SHIPBUILDING CONTRACT FOR THE CONSTRUCTION OF ONE (1) 36,000 DWT CLASS BULK CARRIER (DOUBLE HULL) HULL NO. ****** BETWEEN EAST GULF SHIPHOLDING, INC. (AS BUYER) AND HYUNDAI MIPO DOCKYARD CO., LTD. (AS BUILDER)

 

6. REMOVAL OF THE VESSEL

 

The BUYER shall take possession of the VESSEL immediately upon delivery thereof and shall remove the VESSEL from the SHIPYARD within five (5) days after delivery thereof is effected.

 

From the delivery of the VESSEL until the actual removal thereof from the SHIPYARD, The BUYER shall be responsible for the safety and preservation of the VESSEL in all respects, including without limitation, keeping the VESSEL insured at his own cost, and furthermore, the BUYER shall indemnify and hold the BUILDER free and harmless against any liability or claims including without limitation, the claims of his insurers arising out of any accident whatsoever , unless caused by the gross negligence or willful misconduct of the BUILDER, his employee or agent.

 

Port dues and other charges levied by the Korean Government Authorities after delivery of the VESSEL and any other costs related to the removal of the VESSEL shall be borne by the BUYER.

ARTICLE VIII : DELAYS AND EXTENSIONS OF TIME (FORCE MAJEURE) 1. CAUSES OF DELAY

 

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

 

2. NOTICE OF DELAYS

 

As soon as practicably possible after commencement of any delay on account of which the BUILDER claims that it is entitled under this CONTRACT to an extension of the DELIVERY DATE of the VESSEL, excluding delays due to arbitration, the BUILDER shall advise the BUYER in writing or by e-mail or facsimile within one (1) week of the date such delay commenced and discovered, the reasons thereof and, if possible, its estimated duration of the probable delay in the delivery of the VESSEL, and shall supply the BUYER if reasonably available with evidence to justify the delay claimed. Within one (1) week after such delay ends, the BUILDER shall likewise advise the BUYER in writing or by e-mail or facsimile of the date that such delay ended, and also, shall spe cify the period of time by which the BUILDER claims the DELIVERY DATE should be extended by reason of such delay. Failure of the BUYER to object to the BUILDER' s notification of any claim for extension of the date for delivery of the VESSEL within one (1) week after receipt by the BUYER of such notification shall be deemed to be a waiver by the BUYER of its right to object to such extension.

 

3. RIGHT TO CANCEL FOR EXCESSIVE DELAY

 

If the total accumulated time of all permissible and non-permissible delays, excluding delays

 

due to (i) arbitration under Article XIII, (ii) the BUYER's defaults under Article XI, (iii)

 

modifications and changes under Article V or (iv) delays or defects in the BUYER' s supplies as stipulated in Article XII, aggregates two hundred and fifty-five (255) days or more [including thirty (30) days as per Article III.1.(a)], then, the BUYER may, at any time thereafter, cancel this CONTRACT by giving a written notice of cancellation to the BUILDER. Such cancellation shall be effective as of the date the notice thereof is received by the BUILDER.

 

If the BUYER has not served the notice of cancellation as provided in the above or Article III. 1. hereof, the BUILDER may, at any time after expiration of the accumulated time of the delay in delivery, either two hundred and fifty-five (255) days in case of the delay in this Paragraph or one hundred and fifty (150) days in case of the delay in Article III. 1, notify the BUYER of the future date upon which the BUILDER estimates the VESSEL will be ready for delivery and demand in writing or by e-mail or facsimile that the BUYER make an election either to cancel this CONTRACT or to consent to the delivery of the VESSEL at such future date, in which case the BUYER shall, within ten (10) days after receipt of such demand, make and notify the BUILDER of such election. If the BUYER elects to consent to the delivery of the VESSEL at such f uture date (or other future date as the parties may agree):

 

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

 

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

If the BUYER shall not make an election within ten (10) days as provided hereinabove, the BUYER shall be deemed to have accepted such extension of the DELIVERY DATE to the future delivery date indicated by the BUILDER.

 

4. DEFINITION OF PERMISSIBLE DELAYS

 

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

 

(End of Article)

 

1. GUARANTEE OF MATERIAL AND WORKMANSHIP

 

The BUILDER, for the period of twelve (12) months from the date of delivery of the VESSEL to the BUYER, guarantees the VESSEL and all parts and equipment thereof that are manufactured or furnished by the BUILDER under this CONTRACT against all defects which are directly due to defective materials, construction miscalculation, poor workmanship and/or design which is not in accordance with the SPECIFICATIONS (hereinafter called the "DEFECT(S)") provided such defects have existed at the time of delivery of the VESSEL and have not been caused by circumstances as specified in paragraph 4 (b) of this Article and provided that the cost of repairs of such defects is not recoverable from insurers.

 

The BUILDER shall be responsible for all machinery or parts of machinery and all constructions which are supplied by sub-contractors and shall guarantee the above mentioned for a period of twelve (12) months on the basis as laid down in this Paragraph. If the warranties given by the suppliers and/or subcontractors have a validity in excess of twelve (12) months period as set forth in this CONTRACT, then, such warranties shall be assigned to the BUYER.

 

2. NOTICE OF DEFECTS

 

The BUYER shall notify the BUILDER in writing or by e-mail or facsimile, of any DEFECTS for which claim is made under this guarantee as promptly as possible after discovery thereof. The BUYER's written notice shall include full particulars to describe the nature and extent of the DEFECTS. The BUILDER shall have no obligation for any DEFECTS discovered prior to the expiry date of the said twelve (12) months period, unless notice of such DEFECTS is received by the BUILDER no later than seven (7) days after such expiry date.

 

3. REMEDY OF DEFECTS

 

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

 

(b)

However, if it is impractical to bring the VESSEL to the SHIPYARD, the BUYER may cause the necessary repairs or replacements to be made elsewhere which is deemed suitable for the purpose, provided that, in such event, the BUILDER may forward or supply replacement parts or materials to the VESSEL, unless forwarding or supplying

thereof to the VESSEL would impair or delay the operation or working schedule of the VESSEL. In the event that the BUYER proposes to cause the necessary repairs or replacements to be made to the VESSEL at any other shipyard or works than the SHIPYARD, the BUYER shall first, but in all events as soon as possible, give the BUILDER notice in writing or by e-mail or facsimile of the time and place such repairs will be made, and if the VESSEL is not thereby delayed, or her operation or working schedule is not thereby impaired, the BUILDER shall have the right to verify by its own representative(s) the nature and extent of the DEFECTS complained of. The BUILDER shall in such case, promptly advise the BUYER in writing or by e-mail or facsimile, after such examination has been completed, of its acceptance or rejection of the DEFECTS as ones that are covered by the guarantee herein provided. Upon the BUILDER's acceptance of the DEFECTS as justifying remedy under this Article, or upon the award of the arbitration tribunal so determining the BUILDER shall immediately pay to the BUYER for such repairs or replacements a financial sum equal to the reasonable cost of making the same repairs or replacements in the Hyundai — Vinashin Shipyard Co., Ltd. in Vietnam.

 

(c)

In any case, the VESSEL shall be taken at the BUYER's costs and responsibility to the place elected, ready in all respects for such repairs or replacements and in any event, the BUILDER shall not be responsible for towage, dockage, wharfage, port charges or any other cost or expenses whatsoever incurred by the BUYER in getting and keeping the VESSEL ready for such repairs or replacements.

 

(d)	In the event that it is necessary for the BUILDER to forward a replacement for a defective part under this guarantee, replacement parts shall be shipped to the BUYER under the terms of C.F.R. port of the country where they are to be purchased.

 

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

 

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

 

4. EXTENT OF BUILDER'S RESPONSIBILITY

 

(a) After delivery of the VESSEL the BUILDER shall have no responsibility for any other DEFECTS whatsoever in the VESSEL than the DEFECTS specified in paragraph 1 of this Article. The BUILDER shall have no liability whatsoever in any circumstances whatsoever

 

to the BUYER or to any third party for anything except the cost of repairing the DEFECT itself. The BUILDER shall not in any circumstances be responsible or liable for any 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 or any third party 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. In particular, but without limitation, the BUYER shall have no claim against the BUILDER for any liability, cost or expense whatsoever or howsoever arising in connection with any damage to the VESSEL or to any cargo or to any other property owned by the BUYER or any third party caused by or as a result of the DEFECT and afte r delivery the BUYER shall hold the BUILDER harmless and indemnify the BUILDER against any claim from the BUYER or any third party whatsoever in respect of any such matters and in respect of any other claims relating to the VESSEL for which the BUILDER does not expressly give a warranty to the BUYER under this Article.

 

(b)

The BUILDER 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, 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 servants or agents or by ordinary wear and tear or by any other circumstances beyond the control of the BUILDER.

 

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

 

(End of Article)

ARTICLE X : PAYMENT

 

1. CURRENCY

 

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

 

2. TERMS OF PAYMENT

 

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

 

(a) First Instalment

 

****** per cent (******%) of the CONTRACT PRICE amounting to U.S. Dollars ****** only (US$******) shall be paid within three (3) business days after receipt by the BUYER of a faxed copy of the signed Letter of Refund Guarantee while original Letter of Refund Guarantee shall be dispatched to the BUYER by the BUILDER through express courier or within three (3) business days after receipt by the BUYER's remitting Bank of the authenticated ba nk cable in accordance with this Article.

 

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

 

(b) Second Instalment

 

****** per cent (******%) of the CONTRACT PRICE amounting to U.S. Dollars ****** only (US$******) shall be paid within six (6) months from the date of signing the CONTRACT.

 

(c) Third Instalment

 

****** per cent (******%) of the CONTRACT PRICE amounting to U.S. Dollars ****** only (US$******) shall be paid within three (3) business days of receipt by the BUYER of a facsimiled notice from the BUILDER together with independent confirmation from the CLASSIFICATION SOCIETY confirming that the steel has been cut.

 

(d) Fourth Instalment

****** per cent (******%) of the CONTRACT PRICE amounting to U.S. Dollars ****** only (US$******) shall be paid within three (3) business days of receipt by the BUYER of a facsimiled notice from the BUILDER together with independent confirmation from the CLASSIFICATION SOCIETY confirming that the first keel block has been laid.

 

(e) Fifth Instalment

 

****** per cent (******%) of the CONTRACT PRICE amounting to U.S. Dollars ****** only (US$******) shall be paid within three (3) business days of receipt by the BUYER of a facsimiled notice from the BUILDER together with independent confirmation from the CLASSIFICATION SOCIETY confirming that the VESSEL has been launched.

 

(f) Sixth Instalment

 

****** per cent (******%) of the CONTRACT PRICE amounting to U.S. Dollars ****** only (US$ ******) plus or minus any increase or decrease due to modifications and/or adjustment, if any, arising prior to delivery of the VESSEL of the CONTRACT PRICE under Articles III and V of this CONTRACT shall be paid to the BUILDER concurrently with the delivery of the VESSEL. (The date stipulated for payment of each of the six instalments mentioned above is hereinafter in this Article and in Article XI referred to as the "DUE DATE" of that instalment).

 

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

 

3. DEMAND FOR PAYMENT

 

 

The BUYER shall immediately acknowledge receipt of such notification by e-mail or facsimile to the BUILDER, and make payment as set forth in this Article. If the BUILDER fails to receive the BUYER's said acknowledgement within three (3) days after sending the aforementioned notification, the BUILDER shall promptly e-mail or facsimile to the BUYER a second notification of similar import. The BUYER shall immediately acknowledge by e-mail or facsimile receipt of the foregoing second notification regardless of whether or not the first notification was acknowledged as aforesaid.

 

4. METHOD OF PAYMENT

 

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

 

(i)

The payment of the first, second, third, fourth, and fifth instalments shall be made to the account of the ******  Bank of ****** (hereinafter called the "******"), Account No. ****** at the ****** (hereinafter called the "******") in favour of Hyundai Mipo Dockyard Co., Ltd. (hereinafter called the "HMD") under advice by telefax or telex, including swift, to the ******, ****** by the remitting Bank.

 

(ii)

The sixth instalment as provided for in Paragraph 2.(f) of this Article shall be deposited at the account of the ******, Account No. ****** at ******, or any other bank, ******, ****** as designated by the BUILDER, in favour of HMD at least two (2) business days prior to the scheduled delivery date of the VESSEL notified by the BUILDER, with instructions that the said instalment is payable to the HMD against presentation by the BUILDER to the ******, or any other bank, ******, ****** as the case may be, of a copy of the original PROTOCOL OF DELIVERY AND ACCEPTANCE of the VESSEL signed by the BUILDER and the BUYER.

 

(b) Simultaneously with each of such payments, the BUYER shall advise the BUILDER of the details of the payments by e-mail or facsimile and at the same time, the BUYER shall cause the BUYER's remitting Bank to advise the ******, or any other bank, ******, ***** as the case may be, of the details of such payments by authenticated bank cable or telex.

5. REFUND BY THE BUILDER

 

The payments made by the BUYER to the BUILDER prior to delivery of the VESSEL shall constitute advances to the BUILDER. If the VESSEL is rejected by the BUYER in accordance with the terms of this CONTRACT or, except in the case of rescission or cancellation of this CONTRACT by the BUILDER under the provisions of Article XI hereof, if the BUYER terminates, cancels or rescinds this CONTRACT pursuant to any of the provisions of this CONTRACT specifically permitting the BUYER to do so, the BUILDER shall forthwith refund to the BUYER, in U.S. Dollars, the full amount of total sums paid by the BUYER to the BUILDER in advance of delivery together with interest thereon as herein provided.

 

The transfer and other bank charges of such refund shall be for the BUILDER's account. The interest rate of the refund, as above provided, shall be Five and a Half per cent (5.5%) per annum from the date following the date of receipt by the BUILDER of the pre-delivery instalment(s) to the date of remittance by telegraphic transfer of such refund.

 

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

 

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

 

6. TOTAL LOSS

 

If there is a total loss or a constructive total loss of the VESSEL prior to delivery thereof, the BUILDER shall proceed according to the provisions of (a) or (b) herein below:

 

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

 

(b)	to refund to the BUYER the full amount of the total sums paid by the BUYER to the BUILDER under the provisions of Paragraph 2 of this Article together with interest thereon at the rate of Five and a Half per cent (5.5%) per annum from the date following

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

 

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

 

7. DISCHARGE OF OBLIGATIONS

 

Such refund as provided in the foregoing Paragraphs 5 and 6 by the BUILDER to the BUYER shall forthwith discharge all the obligations, duties and liabilities of each of the parties hereto to the other(other than any obligations of the BUYER in respect of facilities afforded to the BUYER'S REPRESENTATIVE) under this CONTRACT. Any and all refunds or payments due to the BUYER under this CONTRACT shall be made by telegraphic transfer to the account specified by the BUYER.

 

8. REFUND GUARANTEE

 

The BUILDER shall furnish the BU YER prior to the payment of the first instalment with an assignable letter of guarantee issued by the ****** for the refund of the pre-delivery instalments plus interest as aforesaid to the BUYER under or pursuant to Paragraph 5 above in the form as annexed hereto as Exhibit "A".

 

All expenses in issuing and maintaining the letter of guarantee described in this Paragraph shall be borne by the BUILDER.

 

9. PERFORMANCE GUARANTEE

 

Upon signing this CONTRACT, the BUYER shall provide the BUILDER with an irrevocable and unconditional Letter of Guarantee issued by a International Shipholding Corporation for the due and faithful performance by the BUYER of all its liabilities and responsibilities under the CONTRACT including, but not limited to, the payment of the CONTRACT PRICE and taking delivery of the VESSEL in the form as annexed hereto as Exhibit "B".

 

(End of Article)

 

 

1. DEFINITION OF DEFAULT

 

 

(a)	If the first, second, third, fourth or fifth instalment is not paid to the BUILDER within respective DUE DATE of such instalments; or

 

(b)	If the sixth instalment is not deposited in accordance with Article X.4.(a)(ii) hereof or if the said sixth instalment deposit is not released to the BUILDER against presentation by the BUILDER of a copy of the original PROTOCOL OF DELIVERY AND ACCEPTANCE; or

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(b)	The BUYER shall pay to the BUILDER interest at the rate of Five and a Half per cent (5.5%) per annum in respect of the instalment(s) in default from the respective DUE DATE to the date of actual receipt by the BUILDER of the full amount of such instalment(s).

 

(c)

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

 

(d)	If any of the BUYER'S default continues for a period of seven (7) days after the BUILDER's notification to the BUYER of such default, the BUILDER may, at its option, rescind this CONTRACT by serving upon the BUYER a written notice or e-mail or facsimile notice of rescission confirmed in writing.

 

(e)

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

 

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

 

 

Second, if the VESSEL has been completed, in or towards satisfaction of the unpaid balance of the CONTRACT PRICE, to which shall be added the cost of all additional work and extras agreed by the BUYER including interest thereon at Five and a Half per cent (5.5%) per annum from the respective DUE DATE of the instalment in default to

the date of sale, or if the VESSEL has not been completed, in or towards satisfaction of the unpaid amount of the cost incurred by the BUILDER prior to the date of sale-on account of construction of the VESSEL, including work, labour, materials and reasonably estimated profit which the BUILDER would have been entitled to receive if the VESSEL had been completed and delivered plus interest thereon at Five and a Half per cent (5.5%) per annum from the respective DUE DATE of the instalment in default to the date of sale.

 

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

 

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

 

(End of Article)

 

ARTICLE XII : BUYER'S SUPPLIES 1. RESPONSIBILITY OF THE BUYER

 

The BUYER shall, at its cost and expense, supply all the BUYER's supplies mentioned in the SPECIFICATIONS, if any, (hereinafter called the "BUYER'S SUPPLIES"), to the BUILDER at the SHIPYARD in perfect condition ready for installation and in accordance with the time schedule to be furnished by the BUILDER to meet the building schedule of the VESSEL.

 

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

 

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

 

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

 

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

 

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

 

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

 

Furthermore, if the delay in delivery of the BUYER'S SUPPLIES and the necessary document or advice for such supplies should exceed ten (10) days from the date specified by the BUILDER, the BUILDER shall be entitled to proceed with construction of the VESSEL without installation of such items (regardless of their nature or importance to the BUYER or the VESSEL) in or on the VESSEL without prejudice to the BUILDER's right hereinabove provided, and the BUYER shall accept the VESSEL so completed.

 

2. RESPONSIBILITY OF THE BUILDER

 

The BUILDER shall be responsible for storing, safekeeping and handling the BUYER'S SUPPLIES, which the BUILDER is required to install on board the VESSEL under the SPECFICATIONS after delivery of such supplies to the SHIPYARD, and shall install such supplies on board the VESSEL at the BUILDER's expense.

 

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

 

(End of Article)

 

 

1. DECISION BY THE CLASSIFICATION SOCIETY:

 

If a dispute arises between the parties hereto in regard to the design and/or construction of the VESSEL, its machinery and equipment, and/or in respect of the materials and/or workmanship thereof and/or thereon, and/or in respect of interpretations of the CONTRACT or the SPECIFICATIONS, the parties may by mutual agreement refer the dispute to the CLASSIFICATION SOCIETY or to such other expert as may be mutually agreed between the parties hereto, and whose decision shall be final, conclusive and binding upon the parties hereto.

 

2. LAWS APPLICABLE

 

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

 

3. PROCEEDINGS OF ARBITRATION:

 

In the event that the parties hereto do not agree to settle a dispute according to Paragraph 1 of this Article and/or in the event of any other dispute of any kind whatsoever between the parties and relating to this CONTRACT or its rescission or any stipulation herein, such dispute shall be submitted to arbitration in London.

 

If the parties cannot agree upon the appointments of the single arbitrator within two (2) week after one of the parties has given notice to the other party notifying that the other party refer the dispute to arbitration, the dispute shall be settled by three arbitrators, each party appointing one arbitrator, the third being appointed by the London Maritime Arbitrators Association. If either of the appointed arbitrators refuses or is incapable of acting, the party who appointed him shall appoint a new arbitrator in his place.

 

If one party fails to appoint an arbitrator - either originally or by way of substitution - for two (2) week after the other party having appointed its arbitrator, has served the party making default with notice to make the appointment, the London Maritime Arbitrators Association shall, after application from the party having appointed its arbitrator, also appoint an arbitrator on behalf of the party making default. The award of the arbitration made by the sole arbitrator or by the majority of the three arbitrators as the case may be shall be final, conclusive and binding upon the parties hereto.

 

The parties hereby acknowledge that time is of the essence in obtaining an award on such dispute from the arbitration panel and the parties hereby agree that the arbitration shall be conducted according to the following timetable:

 

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

 

(b)	The respondent in the arbitration to serve points of defence and points of counterclaim, if any, within fourteen (14) days days thereafter.

 

(c)	The claimant to serve points of reply and defence to counterclaim, if any, within seven (7) days thereafter and the hearing of the arbitration to commence within eight (8) weeks of the appointment of the panel.

 

4. NOTICE OF AWARD:

 

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

 

5. EXPENSES:

 

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

 

6. ENTRY IN COURT:

 

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

 

7. 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 postponement of the DELIVERY DATE which the Arbitrator or the Arbitration Board may deem appropriate.

 

(End of Article)

 

 

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

 

Notwithstanding the foregoing, the BUYER may, with prior notification to the BUILDER and its acknowledgement of receipt thereof; assign its right, interest and benefit to and in this CONTRACT to a financial institution(s) which provide(s) financing to the BUYER relating to the installments of the CONTRACT PRICE hereunder; provided that the BUYER shall remain responsible for the performance of this CONTRACT; and provided, further, that the BUYER shall give a written notice to the BUILDER of such assignment promptly after such assignment having been made.

 

It is understood that any expenses or charges incurred due to the transfer of this CONTRACT shall be for the account of the BUYER.

 

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

 

(End of Article)

 

 

1. TAXES :

 

 

2. DUTIES :

 

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

 

 

3. INSURANCE:

 

From the time of launching of the VESSEL until the same is completed, delivered to and accepted by the BUYER, the BUILDER shall, at its own cost and expense, keep the VESSEL and all machinery, materials, equipment, appurtenances and outfit, delivered to the SHIPYARD or built into, or installed in or upon the VESSEL fully insured against all risks including war risk with first class insurance companies or underwriters in Korea under coverage corresponding to the London Institute BUILDER's Risks Clause, and shall provide the BUYER with a copy of all insurance policies upon issuance.

 

The amount of such insurance coverage shall, up to the date of delivery of the VESSEL, be in an amount at least equal to, but not limited to, the aggregate of the instalment payments made by the BUYER to the BUILDER.

 

The policy referred to hereinabove shall be taken out in the name of the BUILDER and all losses under such policy shall be payable to the BUILDER.

 

 

(End of Article)

 

 

1. PATENTS, TRADEMARKS AND COPYRIGHTS

 

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

 

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

 

2. RIGHTS TO THE SPECIFICATIONS, PLANS, ETC.

 

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

 

In case the BUYER requests the prior written consent of the BUILDER as set out in the above paragraph, the BUYER shall provide the BUILDER with a written undertaking from the recipient stating that (1) he acknowledge and shall observe the foregoing terms concerning the BUILDER' s right to confidential information and (2) any confidential information furnished in tangible form shall not be duplicated by recipient except for the purpose of the job specifically assigned to him (3) Upon the completion of his job requiring reference to the confidential information, recipient shall return to the BUYER at his option or otherwise destroy all the confidential information received in written or tangible form including copies or reproductions or other media containing such confidential information. (4) Any documents or other media developed by the recipient containing confidential information shall be destroyed by the recipient.

 

(End of Article)

 

 

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

 

(End of Article)

 

 

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

 

To the BUILDER : HYUNDAI MIPO DOCKYARD CO., LTD.

 

1381, Bangeo-Dong, Dong-Ku, Ulsan 682-712, Korea

 

Attention : ******

 

  Tel          : ******

 

Facsimile : ******

 

E-mail       : ******

 

To the BUYER East Gulf Shipholding, Inc.

 

do N. W. Johnsen & Co., Inc. One Whitehall Street

 

New York, New York 10004, USA

 

Attention : ******

 

  Tel          : ******

 

Facsimile : ******

 

E-mail       : ******

 

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

 

(End of Article)

 

 

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

 

(End of Article)

 

ARTICLE XX : EXCLUSIVENESS

 

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

 

(End of Article)

 

 

All terms and conditions of this CONTRACT are strictly confidential and shall not be divulged to any third party without the mutual agreement of the BUYER and BUILDER except as required for financiers, consultants and contractors of the BUYER and BUILDER who will also be bound by this confidentiality provision

 

(End of Article)

 

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

 

BUYER BUILDER

 

For and on behalf of For and on behalf of

 

EAST GULF HYUNDAI MIPO

 

SHIPHOLDING, INC. DOCKYARD CO., LTD

 

By: _/s/******________________                                                                                     By:_/s/******________________

Name:           ******                                                                Name: ******

Title:           ******                                                                Title:   ******

 

 

EXHIBIT "A"

 

LETTER OF GUARANTEE

 

Letter of Guarantee No.:

 

Date : , 2009

 

Gentlemen:

 

We hereby issue our irrevocable letter of guarantee number  in favour of (hereinafter called the "BUYER") for account of Hyundai Mipo Dockyard Co., Ltd., Ulsan, Korea (hereinafter called the "BUILDER") as follows in connection with the shipbuilding

contract dated , 2009 (hereinafter called "CONTRACT") made by and between the BUYER and the BUILDER for the construction of  having the BUILDER's Hull No. (hereinafter called the "VESSEL").

 

If, in connection with the terms of the CONTRACT, the BUYER shall become entitled to a refund of the installment payments of the CONTRACT PRICE (as defined in Article X.2 of the CONTRACT — "First Installment" through "Fifth Installment") made to the BUILDER prior to the delivery of the VESSEL, we hereby irrevocably guarantee, as primary obligor and not as a surety only, the repayment of the same to the BUYER within thirty (30) days after demand not exceeding US$ (Say U.S. Dollars  only)

together with interest thereon at the rate of per cent ( %) per annum from the date following the date of receipt by the BUILDER of the first installment payment of the contract price to the date of remittance by telegraphic transfer of such refund in relation to such instalment.

 

The amount of this Letter of Guarantee will be automatically increased upon the BUILDER's receipt of the respective instalment, not more than times, each time by the amount of instalment plus interest thereon as provided in the CONTRACT, but in any eventuality the amount of this guarantee shall not exceed the total sum of US$ (Say U.S. Dollars

only) plus interest thereon at the rate of per cent ( %) per annum from the date following the date of the BUILDER's receipt of each instalment to the date of remittance by telegraphic transfer of the refund in relation to such installment.

The payment of this Letter of Guarantee shall be made against the BUYER's first written demand and signed statement certifying that the BUYER's demand for refund has been made in conformity with Article X of the CONTRACT and the BUILDER has failed to make the refund within thirty (30) days after the BUYER's demand. Refund shall be made to the BUYER by telegraphic transfer in United States Dollars.

 

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

 

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

 

Notwithstanding the provisions hereinabove, in the event that within thirty (30) days from the date of your demand from us referred to above, we receive notification from you or the BUILDER accompanied by written confirmation to the effect that BUYER's claim to cancel the CONTRACT or BUYER's claim for refundment thereunder has been disputed and referred to arbitration in accordance with the provisions of the CONTRACT, we shall under this Letter of Guarantee, refund to you the sum adjudged to be due to you from the BUILDER pursuant to the award made under such arbitration immediately upon receipt from you of a demand for the sums so adjudged and a copy of the award.

 

This letter of guarantee shall become null and void upon receipt by the BUYER of the sum guaranteed hereby or upon acceptance by the BUYER of the delivery of the VESSEL in accordance with the terms of the CONTRACT and, in either case, this letter of guarantee shall be returned to us.

 

All payments under this Letter of Guarantee will be made to you without any withholding, deduction, set-off or counterclaim of whatsoever nature, and in the event that any applicable law, other than the laws of USA, requires us to make any such withholding, deduction, set-off or counterclaim we will pay to you such gross amounts as will result in your receiving after such withholding, deduction, set-off or counterclaim the full amount claimed by you in your demand for repayment from us.

 

This Letter of Guarantee shall not be affected by any time or indulgence granted to the BUILDER by the BUYER, by (i) any alteration in the terms and conditions of the CONTRACT, (ii) by any failure, defect, illegality or unenforceability of the CONTRACT, any of its terms and conditions or any of the BUILDER's obligations thereunder or (iii) by the insolvency of the BUILDER.

 

This letter of guarantee is assignable and valid from the date of this letter of guarantee until such time as the VESSEL is delivered by the BUILDER to the BUYER in accordance with the provisions of the CONTRACT.

 

Any demand under this Letter of Guarantee shall be made in writing and be sent by fax or delivered by courier to us as follows:

 

Address: Fax No:

 

Any notices shall be sent to us by fax at the number specified above or delivered by courier to the address specified above.

 

This guarantee shall be governed by and construed in accordance with the laws of England and the undersigned hereby submits to the non-exclusive jurisdiction of the courts of England.

 

Very truly yours, for and on behalf of

 

By                                               

 

Name :

 

Title :

 

EXHIBIT "B"

 

Hyundai Mipo Dockyard Co., Ltd.

 

1381, Bangeo-Dong, Dong-Ku,

 

Ulsan, 682-712                                                                               Date : , 2009

 

Korea

 

 

Gentlemen,

 

In consideration of your executing a shipbuilding contract (hereinafter called the "CONTRACT") dated, 2009 with (hereinafter called the "BUYER") providing for the construction of having the BUILDER's Hull No.  (hereinafter called the "VESSEL"), and providing, among other things, for payment of the contract price amounting to United States Dollars only (US$ ) for the VESSEL, prior to, upon and after the delivery of the VESSEL, the undersigned, as a primary obligor and not as a surety merely, hereby unconditionally and irrevocably guarantees to you, your successors and assigns, the due and faithful performance by the BUYER of all its liabilities and responsibilities under the CONTRACT and any supplements, amendments, changes or modifications hereinafter made thereto including but not limited to, due and prompt payment of the contract price (whether on account of principal, interest or otherwise) by the BUYER to you, your successors and assigns under the CONTRACT, notwithstanding any obligation of the BUYER being or becoming unenforceable by defect in or want of its powers, (hereby expressly waiving notice of any such supplement, amendment, change or modification as may be agreed to by the BUYER) and confirms that this guarantee shall be fully applicable to the CONTRACT whether so supplemented, amended, changed or modified and if it shall be assigned by the BUYER in accordance with the terms of the CONTRACT. This guarantee will expire on the fulfillment by the BUYER of it's obligation under the CONTRACT.

 

The undersigned hereby certifies, represents and warrants that all acts, conditions and things required to be done and performed and to have occurred precedent to the creation and issuance of this guarantee, and to constitute the guarantee the valid and legally binding obligation of the undersigned enforceable in accordance with its terms have been done and performed and have occurred in due and strict compliance with applicable laws.

 

The payment by the undersigned under this guarantee shall be made forthwith within thirty (30) days upon receipt by us of written demand from you including a statement that the BUYER is in default of payment of the amounts (including, but not - limited to, the instalment(s) payable prior to or upon delivery of the VESSEL) that were due under the CONTRACT, without requesting you to take any or further procedure or step against the BUYER. In the event that-any withholding, deduction, set-off or counterclaim is imposed by any law, other than the laws of Korea, the undersigned will pay such additional amount as may be necessary in order that the actual amount received after withholding, deduction, set-off or counterclaim shall equal to the amount that wo uld have been received if such withholding, deduction, set-off or counterclaim were not required.

 

Notwithstanding the provisions hereinabove, in the event that within thirty (30) days from the date of your claim to the BUYER referred to above, we receive notification from you or the BUYER accompanied by written confirmation to the effect that your claim to cancel the CONTRACT or your claim for the payment thereunder has been disputed and referred to arbitration in accordance with the provisions of the CONTRACT, we shall under this guarantee, pay to you the sum adjudged to be due to you by the BUYER pursuant to the award made under such arbitration immediately upon receipt from you of a demand for the sums so adjudged and a copy of the award.

 

This guarantee shall be governed by and interpreted in accordance with the laws of England and the undersigned hereby submits to the non-exclusive jurisdiction of the Courts of England and appoints    to receive service of proceedings in such courts on its behalf.

 

Very truly yours, For and on behalf of

 

By                                             

 

Name :

 

Title :