Document:

Exhibit
10.6

 

FORM OF SHIPBUILDING CONTRACT
FOR THE

DESIGN, CONSTRUCTION, SALE AND
PURCHASE

OF A 2,400 DWT DOUBLE HULL
PRODUCT OIL

TANKER WITH RO-RO FACILITY

WITH SEVERNAV S.A.

 

 

FORM OF

SHIPBUILDING CONTRACT

NO.

 

FOR THE

 

DESIGN, CONSTRUCTION, SALE AND PURCHASE

OF A

 

2400 DWT DOUBLE HULL PRODUCT

OIL TANKER WITH RO-RO FACILITY

(HULL NO. N             )

 

BETWEEN:

 

AS BUYER

 

AND

 

SEVERNAV S.A.

 

AS SELLER

 

 

	
  ARTICLE I – DEFINITIONS

  
	
  ARTICLE II - DESCRIPTION AND CLASS

  
	
   

  
	
  1.

  	
  Description

  
	
  2.

  	
  Class
  And Rules

  
	
  3.

  	
  Principal Particulars and Dimensions Of THe
  Vessel

  
	
  4.

  	
  Guaranteed
  Speed

  
	
  5.

  	
  Guaranteed Deadweight

  
	
  6.

  	
  Guaranteed Fuel Consumption

  
	
  7.

  	
  Guaranteed Cargo Tanks Cubic Capacity

  
	
  8.

  	
  Subcontracting

  
	
  9.

  	
  Registration

  
	
   

  	
   

  
	
  ARTICLE III - CONTRACT PRICE AND TERMS OF
  PAYMENT

  
	
   

  	
   

  
	
  1.

  	
  Contract
  Price

  
	
  2.

  	
  Currency

  
	
  3.

  	
  Terms
  Of Payment

  
	
  4.

  	
  Method
  Of Payment

  
	
  5.

  	
  Security For Payment Of Instalments Before Delivery

  
	
  6.

  	
  Refunds

  
	
  7.

  	
  Rights
  Of Set-Off

  
	
   

  	
   

  
	
  ARTICLE IV - ADJUSTMENT OF CONTRACT PRICE

  
	
   

  	
   

  
	
  1.

  	
  Delivery

  
	
  2.

  	
  Speed

  
	
  3.

  	
  Fuel
  Consumption:

  
	
  4.

  	
  Dead-weight

  
	
  5.

  	
  Cargo Tanks Cubic Capacity

  
	
  6.

  	
  Design Responsibility

  
	
  7.

  	
  Effect of rescission

  
	
   

  	
   

  
	
  ARTICLE
  V

  
	
   

  	
   

  
	
  APPROVAL OF PLANS AND DRAWINGS AND
  INSPECTION DURING CONSTRUCTION

  
	
   

  	
   

  
	
  1.

  	
  Approval of Plans and Drawings:

  
	
  2.

  	
  Appointment of BUYER’s Representatives:

  
	
  3.

  	
  Inspection by Representatives:

  
	
  4.

  	
  Rights of BUYER’s Representatives

  
	
  5.

  	
  Facilities

  
	
  6.

  	
  Liability of SELLER:

  
	
  7.

  	
  Responsibility of BUYER:

  
	
   

  	
   

  
	
  ARTICLE VI - MODIFICATIONS

  
	
   

  	
   

  
	
  1.

  	
  Modification of Specification

  
	
  2.

  	
  Change in Class requirements, rules and
  regulations and regulatory bodies:

  
	
  3.

  	
  Substitution of Materials:

  
	
  4.

  	
  Payment for Modifications:

  
	
   

  	
   

  
	
  ARTICLE VII – TRIAL AND ACCEPTANCE

  
	
   

  	
   

  
	
  1.

  	
  Notice

  
	
  2.

  	
  Weather Conditions:

  
	
  3.

  	
  How
  Conducted:

  

 

2

 

	
  4.

  	
  Method of Acceptance or Rejection:

  
	
  5.

  	
  Effect of Acceptance:

  
	
  6.

  	
  Disposal of Surplus Consumable Stores:

  
	
   

  	
   

  
	
  ARTICLE
  VIII - DELIVERY

  
	
   

  	
   

  
	
  1.

  	
  Time and
  Place

  
	
  2.

  	
  When and How
  Effected

  
	
  3.

  	
  Documents to
  be Delivered to BUYER

  
	
   

  	
   

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

  
	
   

  	
   

  
	
  1.

  	
  Causes
  of Delay:

  
	
  2.

  	
  Notice
  of Delay:

  
	
  3.

  	
  SELLER’s Duty of Mitigation

  
	
  4.

  	
  Definition of Permissible Delay:

  
	
  5.

  	
  Right of Rescind for Excessive Delay:

  
	
   

  	
   

  
	
  ARTICLE X - WARRANTY OF QUALITY

  
	
   

  	
   

  
	
  1.

  	
  Guarantee:

  
	
  2.

  	
  Notice of Defects:

  
	
  3.

  	
  Remedy of Defects:

  
	
  4.

  	
  Extent of SELLER’s Responsibility:

  
	
  5.

  	
  GUARANTEE ENGINEER

  
	
   

  	
   

  
	
  ARTICLE XI – RESCISSION BY BUYER

  
	
   

  	
   

  
	
  1.

  	
  RIGHT OR RESCISSION - NOTICE

  
	
  2.

  	
  Refund
  by SELLER:

  
	
  3.

  	
  Return of BUYER’s supplies:

  
	
  4.

  	
  Discharge of Obligations:

  
	
   

  	
   

  
	
  ARTICLE XII – BUYER’S DEFAULT

  
	
   

  	
   

  
	
  1.

  	
  DEFINITION OF DEFAULT

  
	
  2.

  	
  NOTICE
  OF DEFAULT

  
	
  3.

  	
  INTEREST AND CHARGE

  
	
  4.

  	
  DEFAULT BEFORE DELIVERY OF THE VESSEL

  
	
  5.

  	
  SALE OF THE VESSEL

  
	
   

  	
   

  
	
  ARTICLE XIII - DISPUTE AND ARBITRATION

  
	
   

  	
   

  
	
  1.

  	
  Proceedings

  
	
  2.

  	
  Alteration Of Delivery Date

  
	
  3.

  	
  Notice
  Of Award

  
	
  4.

  	
  Expenses

  
	
  5.

  	
  Entry
  Into Court

  
	
   

  	
   

  
	
  ARTICLE XIV - RIGHT OF ASSIGNMENT

  
	
   

  	
   

  
	
  ARTICLE XV – TAXES AND DUTIES

  
	
   

  	
   

  
	
  1.

  	
  Taxes and Duties in Romania:

  
	
  2.

  	
  Taxes and Duties outside Romania:

  
	
   

  	
   

  
	
  ARTICLE XVI - PATENTS, TRADEMARKS,
  COPYRIGHTS, ETC.

  
	
   

  	
   

  
	
  ARTICLE XVII - BUYER’S SUPPLIES:

  
	
   

  	
   

  
	
  1.

  	
  Responsibility of the BUYER:

  
	
  2.

  	
  Responsibility of the SELLER:

  

 

3

 

	
  ARTICLE XVIII - NOTICE

  
	
   

  	
   

  
	
  1.

  	
  Address:

  
	
  2.

  	
  Language:

  
	
   

  	
   

  
	
  ARTICLE XIX - EFFECTIVE DATE OF CONTRACT

  
	
   

  
	
  ARTICLE XX - INTERPRETATION:

  
	
   

  	
   

  
	
  1.

  	
  Laws
  Applicable:

  
	
  2.

  	
  Discrepancies:

  
	
  3.

  	
  Counting
  of time

  
	
  4.

  	
  Entire
  Agreement

  
	
  5.

  	
  Governing Language

  
	
  6.

  	
  Original of the Contract

  
	
   

  	
   

  
	
  EXHIBIT
  A

  
	
   

  	
   

  
	
  A:

  	
  List of
  Contract Documents

  
	
  B:

  	
  Contract
  Drawings

  
	
   

  	
   

  
	
  EXHIBIT
  B

  
	
   

  	
   

  
	
  1.

  	
  List of
  Delivery Documents

  
	
  2.

  	
  List of
  Certificates

  
	
   

  	
   

  
	
  ANNEX
  NO. 1

  
	
   

  	
   

  
	
   

  	
  Draft of the
  PROTOCOL of Delivery and Acceptance

  
	
   

  	
   

  
	
  ANNEX
  NO. 2

  
	
   

  
	
   

  	
  Draft of the
  DECLARATION OF WARRANTY

  
			

 

4

 

THIS CONTRACT, made this 3rd day
of June 2005 by and between:

 

                 .,
a corporation organised and existing under the laws of Laws of Marshall
Islands, having its registered office at Trust Company Complex, Ajeltake Road,
Ajeltake Island, Majuro, Marshall Islands MH 96960 (hereinafter called the “BUYER”),

 

and

 

Severnav S.A., a corporation organised and
existing under the laws of Romania having its registered office at 204,
Timisoara Str., 220242 Drobeta Turnu-Severin, Romania (hereinafter called the “SELLER”),

 

WITNESSETH:

 

In consideration of the mutual
covenants herein contained, the SELLER agrees to design (through its
sub-contractor designer) build, launch, equip and complete (save as otherwise
provided herein) at the SELLER’s Shipyard at Drobeta Turnu-Severin (hereinafter
called the “SHIPYARD”) and to sell and deliver to the BUYER after completion
and successful trial specified in this Contract one (1) 2400 DWT Double Hull
Product Oil Tanker with RORO Facility as more fully described in Article II
hereof (hereinafter called the “VESSEL”), to be registered at the option of the
BUYER and at BUYER’S cost under the Greek flag and the BUYER agrees to purchase
and take delivery of the VESSEL from the SELLER and to pay for the same in
accordance with the terms and conditions hereinafter set forth.

 

5

 

ARTICLE I
– DEFINITIONS

 

In this Contract, the following
terms shall have the meanings set forth below:

 

1.               “Contract”
or “the Contract” shall, unless the context otherwise requires, mean, this
Contract together with any addenda, exhibits or annexes to this Contract, which
may be mutually agreed between the Parties in writing and the Specification.

2.               “Parties”
shall mean the SELLER and the BUYER.

3.               “Classification
Society” shall mean Bureau Veritas.

4.               “Contract
Price” shall mean the sum of EURO 6,835,000.00 (Euro Six Million Eight Hundred
and Thirty Five Thousand Only) as the same may be adjusted, being the price for
the VESSEL completed in accordance with the terms of this Contract.

5.               “EURO”
shall mean freely convertible currency of the European Community.

6.               “Protocol
of Delivery and Acceptance” shall mean the Protocol to be executed by the SELLER
and the BUYER on delivery of the Vessel as referred to in Articles IV and VIII
of this Contract.

7.               “BUYER’s
Supplies” shall mean the items to be furnished by the BUYER as referred to in
the Specification of this Contract.

8.               “Sea
Trial” shall have the meaning set forth in Article VII of this Contract.

9.               “SELLER’s
Bank” shall mean a Bank nominated by the SELLER and acceptable to the BUYER.

10.         “BUYER’s
Bank” shall mean a Bank nominated by the BUYER and acceptable to the “SELLER”

11.         “BUYER’s
Representative” shall mean the person or persons authorised in writing by the
BUYER to act as his representative or representatives for construction supervision
in conformity with the stipulations of Article V of this contract.

12.         “Specification”
shall mean the Technical Specification signed by the Parties, which shall form
an integral part of the Contract, and shall prevail over any other technical
documentation.

13.         “Makers
List” shall mean the Makers List signed by the Parties, the agreement of which
shall be a condition precedent to the Contract coming into effect, and which
shall form an integral part of the Contract.

14.         “Contract
Documents” shall mean documents as per Article II, paragraph 1 signed by both
Parties, which shall form an integral part of the Contract.

15.         “Working
days” shall mean days upon which banks are open for business both in Greece and
Romania.

16.         “Delivery
Documents” shall mean the documents referred to in Exhibit “B”.

 

6

 

ARTICLE II
- DESCRIPTION AND CLASS

 

1.             DESCRIPTION

 

The VESSEL shall be a 2,400
metric tons deadweight, double hull single screw diesel engine driven carrier
of diesel oil, gasoline, and other clean and dirty oil products with a flash
point below 60 degrees Celsius, with RO-RO facility, at design summer draught
of 4.20 metres of the Class described below. 
The VESSEL shall have the SELLER’s Hull No. N            
and shall be constructed, equipped and completed as described in and in
accordance with the terms of this Contract and the following documentation:

 

(1) Technical
Specification (Document No. CMT319-100-100 Revision C from 10.02.2005)

(2) General
Arrangement (Drawing No. CMT319-101-001/Revision 4)

(3) Makers’
List (Document No. CMT319-100-101/10.02.2005 Revision A)

(4) Tank Plan
and Capacity table (Drawing No. CMT319-101-040/14.02.2005 Revision 2)

 

attached hereto and signed by
each of the parties to this Contract (hereinafter collectively called the “Contract
Documents”), making an integral part hereof.

 

2.             CLASS AND
RULES

 

The VESSEL including its
machinery, equipment and outfittings, shall be constructed in accordance with
and shall comply with the rules and regulations (in the edition and subject to
the amendments thereto in force as of the date of this Contract) of and under
the supervision of the Classification Society and shall be distinguished in the
register by the symbols: 1+HULL+MACH BOILER; OIL TANKER-ESP/RO-RO CARGO SHIP;
UNRESTRICTED NAVIGATION+AUT-UMS.

 

The requirements of the
authorities and other regulatory bodies as fully described in the Specification
including those of the Classification Society are to include any rules or
circulars thereof which have been issued up to the date of signing of this
Contract.

 

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

 

All fees and charges incidental
to classification and to compliance with all the rules, regulations and
requirements of this Contract and as described in the Specification issued up
to the date of signing 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 and the VESSEL itself shall at all
times be subject to inspections and tests in accordance with the rules and
regulations of the Classification Society and regulatory bodies, as stated in
the Specification.

 

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

 

3.             PRINCIPAL PARTICULARS AND DIMENSIONS
OF THE VESSEL

 

(a)                                  Hull

	
  Length
  overall

  	
   

  	
  : about 89.95 metres

  
	
  Length between perpendiculars

  	
   

  	
  : about 82.90 metres

  
	
  Breadth, moulded

  	
   

  	
  : about 14.00 metres

  
	
  Depth, moulded

  	
   

  	
  : about 5.80 metres

  

 

7

 

 

	
  Designed
  Draught moulded,

  	
   

  	
  : about 4.2
  metres

  
	
  Scantling
  Draught moulded

  	
   

  	
  : about 4.50
  metres

  
	
  Deadweight
  at design draught moulded

  	
   

  	
  : 2,400 DWT

  
	
  Capacity of
  Cargo tanks & slops (98%)

  	
   

  	
  : 2,640 M3

  
	
  Capacity Water
  Ballast

  	
   

  	
  : 1,450 M3
  (95%)

  
	
  Garage total
  surface

  	
   

  	
  : about 320
  M2 

  

 

(b)           Propulsion
Machinery

The VESSEL
shall be equipped, in accordance with the Specification, with one (1) set
of WARTSILA 6L26 Main Engine MCR of 2040 KW at 1000 rpm

 

4.             GUARANTEED SPEED

 

The SELLER guarantees that the trial speed at
the designed draft moulded of approx. 4.20 meter at CSR (85% MCR) of the main
engine is to be not less than 12 knots.

 

The speed
shall be corrected for wind speed and shallow water effect. The correction method
of the speed shall be as specified in the Specification.

 

5.             GUARANTEED DEADWEIGHT

 

The SELLER
guarantees that the VESSEL is to have a deadweight of not less than 2,400
metric tons at the design draught moulded of 4.20 metres in sea water of 1.025
specific gravity.

 

The term, “Deadweight”, as used in this
Contract, shall have the meaning as defined in the Specification.

 

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
BUYER’s supervisor(s), or the party authorized by the BUYER, and the
Classification Society Surveyor.  

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

 

6.             GUARANTEED FUEL CONSUMPTION

 

The SELLER
guarantees that the fuel oil consumption of the Main Engine is not to exceed
what the Main Engine manufacturer specifies in grams/kw/hour (subject to a
tolerance of +5%) at MCR at shop test based on using a fuel oil type of
standard calorific value as specified by the engine manufacturer.

 

7.             GUARANTEED CARGO TANKS CUBIC CAPACITY

 

The SELLER
guarantees that the VESSEL will have a total capacity of cargo oil tanks
including slop tanks, which shall not in any event be less than 2,640 M3
at full levels (i.e. 98% volume of cargo tanks including slop tanks). The
capacity shall be based on the calculated value as stated in the trim and
stability booklet approved by the Classification Society or the competent
Authority of the Flag State without actual measurement.

 

8.             SUBCONTRACTING

 

The SELLER may, at its sole discretion and responsibility, subcontract
any portion of the construction work of the VESSEL to experienced
subcontractors, provided however that any subcontracting of

 

8

 

main hull
structure or superstructures shall require the prior written approval of the
Classification Society and of the Buyer (however the latter’s approval shall
not be unreasonably withheld) before work commences.

 

However steel
construction delivery and final assembly into the VESSEL of any such work
subcontracted shall be at the SELLER’s Shipyard. The SELLER shall always remain
fully responsible for such subcontracted work. The SELLER shall remain
responsible for compliance with the obligations of this Contract as if there
had been no sub-contracting.

 

In its
contracts with its subcontractors and suppliers, the SELLER shall always ensure
reasonable time margins so as to avoid delays in the progress of the
construction of the VESSEL.

 

9.            REGISTRATION

 

The VESSEL
shall be registered under the Greek flag by the BUYER at its own cost and
expense pursuant to the laws of Greece concurrently with the time of delivery
and acceptance.

 

9

 

ARTICLE III
- CONTRACT PRICE AND TERMS OF PAYMENT

 

1.                                     CONTRACT PRICE

 

The purchase price of the VESSEL is EURO 6,835,000.00 (Euro Six
Million Eight Hundred and Thirty Five Thousand Only) net receivable by the
SELLER and is exclusive of the cost of BUYER’s Supplies as provided in
Article XVII and in the Specification, and shall be subject to upward or
downward adjustment, if any, as hereinafter set forth in this Contract.

 

2.                                     CURRENCY

 

Any and all
payments by the BUYER to the SELLER under this Contract shall be made in EURO
and directly to the SELLER.

 

3.                                     TERMS OF PAYMENT

 

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

 

(a)                                1st
Instalment

 

The sum of
EURO 683,500.00 only (Euro Six Hundred Eighty Three Thousand and Five Hundred)
corresponding to 10% of the Contract Price, shall be paid by the BUYER in
accordance with the provisions of Article III.4 (a).

 

(b)                                 2nd
Instalment:

 

The sum of
EURO 1,025,250.00 (Euro One Million Twenty Five Thousand Two Hundred and Fifty
Only) corresponding to 15% of the Contract Price, shall be paid upon the
cutting of the first steel plate of the VESSEL in the SELLER’s workshop in
accordance with the provisions of Article III.4 (b). The cutting of the
first steel plate shall be notified by the SELLER with a telex, telefax, letter
or email notice to the BUYER stating that the said steel catting has been
carried out accompanied by a copy of the written confirmation issued by the
Classification Society to the effect that the said steel cutting has been
carried out. The SELLER shall send to the BUYER a demand by telex, tele-fax, or
email for payment of this instalment.

 

However this
instalment shall not be payable earlier than four (4) months after the
date this contract becomes effective.

 

(c)                                  3rd
Instalment;

 

The sum of
EURO 1,025,250.00 (Euro One Million Twenty Five Thousand Two Hundred and Fifty
Only) corresponding to 15% of the Contract Price shall be paid upon keel-laying
of the VESSEL in accordance with the provisions of Article III.4 (c). The
keel-laying shall be notified by the SELLER with a telex, telefax, letter or
email notice to the BUYER stating that the said keel-laying has been carried
out accompanied by a copy of the written confirmation issued by the
Classification Society to the effect that the keel-laying has been carried out.
The SELLER shall send to the BUYER a demand by telex, telefax, or email for
payment of this instalment.

 

10

 

(d)                                 4th
Instalment:

 

The sum of
EURO 1,367,000  (EURO One Million Three
Hundred and Sixty Seven Thousand Only) corresponding to 20% of the Contract Price shall be paid upon
launching of the VESSEL in accordance with the provisions of Article III.4
(d). The launching of the VESSEL shall be notified by the SELLER with a telex,
telefax, letter or email notice to the BUYER stating that the launching of the
VESSEL has been successfully carried out with written confirmation issued by
the Classification Society. The SELLER shall send to the BUYER a demand by
telex, telefax, or email for payment of this instalment.

 

(e)                                  5th
Instalment:

 

The sum of
EURO 2,734,000.00 (Euro Two Million Seven Hundred and Thirty Four Thousand
Only) corresponding to 40% of the Contract Price, plus any increase or minus
any decrease due to the modifications of the Specification and/or the
adjustments of the Contract Price hereunder, shall be paid by the BUYER to the
SELLER on the date for delivery of the VESSEL in accordance with the provisions
of Article III.4 (e) and upon the signing of the Protocol of Delivery
and Acceptance by both parties. The SELLER shall send to the BUYER a demand by
telex, telefax, or email for this instalment ten (10) days prior to the
scheduled date of delivery of the VESSEL.

 

4.                                      METHOD OF PAYMENT

 

(a)                                  1st
Instalment

 

The BUYER
shall remit the amount of this instalment in accordance with Article III,
Paragraph 3 (a) by telegraphic transfer to Romanian Commercial Bank,
Mehedinti Branch, as receiving bank nominated by the SELLER, for credit to the
account of the SELLER, IBAN RO21RNCB3500000000020021, so as to reach such
account no later than 5 banking days after receipt by the BUYER of the
following original documents:

 

(i)                                     the
SELLER’s Bank Guarantee provided for in Article III, paragraph 6

 

(ii)                                  the
SELLER’s invoice for the first instalment in duplicate.

 

(b)           2nd
Instalment

 

The BUYER
shall remit the amount of this instalment in accordance with Article III,
Paragraph 3(b) by telegraphic transfer to Romanian Commercial Bank,
Mehedinti Branch, as receiving bank nominated by the SELLER, for credit to the
account of the SELLER, IBAN RO21RNCB3500000000020021 so as to reach such
account no later than 5 banking days after receipt by the BUYER of the
following original documents:

 

(i)                                     the
SELLER’s Bank Guarantee provided for in Article III.6

 

(ii)                                  the
SELLER’s invoice for the second instalment in duplicate

 

(iii)                               a
written confirmation issued by the Classification Society to the effect that
the cutting of the first steel plate has been carried out.

 

(c)                                  3rd
Instalment

 

The BUYER
shall remit the amount of this instalment in accordance with Article III,
Paragraph 3(c) by telegraphic transfer to Romanian Commercial Bank, Mehedinti
Branch, as receiving

 

11

 

bank nominated
by the SELLER, for credit to the account of the SELLER, IBAN
RO21RNCB3500000000020021 so as to reach such account no later than 5 banking
days after receipt by the BUYER of the following original documents:

 

(i)                                     the
SELLER’s Bank Guarantee provided for in Article III.6

 

(ii)                                  the
SELLER’s invoice for the third instalment in duplicate

 

(iii)                               a
written confirmation issued by the Classification Society to the effect that
the keel-laying has been carried out.

 

(d)                                 4th
Instalment

 

The BUYER
shall remit the amount of this instalment in accordance with Article III,
Paragraph 3(d) by telegraphic transfer to Romanian Commercial Bank, Mehedinti
Branch, as receiving bank nominated by the SELLER, for credit to the account of
the SELLER, IBAN RO21RNCB3500000000020021 so as to reach such account no later
than 5 banking days after receipt by the BUYER of the following original
documents;

 

(i)                                     the
SELLER’s Bank Guarantee provided for in Article III.6 

 

(ii)                                  the
SELLER’s invoice for the fourth instalment in duplicate

 

(iii)                               a
written confirmation issued by the Classification Society to the effect that
the launch of the vessel has been carried out.

 

(e)                                  5th
Instalment (Payable upon delivery of the VESSEL)

 

The BUYER
shall on the Delivery Date remit the amount of this instalment in accordance
with Article III, Paragraph 3(e) by telegraphic transfer Romanian
Commercial Bank, Mehedinti Branch, as receiving Bank nominated by the SELLER,
for credit to the account of the SELLER, IBAN RO21RNCB3500000000020021.
Immediately upon confirmation of receipt of this fifth instalment by the
SELLER’s Bank and any upward adjustment in conformity with this Contract, the
SELLER shall deliver the VESSEL and all the Delivery Documents to the BUYER.

 

(f)                                    Upon
completion of each event entitling the SELLER to an instalment of the Contract
Price pursuant to paragraph 3 above, the SELLER shall send by telefax to the
BUYER, an invoice specifying the amount of the instalment then due and shall
send originals of such invoice in duplicate together with the other documents
specified in paragraphs 4 (a)-(d) of this Article III by air courier
to the BUYER. The BUYER shall be deemed to have received such invoice and documents
five (5) banking days after delivery to the air courier.

 

5.                                      SECURITY FOR PAYMENT OF INSTALMENTS
BEFORE DELIVERY

 

The BUYER shall, in accordance
with the provisions of Article XIX of this contract, provide the SELLER
with Bank Guarantee(s) issued by a first class international bank, and in a
form and wording acceptable to SELLER’s bank and the SELLER. The Bank
Guarantee(s) shall guarantee the BUYER’s obligations for payment of the 2nd,
3rd, 4th and 5th instalments of the contract and shall be in an
amount equal to the 90% of the Contract Price. At the option of the BUYER
separate Bank Guarantees may be issued covering payment of each one of the
aforesaid four instalments.

 

12

 

6.             REFUNDS

 

All payments made by the BUYER
prior to delivery of the VESSEL shall be in the nature of advance to the
SELLER. All bank charges in relation to such payments shall be for the account
of the BUYER. In the event the VESSEL is rejected by the BUYER after the sea
trials or this Contract is rescinded or cancelled by the BUYER in accordance
with the specific terms of this Contract permitting such rescission or
cancellation, the SELLER shall refund to the BUYER in EURO the full amount of
all sums already paid by the BUYER to the SELLER under this Contract together
with interest thereon or without interest, as the case may be in accordance
with the terms of this Contract.

 

As security to the BUYER the
SELLER shall provide the BUYER in respect of each instalment of the Contract
Price with a Bank Guarantee issued by a first class bank acceptable in all
respects to BUYER’S bank and the BUYER for the 1st, 2nd, 3rd, and 4th
instalments respectively. Such Bank Guarantee will guarantee the SELLER’S obligation
for refunding to the BUYER instalments of 1st, 2nd, 3rd, and 4th already
received by the SELLER, through SELLER’S finance bank, when any such instalment
becomes refundable to the BUYER, in accordance with the terms of this Contract.
BUYER’S acceptance of the identity of the bank and the form and wording of the
Bank Guarantees, which to be provided by the SELLER pursuant to this
Article III.6, shall be a condition precedent to this Contract becoming
effective.

 

The issuance and delivery to
the BUYER of the relevant Bank Guarantee will be a pre-condition to the BUYER’s
relevant payment obligation becoming effective. If it will be requested that
the SELLER’S Bank Guarantee shall be re -guaranteed by a third bank, this will
be for the cost of the BUYER.

 

7.                                      RIGHTS OF SET-OFF

 

No payment under this contract
shall be delayed or withheld by the BUYER on account of any dispute or
disagreement of whatever nature arising between the parties.

 

13

 

ARTICLE IV - ADJUSTMENT OF CONTRACT PRICE

 

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

 

1.                                      DELIVERY

 

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

 

(b)                                 If
delivery of the VESSEL is delayed more than thirty (30) days then in such
event, beginning at twelve o’clock midnight of the thirtieth (30th) day after the
Delivery Date, up to the ninetieth (90th) day at twelve o’clock midnight the
Contract Price shall be reduced by deducting EURO 1,500.00 (Euro One Thousand
and Five Hundred) per day of delay.

 

(c)                                  If
delivery of the vessel is delayed more than ninety (90) days in such event
beginning at twelve o’clock midnight of the ninetieth day after the Delivery
Date the Contract price shall be reduced by deducting EURO 2,000.00 (Euro Two
Thousand) per day of delay.

 

Unless the
parties hereto agree otherwise, the total reduction in the Contract Price shall
be deducted from the 5th instalment of the Contract Price and in any
event (including the event that the BUYER consents to take delivery of the
VESSEL after the expiration of the 120 days period of delay as described in
paragraph 1 (d) of this Article) the total reduction in the Contract price
shall be no more than would be the case for a delay of ninety (90) days
counting from midnight of the 30th day after the Delivery Date at
the above specified rates of reduction, i.e. it shall be no more than a maximum
deduction of EURO 150,000.00 (Euro One Hundred and Fifty Thousand)

 

(d)                                 If
the delay in delivery of the VESSEL continues for a period of more than 120
days from the Delivery Date then, in such event, and after such period has
expired, the BUYER may, at its option, rescind this Contract by serving upon
the SELLER a notice of rescission by telex, telegram or cable to be confirmed
by a registered letter via airmail directed to the SELLER at the address given
in this Contract. Such rescission shall be effective as of the date the notice
thereof is received by the SELLER, and the SELLER, upon receipt of such a
notice, shall promptly refund telegraphically to the BUYER in immediately
available EURO all the instalments paid by the BUYER as hereinafter provided
for in Paragraph 2 of Article XI hereof, unless the SELLER proceeds to
arbitration under the provisions of Article XIII or the situation is
otherwise disputed. The transfer and other Bank charges of such refund shall be
for the SELLER’s account. If the BUYER shall rescind the contract in the
circumstances described above, the SELLER shall have no obligations to pay any
liquidated damages to the BUYER.

 

The SELLER
may, at any time after the expiration of the aforementioned 120 days delay in
delivery, if the BUYER has not served the notice of rescission as above
provided, demand in writing that the BUYER makes an election, in which case the
BUYER shall, within fourteen (14) days after such demand is received by the
BUYER, either notify the SELLER of its intention to rescind this Contract or consent to the delivery of
the VESSEL at an agreed future date. If the BUYER shall not make an election
within fourteen (14) days as provided hereinabove, the BUYER shall be

 

14

 

 

deemed to have accepted such extension of the
Delivery Date to the future Delivery Date indicated by the SELLER.

 

It is agreed by the parties that, if the
VESSEL is not delivered by such future date, the BUYER shall have the same
right of acceptance or rescission upon the same terms as hereinabove provided
and the acceptance of such future date will be without prejudice to the right
of the BUYER to liquidated damages under this Article IV in the event that
it does not rescind this Contract.

 

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

 

2.                                      SPEED

 

(a)                                  The
Contract Price shall not be affected or changed by reason of the actual speed,
as determined by the trial run, being less than three/tenths (3/10) of one (1) knot
in actual speed below the guaranteed speed of the VESSEL.

 

However commencing with and including such
deficiency of three/tenths (3/10) of one (1) know in actual speed below
the guaranteed speed of the VESSEL, the Contract Price shall be reduced as
follows (but disregarding fractions of one/tenth (1/10) of a knot).

 

from 0.30 knots to 0.39 knots: a total sum of
EURO 5,000.00 (Five Thousand)

from 0.40 knots to 0.49 knots: a total sum of
EURO 10,000.00 (Ten Thousand)

from 0.50 knots to 0.59 knots: a total sum of
EURO 15,000.00 (Fifteen Thousand)

from 0.60 knots to 0.69 knots: a total sum of
EURO 20,000.00 (Twenty Thousand)

from 0.70 knots to 0.79 knots: a total sum of
EURO 25,000.00 (Twenty Five Thousand)

from 0.80 knots to 0.89 knots: a total sum of
EURO 30,000.00 (Thirty Thousand)

from 0.90 knots to 0.99 knots: a total sum of
EURO 35,000.00 (Thirty Five Thousand)

from 1.00 knots to 1.09 knots: a total sum of
EURO 40,000.00 (Forty Thousand)

from 1.10 knots to 1.19 knots: a total sum of
EURO 50,000.00 (Fifty Thousand)

 

(c)                                  If the deficiency in
actual speed of the VESSEL during the trial run is more than twelve/tenths
(12/10) of a know below the guaranteed speed of the VESSEL, then the BUYER may,
at his option, reject the VESSEL, and rescind this Contract in accordance with
the provisions of Article XI of this Contract, or accept the VESSEL with a
total reduction of EURO 50000(Euro Fifty Thousand).

 

3.                                      FUEL CONSUMPTION:

 

(a)                                  The
Contract Price shall not be affected or changed by reason of the fuel
consumption of the VESSEL, as determined during the shop tests at the Engine
manufacturer in accordance with the Specification, being less than or equal to
5%, in excess of the guaranteed fuel consumption.

 

(b)                                 However,
should the actual fuel consumption as aforesaid exceed 5% of the guaranteed
fuel consumption, the Contract Price shall be reduced by the sum of EURO
20,000.00 (Euro Twenty Thousand) for each full one percent (1%) increase in
fuel consumption above the said 5% up to a maximum of 8%.

 

(c)                                  If
such actual fuel consumption exceeds 8% of the guaranteed fuel consumption, the
BUYER may, at its option, reject the VESSEL and rescind this Contract in
accordance

 

15

 

with the provisions of Article XI of
this Contract or accept the vessel with a total reduction of the total price of
EURO 60,000.00 (Euro sixty thousand)

 

4.                                      DEAD-WEIGHT

 

(a)                                  In
the event that the actual dead-weight of the VESSEL as determined in accordance
with the Specification is less than or in excess of the guaranteed dead-weight
of the VESSEL, the Contract Price shall either be reduced by the sum of EURO
500.00 (Euro Five Hundred) for each full metric ton of such deficiency being
more than 50 metric tons, up to a maximum deficiency of 150 metric tons or
increased by the sum of EURO 500.00 (Euro Five Hundred) for each full metric
ton of such increase being more than 50 metric tons but up to a maximum
150tons, that is a maximum increase of EURO 50,000.00 (Euro Fifty Thousand).

 

(b)                                 In
the event of such deficiency in the actual dead-weight of the VESSEL being 150
metric tons or more, then, the Buyer, at its option, may reject the VESSEL and
rescind this Contract in accordance with the provisions of Article XI
hereof or accept the VESSEL at a reduction in the Contract Price as above
provided for 150 metric tons only, that is, at a total reduction of EURO
50,000.00 (Euro Fifty Thousand).

 

5.                                      CARGO TANKS CUBIC CAPACITY

 

(a)          In the event that the
actual cargo tanks cubic capacity (including slops tanks) of the VESSEL as
determined in accordance with the Specifications is less than the guaranteed
cargo tanks cubic capacity (including slops tanks) of the VESSEL, the Contract
Price shall be reduced, however, if such deficiency does not exceed 50 Cubic
metres, the Contract Price shall not be affected or changed by the reason of
such deficiency.

 

(b)         In the event of such
deficiency in the actual cargo tanks cubic capacity (including slops tanks) of
the VESSEL being more than such 50 cubic metres, the Contract Price shall be
reduced by the sum of EURO 500.00 (Euro Five Hundred) for each full cubic metre
(disregarding all fractions of one cubic metre) from such 50 cubic metres
deficiency.

 

(c)          In the event of such
deficiency in the actual cargo tanks cubic capacity (including slops tanks) of
the VESSEL being 150 cubing metres or more, then, the BUYER may, at its option,
reject the VESSEL and rescind this Contract in accordance with the provisions
of Article XI hereof or may accept the VESSEL at a reduction in the
Contract Price as above provided for only, that is, at a total reduction of
EURO 50,000.00 (Euro Fifty Thousand).

 

(d)         In the event that there
will be a deficiency both in the actual deadweight or the VESSEL up to 150
metric tons and in the actual cargo tank cubic capacity up to 150 cubic metres
the Contract Price shall be reduced only once on the basis of the larger of the
two deficiencies by the sum of EURO 500 for each full metric ton of deadweight
deficiency or by each cubic meter of cargo tank cubic capacity deficiency as
the case may be.

 

6.                                      DESIGN RESPONSIBILITY

 

It is expressly understood and agreed that the SELLER shall be solely
responsible for the design of the VESSEL by its subcontractor Callatis Modeling
and Trading.  Notwithstanding that all
test results, plans and drawings for the VESSEL shall (as detailed hereafter)
be submitted to and approved by the Classification Society and the BUYER, the
SELLER shall at all times warrant the accuracy and the sufficiency of the
VESSEL s design to permit the VESSEL to meet the requirements of this Contract
and the Specification.

 

16

 

7.                                      EFFECT OF RESCISSION

 

It is
expressly understood and agreed by the parties hereto that in any case, if the BUYER rescinds this
Contract under this Article, the BUYER shall not be entitled to any liquidated damages, but the parties shall
follow the provisions of Article XI hereof.

 

17

 

ARTICLE V

 

APPROVAL
OF PLANS AND DRAWINGS AND INSPECTION DURING

CONSTRUCTION

 

1.                                      APPROVAL OF PLANS AND DRAWINGS:

 

(a)        The SELLER shall submit to the BUYER, by e-mail,
copies of each of the plans and drawings to be submitted thereto for its approval
at its address as set forth in Article XVIII hereof.  The BUYER shall, within five (5) days
after receipt thereof, return to the SELLER, by e-mail, one copy of such plans
and drawings with the BUYER’ s approval or comments written thereon, if any.  A list of the plans and drawings to be so
submitted to the BUYER shall be mutually agreed upon between the parties hereto.  The Buyer’s comments shall not conflict with
Class rules and regulations and or with the Specification.

 

The SELLER is entitled to refuse any
amendment which will, in the judgment of the SELLER, cause unreasonable delay
or disturbance to the SELLER’S construction schedule and/or planning or
programme.

 

(b)       When and if the Representative (as
hereinafter defined) shall have been sent by the BUYER to the Shipyard in
accordance with Paragraph 2 of this Article, the SELLER may submit the
remainder, if any, of the plans and drawings in the agreed list, to the
Representative for his approval, unless otherwise agreed upon between the
parties hereto.

 

The Representative shall return to the SELLER
one (1) copy of such plans and drawings with his approval or comments
written thereon, if any, in the manner it would not cause any delay to the
building schedule (max 5 days).

 

Approval by the Representative of the plans
and drawings duly submitted to him shall be deemed to be the approval of the
BUYER for all purposes of this Contract.

 

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

 

(d)       Approval by the BUYER and/or its
representative of plans and drawings submitted by the SELLER shall not affect SELLER’S
obligations and BUYER’s rights under this Contract.

 

2.                                      APPOINTMENT OF BUYER’S
REPRESENTATIVES:

 

The BUYER may send to and maintain at the
Shipyard, at the BUYER’s own risk and expense, one or more representative who
shall be duly authorized in writing by the BUYER (hereinafter called the
“Representative”) to act on behalf of the BUYER in connection with the
supervision of construction of the VESSEL, modifications of the Specifications,
approval of the plans and drawings, attendance to the tests and inspections
relating to the VESSEL, its machinery, equipment and outfitting, and any other
matters for which he is specifically authorized by the BUYER. However, the
BUYER shall nominate one of the representatives as a single responsible party.

 

3.                                      INSPECTION BY REPRESENTATIVES:

 

The necessary inspections of the VESSEL, its
machinery, equipment and out fittings shall be carried out by the BUYER’s
Representative(s), the Classification Society, other regulatory bodies as
mentioned in the Specification and/or an 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 this Contract
and the Specification.

 

18

 

4.                                      RIGHTS OF BUYER’S REPRESENTATIVES

 

The
BUYER’s Representative shall, in working hours during the construction until
delivery and acceptance of the VESSEL have the unrestricted free and prompt
access to the VESSEL, her equipment and accessories and to any other place when
and where work is in progress as well as the right to inspect and attend the
VESSEL, and all work in progress, materials utilized and quality of work in
connection with the construction thereof wherever such work is being done within
Shipyard’s premises or the premises of subcontractors of the SELLER or such
materials and equipment are stored, for the purpose of determining that the
VESSEL is being constructed in accordance with the terms of this Contract and
the Specifications and approved Plans.  BUYER’s
representatives shall be allowed to inspect/visit the subcontractors.

 

The
construction of the VESSEL, its machinery, equipment and outfitting shall be
subjected, throughout the entire period of construction, to quality control by a
quality control department of Shipyard.

 

The
SELLER shall give the Representatives reasonable advance notice of the date and
place but at least 24 hours advance notice of tests and inspections within the
Shipyard stating particulars of any tests or inspections which may be attended
by the Representatives provided that in exceptional circumstances the manner in
which such notice is given may be modified by mutual agreement.

 

The
SELLER shall at all times make available to the BUYER’s Representative an Overall
Building Schedule from which a Monthly Schedule will be extracted.  With reference to the Monthly Schedule, a
weekly Inspection Schedule will be devised and presented to the BUYER’s
Representative the Friday before the relevant week.  This Inspection Schedule must be
reasonable at all times in order to allow the BUYER’s supervisors to cany out
their duties properly and inspections must be spread over a reasonable time,
but to follow building schedule at the same rate.  In principle, no inspections to be applied on Saturdays and Sundays, unless
mutually agreed upon in order to meet the SELLER’s schedule.

 

For
tests or inspections outside the Shipyard sufficient advance notice to allow
for the Representatives to arrange transportation shall be given.  This notice shall be as per Specification.  The SELLER to provide the Representative with
copies of all test and inspection results as may be reasonably required.

 

Failure
of the Representative to be present at the tests and inspections after due
notice shall be deemed to be a waiver of the BUYER’s right to be present, and
in such case the BUYER’s representative shall be obliged to accept the results
of such tests and inspections on the basis of the SELLER’s, the Classification
Society’s and the maker’s reports on the said result.

 

The
Representative shall notify the SELLER promptly, in writing, if, in his
opinion, any construction or property, which is discovered does not or will not
conform to this Contract and the Specification and/or approved plans.

 

The
decision, approval or advice of the BUYER’s Representative shall be deemed to
have been given by the BUYER.  The BUYER’s
Representative shall notify the SELLER promptly in writing of his discovery of
any construction, quality of work or materials, which he believes do not or
will not conform to the requirements of the Contract and/or the Specifications
and/or Plans and likewise advise and consult the SELLER on all matters
pertaining to the construction of the VESSEL, as may be required by the SELLER,
or as he may deem necessary.

 

If
the Representative shall notify the SELLER that any construction, quality of
work or materials does not or will not conform to this Contract and/or the
Specification, the SELLER shall take steps that will result in conforming the
VESSEL to this Contract and/or the Specification as appropriate, if the SELLER
agrees with his view.  Any disagreement
pertaining to Class or Rules and Regulations

 

19

 

specified
in the Specification shall if possible be resolved with the intervention of
Class, falling which in accordance with Article XII herein.

 

The
inspection thus exercised on behalf of the BUYER shall not alter or diminish
the responsibility of the SELLER to construct the VESSEL in accordance with the
Contract, the Specification and Plans with regard to the time of delivery or
quality of the VESSEL.

 

5.                                      FACILITIES

 

The
SELLER shall furnish the Representative and his assistant(s) with adequate
office space, equipped with desks, chairs, tables, filing cabinets,
international line for telefax, internal and external telephone extension or in
the immediate vicinity of the Shipyard as may be necessary to enable them to
effectively carry out their duties.

 

The
BUYER shall pay at the SELLER’S normal rate of charges, the call charges in
respect of telephone,
telefax and the cost of any additional office equipment or furniture over that
above referred to.

 

With
an ample prior notice by the BUYER, the SELLER shall help in finding for the
Representative(s) suitable
and convenient living quarters nearest possible to the Shipyard, which shall be
provided for the entire construction period, all at the BUYER’S expense.

 

6.                                      LIABILITY OF SELLER:

 

The
Representative and his assistant(s) shall at all times be deemed to be the
employees of the BUYER and not of the SELLER. 
The SELLER shall be under no liability whatsoever to the BUYER, the
Representative or his assistant(s) for personal injuries, including death,
suffered during the time when he or they are on the VESSEL, or within the
premises of either the 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 its employees or agents or subcontractors.  Nor shall the SELLER be under any liability
whatsoever to the BUYER, the Representative or his assistant(s) for damage to,
or loss or destruction of property of the BUYER or of the Representative or his
assistant(s) unless such damage, loss or destruction were caused by a gross
negligence of the SELLER, or of any of its employees or agents or
subcontractors.

 

The
BUYER shall defend, protect, indemnify and hold harmless the SELLER or any of
its employees, agents or sub-contractors from and against all proceedings,
costs, claims, expenses and liabilities whatsoever including attorneys fees,
arising out of or in respect of personal injuries (including death) or for
damage to or for loss of or destruction of property suffered as aforesaid by
the Representative and any assistant or to the BUYER’S employees and agents
except those caused by the gross negligence of the SELLER or any its employees,
agents or sub-contractors.

 

7.             RESPONSIBILITY OF BUYER:

 

The
BUYER shall undertake and assure that the Representative shall carry out his
duties hereunder in accordance with the Contract. Specification and the normal
shipbuilding practice of the SELLER and in such a way as to avoid any
unnecessary increase in building cost, delay in the construction of the VESSEL,
and/or any disturbance in the construction schedule of the SELLER.  The BUYER’s Representative shall abide by the
work rules and regulations prevailing at the premises of the SELLER and
its subcontractors and explanation of which in English shall be provided in
writing to Representative.

 

The
BUYER’s Representative shall, within the limits of the authority conferred upon
him by the

 

20

 

BUYER,
make decisions or give advice to the SELLER on behalf of the BUYER promptly on
all problems arising out of, or in connection with the construction of the
VESSEL and generally act in a reasonable manner with a view to cooperating with
the SELLER in the construction process of the VESSEL.

 

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

 

21

 

ARTICLE VI
- MODIFICATIONS

 

1.                                      MODIFICATION
OF SPECIFICATION

 

The
Specification and Plans with which the VESSEL shall be constructed may be
modified and/or changed by written agreement of the parties hereto, provided
that the BUYER and The SELLER shall first agree, before such modifications
and/or changes are carried out, to alterations in the Contract Price, the
Delivery Date and other terms and conditions of this Contract and Specification
occasioned by or resulting from such modifications and/or changes.  The SELLER shall use every reasonable effort
to accommodate the wishes of the BUYER with regard to any modification of the
Specification and to mitigate the costs and other effects of such modification.

 

Such
agreement may be effected by exchange of letters signed by the authorised
representatives of the parties hereto or by either fax or telex, confirmed by
such letters, manifesting agreements of the parties hereto which shall
constitute amendments to this Contract and/or the Specification.

 

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

 

2.                                      CHANGE IN CLASS REQUIREMENTS, RULES AMD REGULATIONS AND REGULATORY
BODIES:

 

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

 

(a)                                  If such alterations or changes are compulsory
for the VESSEL, either of the parties hereto, upon receipt of such information,
shall promptly transmit details of the alterations or changes to the other in
writing, and the SELLER shall thereupon incorporate such alterations or changes
into the construction of the VESSEL, provided that the BUYER and the SELLER
shall first agree to reasonable adjustments required by the SELLER in the
Contract Price, the Delivery Date and other terms and conditions of this
Contract and the Specification occasioned by or resulting from such alterations
or changes.

 

(b)                                 If such alterations or changes are not
compulsory for the VESSEL, up to Vessel’s delivery date but the BUYER desires
to incorporate such alterations or changes into the construction of the VESSEL,
then the BUYER shall notify the SELLER of such intention.  The SELLER shall accept such alterations or
changes, provided that such alterations or changes will not, in the reasonable
judgment of the SELLER adversely affect the SELLER’S planning or programme in
relation to the SELLER’S other commitments and provided, further, that the
BUYER and the SELLER shall first agree to adjustments in the Contract Price,
the Delivery Date and other terms and conditions of this Contract and the
Specification occasioned by or resulting from such alterations or changes.

 

Agreements
as to such alterations or changes under this Paragraph shall be made in the
same manner as provided in Paragraph 1 of this Article for modifications
or changes to the Specification.

 

22

 

3.                                      SUBSTITUTION
OF MATERIALS:

 

In the event that any of the materials and/or equipment required by the
Specification or otherwise under this Contract for the construction of the
VESSEL cannot be procured in time or are in short supply to maintain the
Delivery Date of the VESSEL, the SELLER may, provided that the BUYER shall so
agree first in writing, (such agreement not to be unreasonably withheld) supply
other materials and/or equipment of at least the same standard and quality in
accordance with the requirements of the Classification Society and of the
rules, regulations requirements with which the construction of the VESSEL must
comply in accordance with the terms of this Contract and the Specification.  Should the BUYER request certain equipment
which is more expensive than that one the SELLER suggested within those,
provided by the Makers list, then the respective price balance shall be on
BUYER’s account.  Any agreements as to
such substitution of materials under this Paragraph shall be made in the same
manner as provided in Paragraph 1 of this Article and shall, likewise,
include alterations in the Contract Price and other terms and conditions of
this Contract occasioned by or resulting from such substitution.

 

4.                                      PAYMENT FOR MODIFICATIONS:

 

The BUYER shall pay the SELLER the cost of all agreed modifications at
the time of delivery and acceptance of the VESSEL, or as may be otherwise
agreed.

 

23

 

ARTICLE VII - TRIAL AND ACCEPTANCE

 

1.                                      NOTICE

 

Taking to account that the VESSEL will be constructed at the SELLER’S
Shipyard and then taken via the Danube River to the Black Sea for trials and
delivery the following are confirmed by the SELLER:

 

(a)          The vessel will be, save
to any minor works, complete in construction and outfitting at the SELLER’s
shipyard prior to navigation to the Black Sea.

 

(b)         There is enough draft and
air draft under bridges on the river Danube for safe navigation between Turnu
Severin and Black Sea.

 

(c)          Sea trials will be
conducted in the Black Sea.

 

(d)         The delivery of the
VESSEL will take place in a suitable Romanian sea port at a safe berth safely
afloat.

 

(e)          If any grounding has
occurred until delivery or if any post sea-trial inspection/dry docking is
necessary, they will be carried out in a suitable Romanian sea port at the
SELLER’S cost and expense.

 

When the VESSEL has been fully equipped and painted and all quay side
tests have been carried out and the VESSEL is in every respect completed
according to the relevant provisions of the Specification the SELLER shall give
the BUYER at least (30) days approximate prior notice either by fax or telex,
confirmed in writing, of the time, place and programme of the sea trials of the
VESSEL, and the BUYER shall promptly acknowledge receipt of such notice.

 

The BUYER shall be entitled to have their Representative(s) on board
the VESSEL to witness such sea trials.

 

Failure in attendance of the Representative of the BUYER at sea trials
of the VESSEL after due notice to the BUYER as above provided shall be deemed
to be a waiver by the BUYER of its right to have their Representative(s) on
board the VESSEL during sea trials, and the SELLER may conduct sea trials
without the Representative of the BUYER being present provided that a
representative of the Classification Society shall be present throughout such
sea trials on board the VESSEL, and in such case the BUYER shall be obliged to
accept the VESSEL on the basis of a certificate of the SELLER endorsed by the
Classification Society that the VESSEL, on sea trials is found to conform to
this Contract and the Specificiation.

 

2.                                      WEATHER CONDITIONS:

 

The sea trials shall be carried out under weather conditions in
accordance with the Specification.

 

In the event of unfavourable weather on the date specified for the
trial run, the same shall take place on the first available day thereafter on
which weather conditions permit.  The
SELLER shall give adequate prior notice of commencement of such postponed sea
trial so as to give the BUYER’s Representative and the representative of the
Classification Society sufficient time to attend the postponed trial.

 

It is agreed that, if during the trial run of the VESSEL, the weather
or sea conditions should suddenly become so unfavourable that orderly conduct
of the trial run can no longer be continued, the sea trial shall be
discontinued and postponed until the first favourable day thereafter, unless
the BUYER shall assent in writing to acceptance of the VESSEL on the basis of the
trial run already made before such discontinuance has occurred.

 

24

 

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

 

3.                                      HOW CONDUCTED:

 

The Sea Trial(s) shall be conducted according
to the Program of the Sea Trials elaborated on basis of the Classification Society
and Technical Specification provisions and shall be agreed upon with the
Classification Society and the BUYER in due time.

 

The Sea Trial(s) shall be performed at the
risk and expense of the SELLER, who will provide all necessary crew, fuel, and
gas oil water, pilotage, all harbour duties and tug expenses as well as any
other expenses in connection with the Sea Trial(s).  All lubricants are to be BUYER’s delivery and
at BUYER’s expense.

 

Any lubricants delivered by the BUYER and
consumed before and in connection with Sea Trial(s) and up to the time of
delivery of the Vessel shall be measured and the BUYER shall be credited for
the quantity of consumed lubricants against presentation of supplier’s invoice.

 

4.                                      METHOD OF ACCEPTANCE OR REJECTION:

 

(a)                                  Upon
completion of the sea trials of the Vessel, the SELLER shall give immediate
notice to the BUYER in writing of completion of the sea trial, provided that
the SELLER considers that the results of the sea trials indicate conformity of
the VESSEL to this Contract and the Specification, such notice shall be
accompanied by test results in sufficient detail to enable the Buyer to make
its own analysis.  The BUYER shall within
maximum there (3) working days after receipt of such notice from
the SELLER notify the SELLER in writing, of its acceptance or rejection of the
VESSEL.

 

Should the results of the trial run indicate
that the VESSEL, or any part or equipment thereof, does not conform to the
requirements of this Contract and/or the Specification and/or Class then
the SELLER shall take necessary steps to correct such non-conformity
forthwith.  Upon completion of correction
of such non-conformity, the SELLER shall conduct a further test and/or seatrial
to enable the correction to be verified with the same provisions of the
preceding paragraph relating to SELLER’s notice and BUYER’s acceptance or
rejection of the VESSEL being also applicable in such an event.

 

(b)                                 In
the event that the BUYER rejects the VESSEL, the BUYER shall indicate in its
notice of rejection in what respect the VESSEL, or any part or equipment hereof
does not conform to this Contract and/or the Specification and the reasons
based on which the SELLER cannot remedy the defect.

 

Should any breakdowns occur during the Sea
Trials, entailing their interruption or irregular performance, and breakdown
cannot be repaired by the normal means available on board, the trial to
affected will be cancelled and will be repeated by at the expense of the
SELLER.  The time period required for the
repairs will produce and extension of the delivery date to be agreed upon by
the BUYER and SELLER if caused by events which permit extension of the delivery
date under Article IX.  If the
breakdown is repaired by normal means available on board, the Sea Trial
will be continued and considered as a valid trial.

 

(c)                                  In
the event that the BUYER fails to notify the SELLER in writing, of the
acceptance of or the rejection together with the reason there for of the VESSEL
within the period as provided in the above sub-paragraphs (a) or (b), the
BUYER shall be deemed to have accepted the VESSEL.

 

25

 

(d)                                 If
the BUYER rejects the VESSEL pursuant to this Article, the SELLER shall be
entitled to dispute such rejection in accordance with Article XIII of this
Contract.

 

5.                                      EFFECT OF ACCEPTANCE:

 

The BUYER’s acceptance of the VESSEL as above provided, shall be final
and binding so far as conformity of the VESSEL to this Contract and the
Specification is concerned and shall preclude the BUYER from refusing formal
delivery of the VESSEL as hereinafter provided, if the SELLER complies with all
other procedural requirements for delivery as provided in Article VIII
hereof, however the BUYER’s acceptance of the VESSEL, shall not in any way
affect the BUYER’s rights under Article X of this Contract.

 

6.                                      DISPOSAL OF SURPLUS CONSUMABLE STORES:

 

Should any HFO or DFO furnished by the SELLER for the trial run 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 original purchase Price thereof
(net of any available discounts), and payment by the BUYER shall be effected
upon delivery of the VESSEL.  Upon
delivery of the VESSEL all fresh water tanks shall be full without cost to the
BUYER.  Similarly, any L.O. or Hydraulic
Medium used for flushing or consumed up to the time of delivery, which has been
supplied by the BUYER, will be paid by the SELLER to the BUYER at BUYER’S
original purchase Price thereof net of any available discounts but not higher
than the domestic prices in Romania.

 

26

 

ARTICLE
VIII - DELIVERY

 

1.             TIME
AND PLACE

 

The VESSEL shall be delivered
safely afloat at a safe and accessible berth in a Romanian sea port by the SELLER
to the BUYER on or
before                                                                  
after the Contract becoming effective after completion of satisfactory trial run(s)
and acceptance by the BUYER pursuant to Article VII hereof (together with all
certificates and documents listed in Paragraph 3 below in the condition therein
stated) except that, in the event of delays in the construction of the VESSEL
or any performance required under this Contract due to causes which under the
terms of this Contract permit postponement of the date for delivery, the
aforementioned date for delivery of the VESSEL shall be postponed accordingly
up to the maximum extent permitted by the said terms.  The aforementioned date, or such later date
to which the requirement of delivery is postponed pursuant to such terms or by
express written agreement of the Parties, is herein called the “Delivery Date”.

 

2.             WHEN
AND HOW EFFECTED

 

Provided that the BUYER shall
have fulfilled all of its obligations stipulated under this Contract, delivery
of the VESSEL shall be effected forthwith by the concurrent delivery by each of
the Parties to the other of the PROTOCOL OF DELIVERY AND ACCEPTANCE,
acknowledging delivery of the VESSEL by the SELLER and acceptance thereof by
the BUYER.  The form of PROTOCOL OF
DELIVERY AND ACCEPTANCE shall be as set out in Appendix III to this Contract.

 

3.             DOCUMENTS
TO BE DELIVERED TO BUYER

 

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

 

(a)                                  PROTOCOL
of Trials of the VESSEL made pursuant to the Specification.

 

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

 

(c)                                  PROTOCOL
OF STORES OF CONSUMABLE NATURE referred to under Paragraph 6 of Article VII
hereof, including the original purchase Price thereof.

 

(d)                                 ALL
CERTIFICATES (as specified in the Specification) required to be furnished upon
delivery of the VESSEL pursuant to this Contract and the Specification.  It is agreed that if, through no fault on the
part of the SELLER, the classification certificate and/or other certificates
are not available at the time of delivery of the VESSEL, provisional certificates
shall be accepted by the BUYER, provided that the SELLER shall furnish the
BUYER with the formal certificates as promptly as possible after such formal
certificates have been issued.  All such
certificates shall be “clean” i.e. without any subjects or conditions,
recommendations or notations.

 

(e)                                  BUILDER’S
CERTIFICATE, in two originals, duly notarised and legalised by Apostil.

 

(f)                                    DECLARATION
OF WARRANTY of 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 burden in the nature of duties, taxes or charges imposed by the
governmental authorities in Romania, as well as of all liabilities of the
SELLER to its

 

27

 

suppliers, subcontractors, employees and crew, and of all liabilities
arising from the operation of the VESSEL in trial runs, or otherwise, prior to
delivery.

 

(g)                                 AS BUILT DRAWINGS, pertaining to the VESSEL
as stipulated in the Specification.

 

(h)                                 COMMERCIAL INVOICE.

 

(i)                                     NON-REGISTRATION CERTIFICATE.

 

(j)                                     Two (2) original Bills of Sale duly
notarised and legalised by Apostil.

 

(k)                                  The Seller shall provide The Buyer with a
Classification Certificate issued by Bureau Veritas.

 

4.                                       Tender of VESSEL

 

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

 

5.                                       Removal of VESSEL:

 

The
Buyer shall take possession of the VESSEL immediately upon delivery and
acceptance therof and shall remove the VESSEL from the delivery place within
five (5) days after delivery and acceptance thereof is effected, unless
otherwise agreed by the SELLER, provided the full payment due for the VESSEL
has been paid by the BUYER to the SELLER.

 

If
the BUYER shall not remove the VESSEL from the delivery place within the
aforesaid five (5) days, then, in such event,
the BUYER shall pay to the SELLER reasonable mooring charges for the VESSEL.

 

6.                                       Title and Risk:

 

Title
to and risk of loss of the VESSEL shall pass to the BUYER only upon delivery
and acceptance thereof having been completed as stated above; it being
expressly understood that, until such delivery is effected, title to and risk
of loss of the VESSEL and her equipment as well as risk of loss of BUYER’s
supplies (which are actually in SELLER’s custody) shall be in the SELLER,
excepting risks of war, earthquakes and tidal waves.  The title to the BUYER’s supplies as provided
in the Specification, shall remain with the BUYER.

 

28

 

ARTICLE IX
- DELAYS AND EXTENSION OF TIME FOR DELIVERY

 

(FORCE MAJEURE)

 

1.                                      CAUSES OF DELAY:

 

If,
at any time before the actual delivery of the VESSEL, either the construction
of the vessel and/or her sailing towards the Black Sea, or any performance required
as a pre-requisite of delivery of the vessel is delayed due to Acts of God;
acts of princes or rulers, requirements of Government Authorities; war or other
hostilities or preparations therefor; blockade; revolution, insurrections;
mobilisation, civil war, civil commotion or riots; vandalism, sabotages,
strikes, lock-outs or other labour disturbances; plague or other epidemics;
quarantines; flood, typhoons, hurricanes, storms or other weather conditions
not included in normal planning; earthquakes; tidal waves; landslides; fires,
explosions, collisions or strandings; embargoes; delays or failure in
transportation; shortage of materials, machinery or equipment; import
restrictions; inability to obtain delivery or delays in delivery of materials,
machinery or equipment, provided that at the time of ordering the same could
reasonably be expected by the SELLER to be delivered in time, prolonged
failure, shortage or restriction of electric current, oil or gas; defects in
materials, machinery or equipment supplied from sources outside SELLER’s
shipyard which could not have been detected by the SELLER using reasonable
care; casting or forging rejects or the like not due to negligence; delays
caused by the Classification Society or other bodies whose documents are
required; destruction of or damage to the Shipyard or works of the SELLER, its
sub-contractors or suppliers, or of or to the vessel or any part thereof, by
any causes herein described; delays in the SELLER’S other commitments resulting
from any causes herein described which in turn delay the construction of the
vessel or the SELLER’S performance under this contract; low levels of the water
in the River Danube below 2.5 metres in depth along the route from the Shipyard
to the Black Sea, local temperature higher than 30 degrees (in the shade)
centigrade, or lower than 5 degrees centigrade and/or other weather conditions
technologically unacceptable; other causes or accidents beyond the control of
the SELLER, its sub-contractors or suppliers, then and in such case, the
Delivery Date shall be postponed for a period of time which shall not exceed
the total accumulated time of all such delays but in any case up to the
permitted maximum stated in Paragraph 5 of this Article IX, except that
concurrent delays shall not be calculated as cumulative.

 

However,
the happening of any of the aforementioned contingencies shall cot give rise
any extension of the Delivery Date unless;

 

(i)                                the occurrence of the foregoing circumstances could not reasonably have
been foreseen by the SELLER at the date of signing of this Contract; or

 

(ii)                             the SELLER shall have exercised, in connection with any such
circumstances, reasonable due diligence to avoid or minimize the occurrence of
such circumstances; and

 

(iii)                          the SELLER shall have used its reasonable efforts to mitigate the
duration and effects of such circumstances on the schedule for
construction of the Vessel.

 

The
SELLER shall not be entitled to an extension of the delivery date pursuant to
this Article IX to the extent that the force majeure event in question has
been directly caused by the negligence of the SELLER, its servants or agents or
of the SELLER’s subcontractors, their servants or agents.

 

2.                                      NOTICE OF DELAY:

 

Promptly,
but in any event within five (5) days after the date when the case of
Force Majeure is affecting the SELLER’s program for construction, sailing,
completion and delivery of the VESSEL, on account of which the SELLER claims
that it is entitled under this Contract to a postponement of the Delivery Date,
the SELLER shall notify the BUYER in writing, of the date on which such cause
of

 

29

 

delay
occurred, the nature of same, its expected duration, and SELLER’s valuation of
its consequences on the delivery date and steps that SELLER intends to take to
overcome such cause of delay.

 

Likewise,
within five (5) days after the date of ending of such cause of delay, the
SELLER shall notify the BUYER either by telex or fax, confirmed in writing, of
the date on which such cause of delay ended.

 

The
SELLER shall as soon as possible notify the BUYER of the period by which the
Delivery Date is postponed by reason of such cause of delay with all reasonable
despatch after it has been determined.  If
the SELLER shall fail to notify the BUYER of the commencement and/or ending of
any such cause of delay within each period five (5) days as aforesaid, its
rights to claim for the permissible delay for the period of such delay shall be
automatically disallowed.  Failure of the
BUYER to object to the SELLER’S claim for postponement of the Delivery Date
within five (5) days after receipt by the BUYER of such notice of claim
shall be deemed to be a waiver by the BUYER of its right to object to such
postponement of the Delivery Date.

 

3.                                     SELLER’S
DUTY OF MITIGATION

 

Throughout
any period during which the SELLER claims an extension to the Delivery Date on
grounds of permissible delay, the SELLER shall use all best efforts to minimise
the delay and the effects thereof and shall keep the BUYER fully informed of
all such efforts.

 

4.                                     DEFINITION OF PERMISSIBLE DELAY:

 

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

 

5.                                     RIGHT TO RESCIND FOR EXCESSIVE DELAY:

 

If
the total accumulated time of all delays on account of the causes specified in
Paragraph 1 of this Article amounts to one hundred and fifty (150) days or
more, then, in such event, the BUYER may rescind this Contract in accordance
with the provisions of Article XI hereof.

 

The
SELLER may, at any time after the accumulated time of the aforementioned delays
justifies rescission by the BUYER, demand in writing that the BUYER shall
within twenty (20) days after such demand is received by the BUYER, either notify
the SELLER of his intention to rescind this Contract, or consent to a
postponement of the Delivery Date to a specific future date: it being
understood and agreed by the parties hereto that, if any further delay occurs
beyond such specific future date the BUYER shall have the same right of
rescission upon the same terms as hereinabove provided.

 

30

 

ARTICLE X
- WARRANTY OF QUALITY

 

1.                                      GUARANTEE:

 

Subject
to the provisions hereinafter set forth the SELLER undertakes to remedy or, if
remedy cannot cure the defect, to replace, free of charge to the BUYER, any
defects in the VESSEL which are due to defective construction, defective
material and/or defective design and/or bad workmanship on the part of the
SELLER and/or its suppliers and/or its subcontractors, provided that the
defects are discovered within a period of twelve (12) months after the date of
delivery of the VESSEL and a notice thereof is duly given to the SELLER as
hereinafter provided and provided further that if any defect complained of
shall consist of or relate to the painting of the VESSEL’s underwater parts,
the period above referred to shall be twenty four (24) and not twelve (12)
months.

 

For
the purpose of this Article, the VESSEL shall include her hull, machinery,
equipment and gear but excludes the consumable materials and parts, BUYER’s
supplies other than the installation thereof.  If the guarantees given by suppliers and/or
subcontractors have validity in excess of 12 or 24 months respectively, the
SELLER will transfer any residual rights in the guarantees given by any
supplier and/or subcontractor to the BUYER at the end of the Guaranteed Period
under this Article.

 

Any
defect on the painting of the underwater parts of the VESSEL that has been
discovered and notified within the twenty four (24) months guarantee period
shall be remedied on SELLER’s costs and expenses even if such remedy shall be
made within two (2) months after the expiry of the said guarantee period,
i.e. twenty six months after the date of delivery and acceptance of the VESSEL.

 

In
addition to the above the SELLER shall on delivery of the VESSEL assign on to
the BUYER the guarantees and all benefits arising therefrom which the SELLER
shall obtain from all suppliers.

 

The
guarantee period for parts of the VESSEL’S hull, her machinery and/or her
equipment repaired or replaced by the SELLER or on his behalf shall be extended
for a further period of three (3) months always provided that this three (3) months
guarantee does not expire before the original twelve (12) months guarantee.  The Guarantee shall not in any way extend
beyond fifteen (15) months from the delivery date of the VESSEL.

 

2.                                      NOTICE OF DEFECTS:

 

The
BUYER shall notify the SELLER in writing or by telex or fax confirmed in
writing, of any defects for which claim is made under this guarantee as
promptly as possible, but anyhow not later than five (5) days, after
discovery thereof.

 

The
BUYER’s written notice shall describe as far as is possible the nature and
ascertainable extent of the defects.

 

The
SELLER shall have no obligation for any defect(s) discovered prior to the
expiry date of the said twelve (12) months period, or as the case may be, the
said twenty four (24) month period unless written notice thereof is given to
the SELLER in accordance with the provisions of this Article X.2.  In respect, however, of major parts replaced
or repaired within a period of twelve (12) months of the date of delivery and
acceptance of the VESSEL, the SELLER’s guarantee obligations shall continue in
full force and effect for a further (12) months from the date of completion of
such repairs and/or installation of any replacement items, but in any event,
the period of SELLER’s guarantee obligations shall not exceed fifteen (15) months
after the date of delivery and acceptance of the VESSEL, but the

 

31

 

SELLER
shall use their best endeavours to obtain from the suppliers a further twelve
(12) months on each replaced item.

 

3.                                      REMEDY
OF DEFECTS:

 

(a)                                  The SELLER shall remedy, at its expense, any
defects against which the VESSEL is guaranteed under this Article, by making
all necessary repairs or replacements, including the supply of fresh parts,
materials or equipment in substitution for parts, materials and equipment found
to be defective, at the Shipyard of the SELLER or elsewhere as provided in (b) herein.

 

(b)                                 However, if in the opinion of the BUYER it is
impractical or inconvenient to bring the VESSEL to the Shipyard, the BUYER may
cause the necessary repairs or replacements be made at another place which is
deemed suitable for the purpose, provided that, in such event, the SELLER may
forward or supply replacement parts or materials to the VESSEL, at the SELLER’s
expense, unless forwarding or supplying thereof to the VESSEL would in the
BUYER’s judgement impair or delay the operation or working schedule of the
VESSEL.  In the event that the BUYER
proposes to cause the necessary repairs or replacements to be made to the
VESSEL at any other shipyard or works than the Shipyard, the BUYER shall first,
but in all events as soon as possible, give the SELLER notice in writing or by
telex or fax confirmed in writing of the time, place, items and costs at which
such repairs will be made, and if the VESSEL is not thereby delayed, or her
operation or working schedule is not thereby impaired, the SELLER shall
have the right to verify by his own representative(s) the nature and extent of
the defects complained of.

 

The
SELLER shall, in such case, promptly advise the BUYER by telex or fax after
such examination has been completed, of its acceptance or rejection of the
defects as ones that are covered by the guarantee herein provided.

 

Upon
the SELLER’s acceptance of the defects as justifying remedy under this Article,
or upon award of any arbitration so determining, the SELLER shall immediately
pay to the BUYER the cost of such repairs or replacements.  Such cost shall however not exceed what would
be charged if the repairs or replacements had been made at the SELLER’S
Shipyard.

 

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

 

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

 

4.                                      EXTENT
OF SELLER’S RESPONSIBILITY:

 

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

 

(b)                                 The SELLER shall not be responsible for any
defects in any part of the VESSEL which may subsequent to delivery of the
VESSEL have been replaced or in any way
repaired by any other contractor unless such repairs have been approved by the
SELLER, or for any defects which have been caused or aggravated by omission or
improper use and maintenance of the VESSEL on the part of the BUYER, its
employees or agents, or by ordinary wear and tear or by any other circumstances
beyond the control of the SELLER.

 

32

 

 

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

 

5.                                      GUARANTEE ENGINEER

 

The SELLER shall have the right to arrange
for one Guarantee Engineer to serve on the VESSEL as the SELLER’S
representative for a period of twelve (12) months, at SELLER’s option, from the
date of delivery of the VESSEL.  The
BUYER and its employees shall give such Guarantee Engineer full cooperation in
carrying out his duties as the representative of the SELLER onboard the VESSEL.  The BUYER shall accord the Guarantee Engineer
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.

 

The
BUYER may at its option terminate the stay of the Guarantee Engineer before the
completion of one (1) year but in no event earlier than three (3) months
after delivery of the VESSEL, with SELLER’s prior approval which not to be
unreasonably withheld.

 

The
BUYER shall pay to the SELLER for the Guarantee Engineer the sum of United
States Dollars two thousand only (USD 2,000.00) per month to cover his/their
miscellaneous expenses and the BUYER shall pay expense of repatriation of one
person to Romania, by air upon termination of his service, and also shall pay
the expense of his communications with the SELLER when made in performance of
his duties as the Guarantee Engineer and the expenses, if any, of his medical
and hospital care.  The BUYER shall
indemnify the Guarantee Engineer for personal injuries, including death and
damages to, or loss or destruction of property of the Guarantee Engineer, 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.

 

In case the BUYER considers that the
Guarantee Engineer is unsuitable for the job or is uncooperative with the
VESSEL’s Chief Engineer, then the BUYER shall notify accordingly the SELLER and
the SELLER shall assist to arrange replacement provided that such replacement
is approved by the SELLER, and the crews certificates and passports of the replacing
engineer(s) can be procured. Until the replacement is arranged as aforesaid, no
replacement of the Guarantee Engineer on aboard shall be effected.

 

Pertaining
to the detailed particulars of this paragraph, a detailed Contract will be
executed between the Parties upon delivery of the VESSEL.

 

33

 

ARTICLE XI - RESCISSION BY BUYER

 

1.                                      RIGHT OR RESCISSION - NOTICE

 

The
payments made by the BUYER prior to the delivery of the VESSEL shall be in the
nature of advances to the SELLER.  In the
event that the BUYER shall exercise its right of rescission of this Contract
under and pursuant to any of the provisions of this Contract specifically
permitting the BUYER to do so, and/or in the event that the VESSEL is determined
to be an actual or constructive total loss, and/or in the event of the SELLER
is declared bankrupt and/or going into liquidation (other than a voluntary
liquitation for purposes of amalgamation or reconstruction) and/or having a
Receiver appointed over any of its property assets and/or ceasing to carry on
its business and/or declaring its intention to cease to carry on its business
the BUYER shall be entitled (but not bound) to rescind this Contract whereupon
the provisions of this Article shall apply and then in anyone of these
events the BUYER shall notify the SELLER in writing or by fax and/or telex
confirmed in writing, and such rescission shall be effective as of the date
notice thereof is received by the SELLER.

 

2.                                      REFUND BY SELLER:

 

Thereupon
the SELLER shall promptly refund to the BUYER the full amount of all sums paid
by the BUYER to the SELLER on account of the VESSEL, together with interest, if
any, thereon as herein provided, unless the SELLER proceeds to arbitration
under the provision of article XIII.

 

In
such event, the SELLER shall pay the BUYER interest at the rate of seven
percent (7%) per annum on the amount required herein to be refunded to the
BUYER, computed from the respective dates on which such sums were paid by the
BUYER to the SELLER to the date of remittance by transfer of such refund to the
BUYER by the SELLER, provided, however, that if the said rescission by the
BUYER is made under the provisions of Paragraph 5 of Article IX hereof,
and/or due to the actual or constructive total loss of the VESSEL then in such
event the SELLER shall not be required to pay any interest.

 

3.                                      RETURN OF BUYER’S SUPPLIES:

 

If
pursuant to the provisions of this Contract the SELLER is required to refund to
the BUYER the instalments paid by the BUYER to the SELLER, the SELLER shall
return to the BUYER all of the BUYER’s supplies not incorporated into the
VESSEL and pay to the BUYER an amount equal to the purchase price, according
with the invoices received by the BUYER from makers, of those supplies incorporated
into the VESSEL.

 

4.                                      DISCHARGE OF OBLIGATIONS:

 

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

 

34

 

ARTICLE XII - BUYER’S DEFAULT

 

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 in accordance with the provisions of Article III hereof; or

 

(b)                   The BUYER fails to pay the fifth instalment to the SELLER in accordance
with Article III hereof; or

 

(c)                    The BUYER fails to accept and take delivery of the VESSEL, when the
VESSEL is duly tendered for delivery by the SELLER under the provisions of Article VIII
hereof within three (3) days from the tendered date and without any
justifiable reason thereof under this Contract;

 

2.                                      NOTICE
OF DEFAULT

 

If
the BUYER is in default of any instalment of the Contract Price, or in
performance of its obligations as provided hereinabove, the SELLER shall notify
the BUYER to that effect by telex, e-mail or fax, after the date of occurrence
of the default as per Paragraph 1 of this Article and the BUYER shall
forthwith acknowledge by telex, e-mail or fax, confirmed to the SELLER that
such notification has been received.  In
case the BUYER does not give the aforesaid telex, fax or e-mail acknowledgment
to the SELLER within five (5) banking days, it shall be deemed that such
notification has been duly received by the BUYER.

 

3.                                      INTEREST AND CHARGE

 

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 seven percent (7%) per annum from
the due date thereof to the date of payment to the SELLER of the full amount
including all aforesaid interest.  In
case the BUYER shall unjustifiably 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 fifth instalment and shall pay
interest thereon at the same rate as aforesaid and mooring charges from and
including the day on which the VESSEL is tendered for delivery by the SELLER to
the date on which payment of the fifth instalment is received by the SELLER.

 

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 of this Article committed by the
BUYER continues for a period of fifteen (15) days after receipt by the BUYER of
the notice provided for in Paragraph 2 of this Article, then, the SELLER shall
have all following rights and remedies:

 

(i)                                     The SELLER may, at its option, cancel or
rescind this Contract, by giving notice of such effect to the BUYER by letter
or telefax or telex.  Upon receipt by the
BUYER of such notice of cancellation or rescission, all of the BUYER’s supplies
and all its equipment and machinery shall be kept as a security for the SELLER’s
claims; and

 

35

 

(ii)                                  In the event of such cancellation or
rescission of this Contract, the SELLER shall also be entitled to retain any
instalment or instalments of the Contract Price paid by the BUYER to the SELLER
as a security for SELLER’s claim; and

 

(iii)                               In addition to the above and in the event of such rescission or
cancellation, the SELLER shall be entitled (but not bound) to exercise and
enforce any or all of its rights, powers and remedies under this Contract
(including but not limited to the sale of the VESSEL and application of the
proceeds thereof pursuant to Paragraph 5 here below) and/or under any or all of
the securities provided to the SELLER by way of security for the BUYER’s
obligations hereunder.

 

5.                                      SALE OF THE VESSEL

 

(a)                    In the event of cancellation or rescission of this Contract by the
SELLER 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 thereby.  In any case the SELLER shall use all
reasonable endeavours to secure the best price obtainable.

 

In
the case of sale of the VESSEL, the SELLER shall give reasonable early written
notice by letter, telefax or telex, to the BUYER but the BUYER or any Companies
within its group of any of its related parties shall not be entitled to bid for
the VESSEL at a public auction or to make an offer to buy the VESSEL if it
receives notice from the SELLER of its intention to sell it privately.

 

(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 (less the value of the BUYER’s Supplies) and interest on such
instalments 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 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) less the
instalments so retained by the SELLER, and compensation to the SELLER for a
reasonable sum of loss of profit due to the cancellation or rescission of this
Contract.

 

(d)                   If the proceeds of sale exceeds the total of amounts to which such
proceeds are to be applied as aforesaid, the SELLER shall promptly pay the
excess to the BUYER without interest, provided, however, that the amount of
such 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, if such deficiency is exceeding the total amount of instalments
already paid by the BUYER.

 

36

 

ARTICLE XIII - DISPUTE AND ARBITRATION

 

1.                                     PROCEEDINGS

 

This
Contract shall be governed by and construed in accordance with English law and
any dispute arising out of or in connection with this Contract shall be
referred to arbitration in London in accordance with the Arbitration Act 1996
or any statutory modification or reenactment thereof save to the extent
necessary to give effect to the provisions of this Clause.

 

The
arbitration shall be conducted in accordance with the London Maritime
Arbitrators Association (LMAA) Terms current at the time when the arbitration
proceedings are commenced.  The reference
shall be to three arbitrators. A party wishing to refer a dispute to
arbitration shall appoint its arbitrator and send notice of such appointment in
writing to the other party requiring the other party to appoint its own
arbitrator within 14 calendar days of that notice and stating that it will
appoint its arbitrator as sole arbitrator unless the other party appoints its
own arbitrator and give notice that it has done so within the 14 days
specified.  If the other party does not
appoint its own arbitrator and give notice that it has done so within the 14
days specified, the party referring a dispute to arbitration may, without the
requirement of any further prior notice to the other party, appoint its
arbitrator as sole arbitrator and shall advise the other party accordingly.  The award of a sole arbitrator shall be
binding on both parties as if he had been appointed by agreement.

 

Nothing
herein shall prevent the parties agreeing in writing to vary these provisions
to provide for the appointment of a sole arbitrator.

 

2.                                      ALTERATION OF DELIVERY DATE

 

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

 

3.                                      NOTICE OF AWARD

 

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

 

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.

 

5.                                      ENTRY INTO COURT

 

In
case of failure by either party to honor the Arbitration Award(s), a judgment
may be entered in any proper court having jurisdiction thereof.

 

37

 

ARTICLE XIV
- RIGHT OF ASSIGNMENT

 

1.                         The BUYER shall not be entitled to assign its
rights under this Contract without the prior written consent of the SELLER
(such consent not to be unreasonably withheld).

 

However
the BUYER shall be entitled without the prior written consent of the SELLER but
with prior written notice to the SELLER, to assign its rights under this
contract in favour of a bank or financial Institution which will finance part
or all of the pre-delivery instalments payable under this Contract as security
for such financing (it being understood for the avoidance of doubt that: 

 

(i)                                     Such assignment shall be an assignment by way
of security in favour of a financier of the BUYER and not an assignment by way
of transfer in favour of a third party purchaser, 

 

(ii)                                  The SELLER shall not by virtue of such
assignment have any additional obligation and/or risk other than those existing
prior the date of such assignment and 

 

(iii)                               The BUYER shall remain responsible for the Performance of all its
obligations under this contract.)

 

2.                         Excluding an eventual subcontracting for any
portion of the construction work of the VESSEL as provided in Article II
paragraph 8 herein and the assignment of the rights under this contract to the bank
and/or financial Institution which will finance part of the construction of the
VESSEL with prior written notice to the BUYER, the SELLER may not assign or
transfer any of its rights or obligations under this Contract

 

38

 

 

ARTICLE XV - TAXES AND DUTIES

 

1.                                      TAXES AND DUTIES IN ROMANIA:

 

The
SELLER shall bear and pay all taxes and duties imposed in Romania in connection
with the execution and/or performance of this Contract.

 

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

 

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

 

2.                                      TAXES
AND DUTIES OUTSIDE ROMANIA:

 

The
BUYER shall bear and pay all taxes and duties imposed outside Romania in
connection with execution and/or performance of this Contract except for taxes
and duties imposed upon those items to be procured by the SELLER for
construction of the VESSEL.

 

The
cost connected to Greek flag registration will be also Buyers cost.

 

3.  For the avoidance of doubt it is hereby
clarified that the SELLER shall meet all tax liabilities imposed in its own
domicile (i.e. Romania) or elsewhere to the extent that such taxes relate to
the performance of the contract works and/or the items to be provided by the
SELLER in connection with the contract works, whereas the BUYER shall meet all
other tax liabilities incurred outside SELLER’s domicile and wherever arising
in connection with BUYER’s supplies.

 

39

 

ARTICLE XVI
- PATENTS, TRADEMARKS, COPYRIGHTS, ETC.

 

Machinery
and equipment of the VESSEL may bear the patent number, trademarks or trade
names of the manufacturers.

 

The
SELLER shall indemnify and hold harmless the BUYER from all costs, claims,
damages and expenses (including legal fees on a full indemnity basis) incurred by or awarded against the BUYER
as a result of or in connection with any claim brought against the BUYER for infringement
of any patents, copyright or other intellectual property arising out of the
performance of this Contract except where such claim arises howsoever in
relation to any item of BUYER’s design and BUYER’s Supplies.

 

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.

 

40

 

ARTICLE XVII
- BUYER’S SUPPLIES:

 

1.                                     RESPONSIBILITY OF THE BUYER:

 

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

 

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

 

(c) Any
and all of the BUYER’s supplies shall be subject to the SELLER’S reasonable
right of rejection, as and if they are found to be unsuitable or in improper
condition for installation. However, if so requested by the BUYER, the SELLER
may repair or adjust the BUYER’s Supplies without prejudice to the SELLER’S
other rights and remedies hereunder and without being responsible for any
consequences therefrom. In such case, the BUYER shall reimburse the SELLER for
all costs and expenses incurred by the SELLER in such repair or adjustment and
the Delivery Date shall be automatically postponed for a period of time
necessary for such repair or replacement.

 

(d) Should
the BUYER fail to deliver to the SELLER any item of Buyer’s Supplies including
the necessary plans, instruction books, manuals, test reports and certificates
mentioned in accordance with the time schedule designated by the SELLER,
the Delivery Date of the Vessel shall be extended by the period of any delay in
the construction of the Vessel directly caused thereby.

 

If
delay in delivery of any of the BUYER’s Supplies exceeds ten (10) days
then, the SELLER shall be entitled to proceed with construction of the VESSEL
without installation thereof in or on the VESSEL, without prejudice to the
SELLER’S other rights as hereinabove provided, and the BUYER shall accept and
take delivery of the VESSEL so constructed.

 

2.                                     RESPONSIBILITY
OF THE SELLER:

 

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

 

BUYER’s
Supplies will be delivered in Incoterms 2000 condition CIP Turnu Severin and
each shipment will be accompanied by Pro-forma Invoices, Packing Lists, Conformity
Certificates and EUR 1 Certificate. Same documents will be provided to the
SELLER by fax at least one week in advance.

 

Return of Buyer’s Supplies

 

In
the event of termination of this Contract through default of the SELLER, the
SELLER shall return to the BUYER all BUYER’S Supplies at the SELLER’s expense.
In such event, if it is not possible to return any item of BUYER’s Supplies,
the SELLER shall refund to or give credit to the BUYER for

 

41

 

the
full value thereof according with the invoices paid by The BUYER to the Makers.
All payments shall be made in EURO.

 

42

 

ARTICLE XVIII
- NOTICE

 

1.                                     ADDRESS:

 

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

 

	
  To
  the SELLER:

  	
  Severnav
  S.A.

  
	
   

  	
  204,
  Timisoara Str.,

  
	
   

  	
  220242
  Drobeta Turnu-Severin,

  
	
   

  	
  Romania

  
	
   

  	
  Tel:
  +40 252 314 270

  
	
   

  	
  Fax:
  +40 252 313 215

  
	
   

  	
  E-mail:
  office@severnav.ro

  

 

and
an e-mail copy of the notices and communications with regard to the technical
documents (including plans and drawings) to design@severnav.ro

 

	
  To
  the BUYER:

  	
  C/O
  Aegean Bunkering Services Inc

  
	
   

  	
  42
  Hadjikyriakou Avenue,

  
	
   

  	
  Piraeus
  185 38,

  
	
   

  	
  Greece

  
	
   

  	
  Tel:
  +302104586000

  
	
   

  	
  Fax:
  +302104586242

  
	
   

  	
  e-mail:
  shipping@aegeanoil.gr

  

 

and
an e-mail copy of the notices and communications with regard to the technical
documents (including plans and drawings) to BUYER’s technical consultant IOTA
CORPORATION (Attn: Dr G.G. Parissis) at

 

	
   

  	
  123
  Aldersgate Street

  
	
   

  	
  EC1A
  4JQ London

  
	
   

  	
  United
  Kingdom

  
	
   

  	
   

  
	
   

  	
  Tel:
  +44-207-2533660

  
	
   

  	
  Fax:
   +44-207-6082512

  
	
   

  	
  E-mail:
  gparissis@tiscali.co.uk

  

 

2.                                      LANGUAGE:

 

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

 

43

 

ARTICLE XIX - EFFECTIVE DATE OF CONTRACT

 

This
Contract shall become effective when the following terms have been met in
strict compliance with the following sequence:

 

	
  1.

  	
   

  	
  This
  Contract together with all the attachments, including The Makers List to it
  have been agreed upon and duly signed by both parties.

  
	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  Each
  party has confirmed in writing to the other one of the approval of his Board
  of Directors of the Contract.

  
	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  The
  BUYER’s bank has approved the BUYER’s financing and the BUYER has given
  written notice to the SELLER to that effect.

  
	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  The
  SELLER has provided the BUYER with the Refund Bank Guarantee for the 1st
  instalment.

  
	
   

  	
   

  	
   

  
	
  5.

  	
   

  	
  The
  BUYER has provided the SELLER with the Bank Guarantee for the payment of 2nd,
  3rd, 4th and 5th instalments of the contract.

  
	
   

  	
   

  	
   

  
	
  6.

  	
   

  	
  The
  BUYER has made the payment of the first instalment to the SELLER.

  

 

If
due to whatever reason, any one or more of the above conditions fail to be
fulfilled (within 45 days after the date of signing) then this Contract shall
be regarded null and void, having no effect whatsoever, unless otherwise agreed
in writing by the Parties.

 

44

 

ARTICLE XX
- INTERPRETATION:

 

1.                                     LAWS APPLICABLE:

 

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

 

2.                                     DISCREPANCIES:

 

All
general language or requirements embodied in the Specification are intended to
amplify, explain and implement the requirements of this Contract.

 

However,
in the event that any language or requirements so embodied permit of an
interpretation inconsistent with any provisions of this Contract, then in each
and every such event, the applicable provisions of this Contract shall prevail
and govern.

 

The
Specification and Plan are also intended to explain each other, and anything
shown on the Plan and not stipulated in the Specification or stipulated in the
Specification and not shown on the Plan shall be deemed and considered as if
embodied in both.

 

In
the event of conflict between the Contract and the Specification the Contract
shall prevail and govern.

In
the event of conflict between the Specification and Plan, the Specification
shall prevail and govern.

In
the case of conflict between any of the plans, that of the later date shall
prevail and govern.

 

3.                                    COUNTING OF TIME

 

For
the purposes of the giving of any advice, or notice under this Contract, a
period of time shall begin to run on the day following the day when the advice
or notification is given. A period of time stipulated by reference to a number
of days shall be deemed to refer to running days. If the last day of any such
period is a not a Working Day the period will be extended until the first
Working Day which follows.

 

4.                                    ENTIRE AGREEMENT

 

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

 

5.                                    GOVERNING LANGUAGE

 

The
Contract shall be executed in the English Language.

 

6.                                    ORIGINAL OF THE CONTRACT

 

The
present Contract is made out in two originals

 

45

 

IN WITNESS WHEREOF, the parties hereto have caused this Contract to be
duly executed on the 3rd of June 2005.

 

 

	
  The Buyer:

  
	
   

  
	
   

  
	
  By:

  	
  Signature:

  
	
   

  
	
   

  	
  Name: Spyridon Fokas

  
	
   

  	
  Title: Attorney-in-fact

  
	
   

  
	
  Date:

  	
  3rd of June 2005

  
	
   

  
	
   

  
	
  Witnessth by:

  
	
   

  
	
   

  
	
  The Seller:     Severnav
  Shipyard S.A.

  
	
   

  
	
   

  
	
  By:

  	
  Signature:

  
	
   

  
	
   

  	
  Name: Stelian Stancioiu

  
	
   

  	
  Title: General Director

  
	
   

  
	
  Date:

  	
  3rd of June 2005

  
	
   

  
	
   

  
	
  Witnessth by:

  

 

46Exhibit 10.7

 

OPTION AGREEMENT, DATED JUNE 3,
2005, BY

AND BETWEEN AEGEAN BUNKERING SERVICES

INC. AND SEVERNAV S.A.

 

 

OPTION AGREEMENT

 

This OPTION AGREEMENT
(“Agreement”) is made on the 3rd of June 2005 by and
between:

 

(1)          Aegean
Bunkering Services Inc a corporation organized and existing under the Laws of
Marshal Islands (hereinafter called the “BUYER”); and

 

(2)          Severnav
Shipyard S.A. a corporation organized and existing under the Laws of Romania
(hereinafter called the “SELLER”).

 

In consideration of two
Shipbuilding Contracts No 222 and No 223, each dated 3rd
of June 2005 entered into between the SELLER and the respective two (2) buying
Companies which were nominated by the BUYER for two (2) firm CMT 319 Oil
Tankers (having Hull Number N 2220000, and N 2230007) and the payment of EURO I
by the BUYER to the SELLER and other good valuable consideration, the parties
hereto agree two plus two optional vessels as follows:

 

1.  Specification

 

The vessels will be built by
the Seller based on the contract documents and any amendments thereto in
respect of the CMT 319 Oil Tankers agreed and signed on 3rd
of June 2005.

 

2. 
Price

 

Euro 6,560,000.00 (Euro Six
Million Five Hundred and SixtyThousand only) for each vessel.  However it is agreed that the price of the optional
vessels may be adjusted upwards or downwards subject only to the costs and
prices of the materials, labor, machinery and equipment changing from the time
of contracting vessels to the time of signing of the contracts based on
declaring the options.

 

3.  Quantity

 

Two plus two (2+2) Vessels.

 

4.  Option Declaration Date

 

The BUYER shall exercise its
right and declare the option to purchase the first two (2) optional vessels (No
3 and No 4) by sending a fax to the SELLER (to the fax number referred to in
Article 17 of each Contract) on or before the launching of the first of the two
firm CMT 319 Oil Tankers (being Hull No N 2220000).

 

The BUYER shall exercise its
right and declare the option to purchase the second two (2) optional vessels
(No 5 and No 6) by sending a fax to the SELLER (to the fax number referred to
in Article 17 of each Contract) on or before the delivery of the first of the
two firm CMT 319 Oil Tankers (being Hull No N 2220000).

 

The SELLER and the BUYER
undertake to sign a New Buildings Contract for each optional vessel
(substantially on the same terms as each Contract) within thirty (30) days from
the date on which notice of the exercise of the option is given to the SELLER.

 

 

5.  Terms of payment

 

The Contract Price for each optional
vessel shall be paid in the following way:

 

10% upon
effectiveness of the contract

15% upon
steel-cutting

15% upon
keel-laying

20% upon
launching

40% upon
delivery

 

5.  Bank Guarantees

 

Security
for Payment of Installment Before Delivery:

 

The BUYER shall provide the
SELLER with a Bank Guarantee issued by a first class international bank,
acceptable to SELLER’s bank and the SELLER.

 

The Bank Guarantee shall
guarantee the BUYER’s obligations for payment of 2nd, 3rd, 4th and 5th
instalments of the contract and be delivered to the SELLER concurrently with
the Shipbuilding Contract becoming effective. 
The amount of such Bank Guarantee shall be equal to the 90% of the
Contract price.  The form and substance
of this Bank Guarantee shall, in all respects, be acceptable to SELLER’s bank
and the SELLER.

 

Refund
Guarantee:

 

As security to the BUYER the
SELLER shall provide the BUYER before receipt by the SELER of each instalment
of the Contract Price with a Bank Guarantee issued by a first class bank
acceptable in all respects to BUYER’s bank and the BUYER for the 1st, 2nd, 3rd
and 4th instalments respectively.  Such
Bank Guarantees will guarantee the SELLER’s obligation for refunding to the
BUYER instalments of 1st, 2nd, 3rd and 4th already received by the SELLER,
through SELLER’s finance bank, when any such instalment becomes refundable to
the BUYER, in accordance with the terms of this Contract.

 

The issuance and delivery to
the BUYER of the relevant Bank Guarantee for the 1st instalment
will be a pre-condition to any of the BUYER’s payment obligations becoming
effective.  If it will be requested that
the Seller’s Bank Guarantees shall be re -guaranteed by a third bank, this will
be for the cost of the Buyer.

 

7.  Time of Delivery of Optional Vessels

 

The Delivery Times of the
optional Vessels are estimated as follows:

 

As for Vessel
no. 3 – Three Months after Vessel No 2

As for Vessel
no. 4 – Three Months after Vessel No 3

As for Vessel
no. 5 – Three Months after Vessel No 4

As for Vessel
no. 6 – Three Months after Vessel No 5

 

8.  Place of Delivery

 

The Vessels will be delivered
at Constantza, Romania.

 

9.  Contract Terms and Conditions

 

Form and substance of the
Shipbuilding Contract of the Optional Vessels shall be the same as those agreed
for the Firm Vessels with logical amendments.

 

10.  Governing Law

 

This Agreement shall be
governed by, and construed in accordance with English Law.  Any dispute under this Agreement shall be
referred to arbitration in London and the

 

 

provisions of Article 13 of
each Contract shall apply (mutaus mutandis) to this Agreement.

 

The BUYER: Aegean Bunkering
Services

 

	
  By:

  	
  Signature:

  
	
   

  	
   

  
	
   

  	
   

  	
  /s/
  Apostolos Manitsas

  	
   

  
	
   

  	
  Name:  Apostolos Manitsas

  
	
   

  	
  Title:  President Director

  
	
   

  	
   

  
	
  Date:

  	
  3rd
  of June 2005

  

 

 

	
  Witnessth
  by:

  	
   

  
	
   

  	
  /s/ [ILLEGIBLE]

  	
   

  
	
   

  	
  Intermodal
  Shipbrokers Co.

  

 

 

The SELLER:                                                       Severnav
Shipyard S.A.

 

 

	
  By:

  	
  Signature:

  
	
   

  	
   

  
	
   

  	
   

  	
  /s/ Stehan [ILLEGIBLE]

  	
   

  
	
   

  	
  Name:  Stehan Stancioiu

  
	
   

  	
  Title:  General Director

  
	
   

  	
   

  
	
  Date: 3rd
  of June 2005

  

 

 

	
  Witnessth
  by:

  	
   

  
	
   

  	
  CMT Engineering Ltd.

  
	
   

  	
  /s/
  [ILLEGIBLE]

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