STANDARD SHIPBULIDING CONTRACT

THIS CONTRACT, made this                                 day of                 ,

20               , by and between                          , a corporation organized and existing under the laws of Korea, having its principal office at                , Korea(hereinafter called the “BUILDER”), the party of the first part, and                 , a corporation organized and existing under the laws of                              , having its principal office at                      (hereinafter called the “BUYER”), the   party of the second part,

WITNESSETH

In consideration of the mutual covenants herein contained, the BUILDER agrees to build, launch, equip and complete at its

(hereinafter called the “Shipyard”) and sell and deliver to the BUYER one(1)

more fully described in Article Ⅰ hereof (hereinafter called the “VESSEL”), and the BUYER agrees to purchase and take delivery of the VESSEL from the BUILDER and to pay for the same, all upon the terms and conditions hereinafter set forth.

ARTICLE I  DESCRIPTION AND CLASS

1. Description

The vessel shall have the BUILDER’s Hull No. ______________ and shall be constructed, equipped and completed in accordance with the provisions of the this Contract, and the Specifications and the General Arrangement Plan(herein collectively called the “Specifications”) signed by each of the parties hereto for identification and attached hereto and made an integral part hereof.

2. Dimensions and Characteristics

Length, overal

Length, between perpendiculars

Breath, moulded

Depth, moulded

Designed loaded draft, moulded

Gross tonnage

Propelling Machinery

Deadweight, guaranteed

Trial speed, guaranteed

Fuel consumption, guaranteed

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

3. Classification, Rules and Regulations

The VESSEL, including its machinery, equipment and outfittings shall be constructed in accordance with the rules(the edition and amendments thereto being in force as of the date of this Contract) of and under special survey of the Korean Register of Shipping(herein called the “Classification Society”), and shall be distinguished in the register by the symbol of KR      .

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

The VESSEL shall also comply with the rules, regulations and requirements of other regulatory bodies as described in the Specifications in effect as of the date of this Contract.

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

4. Subcontracting

The BUILDER may, at its sole description and responsibility, subcontract any portion of the construction work of the VESSEL.

5. Registration

The VESSEL shall be registered by the BUYER at its own cost and expense under the laws of                                                           with its home port of                                                   at the time of its delivery and acceptance hereunder.

ARTICLE II  CONTRACT PRICE AND TERMS OF PAYMENTS

1. Contract Price

The contract price of the VESSEL as per Article Ⅰ is Korean Won,

(US $                         )(hereinafter called the “Contract Price”).

2. Adjustment of Contract price

Increase or decrease of the Contract Price, if any, due to adjustment and modification made in accordance with the provisions of this Contract shall be paid or credited upon delivery of the VESSEL in the manner as hereinafter provided.

3. Terms of Payment

The Contract Price shall be paid by the BUYER to the BUILDER in installments as follows;

(a) 1st Installment :

The sum of Korean Won                      (US $                       ), equivalent to twenty percent (20%) of the Contact Price, shall be paid on the

day of                         , 20                    .

(b) 2nd Installment :

The sum of Korean Won                      (US $                         ), equivalent to twenty percent (20%) of the Contract Price, shall be paid upon steel cutting of the VESSEL(hereinafter called the “2nd Installment”).

(c) 3rd Installments :

The sum of Korean Won                                 (US $                                ), equivalent to twenty percent (20%) of the Contract Price, shall be paid upon keel-laying of the VESSEL (hereinafter called the “3rd Installment”).

(d) 4th Installment :

The sum of Korean Won                       (US $                         ), equivalent to twenty percent (20%) of the Contract Price, shall be paid upon launching of the VESSEL (hereinafter called the “4th Installment”).

(e) 5th Installment :

The sum of Korean Won                   (US $                          ), equivalent to twenty percent (20%) of the Contract Price, plus any increase or minus any decrease due to modification and/or adjustment of the Contract Price, shall be paid upon delivery of the VESSEL(hereinafter called the “5th Installment”).

4. Method of Payment

Any and all payments by the BUYER to the BUILDER under this Contract shall be made in Korean Won or in United States Dollars to the account of the Export-Import Bank of Korea, Seoul, Korea (hereinafter called the “KOEXIM”) in favour of the BUILDER or any other bank in favour of the BUILDER, as designated and notified by the builder, under separate telefax advice to the BUILDER.

(a) 1st Installment

On the                           day of                    , 20                  , the BUYER shall remit the 1st Installment by telegraphic transfer to the KOEXIM or any other bank in favour of the BUILDER.

(b) 2nd Installment

Upon receipt of the BUILDER’s telefax notice that the steel cutting of the VESSEL has been done, the BUYER shall, within three (3) Banking Days after receipt of such notice by the BUILDER, remit by telegraphic transfer the amount of the 2nd Installment to the KOEXIM or any other bank in favour of the BUILDER.

(c) 3rd Installment

Upon receipt of the BUILDER’s telefax notice that the keel of the VESSEL has been laid, the BUYER shall, within three (3) Banking Days after receipt of such notice by the BUILDER, remit by telegraphic transfer the amount of the 3rd Installment to the KOEXIM or any other bank in favour of the BUILDER.

(d) 4th Installment

Upon receipt of the BUILDER’s telefax notice that the VESSEL has been launched, the BUYER shall, within three (3) Banking Days after receipt of such notice by the BUILDER, remit by telegraphic transfer the amount of the 4th Installment to the KOEXIM or any other bank in favour of the BUILDER.

(e) 5th Installment

On the Actual Delivery Date as set forth in Article Ⅶ. 1(b) hereof, the BUYER shall deposit the amount of the 5th Installment as adjusted, if any, at the account of KOEXIM or any other bank in favour of the BUILDER, as designated and notified by the BUILDER by telegraphic transfer remittance prior to the Delivery of the VESSEL, with instructions that the said installment is payable to the BUILDER against presentation by the BUILDER to KOEXIM or the other bank, as the case may be, of a duplicate original copy of PROTOCOL OF DELIVERY AND ACCEPTANCE of the VESSEL duly signed by the parties hereto.

With respect to the 2nd, 3rd, 4th and 5th Installments, the BUILDER shall advise the BUYER by telefax of the steel cutting, keel-laying, launching, delivery of the VESSEL, respectively, at least ten (10) Days prior to the scheduled dates hereof. No payment under this Contract shall be delayed or withheld by the BUYER by reason of any dispute or disagreement of whatsoever nature arising between the parties hereto.

Whenever any payment under this Contract shall become due on a day which is not a Banking Day, the due date thereof shall be the immediately following Banking Day, unless such day falls in the next calendar month, in which event such due date shall be the immediately preceding Banking Day. In this Contract, “Banking Day” shall mean a day on which banks are open for business in New York and Seoul and on which deposit transactions in Dollars are being carried out in the London Interbank Market.

Expenses and bank charges for remitting payments and any taxes, duties, expenses and fees incurred in connection with such payment shall be for the account of the BUYER.

5. Prepayment

Prepayment of any installment shall be subject to mutual agreement between the parties.

ARTICLE III   ADJUSTMENT OF CONTRACT PRICE

The Contract Price shall be subject to adjustment, as hereinafter set forth, in the event of the following contingencies(it being understood by both parties that any reduction of the Contract Price is by way of 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 Ⅶ hereof (ending as of twelve o’clock midnight of the thirtieth (30th) day of delay).

(b) If the delivery of the VESSEL is delayed more than thirty (30) days after the Delivery Date, then, in such event, beginning at twelve o’clock midnight of the thirtieth (30th) day after the Delivery Date, the Contract Price shall be reduced by deducting therefrom as follows:

31st ~ 60th days   Korean Won                        (US $                     )

61st ~ 90th days   Korean Won                        (US $                     )

91st ~ 120th days  Korean Won                        (US $                     )

121st ~ 150th days Korean Won                        (US $                     )

151st ~ 180th days Korean Won                        (US $                     )

181st ~ 210th days Korean Won                        (US $                     )

However, the total reduction in the Contract Price shall not be more than as would be the case for a delay of hundred and eighty (180) days, counting from midnight of the thirtieth (30th) day after the Delivery Date at the above specified rate of reduction.

(c) But, if the delay in delivery of the VESSEL should continue for a period of hundred and eighty (180) days from the thirty-fist (31st) day after the Delivery Date, then in such event, and after such period has expired, the BUYER may at its option rescind this Contact in accordance with the provisions of Article Ⅹ hereof.  The BUILDER may, at any time after the expiration of the aforementioned hundred and eighty (180) days of delay in delivery, if the BUYER has not served notice of rescission as provided in Article Ⅹ hereof, demand in writing that the BUYER shall make an election, in which case the BUYER shall, within fifteen (15) days after such demand is received by the BUYER, notify the BUILDER of its intention either to rescind this Contract or to consent to the acceptance of the VESSEL at an agreed future date; it being understood by the parties hereto that, if the VESSEL  is not delivered by such future date, the BUYER shall have the same right of rescission upon the same terms and conditions as hereinabove provided.

(d) If the BUYER requests in writing that the delivery of the VESSEL be made earlier that the Delivery Date, and if the delivery of the Vessel is made, in response to such request of the BUYER, more than thirty (30) days earlier than the Delivery Date, then, in such event, beginning with the thirty-first (31st) day prior to the Delivery Date, the Contract Price of the VESSEL shall be increased by adding thereto ￦________________ for each full day (it being understood that the BUILDER’S acceptance of such BUYER’S request for early delivery shall be in no way construed as change or alteration of the Delivery Date under 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 Ⅷ and/or any other reason under this Contract, is not delivered by the date upon which delivery is required under the terms of this Contact.

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 below the guaranteed speed of the VESSEL.

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

For Three-tenths (3/10) of a knot a total sum of ￦           (US $ )

For Four-tenths	(4/10) of a knot   a total sum of ￦           (US $ )

For Five-tenths	(5/10) of a knot   a total sum of ￦           (US $ )

For Six-tenths	(6/10) of a knot   a total sum of ￦           (US $ )

For Seven-tenths(7/10) of a knot   a total sum of ￦           (US $ )

For Eight-tenths(8/10) of a knot   a total sum of  ￦           (US $ )

For Nine-tenths	(9/10) of a knot   a total sum of  ￦           (US $ )

For One(1) knot a total sum of  ￦           (US $ )

(c) If the deficiency in actual speed of the VESSEL upon trial run is more than one (1) full knot below the guaranteed speed of the VESSEL, then the BUYER may, at its option, reject the VESSEL and rescind this Contract in accordance with the provisions of Article Ⅹ hereof, or may accept the VESSEL at a reduction in the Contract Price as above provided for one (1) full knot only, that is, at a total reduction of ￦                          .

3. Fuel Consumption

(a) The Contract Price shall not be affected or changed by reason of the fuel consumption of the VESSEL, as determined by                              trial as per the Specifications, being more than the guaranteed fuel consumption of the VESSEL, if such excess is not more than                               percent

(                      %) over the guaranteed fuel consumption.

(b) However, commencing with and including an excess of

percent (                  %) in the actual fuel consumption over the guaranteed fuel consumption of the VESSEL, the Contract Price shall be reduced by the sum of ￦                           for each full one percent (1%) increase in fuel consumption above said                             percent (                          %) (fraction of one percent(1%) to be prorated), up to a maximum of                         percent (                   %) over the guaranteed fuel consumption of the VESSEL.

(c) If such actual fuel consumption exceeds                                  percent

(             %) of the guaranteed fuel consumption of the VESSEL, the BUYER may, at its option, reject the VESSEL and rescind this Contract in accordance with the provisions of Article Ⅹ hereof, or may accept the VESSEL at a reduction in the Contract Price as above specified for

percent (                                            %) only, that is, at a total reduction of

￦                                                    .

4. Deadweight

(a) In the event that the actual deadweight of the VESSEL as determined in accordance with the Specifications is less than or in excess of the guaranteed deadweight of the VESSEL, the Contract Price shall be either reduced by the sum of ￦                                 for each full long ton of such deficiency being more than                              (                             ) long tons, up to a maximum reduction of ￦                          , or increased by the sum of ￦                           for each full long ton of such excess being more than                            (                          ) long tons, as the case may be (in both cases disregarding fractions of one(1) long ton).

(b) In the event of such deficiency in the actual deadweight of the VESSEL being                            (                          ) long tons or more, then, the BUYER may, at its option, reject the VESSEL and rescind this Contract in accordance with the provisions of Article Ⅹ hereof or accept the VESSEL at a reduction in the Contract Price as above provided for

(                                              ) long ton only, that is, at a total reduction of

￦                                                    .

5. Effect of Rescission

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

ARTICLE IV    APPROVAL OF PLANS AND DRAWINGS AND INSPECTION DURING CONSTRUCTION

1. Approval of Plans and Drawings

(a) The BUILDER shall submit to the BUYER for its approval four(4) copies each of plans and drawings, the list of which shall be mutually agreed upon between the parties thereto. The BUYER shall, within fourteen (14) days after receipt thereof, return to the BUILDER one (1) copy of such plans and drawings with its approval or amendments it any, written thereon.

(b) When and if the Representative (as hereinafter defined) shall have been sent to the SHIPYARD by the BUYER in accordance with Paragraph 2 of this Article, the BUILDER may submit the plans and drawings in the mutually agreed list to the Representative for his approval.

The Representative shall, as soon as possible, however not later than within seven (7) days after receipt therof, return to the BUILDER one (1) copy of such plans and drawings submitted to him with his written approval or comments, if any. 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 the BUYER shall fail to return the plans and drawing to the BUILDER within the time hereinabove provided, such plans and drawings shall be deemed to have been automatically approved without any comment.

2. Appointment of BUYER’s Representative

The BUYER may send to and maintain at the SHIPYARD, at the BUYER’s own cost and expense, one or more representatives who shall be duly authorized in writing by the BUYER (herein collectively called the “Representative”) to act on behalf of the BUYER in connection with approval of plans and drawings, modification of Specifications, adjustment of Contract Price and the Delivery Date, attendance at inspections and tests relating to the VESSEL, its machinery, equipment, outfitting and any other matters for which he is specifically authorized by the BUYER.

3. Inspection by Representative

The necessary inspections of the VESSEL, its machinery, equipment and outfittings shall be carried out by the Classification Society, other regulatory bodies and/or an inspection team of the BUILDER throughout the entire period of construction, in order to ensure that the construction of th VESSEL is duly performed in accordance with this Contract and the Specifications, The Representative shall have, during construction of the VESSEL, the right to attend such tests and inspections of the VESSEL, its machinery and equipment as are mutually agreed between the BUYER and BUILDER. The BUILDER shall give a notice to the Representative reasonably in advance of the date and place of such test and inspections to be attended by him for his convenience. Failure of the Representative to be present at such tests and inspections after due notice to him as above provided shall be deemed to be a waiver of his right to be present.

In the event that the Representative discovers any construction or material or workmanship which is not deemed to conform to the requirements of this Contract and/or the Specifications, the Representative shall promptly give the BUILDER a notice in writing as to such non-conformity. Upon receipt of such notice from the Representative, the BUILDER shall correct such non-conformity, if the BUILDER agrees to his view. In all working hours during the construction of the VESSEL until delivery thereof, the Representative shall be given free and ready access to the VESSEL, its engines and accessories, and to any other place where work is being done, or materials are being processed or stored, in connection with the construction of the VESSEL, including the yards, workshops, stores and offices of the BUILDER, and the premises of subcontractors of the BUILDER, who are doing work or storing materials in connection with the VESSEL’S construction,

4. Facilities

The BUILDER shall furnish the Representative and his assistant(s) with adequate office space, and such other reasonable facilities according to the BUILDER’S practice at or in the immediate vicinity of the Shipyard as may be necessary to enable them to effectively carry out their duties.

5. Liability of BUILDER

The representative and his assistant(s) shall at all times be deemed to be the employees of the BUYER and not of the BUILDER. The BUILDER 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 BUILDER 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 a gross negligence of the BUILDER, or of any of its employees or agents or subcontractors. Nor shall the BUILDER 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 BUILDER, or of any of its employees or agents or subcontractors.

6. Responsibility of BUYER

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

The BUILDER has the right to request the BUYER to replace 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 such BUILDER’S request is justified, the BUYER shall effect such replacement as soon as conveniently arrangeable.

ARTICLE V   MODIFICATIONS

1. Modifications of Specifications

The specifications may be modified and/or changed by written agreement of the parties hereto, provided that such modifications and/or changes or an accumulation thereof will not, in the BUILDER’S judgement, adversely affect the BUILDER’S planning or program in relation to the BUILDER’S other commitments, and provided, further, that the BUYER shall first agree, before such modifications and/or changes are carried out, to alterations in the Construct 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 BUILDER has the right to continue construction of the VESSEL on the basis of the Specifications until the BUYER has agreed to such adjustment.

Such agreement may be effected by exchange of letters signed by the authorized representatives of the parties hereto or by cables confirmed by such letters manifesting agreements of the parties hereto which shall constitute amendments to this Contract and/or the Specifications.

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

2. Changes in Class, etc.

If, after the date of this Contract, the requirements of any rule and regulations as to which the construction of the VESSEL is required to conform, are altered or changed by the Classification Society or other regulatory bodies specified in the Specifications or to whose rule and regulations the construction of the VESSEL is required to conform, authorized to make such alterations or changes, either of the parties hereto, upon receipt of due notice from the Classification Society  or other regulatory bodies concerned, shall forthwith transmit such notice to the other in writing. Within ten (10) days after the first receipt of such notice from the Classification Society or other regulatory bodies concerned or from the BUILDER transmitting the notice it has received, the BUYER shall decide, in its sole discretion, and notify the BUYER in writing, whether such alterations or changes should be made in the VESSEL.

The BUILDER shall not be obliged to comply with such alterations and/or changes if the BUYER fails to notify the BUILDER of its decision within the time limit stated above.

The BUILDER shall comply with such alterations or changes, if so required by the BUYER, provided that such modifications and/or changes will not, in the BUILDER’s judgement, adversely affect the BUILDER’s construction schedule and/or the normal working schedule of the SHIPYARD, and provided further that the BUYER and the BUILDER shall first agree to adjustment of the Contract Price, the Delivery Date, Speed and other terms and conditions of this Contract and the Specifications occasioned by or resulting from such alterations and/or changes.

Any delay in the construction of the VESSEL caused by the BUYER’s delay in making a decision or agreement as above shall constitute a permissible delay under this Contract. Such Agreements by the BUYER shall be effected in the same manner as provided in Paragraph 1 of this Article for modifications and, or changes of the Specifications.

3. Substitution of Materials

In the event that any materials, machinery or equipment required by the Specifications or otherwise under this Contact for the construction of the VESSEL cannot be procured in time or insufficient quantity to maintain the Delivery Date of the VESSEL, or are unreasonably high in price compared with the prevailing international market price, the BUILDER may, provided that the BUYER shall so agree in writing, and the performance of the VESSEL as set forth in this Contract and the Specifications shall not be adversely affected, supply other materials capable of meeting the requirements of the Classifications Society and of the rules, regulations, requirements and recommendations with which the construction of the VESSEL must comply. Any agreement as to such substitution of materials shall be effected in the manner provided in Paragraph 1 of this Article.

ARTICLE VI    TRIALS

1. Notice

The BUYER shall receive from the BUILDER at least twenty (20) days prior notice by telefax confirmed in writing of the expected time and place of the trial run of the VESSEL and the BUYER shall promptly acknowledge receipt of such notice. Such date shall be confirmed by the BUILDER at least seven (7) days in advance by telefax in writing. However, if the trial run of the VESSEL is postponed or delayed due to unfavorable weather condition for the trial run of the VESSEL, then no further fresh notice under this Paragraph shall be required, but the BUILDER shall keep the BUYER duly informed of a new date of trial run. The Representative shall be entitled to be on board the VESSEL to witness such trial run. Failure of attendance of the representative at the trial run of the VESSEL for any reason whatsoever after due notice to the BUYER as provided above shall be deemed to be a waiver by the BUYER of its right to have the Representative on board the VESSEL at the trial run, and the BUILDER may conduct the trial run without the Representative being present, and in such case the BUYER shall be obligated to accept the VESSEL on the basis of a certificate by the BUILDER and Classification surveyor that the VESSEL, after trial run, subject to alterations and corrections if necessary, it found to conform to this Contract and the Specifications.

2. Weather Conditions

The trial run shall be carried out under the weather condition which is deemed favorable enough by the judgement of the BUILDER. 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 that weather condition permits.

If during the trial run of the VESSEL, the weather should become unfavourable as per above, the trial run shall be discontinued and postponed until the first favourable day next following, 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.

Any delay of trial run caused by unfavourable weather condition shall operate to extend the Delivery Date of the VESSEL 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

(a) All expenses in connection with the trial run are to be for the account of the BUILDER and the BUILDER shall provide at its own expense necessary crew to comply with conditions of safe navigation. From the BUYER’s side, the Representative(s) only will be permitted on board the VESSEL during the trial run, unless otherwise agreed. The trial run shall be conducted in the manner prescribed in the Specifications, and shall prove fulfillment of the performance of the VESSEL as set forth in the Specifications. The course of trial run shall be determined by the BUILDER.

(b) Notwithstanding the foregoing, the BUYER has the option to supply fuel oil, diesel oil, lubricating oils and greases necessary for the trial run of the VESSEL, and the BUILDER shall pay the BUYER upon delivery of the VESSEL the cost of the quantities of fuel oil, diesel oil, lubricating oils and grease (if supplied by the BUYER) consumed during the trial run at the original purchase price. In measuring the quantities consumed, any lubricating oils and greases remaining in the main engine, sump tank, in other machinery and their pipes, and in the stern tube and the like, shall be excluded.

The quality and quantity of lubricating oils and greases supplied by the BUYER shall be in accordance with the instruction from the BUILDER.

4. Method of Acceptance or Rejection

Within five (5) days after completion of the trial run of the VESSEL, the BUYER shall notify the BUILDER in writing, or by telefax confirmed in writing, of its acceptance or rejection of the VESSEL on the basis of its conformity with the requirements of this Contract and the specifications. Should it develop on the trial run that the VESSEL or any part or equipment thereof does not conform to the requirements of this Contract and/or the specifications, the BUILDER shall promptly take necessary step to correct such non-conformity.

Upon completing of correction of such non-conformity, the BUILDER shall promptly perform such further trial or other test of the VESSEL or the part or equipment thereof concerned as may be deemed necessary to prove the VESSEL’s compliance with the requirements of this Contract and the Specifications, and the BUYER shall, within three (3) days after completion of such further trial or test, advise the BUILDER in writing, or by telefax confirmed in writing of its acceptance or rejection of the VESSEL.

Any notice of rejection of the VESSEL shall state the reason why the VESSEL fails to conform with the requirements of this Contract and the Specifications. If the BUILDER does not agree to the rejections by the BUYER of the VESSEL or any part or equipment thereof, the BUILDER shall so advise the BUYER promptly. In the event the BUYER fails to notify the BUILDER in writing or by telefax confirmed in writing of its acceptance or rejection of the VESSEL within three(3) days from its receipt of the BUILDER’s advise as provided for in the immediate preceding sentence, the BUYER shall be deemed to have accepted the VESSEL.

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

In the event that the BUYER reject the VESSEL within such three(3) days with written notice to the BUILDER the BUYER may terminate this Contract in accordance with the provisions of Article Ⅹ.

5. Effect of Acceptance

The BUYER’s acceptance of the VESSEL, as provided above, shall be final and binding so far as conformity of the VESSEL to this Contract and the Specifications are concerned, and shall preclude the BUYER from refusing formal delivery of the VESSEL, as hereinafter provided, if the BUILDER complies with all other conditions for delivery as provided in Article Ⅶ hereof.

If the BUYER fails to notify the BUILDER of its acceptance or rejection of the VESSEL as hereinabove provided, the BUYER shall be deemed to have accepted the VESSEL. Nothing contained in this Article shall preclude the BUILDER form exercising any and all rights which the  BUILDER has under this Contract if the BUILDER disagrees with the BUYER’s rejection of the VESSEL or any reasons given for such rejection, including arbitration provided in Article Ⅷ. 2. hereof.

6. Disposition of Surplus Consumable Stores

Should any fuel oil, diesel oil, lubricating oil and grease or other consumable stores furnished by the BUILDER for the trial run remain on board the VESSEL at the time of acceptance thereof by the BUYER, the BUYER agrees to by the same from the BUILDER at the actual purchasing price to the BUILDER, and payment by the BUYER shall be effected upon delivery of the VESSEL.

ARTICLE VII   DELIVERY

1. Time and Place

(a) Delivery Date and Place

The VESSEL shall be delivered by the BUILDER to The BUYER at SHIPYARD on or before the ______________ day of _________________ 20________except that, in the event of delay 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 time for delivery of the VESSEL, the aforementioned date of delivery of the VESSEL shall be postponed accordingly (which date, or the date as so postponed, is herein called the “Delivery Date”), The BUILDER shall advise the BUYER by telefax of the estimated Delivery Date at least three(3) months prior to the scheduled date thereof.

(b) Actual Delivery Date

The Actual Delivery Date shall mean the date on which the BUILDER shall have actually delivered the VESSEL to the BUYER. However, in case of the BUYER’s default as provided in Paragraph 1(c) of Article XI, the date on which the BUILDER shall have tendered the VESSEL for delivery shall be regarded as the Actual Delivery Date.

2. When and How effected

Provided that the BUYER shall concurrently with delivery of the VESSEL release to the BUILDER the fifth installment as set forth in Article Ⅱ. 3, and 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 hereto the other of a PROTOCOL OF DELIVERY AND ACCEPTANCE, acknowledging delivery of the VESSEL by the BUILDER and acceptance thereof by the BUYER.

3. Documents to be Delivered to BUYER

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

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

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

(c) PROTOCOL OF STORES OF CONSUMABLE NATURE referred to in Paragraph 3 (b) and 6 of Article Ⅵ hereof, including the original cost thereof.

(d) ALL CERTIFICATES including the BUILDER’s CERTIFICATE required to be furnished upon delivery of the VESSEL pursuant to this Contract and the Specifications. It is agreed that if, through no fault on the part of the BUILDER, the Classification Certificate and/or other certificates are not available at the time of delivery of the VESSEL, provisional certificates shall be accepted by the BUYER, provided that the BUILDER shall furnish the BUYER with the formal certificates as promptly as possible after such formal certificates have been issued.

(e) DECLARATION OF WARRANTY of the BUILDER that the VESSEL is delivered to the BUYER free and clear of any registrations of ownership, liens, charges, claims, mortgages, or other encumbrances upon the BUYER’s title hereto, and in particular, that the VESSEL is absolutely free of all burdens in the nature of imposts, taxes or charges imposed by the Korean authorities, as well as of all liabilities of the BUILDER to its subcontractors, employees and crew, and of all liabilities arising from the operation of the VESSEL in trial runs, or otherwise prior to delivery.

(f) DRAWINGS AND PLANS pertaining to the VESSEL as stipulated in the Specifications.

(g) BILL OF SALE.

(h) COMMERCIAL INVOICE.

(i) Copy of Export Permit issued by Korean Custom.

4. Tender of VESSEL

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

5. 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 shall be in the BUILDER, excepting risks of war, earthquakes and tidal waves.

6. Removal of VESSEL

The BUYER shall take possession of the VESSEL immediately upon delivery and acceptance thereof and shall remove the VESSEL from the premises of the SHIPYARD within three (3) days after delivery and acceptance thereof is effected. If the BUYER shall not remove the VESSEL from the premises of the SHIPYARD within the aforesaid three (3) days, then, in such event the BUYER shall pay to the BUILDER the reasonable mooring charges of the VESSEL.

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

1. Causes of Delay

If, at any time before the actual delivery, either the construction of the VESSEL or any performance required as a prerequisite of delivery of the VESSEL is delayed due to Acts of God, acts of princes or rulers, intervention of government authorities, war, blockade, revolution, insurrections, mobilization, civil commotion, riots, strikes, sabotages, lockouts, labour shortages, plague, epidemics, fire, flood, typhoons, hurricanes, storms or other weather conditions not included in normal planning, earthquakes, tidal waves, landslides, explosions, collisions, strandings, embargoes, delays in transportation, shortage of materials or equipment, or delay in delivery or inability to take delivery thereof, provided that such materials and equipment at the time of ordering could reasonably be expected by the BUILDER to be delivered in time, prolonged failure or restriction of energy sources including electric current and petroleum, mishaps of casting and/or forging: or by destruction of the SHIPYARD or works of the BUILDER or its subcontractors, or of the VESSEL or any part thereof by fire, flood, or other causes as above specified: or due to delays in the BUILDER’s other commitments resulting from any such causes hereinabove described which in turn delay the construction of the VESSEL or the BUILDER’s performance under this Contract: or due to other causes or accidents beyond control of the BUILDER, its subcontractors or supplier of the nature whether or not indicated by the foregoing words, irrespective of whether or not these events could be foreseen at the day of signing this Contract, the Delivery Date shall be postponed for a period of time which shall not exceed the total accumulated time of all such delays.

2. Notice of delay

Within seven (7) days from the date of commencement of the delay on account of which the BUILDER claims that it is entitled under this Contract to a postponement of the Delivery Date of the VESSEL, the BUILDER shall advise the BUYER by cable confirmed in writing of the date such delay commences and the reasons therefor.

Likewise within seven (7) days after such delay ends, the BUILDER shall advise the BUYER in writing or by cable confirmed in writing of the date such delay ended, and also shall specify the period of time by which the Delivery Date is postponed by reason of such delay. Failure of the BUYER to acknowledge the BUILDER’s notification of any claim for postponement of the Delivery Date within seven (7) day after receipt of such notification shall be deemed to be a wavier by the BUYER of its right to object to such postponement.

3. Definition of Permissible Delay

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

4. Right to Terminate 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 thirty five (135) days or more, then, in such event, the BUYER may terminate this Contract in accordance with the provisions of article Ⅹ hereof.

The BUILDER may, at any time, after the accumulated time of the aforementioned delays justifying termination by the BUYER, demand by telefax confirmed in writing that the BUYER shall make an election, in which case the BUYER shall, within seven (7) days after such demand is received by the BUYER, either notify the BUILDER of its intention to terminate this Contract, or consent to a postponement of the Delivery Date to a specific future date, if the BUYER shall not make an election within seven (7) days as provided herein above, the BUYER shall be deemed to have accepted such extension of the Delivery Date to the future delivery date indicated by the BUILDER: It being understood and agreed by the parties hereto that, if any further delay occurs on account of such causes justifying termination as specified in this Article, the BUYER shall have the same right of termination upon the same terms as hereinabove provided.

ARTICLE IX   WARRANTY OF QUALITY

1. Guarantee

Subject to the provisions hereinafter set forth, the BUILDER undertakes to remedy, free of charge to the BUYER, any defects in the VESSEL which are due to defective material and/or bad workmanship on the part of the BUILDER 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 BUILDER as hereinabove provided.

For the purpose of this Article, the VESSEL shall include her hull, machinery, equipment and gear, but excludes an parts for the VESSEL which have been supplied by or on behalf of the BUYER.

2. Notice of Defects

The BUYER shall notify the BUILDER in writing, or by cable confirmed in writing, of any defects for which claim is made under this guarantee as promptly as possible after discovery thereof. The BUYER’s written notice shall 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 not later than thirty (30) days after such expiry date.

3. Remedy of Defects

(a) The BUILDER shall remedy, at its expense, any defects, against which the VESSEL is guaranteed under this Article, by making all necessary repairs or replacements at the SHIPYARD.

(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 cable confirmed in writing of the time and place such repairs will be made, and if the VESSEL is not thereby delayed, or her operation or working schedule is not thereby impaired, the BUILDER shall have the right to verify by its own representative(s) the nature and extents of the defects complained of. The BUILDER shall, in such case, promptly advise the BUYER by cable, 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 th defects as justifying remedy under this Article, or upon award of the arbitration so determining, the BUILDER shall immediately pay to the BUYER for such repairs or replacements a sum equal to the reasonable cost of making the same repairs or replacements in the 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 BUILDER’s Responsibility

(a) The builder 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 the BUILDER shall 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 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 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 aggravate 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 whatsoever 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 imposed or implied by the law, customary, statutory or otherwise, by reason of the construction and sale of the VESSEL for and to the BUYER.

5. Guarantee Engineer

The BUILDER  shall have the right to appoint a Guarantee Engineer to serve on the VESSEL as its representative for such portion of the guarantee period as the BUILDER may decide. The BUYER and its employees shall give the Guarantee Engineer full cooperation in carrying out his duties as the representative of the BUILDER on board the VESSEL. The BUYER shall accord the Guarantee Engineer the treatment comparable to the VESSEL’s Chief Engineer and shall provide him with accommodations and subsistence at no cost of the BUILDER and/or the Guarantee Engineer.

The BUYER shall pay to the BUILDER the sum of ____________________ per month as a compensation for a part of costs and charges to be borne by the BUILDER in connection with the Guarantee Engineer and also shall pay the expenses of repatriation by air upon termination of his service.

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

ARTICLE X   RESCISSION BY BUYER

1. Notice

The payments made by the BUYER prior to the delivery of the VESSEL shall be in the nature of advances to the BUILDER. 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, then the BUYER shall notify the BUILDER in writing or by cable confirmed in writing, and such rescission shall be effective as of the date notice thereof is received by the BUILDER.

2. Refund by BUILDER

Thereupon the BUILDER shall promptly refund to the BUYER the full amount of all sums paid by the BUYER to the BUILDER on account of the VESSEL, unless the BUILDER proceeds to the arbitration under the provisions of Article ⅩⅢ hereof.

In such event, the BUILDER shall pay the BUYER interest at the rate of ______________ percent (_______________%) 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 BUILDER to the date of remittance by transfer of such refund to the BUYER by the BUILDER, provided, however, that if the said rescission by the BUYER is made under the provisions of Paragraph 4 of Article Ⅷ hereof, then in such event the BUILDER shall not be required to pay any interest.

3. Discharge of Obligations

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

ARTICLE XI   BUYER’S DEFAULT

1. Definition of Default

The BUYER shall be deemed to be in default of performance of its obligations under this Contract in the following cases:

(a) If the BUYER fails to pay of the 1st, 2nd, 3rd and 4th Installments to the BUILDER when such Installment becomes due and payable under the provisions of Article Ⅱ hereof; or

(b) If the fifth Installment is not deposited at the account of KOEXIM or any other bank in accordance with Article Ⅱ.4.(e) hereof or if the said fifth Installment deposit is not released to the BUILDER against presentation by the BUILDER of a duplicate original copy of the PROTOCOL OF DELIVERY AND ACCEPTANCE; or

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

(d) If the BUYER shall become voluntarily or involuntarily dissolved, bankrupt or insolvent by any cause (except for the purpose of reorganization, merger or amalgamation).

2. Interest and Charge

If the BUYER is in default of payment as to any Installment as provided in Paragraph 1 (a) and (b) of this Article, the BUYER shall pay interest on such Installment at the rate of six percent (6%) per annum from the due date thereof to the date of payment to the BUILDER of the full amount including interest; in case the BUYER shall fail to take delivery of the VESSEL as provided in Paragraph 1 (c) of this Article, the BUYER shall be deemed in default of payment of the 5th Installment and shall pay interest thereon at the same rate as aforesaid from and including the day on which the VESSEL is tendered for delivery by the BUILDER.

3. Effect of Default

(a) If any default by the BUYER occurs as provided hereinbefore, the Delivery Date shall be automatically postponed for a period of continuance of such default by the BUYER.

(b) If any default by the BUYER continues for a period of fifteen (15) days, the BUILDER may, at its option, rescind this Contract by giving notice of such effect to the BUYER by cable confirmed in writing. Upon receipt by the BUYER of such notice of rescission, this Contract shall forthwith become null and void and any of the BUYER’s Supplies shall become the sole property of the BUILDER.

In the event of such rescission of this Contract, the BUILDER shall be entitled to retain any Installment or Installments theretofore paid by the BUYER to the BUILDER on account of this Contract.

4. Sale of VESSEL

(a) In the event of rescission of this Contract as above provided, the BUILDER 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 BUILDER thinks fit without being answerable for any loss or damage.

(b) In the event of the sale of the VESSEL in its completed state, the proceeds of the sale received by the BUILDER shall be applied firstly to payment of all expenses attending such sale and otherwise incurred by the BUILDER as a result of the BUYER’s default, and then to payment of all unpaid Installments of the Contract Price and interest on such Installments at the rate of _____________percent (_____________%) per annum from the respective due dates thereof to the date of application.

(c) In the event of sale of the VESSEL in its incompleted state, the proceeds of sale received by the BUILDER shall be applied firstly to all expenses attending such sale and otherwise incurred by the BUILDER  as a result of the BUYER’s default, and then to payment of all costs of construction of the VESSEL less the Installments so retained by the BUILDER and compensation to the BUILDER for a reasonable loss of profit due to the rescission of this Contract.

(d) In either of the above events of sale, if the proceeds of sale exceeds the total of amounts to which such proceeds are to be applied as aforesaid, the BUILDER 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 Installments 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 BUILDER upon request.

ARTICLE XII   INSURANCE

1. Extent of insurance Coverage

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, appurtenance and outfit, delivered to the SHIPYARD or built into, or installed in or upon the VESSEL fully insured 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 polices 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 limit to, the aggregate of the payments made by the BUYER to the BUILDER.

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

2. Application of Recovered Amount

(a) Partial Loss

In the event the VESSEL shall be damaged by any insured cause whatsoever prior to acceptance thereof by the BUYER and in the further event that such damage shall not constitute and actual or a constructive total loss of the VESSEL, the BUILDER shall apply the amount recovered under the insurance policy referred to in Paragraph 1 of this Article to the repair of such damage satisfactory to the Classification Society requirements and the BUYER shall accept the VESSEL under this Contract if completed in accordance with this Contract and Specifications.

(b) Total Loss

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

i) Proceed in accordance with the terms of this Contact, in which case the amount recovered under said insurance policy shall be applied to the reconstruction of the VESSEL’s damage, provided the parties hereto shall have first agreed in writing as to such reasonable postponement of the Delivery Date and adjustment of other terms of this Contract including the Contract Price as may be necessary for the completion of such reconstruction ; or

ii) Refund to the BUYER the amount of all Installments paid to the BUILDER  under this Contract including any BUYER’s Supplies in accordance with Article Ⅹ.2 with interest thereon at the rate that is four percent (4%) per annum, computed from the respectively date on which any sums were paid by the BUYER to the BUILDER (in case of the Installments) and to any third party (in case of the value of the BUYER’s Supplies) to the date of by the BUILDER to the BUYER of the refund, whereupon this Contract shall be deemed to be cancelled and all rights, duties, liabilities and obligations of each of the parties toward the other shall terminate forthwith.

3. Termination of BUILDER’s Obligation to Insure

The BUILDER’s obligation to insure the VESSEL hereunder shall cease and terminate upon delivery thereof and acceptance by the BUYER.

ARTICLE XIII  DISPUTE AND ARBITRATION

1. Proceedings

Any dispute arising out of or in connection with this contract shall be finally settled by arbitration in Seoul in accordance with the Arbitration Rules of the Korean Commercial Arbitration Board, except as hereinafter otherwise specifically provided.

Notwithstanding the preceding provisions of this Paragraph, it is recognized that in the event of any dispute or difference of opinion arising in regard to the construction of the VESSEL, her machinery or equipment, or concerning the quality of materials or workmanship thereof or thereon, such dispute may be referred to the Classification Society upon mutual agreement of the parties hereto as far as the Classification Society agrees to determine such dispute. The decision of the Classification Society shall be final and binding upon the parties hereto.

2. Notice of Award

The award shall immediately be given to the BUYER and the BUILDER in writing or by cable confirmed in writing.

3. Expenses

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

Expenses for the decision of the Classification Society, if any, shall be born equally by the parties.

4. 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 Arbitration Board may deem appropriate.

5. Remark

This Clause is, for the Construction of Korean Ship, simplified, therefore, for the case of the Construction of foreign ships, relating clause in SAJ CONTRACT, Article ⅩⅢ dispute and Arbitration, to be referred.

ARTICLE XIV   RIGHT OF ASSIGNMENT

This Contract shall insure to the benefit of and shall be binding upon the lawful successors and assigns of the parties hereto, provided, however, that neither of the parties hereto shall assign this contract to any third party unless prior consent of the other party is given in writing.

In case of assignment by the BUYER, 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.

In case of Assignment by the BUILDER, the BUILDER shall remain primarily liable for the due performance of all obligations to be performed by the BUILDER hereunder.

ARTICLE XV   TAXES AND DUTIES

1. Taxes and duties incurred in Korea

The BUILDER shall bear and pay all taxes and duties incurred in Korea in connection with execution and/or performance of this Contract as a shipbuilder, excluding any taxes and duties imposed in Korea in connection with execution and/or performance of this Contract as a shipowner, upon the BUYER’s Supplies and income of the Representative which shall be borne by the BUYER.

2. Taxes and Duties incurred outside Korea

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

ARTICLE XVI   PATENTS, TRADEMARKS, COPYRIGHTS, ETCS. :

1. Patents, Trademarks and Copyrights

(a) Machinery and equipment of the VESSEL may bear the patent number, trademark or trade names of the manufacturers.

(b) The BUILDER shall defend and save harmless the BUYER from patentability or claims of patent infringement of any nature of kind, including costs and expenses for, or on account of any of this Contract and also including costs and expenses of litigation, if any.

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

(c) The BUILDER’s obligation hereof does not extend to any item of the BUYER’s Supplies.

2. General Plans, Specifications and Working Drawings

The BUILDER retains all rights with respect to the Specifications, and 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.

ARTICLE XVII   BUYER’S SUPPLIES

1. Responsibility of BUYER

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

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

(c) Any and all of the BUYER’s Supplies shall be subject to the BUILDER’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 BUILDER may repair or adjust the BUYER’s Supplies without prejudice to the BUILDER’s other rights hereunder and without being responsible for any consequences therefrom. In such case, the BUYER shall reimburse the BUILDER for all costs and expense incurred by the BUILDER 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 any of the BUYER’s Supplies within the time designated, the Delivery Date shall be automatically extended for a period of such delay in delivery. In such event, the BUYER shall be responsible for and pay to the BUILDER all losses and damages incurred by the BUILDER by reason of such delay in delivery of the BUYER’s Supplies and such payment shall be made upon delivery of the VESSEL.

If delay in delivery of any of the BUYER’s Supplies exceeds thirty (30) days, then, the BUILDER shall be entitled to proceed with construction of the VESSEL without installation thereof in or on the VESSEL, without prejudice to the BUILDER’s other rights as hereinabove provided, and the BUYER shall accept and take delivery of the VESSEL so constructed.

2. Responsibility of BUILDER

The BUILDER shall be responsible for storing and handling with reasonable care of 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 BUILDER shall not be responsible for quality, efficiency and/or performance of any of the BUYER’s Supplies.

ARTICLE XVIII   NOTICE

1. Address

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

To the BUYER	:

Telephone	:

Telefax No.	:

Attention	:

To the  BUILDER	:

Telephone	:

Telefax No.	:

Attention	:

2. Language

Any notice sent by telefax shall be effective on the date the telefax is received unless specified otherwise in this Contract. Any and all notices and communications in connection with this Contract shall be written in the Korean and the English language.

ARTICLE XIX   EFFECTIVE DATE OF CONTRACT

This contract shall become effective as from the date of execution thereof by the BUYER and the BUILDER.

ARTICLE XX    MISCELLANEOUS

1. Discrepancies

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

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

The Specifications and Plan are also intended to explain each other, and anything show on the Plan and not stipulated in the specifications or stipulated in the Specifications and not shown on the Plan shall be deemed and considered as if embodied in both. In the event of conflict between the Specifications and Plan, the Specifications shall prevail and govern.

2. Entire Agreement

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

3. Amendment

No provision of this Contract may be deemed, modified, waived or terminated except by an instrument in writing executed by each of the parties hereto.

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

BUYER	BUILDER

By	:	By	:

Name :	Name :

Title	:	Title	:

WITNESS	WITNESS

By	:	By	:

Name :	Name :

Title	:	Title	:

LETTER OF GUARANTEE

Date : ______________, 20____________

Gentlemen:

We hereby open our irrevocable letter of guarantee number in favour of ________________________ (hereinafter called the “BUYER”) for account of ________________________(hereinafter called the “BUILDER”) as follows in connection with the shipbuilding contract dated ____________________, 20_________ (hereinafter called “CONTRACT”) made by and between the BUYER and the BUILDER for the construction of one (1) 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 advance payments made to the BUILDER prior to the delivery of the VESSEL, we hereby irrevocably guarantee the repayment of the same to the BUYER within thirty (30) days after demand not exceeding ￦___________________ (US $ _________________) together with interest thereon at the rate of ___________ percent (_________%) per annum from the date following the date of receipt by the BUILDER to the date of remittance by telegraphic transfer of such refund.

The amount of this guarantee will be automatically increased upon the BUILDER’s receipt of the respective installment, not more than (_______) times, each time by the amount of installment 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 $ _________________)  plus interest thereon at the rate of ____________ percent (___________%) per annum from the date following the date of the BUILDER’s receipt of each installment to the date of remittance by telegraphic transfer of the refund.

The payment by the undersigned under this guarantee (subject to the second and third paragraph hereof) shall be made upon simple receipt by us of written demand from you including a 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.

It is herby understood that payment of any interest provided herein is by way of liquidated damaged 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 claim to the BUILDER referred to above, we receive notification from you or the BUILDER accompanied by written confirmation to the effect that your claim to cancel the CONTRACT or your claim for refundment  thereunder has been disputed and referred to arbitration in accordance with the provisions of the CONTRACT, we shall under this guarantee, refund to you the sum adjudged to be due to  you by the BUILDER pursuant to the award made under such arbitration immediately upon receipt from you of a demand for the sum 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.

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.

※참고 : 수출선 계약의 보증서인 경우에는 다음의 규정을 추가함.

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

Very truly yours,

for and on behalf of

By    ________________________

Name ________________________

Title  ________________________