt of notice of such
      demand for arbitration, the other party shall in turn appoint a second
      arbitrator. The two arbitrators thus appointed shall thereupon select a third
      arbitrator, and the three arbitrators so named shall constitute the board of
      arbitration (hereinafter called the "Arbitration
      Board")
      for
      the settlement of such dispute.

    

    In
      the
      event however, that said other party should fail to appoint a second arbitrator
      as aforesaid within twenty (20) days following receipt of notice of demand
      of
      arbitration, it is agreed that such party shall thereby be deemed to have
      accepted and appointed as its own arbitrator the one already appointed by the
      party demanding arbitration, and the arbitration shall proceed forthwith before
      this sole arbitrator, who alone, in such event, shall constitute the Arbitration
      Board. And in the further event that the two arbitrators appointed respectively
      by the parties hereto as aforesaid should be unable to reach agreement on the
      appointment of the third arbitrator within twenty (20) days from the date on
      which the second arbitrator is appointed, either party of the said two
      arbitrators may apply to any court in England or other official organization
      in
      England having jurisdiction in such matter to appoint the third arbitrator.
      The
      award of the arbitration, made by the sole arbitrator or by the majority of
      the
      three arbitrators as the case may be, unless appealed by either parties, shall
      be final, conclusive and binding upon the parties hereto.

    

    
      	13.2  	
              ALTERNATIVE
                ARBITRATION BY AGREEMENT

            

    

    

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

    

    
      	13.3  	
              NOTICE
                OF AWARD

            

    

    

    Notice
      of
      any award shall immediately be given in writing or by telefax confirmed in
      writing to the SELLER and the BUYER.

    

    
      	13.4  	
              EXPENSES

            

    

    

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

    

    
      	13.5  	
              AWARD
                OF ARBITRATION

            

    

    

    Award
      of
      arbitration, unless appealed by either parties, shall be final and binding
      upon
      the parties concerned.

    

    
      	13.6  	
              ENTRY
                IN COURT

            

    

    

    Judgment
      on any award may be entered in any court of competent jurisdiction.

    

    
      	13.7  	
              ALTERATION
                OF DELIVERY DATE

            

    

    

    In
      the
      event that any dispute or difference is referred either to arbitration or to
      an
      expert, the arbitration tribunal or expert, as the case may be, shall, where
      the
      dispute requires, include a finding as to whether or not the Delivery Date
      of
      the VESSEL should, as a result of such dispute, be in any way altered thereby.
      

    

    

    
      	14.  	
              ARTICLE
                XIV - RIGHT OF ASSIGNMENT

            

    

    

    14.1  The
      BUYER
      shall be entitled to assign any and all of its rights under this Contract for
      the purposes of obtaining finance, to which assignment(s) the BUILDER hereby
      consents.

    

    14.2  Subject
      to paragraph 1 of this Article, the BUYER may assign this Contract to a third
      party only and always subject to a prior written consent of the SELLER which
      consent shall not be unreasonably withheld by the SELLER, provided that all
      of
      the SELLER’S rights under this contract are protected by the terms of such
      assignment. 

    

    

    
      	15.  	
              ARTICLE
                XV - TAXES AND DUTIES

            

    

    

    
      	15.1  	
              TAXES

            

    

    

    All
      costs
      for taxes including stamp duties and import licence fees, if any, incurred
      in
      connection with this Contract in the People's Republic of China shall be borne
      by the SELLER. Any taxes and/or duties imposed upon those items or services
      procured by the SELLER in the People's Republic of China or elsewhere for the
      construction of the VESSEL, including export licence fees, shall be borne by
      the
      SELLER.

    

    
      	15.2  	
              DUTIES

            

    

    

    The
      SELLER shall indemnify the BUYER for, and hold it harmless against, any duties,
      including import and export licence fees, imposed in the People's Republic
      of
      China upon materials and equipment which under the terms of this Contract and/or
      the Specifications will, or may be, supplied by the BUYER from the abroad for
      installation in the VESSEL as well as any duties imposed in the People's
      Republic of China upon running stores, provisions and supplies furnished by
      the
      BUYER from abroad to be stocked on board the VESSEL and also from the payment
      of
      export duties, if any, to be imposed upon the VESSEL as a whole or upon any
      of
      its parts or equipment.

    

    

    
      	16.  	
              ARTICLE
                XVI - PATENTS, TRADEMARKS AND
                COPYRIGHTS

            

    

    

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

    

    Nothing
      contained herein shall be construed as transferring any patent or trademark
      rights or copyright in equipment covered by this Contract, and all such rights
      are hereby expressly reserved to the true and lawful owners thereof.
      Notwithstanding any provisions contained herein to the contrary, the SELLER's
      obligation under this Article should not be terminated by the passage of any
      specified period of time.

    

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

    

    

    
      	17.  	
              ARTICLE
                XVII - NOTICES

            

    

    

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

    

    To
      the
      BUYER 

    Suite
      306

    Commerce
      Building

    One
      Chancery Lane

    Hamilton
      HM12

    Bermuda

     

      Telefax
      No. :441-295-4957

     

    with
      copy to:

    

    TBS
      Shipping Services Inc.

    612
      Grassy Sprain Road

    Yonkers,
      New York 10710

    USA
      

    

    Attention:
      Joseph E. Royce

    

    Telefax
      No. : 914-961-0567 

    

    To
      CCCC

    

    CHINA
      COMMUNICATIONS CONSTRUCTION COMPANY LTD. 

    c/o.
      CCCC
      SHANGHAI EQUIPMENT ENGINEERING CO., LTD

    12
      Floor,
      3456 Pu Dong Nan Road, Shanghai 200125 China

     

      Telefax
      No. : +8621
      5089 0068

    

     with
      copy to the BUILDER:

    NANTONG
      YAHUA SHIPBUILDING CO., LTD.

    1#
      Hongzha Road, Jiuweigang, Nantong Jiangsu P.C. 226361, China

     

    Telefax
      No. : +86513
      8556 0018

    

    Any
      notices and communications sent by CCCC or the BUILDER alone to the BUYER shall
      be deemed as having being sent by both CCCC and the BUILDER. 

    

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

    

    Any
      and
      all notices, requests, demands, instructions, advice and communications in
      connection with this Contract shall be deemed to be given at, and shall become
      effective from, the time when the same is delivered to the address of the party
      to be served, provided, however, that registered airmail shall be deemed to
      be
      delivered ten (10) days after the date of dispatch, express courier service
      shall be deemed to be delivered five (5) days after the date of dispatch, and
      telefax acknowledged by the answerbacks shall be deemed to be delivered upon
      dispatch. Any and all notices, communications, Specifications and drawings
      in
      connection with this Contract shall be written in the English language and
      each
      party hereto shall have no obligation to translate them into any other language.
      

    

    

    
      	18.  	
              ARTICLE
                XVIII - EFFECTIVE DATE OF
                CONTRACT

            

    

    

    This
      Contract shall not become effective and shall have no effect whatsoever, with
      no
      party being liable to the other for any loss or damage, unless and until all
      the
      following conditions are completely fulfilled and satisfied, latest by
      31st
      March
      2007: 

    

    

    (1) Due
      execution of this Contract by each of the BUYER, CCCC and the BUILDER comprising
      of (i) the signing of this Contract by duly authorised representatives of each
      party and (ii) the stamping of this Contract through the placement of each
      party’s corporate chop; 

    

    (2) Receipt
      by the BUYER of (i) the Refund Guarantee for the First Instalment issued by
      the
      SELLER’s Bank and (ii) documentary evidence from the SELLER’s Bank that this has
      been duly registered with SAFE; and 

    

    (3) Receipt
      by the SELLER of (a) the First Instalment in accordance with Paragraph 3(a)
      and
      4(a) of Article II of this Contract and (b) an original of the Letter of
      Guarantee issued by The Royal Bank of Scotland or other international bank
      acceptable to the Seller in accordance with Article II Paragraph 6(a)
      hereof.

    

    For
      the
      purpose of this Contract, the “Effective Date” means the date on which this
      Contract becomes effective in accordance with the provisions of this Article
      XVIII. 

    

    

    
      	19.  	
              ARTICLE
                XIX - INTERPRETATION

            

    

    

    
      	19.1  	
              LAW
                APPLICABLE

            

    

    

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

    

    
      	19.2  	
              DISCREPANCIES

            

    

    

    All
      general language or requirements embodied in the Specifications are intended
      to
      amplify, explain and implement the requirements of this Contract. However,
      in
      the event that any language or requirements so embodied in the Specifications
      permit an interpretation inconsistent with any provision of this Contract,
      then
      in each and every such event the applicable provisions of this Contract shall
      govern. The Technical Specification and plans (which comprise the
      Specifications) are also intended to explain each other, and anything shown
      on
      the plans and not stipulated in the Technical Specification or stipulated in
      the
      Technical Specification and not shown on the plans, shall be deemed and
      considered as if embodied in both. In the event of conflict between the
      Technical Specification and plans, the Technical Specification shall
      govern.

    

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

    

    
      	19.3  	
              DEFINITION

            

    

    

    In
      absence of stipulation of “New York business day(s)", all references to "day" or
      "days" shall be taken as "calendar day" or "calendar days". 

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

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

    

    

    THE
      BUYER: LONGWOOD MARITIME CORP. 

    

    

    By
      :
      _/s/
      Martin Levin________________________

     

    Name
      :
      Martin Levin 

    Title
      :
Director
      - New Shipbuilding Projects

    Witness
      :

    

    

    

    

    

    

    CCCC
      : CHINA COMMUNICATIONS CONSTRUCTION COMPANY LTD. 

    

    

    

    By
      :
      _______________/s/____________________

     

    Name
      :

    Title
      : 

    Witness
      :
      CCCC SHANGHAI EQUIPMENT ENGINEERING CO., LTD

    

    

    

    

    

    

    

    THE
      BUILDER: NANTONG YAHUA SHIPBUILDING CO., LTD.

    

    

    

    By
      :
      ______________/s/___________________

    

    Name
      :

    Title
      :

    Witness
      :

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    Exhibit
      "A" : 

    

    REFUND
      LETTER OF GUARANTEE

    FOR
      THE 1st
      INSTALMENT (DRAFT)

    

    To:
      LONGWOOD
      MARITIME CORP.

    Trust
      Company Complex

    Ajeltake
      Road

    Ajeltake
      Island

    Majuro

    Marshall
      Islands MH96960

    Date:
      

    

    Dear
      Sirs,

    

    Irrevocable
      Letter of Guarantee No.

    

    

    1.
      At the
      request of CHINA COMMUNICATION CONSTRUCTION COMPANY LTD and NANTONG YAHUA
      SHIPBUILDING CO., LTD. (hereinafter collectively called the "SELLER")
      and in
      consideration of your entering in to the shipbuilding contract concluded by
      and
      amongst you and the SELLER dated February 2007 for the construction of one
      (1)
      multi-purpose vessel (the “VESSEL”)
      to be
      designated as Hull No. NYHS200723 (hereinafter called the "Contract"),
      we,
      the undersigned, do hereby irrevocably guarantee repayment to you by the SELLER
      of a total amount of United States Dollars seven million(US$
      7,000,000),representing the 1st
      instalment of the Contract Price of the VESSEL (the “Instalment”),
      that
      you are to pay to the SELLER under the Contract prior to the delivery of the
      VESSEL, if and when the same or any part thereof becomes repayable to you from
      the SELLER in accordance with the terms of the Contract. Should the SELLER
      fail
      to make such repayment, we shall pay you the amount the SELLER ought to pay
      together with interest at the rate of zero percent (0%) per annum if the
      rescission of the Contract is exercised by you for the total loss in accordance
      with the Article XII and X of the Contract or together with an interest at
      the
      rate of five percent (5%) per annum if the rescission of the Contract is
      exercised by you for delay in accordance with the provisions of Article VIII
      of
      the Contract or by the events described in Article III 1(c), 2(c), 3(c) or
      4(c)
      of the Contract within thirty (30) business days after our receipt of a simple
      written demand from you for repayment confirming that the SELLER has refused
      and/or has failed to refund the BUYER in breach of the relevant Article of
      the
      Contract. 

    

    2.
      However, in the event of any dispute between you and the SELLER as to whether
      the SELLER is liable to repay the Instalment paid by you and such dispute is
      submitted either by the SELLER or by you for arbitration in accordance with
      Article XIII of the Contract, we shall be entitled to withhold and defer payment
      until the arbitration award is granted. We shall not be obligated to make any
      payment to you unless the arbitration award orders the SELLER to make repayment
      and any right of appeal available to the SELLER under English law is waived
      or
      is not exercised by the SELLER in accordance with English law. Provided further
      that in the event an application is successfully made for leave to appeal,
      our
      liability to make payment hereunder shall be conditional upon the final
      determination in your favour of the matters in respect of which leave to appeal
      has been granted. Our obligation to make payment hereunder of the principal
      amount guaranteed and interest thereon shall arise immediately upon our
      receiving of a certified copy of such relevant award and shall be to the extent
      the arbitration award (or any court judgment) orders but not exceeding the
      aggregate amount of this guarantee plus the interest as described
      above.

    

    3.
      The
      said repayment shall be made by us in United States Dollars. All payments by
      us
      under this Letter of Guarantee shall be made without any set-off or counterclaim
      and without deduction or withholding for or on account of any taxes, duties,
      or
      charges whatsoever unless we are compelled by law to deduct or withhold the
      same. In the latter event we shall make the minimum deduction or withholding
      permitted and will pay such additional amounts as may be necessary in order
      that
      the net amount received by you after such deductions or withholdings shall
      equal
      the amount which would have been received had no such deduction or withholding
      been required to be made.

     

    4.
      This
      Letter of Guarantee shall become effective from the time of the actual receipt
      by the SELLER of the payment of the Instalment of the Contract Price from you
      or
      on your behalf or from your parent company as your guarantor or pursuant to
      any
      Payment Guarantee issued by your bank. However, our liability under this Letter
      of Guarantee shall be limited to the above mentioned amount actually paid to
      the
      SELLER, together with interest calculated, as described above at five percent
      (5%) or, zero percent (0%) per annum, as the case may be for the period
      commencing with the date of receipt by the SELLER of the said Instalment to
      the
      date of repayment thereof.

    

    5.
      This
      Letter of Guarantee shall remain in force until (i) the VESSEL has been
      delivered to and accepted by you or (ii) refund has been made by the SELLER
      or
      ourselves or  (iii) 30th
      November
      2010, whichever
      occurs earlier. However, in the event that by 30th
      November
      2010 (i) the Vessel has not been delivered to and accepted by you or (ii) refund
      has not been made by the SELLER or ourselves then, the validity of this Letter
      of Guarantee shall be automatically extended until 31st
      May
      2012.
      Notwithstanding the foregoing, if arbitration or appeal proceedings exist
      between you and the SELLER for such matter as described above, then the validity
      of this Letter of Guarantee shall be automatically extended until the date
      falling on the sixtieth (60th) calendar day after the final arbitration award
      or
      final court order is granted.

    

    6.
      Our
      liability hereunder shall not be affected by any alteration to, or variation
      of,
      the terms of the Contract you may hereafter agree with the SELLER. We hereby
      agree that this Letter of Guarantee shall be construed as a continuing and
      unconditional guarantee of payment and without regard to the validity or
      unenforceability of any other agreement or instrument (including the Contract)
      and without regard to defence, set-off or counterclaim, or any other
      circumstance whatsoever which might constitute an equitable or legal discharge
      of our obligation hereunder. No action or failure to act on your part shall
      relieve us of any of our obligation hereunder. 

    

    7.
      We
      hereby confirm that you may assign this Letter of Guarantee to your financiers
      by way of security. No other assignment of your rights under this Letter of
      Guarantee shall be permissible without our prior written consent, such consent
      not to be unreasonably withheld. In any event, the right for making a demand
      under this Letter of Guarantee shall exclusively remain with you. 

    

    8.
      This
      Letter of Guarantee is governed by the laws of England and is subject to the
      exclusive jurisdiction of the English Courts. For the purpose of any proceedings
      hereunder, we irrevocably appoint the following as our agent for service of
      process: [   ].

    

    For
      The
      _______ Bank 

    (Stamp
      & Signature) 

    

    Name
      :

    Title
      :

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Exhibit
      "B" : 

    

    REFUND
      LETTER OF GUARANTEE

    FOR
      THE 2nd,
      3rd
      AND 4th
      INSTALMENTS (DRAFT)

    

    To:
      LONGWOOD
      MARITIME CORP.

    Trust
      Company Complex

    Ajeltake
      Road

    Ajeltake
      Island

    Majuro

    Marshall
      Islands MH96960

    

    Date:
      

    Dear
      Sirs,

    

    Irrevocable
      Letter of Guarantee No.

    

    1.
      At the
      request of CHINA COMMUNICATION CONSTRUCTION COMPANY LTD and NANTONG YAHUA
      SHIPBUILDING CO., LTD. (hereinafter collectively called the "SELLER")
      and in
      consideration of your entering into the shipbuilding contract concluded by
      and
      amongst you, and the SELLER dated February 2007 for the construction of one
      (1)
      multi-purpose vessel (the “VESSEL”)
      to be
      designated as Hull No. NYHS200723 (hereinafter called the "Contract"),
      we,
      the undersigned, do hereby irrevocably guarantee repayment to you by the SELLER
      of a total amount of United States Dollars twenty one million (US$
      21,000,000),representing United States Dollars seven million (US$ 7,000,000)
      for
      the 2ndinstalment
      of the Contract Price of the VESSEL, United States Dollars seven million (US$
      7,000,000) for the 3rd
      instalment of the Contract Price of the VESSEL and United States Dollars seven
      million (US$ 7,000,000) for the 4th
      instalment of the Contract Price of the VESSEL (the “Instalments”
and
      each, an “Instalment”),
      that
      you are to pay to the SELLER under the Contract prior to the delivery of the
      VESSEL, if and when the same or any part thereof becomes repayable to you from
      the SELLER in accordance with the terms of the Contract. Should the SELLER
      fail
      to make such repayment, we shall pay you the amount the SELLER ought to pay
      together with interest at the rate of zero percent (0%) per annum if the
      rescission of the Contract is exercised by you for the total loss in accordance
      with the Article XII and X of the Contract or together with an interest at
      the
      rate of five percent (5%) per annum if the rescission of the Contract is
      exercised by you for delay in accordance with the provisions of Article VIII
      of
      the Contract or by the events described in Article III 1(c), 2(c), 3(c) or
      4(c)
      of the Contract within thirty (30) business days after our receipt of a simple
      written demand from you for repayment confirming that the SELLER has refused
      and/or has failed to refund the BUYER in breach of the relevant Article of
      the
      Contract. 

    

    2.
      However, in the event of any dispute between you and the SELLER as to whether
      the SELLER is liable to repay an Instalment or Instalments paid by you and
      such
      dispute is submitted either by the SELLER or by you for arbitration in
      accordance with Article XIII of the Contract, we shall be entitled to withhold
      and defer payment until the arbitration award is granted. We shall not be
      obligated to make any payment to you unless the arbitration award orders the
      SELLER to make repayment and any right of appeal available to the SELLER under
      English law is waived or is not exercised by the SELLER in accordance with
      English law. Provided further that in the event an application is successfully
      made for leave to appeal, our liability to make payment hereunder shall be
      conditional upon the final determination in your favour of the matters in
      respect of which leave to appeal has been granted. Our obligation to make
      payment hereunder of the principal amount guaranteed and interest thereon shall
      arise immediately upon our receiving of a certified copy of such relevant award
      and shall be to the extent the arbitration award (or any court judgment) orders
      but not exceeding the aggregate amount of this guarantee plus the interest
      as
      described above.

    

    3.
      The
      said repayment shall be made by us in United States Dollars. All payments by
      us
      under this Letter of Guarantee shall be made without any set-off or counterclaim
      and without deduction or withholding for or on account of any taxes, duties,
      or
      charges whatsoever unless we are compelled by law to deduct or withhold the
      same. In the latter event we shall make the minimum deduction or withholding
      permitted and will pay such additional amounts as may be necessary in order
      that
      the net amount received by you after such deductions or withholdings shall
      equal
      the amount which would have been received had no such deduction or withholding
      been required to be made.

     

    4.
      This
      Letter of Guarantee shall become effective from the time of the actual receipt
      by the SELLER of the payment of the 2nd
      Instalment of the Contract Price from you or on your behalf or from your parent
      company as your guarantor or pursuant to any Payment Guarantee issued by your
      bank. However, our liability under this Letter of Guarantee shall be limited
      to
      the above mentioned amount actually paid to the SELLER, together with interest
      calculated, as described above at five percent (5%) or, zero percent (0%) per
      annum, as the case may be for the period commencing with the date of receipt
      by
      the SELLER of the respective Instalment to the date of repayment thereof.

    

    5.
      This
      Letter of Guarantee shall remain in force until (i) the VESSEL has been
      delivered to and accepted by you or (ii) refund has been made by the SELLER
      or
      ourselves or (iii)  30th
      November
      2010, whichever
      occurs earlier. However, in the event that by 30th
      November
      2010 (i) the Vessel has not been delivered to and accepted by you or (ii) refund
      has not been made by the SELLER or ourselves then, the validity of this Letter
      of Guarantee shall be automatically extended until 31st
      May
      2012. Notwithstanding the foregoing, if arbitration or appeal proceedings exist
      between you and the SELLER for such matter as described above, then the validity
      of this Letter of Guarantee shall be automatically extended until the date
      falling on the sixtieth (60th) calendar day after the final arbitration award
      or
      final court order is granted.

    

    6.
      Our
      liability hereunder shall not be affected by any alteration to, or variation
      of,
      the terms of the Contract you may hereafter agree with the SELLER. We hereby
      agree that this Letter of Guarantee shall be construed as a continuing and
      unconditional guarantee of payment and without regard to the validity or
      unenforceability of any other agreement or instrument (including the Contract)
      and without regard to defence, set-off or counterclaim, or any other
      circumstance whatsoever which might constitute an equitable or legal discharge
      of our obligation hereunder. No action or failure to act on your part shall
      relieve us of any of our obligation hereunder. 

    

    7.
      We
      hereby confirm that you may assign this Letter of Guarantee to your financiers
      by way of security. No other assignment of your rights under this Letter of
      Guarantee shall be permissible without our prior written consent, such consent
      not to be unreasonably withheld. In any event, the right for making a demand
      under this Letter of Guarantee shall exclusively remain with you. 

    

    8.
      This
      Letter of Guarantee is governed by the laws of England and is subject to the
      exclusive jurisdiction of the English Courts. For the purpose of any proceedings
      hereunder, we irrevocably appoint the following as our agent for service of
      process: [   ].

    

    For
      The
      _______ Bank 

    (Stamp
      & Signature) 

    

    Name
      :

    Title
      :

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    Exhibit
      "C" 

    

    IRREVOCABLE
      PAYMENT LETTER OF GUARANTEE

    FOR
      THE 2nd
      , 3rd
      and 4th
      INSTALMENTS (DRAFT)

    

    From:
      The
      Royal Bank of Scotland

    

    To: China
      Communications Construction Company Ltd. (“CCCC”); 

    

     

    

     

    Date:
      

    

    Dear
      Sirs,

    

    1.
      In
      consideration of your entering into a Shipbuilding Con-tract dated February
      2007
      (the “Shipbuilding
      Contract”)
      with
      Nantong Yahua Shipbuilding Co., Ltd. of 1# Hongzha Road, Jiuweigang, Nantong,
      Jiangsu P.C. 226361 (the “BUILDER”)
      and
      LONGWOOD Maritime Corp. of Trust Company Complex, Ajeltake Road, Ajeltake
      Island, Majuro, Marshall Islands MH96960 as the buyer (the “BUYER”)
      for
      the construction of one (1) multi-purpose vessel known as the Builder’s Hull
      No.NYHS200723(the “VESSEL"),
      we,
The
      Royal Bank of Scotland
      of [ ],
      hereby IRREVOCABLY, ABSOLUTELY and UNCONDITIONALLY guaran-tee, as the primary
      obligor and not merely as the surety, the due and punctual payment by the BUYER,
      as and when the same shall fall due, of each and all of the 2nd, 3rd
      and
      4th
      instalments
      (the “Instalments”
and
      each, an “Instalment”)
      of the
      Contract Price amounting to a total sum of United States Dollars twenty one
      million (US$ 21,000,000) as specified in (2) below, being part of a total
      Contract Price of United States Dollars thirty five million four hundred and
      twenty thousand (US$ 35,420,000). Terms used herein shall bear the same meaning
      as in the Shipbuilding Contract, a copy of which has been provided to us.

    

    2.
      The
      Instalments guaranteed hereunder, pursuant to the terms of the Shipbuilding
      Contract, comprise:-

    

    
      	(a)  	
              the
                2nd Instalment in the amount of U.S. Dollars seven million only (US$
                7,000,000) payable by the BUYER within five (5) New York business
                days of
                the receipt by the BUYER of (i) the Refund Guarantee issued by the
                SELLER’s Bank in respect of the 2nd,
                3rd
                and 4th
                Instalments together with documentary evidence that this has been
                duly
                registered with the State Administration for Foreign Exchange (“SAFE”) and
                (ii) a telefax notice attaching the Stage Certificate issued by you
                and
                the BUILDER in the form of the draft attached as Appendix A to the
                Overall
                Agreement, countersigned by the Classification Surveyor, certifying
                that
                the steel cutting of the first plate of BUILDER’s Hull NYHS200720 in the
                BUILDER’s Shipyard has commenced, 

            

    

    

    
      	(b)  	
              the
                3rd Instalment in the amount of U.S. Dollars seven million only (US$
                7,000,000) payable by the BUYER within five (5) New York business
                days of
                the receipt by the BUYER of a telefax notice attaching the Stage
                Certificate issued by you and the BUILDER in the form of the draft
                attached as Exhibit D to the Shipbuilding Contract, countersigned
                by the
                Classification Society, certifying that the VESSEL’s keel has been laid
                within the meaning of Article 2.3 of the Shipbuilding Contract;
                and

            

    

    

    
      	(c)  	
              the
                4th Instalment in the amount of U.S. Dollars seven million only (USD
                7,000,000) payable by the BUYER within five (5) New York business
                days of
                the receipt by the BUYER of a telefax notice attaching the Stage
                Certificate issued by you and the BUILDER in the form of the draft
                attached as Exhibit D to the Shipbuilding Contract, countersigned
                by the
                Classification Surveyor, certifying that the VESSEL has been successfully
                launched.

            

    

    

    

    PROVIDED
      HOWEVER that it is expressly understood and agreed that our maximum liability
      under this Letter of Guarantee shall at all times be limited to the aggregate
      of:

    

    (a)
      the
      lesser of (i) United States Dollars fourteen million (USD 14 million) and (ii)
      the difference between the Contract Price and an amount corresponding to the
      aggregate of each Instalment payment made from time to time by the BUYER to
      the
      SELLER under the Shipbuilding Contract; and 

    

    (b)
      interest thereon as specified in paragraph 3 below.

    

    For
      the
      avoidance of doubt, our liability under this Letter of Guarantee shall be
      limited to United States Dollars fourteen million (USD 14 million) plus interest
      thereon as specified in paragraph 3 below until such time as the BUYER pays
      the
      3rd
      instalment of the Contract Price of the VESSEL, which shall reduce our liability
      under this Letter of Guarantee to United States Dollars seven million (USD
      7
      million) plus interest. Our liability shall remain at United States Dollars
      seven million (USD 7 million) plus interest until the payment by the BUYER
      of
      the 4th
      instalment of the Contract Price, whereupon we shall have no further liability
      to you under this Letter of Guarantee whatsoever. 

    

    3.
      We
      also IRREVOCABLY, ABSOLUTELY and UNCONDITIONALLY guarantee, as primary obligor
      and not merely as surety, the due and punctual payment by the BUYER of interest
      on each In-stalment guaranteed hereunder at the rate of five percent (5%) per
      annum from and including the first day after the date this Instalment fell
      due
      under the Shipbuilding Contract until the date of full payment by us of such
      amount guaranteed hereunder. 

    

    4.
      In the
      event that the BUYER fails to punctually pay any Instalment guaranteed hereunder
      or the BUYER fails to pay any interest thereon, and such default continues
      for a
      period of fifteen (15) calendar days from the date of notice thereof from
      yourselves to the BUYER, then, upon receipt by us of your first written demand,
      we shall pay to you or your Assignee duly notified in your demand, within
      fifteen (15) calendar days all unpaid 2nd,
      3rd
      and
      4th
      Instalments, together with the interest as specified in paragraph (3) hereof,
      without requesting you to take any or further action, procedure or step against
      the BUYER or with respect to any other security which you may hold, provided
      that:

    

    (a)
      Your
      demand is accompanied by an original of the relevant Stage Certificate(s)
      referred to in paragraph 2 above, issued in compliance with the Stage
      Certificate formalities stated in the Overall Agreement or Shipbuilding
      Contract, as the case may be; and

    

    (b)
      Your
      demand is made not earlier than 20 days after receipt by us of a valid Refund
      Guarantee duly registered with SAFE in respect of each Instalment claimed under
      your demand, issued in compliance with the requirements of the Shipbuilding
      Contract.

    

    5.
      Any
      payment by us under this Letter of Guarantee shall be made in United States
      Dollars by telegraphic transfer to , as receiving bank nominated by you for
      credit to the account of you with [Bank
      of
      Communications (Beijing Branch)][Industrial and Commercial Bank of China
      (Beijing Branch)], the People's Republic of China or through such other
      receiving bank to be nominated in writing by you from time to time, in favour
      of
      you or your Assignee.

    

    6.
      Our
      obligations under this Letter of Guarantee shall not be affected or prejudiced
      by any dispute between you as the SELLER and the BUYER under the Shipbuilding
      Contract or by the BUILDER's delay in the construction and/or delivery of the
      VESSEL due to whatever causes or by any variation or extension of their terms
      thereof or by any security or other indemnity now or hereafter held by you
      in
      respect thereof, or by any time or indulgence granted by you or any other person
      in connection therewith, or by any invalidity or unenforceability of the terms
      thereof.

    

    7.
      Any
      claim or demand shall be in writing signed by one of your officers and may
      be
      served on us for the attention of the Letter of Guarantee Department either
      by
      authenticated SWIFT message via [Bank
      of
      Communications (Beijing Branch)][Industrial and Commercial Bank of China
      (Beijing Branch)], or by hand, or by post and if sent by post to [ ] (or such
      other address as we may notify to you in writing).

    

    8.
      This
      Letter of Guarantee shall come into full force and effect upon delivery to
      you
      of this Letter of Guarantee and shall continue in force and effect until the
      earliest of the following:

    

    (a)
      the
      date on which the VESSEL is delivered to and accepted by the BUYER; or

    

    (b)
      the
      date on which full payment of the 2nd, 3rd
      and
      4th
      Instalments together with the aforesaid interest shall have been made to you
      by
      the BUYER or ourselves, whichever first occurs; or

    

    (c)
      the
      date on which the Shipbuilding Contract has been rescinded in compliance with
      its terms; or

    

    
      	(d)       	
              31st
                May 2010. 

            

    

    

    However,
      in the event that by 31st
      May 2010
      (i) the Vessel has not been successfully launched or (ii) the full payment
      of
      the 2nd,
      3rd
      and
      4th
      Instalments together with interest has not been made to you by the BUYER or
      ourselves or (iii) the Shipbuilding Contract has not been rescinded in
      compliance with its terms, then the validity of this Letter of Guarantee shall
      be automatically extended until 31st
      May
      2011. 

    

    9.
      All
      payments by us under this Letter of Guarantee shall be made without any set-off
      or counterclaim and without deduction or withholding for or on account of any
      taxes, duties, or charges whatsoever unless we are compelled by law to deduct
      or
      withhold the same. In the latter event we shall make the minimum deduction
      or
      withholding permitted and will pay such additional amounts as may be necessary
      in order that the net amount received by you after such deductions or
      withholdings shall equal the amount which would have been received had no such
      deduction or withholding been required to be made.

    

    10.
      We
      hereby confirm that you may assign this Letter of Guarantee to your financiers
      by way of security. No other assignment of your rights under this Letter of
      Guarantee shall be permissible without our prior written consent, such consent
      not to be unreasonably withheld. In any event, the right for making a demand
      under this Letter of Guarantee shall exclusively remain with you. The
      term
“Assignee”
where
      used in this Letter of Guarantee shall be construed by reference to this
      paragraph 11. 

    

    11.
      This
      Letter of Guarantee shall be construed in accordance with and governed by the
      laws of England. We hereby submit to the exclusive jurisdiction of the English
      courts for the purposes of any legal action or proceedings in connection with
      this Letter of Guarantee.

    

    12.
      As
      soon as this Letter of Guarantee expires as aforesaid, you shall return the
      same
      to us without any request or demand from us.

    

    IN
      WITNESS WHEREOF, we have caused this Letter of Guarantee to be executed and
      delivered by our duly authorized representative the day and year above
      written.

     

    

    

    Very
      Truly Yours,

    

    For
      The
      Royal Bank of Scotland

     

    By:
      __________________________

    (Signature
      & Stamp)

    Name
      :

    Title
      :

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    EXHIBIT
      “D” - FORM OF STAGE CERTIFICATE

    

    

    [insert
      date]

    

    LONGWOOD
      MARITIME CORP. 

    

    c/o
      TBS
      SHIPPING SERVICES INC.

    612
      Grassy Sprain Road

    Yonkers

    New
      York
      10710

    USA

    

    For
      the
      attention of Joseph E. Royce

    

    Fax
      no:
914-961-0567

    

    

    Gentlemen:

    

    Hull
      No. NYHS200723 under a Shipbuilding Contract dated

            February
      2007, made between yourselves and ourselves

    

    We
      hereby
      certify in connection with the building of the above VESSEL:-

    

    

    [that
      the
      steel cutting has been commenced]

    [that
      the
      VESSEL’s keel has been laid in accordance with the meaning of Article 2.3 of the
      Contract]

    [that
      the
      VESSEL has been successfully launched].

    

     

    For
      and
      on behalf of

    China
      Communications Construction Company Ltd. and Nantong Yahua Shipbuilding Co.,
      Ltd.

    as
      the
      SELLER 

    

    ................................ 

    Dated
      [
      ] 

    

     

    For
      and
      on behalf of 

    Lloyd’s
      Register

    As
      Classification Society

    

    ................................

    Dated
      [
      ]

     

     

    

      ADDENDUM
        No.1

      

      to
        a
Shipbuilding
        Contract
        dated
        24th
        February
        2007

      

      BETWEEN

      

      	1.  	
              CHINA
                COMMUNICATIONS CONSTRUCTION COMPANY LTD of
                No. C88, An Ding Men Wai Street, Beijing100011, the People’s Republic
                of China (hereinafter called "the Seller"),
                and

            

      

      	2.  	
              NANTONG
                YAHUA SHIPBUILDING CO., LTD of
                1# Hongzah Road, Jiuweigang, Nantong Jiangsu P.C. 226361, the People’s
                Republic of China (hereinafter called "the Builder"),
                and

            

      

      	3.  	
              LONGWOODS
                MARITIME CORP. of
                Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall
                Islands (hereinafter called "the Buyer")

            

      

      WHEREAS

      

      	I.  	
              The
                Seller, the Builder and the Buyer (together the “Parties”) entered into a
                Shipbuilding Contract dated 24 February 2007 (the “Building Contract”) in
                respect of one multi-purpose vessel carrying the Builder’s hull number
                NYHS200723; and

            

      

      	II.  	
              After
                execution of the Building Contract it was detected that the name
                of the
                Buyer was misspelled throughout the Building Contract as “Longwood
                Maritime Corp.” instead of “Longwoods
                Maritime Corp.”

            

      

      	III.  	
              The
                Parties now wish to amend the Building Contract to rectify this
                typographical error.

            

      

      NOW
        THEREFORE
        the
        Parties agree as follows:

      

      	(A)  	
              The
                following parts and pages of the Building Contract are amended by
                deleting
                the words “Longwood Maritime Corp.” and replacing them with the words
                “Longwoods
                Maritime Corp.”:

            

      

      	a.  	
              the
                relevant part of the title page;

            

      

      	b.  	
              the
                relevant part of the recital on page 1;

            

      

      	c.  	
              the
                relevant part of the signature page (page
                46);

            

      

      	d.  	
              the
                address field of Exhibit “A” (Refund Letter of Guarantee for the
                1st
                Instalment);

            

      

      	e.  	
              the
                address field of Exhibit “B” (Refund Letter of Guarantee for the
                2nd,
                3rd
                and 4th
                Instalments);

            

      

      	f.  	
              the
                relevant part of Paragraph 1. of Exhibit “C” (Irrevocable Payment Letter
                of Guarantee for the 2nd,
                3rd
                and 4th
                Instalments);

            

      

      	g.  	
              the
                address field of Exhibit “D” (Form of Stage Certificate); and
                

            

      

      	(B)  	
              All
                other terms and conditions of the Building Contract shall remain
                unaltered
                and in full force and effect.

            

      

      Dated
        this 21st day of March 2007

      

      

      

      

      

      

      

      ____________/s/_________________  ____________/s/_____________

      CHINA
        COMMUNICATIONS   NANTONG
        YAHUA

      CONSTRUCTION
        COMPANY LTD  SHIPBUILDING
        CO. LTD

      By:       By:

      

      

      

      

      

      

      

      _/s/
        Martin D. Levin_______________

      LONGWOODS
        MARITIME CORP.

      By:
        Martin D. Levin

      
        Director
          - New Shipbuilding Projects

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