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MARINTEKNIK SHIPBUILDERS (S) PTE LTD.

SHIPBUILDING CONTRACT

BETWEEN

MARINTEKNIK SHIPBUILDERS (S) PTE LTD

AND

FOR

PASSENGER FERRY OPERATOR

DATED:

HULL NO.

1

MARINTEKNIK SHIPBUILDERS (S) PTE LTD.

I N D E X

NO.

CLAUSE

PAGE

1

DEFINITIONS

2

2

AGREEMENT TO PURCHASE AND NATURE OF WORK

4

3

CONTRACT PRICE

6

4

ADJUSTMENT OF CONTRACT PRICE

8

5

SUBSIDIES, TAXES AND DUTIES

10

6

DELIVERY

10

7

MODIFICATIONS, CHANGES AND EXTRAS

12

8

BUYER'S ACCESS TO THE YARD

13

9

TRIALS

14

10

BUILDER'S RESPONSIBILITY

16

11

DELAYS AND EXTENSIONS OF TIME FOR DELIVERY (FORCE MAJEURE)

17

12

DEFAULT OF THE BUYER AND RESCISSION BY THE BUILDER

18

13

RESCISSION BY THE BUYER

20

14

WARRANTY

20

15

INSURANCE

22

16

LAW OF THE CONTRACT AND REFERENCE TO EXPERT AND ARBITRATION

24

17

ENTIRETY OF CONTRACT AND PROHIBITION OF ASSIGNMENT

25

18

NOTICES

26

19

COSTS

27

EXECUTION

APPENDIX A

THE SPECIFICATION

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MARINTEKNIK SHIPBUILDERS (S) PTE LTD.

THIS CONTRACT is made this

(2002).

BETWEEN:-

day of

, Two Thousand And Two

(1) MARINTEKNIK SHIPBUILDERS (S) PTE LTD, a company incorporated in Singapore, with its registered office at 31, TUAS ROAD, JURONG, SINGAPORE 638493 (hereinafter called "the Builder").

AND

(2)

,

a

company

incorporated

in

, with its registered office at

called "the Buyer").

WHEREAS:-

(hereinafter

The Builder has agreed to construct, launch and complete, and, upon conclusion of successful trials to sell and deliver to the Buyer a Catamaran Vessel designated Yard Hull No. 169 (as more particularly described in the Specification dated 9 th March 2000 and hereinafter called "the Vessel") and the Buyer has agreed to purchase and take delivery of the same on the terms and conditions hereinafter set forth.

NOW THEREFORE it is agreed as follows:-

1.

DEFINITIONS

1.01

In this Agreement, unless the context otherwise requires:-

"Builder's Shipyard"

-

means the Builder's shipyard at 31 Tuas Road, Jurong, Singapore;

"Business Day"

-

means a day other than Saturday,

 

Sunday

or

a

public holiday in

Singapore;

 
 

"Classification Society"

-

means [

];

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MARINTEKNIK SHIPBUILDERS (S) PTE LTD.

"Contract Price"

-

means the price payable by the Buyer to the Builder for the Vessel, as specified in Clause 3.01 and as may be adjusted by reason of any modifications, changes or extras agreed by the parties hereto pursuant to Clause 7 or any adjustments thereto made pursuant to Clause 4;

"Delivery Date"

-

means the date specified for the delivery of the Vessel in Clause

 

6.01;

"Excusable Delay"

-

means any delay specified as an Excusable Delay in Clause 11.06;

"Specification"

-

means the Specification dated which have been initialled by the parties hereto for the purpose of identification and which form an integral part of this Contract, a copy of which is attached hereto as Appendix A;

"Surveyor"

-

means the surveyor appointed by the Classification Society to supervise and certify as to the construction of the Vessel; and

"US$"

-

means United States Dollars, the lawful currency of the United States of America.

1.02

Reference to Clauses herein shall be construed as references to the clauses of this Contract.

2.

AGREEMENT TO PURCHASE AND NATURE OF WORK

2.01

The Builder agrees to build and complete the Vessel at the Builder's Shipyard and sell and deliver the Vessel to the Buyer, and the Buyer agrees to purchase and accept delivery of the Vessel from the Builder and to pay the Contract Price to the Builder, all on the terms and conditions hereinafter set forth in this Contract.

2.02

The Builder shall deliver the Vessel, completed in compliance with the Specification, to the Buyer.

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MARINTEKNIK SHIPBUILDERS (S) PTE LTD.

2.03 Subject to Clause 14, the Vessel shall be constructed as provided in the Specification and in accordance with sound shipbuilding practices for new vessels of the general characteristics of the Vessel and, subject to provisions herein, the Vessel shall be in good and seaworthy condition on the Delivery Date.

2.04 The Vessel shall be constructed under the supervision of the Surveyor. The Vessel shall comply with the rules, regulations and requirements of the Classification Society, which are in force as at the date of this Contract. All fees and charges incidental to the classification of the Vessel and its compliance with the said rules, regulations and requirements shall be for the account of the Buyer.

2.05 In the event of a dispute between the parties hereto regarding the classification of the Vessel or its compliance with the rules, regulations and requirements of the Classification Society, the decision of the Surveyor shall be final and binding upon the parties.

2.06 In the event of any conflict between this Contract and the Specification, the provisions of this Contract shall prevail, and between the Specification and the Drawings, the Specification shall prevail. Should there be any inconsistencies or contradictions in the Specification, the Builder shall be entitled, at its sole discretion, to determine the correct Specification.

2.07 Upon delivery of the Vessel to

the

Buyer,

the

responsible for registering the Vessel under [

cost and expense.

Buyer

]

be

at its own

shall

2.08 The Builder may, at its sole discretion, subcontract the whole or any portion of the construction work of the Vessel to subcontractors.

The engines, gearboxes, and waterjets for the Vessel are to be supplied by the following:-

Engines Diesels

:

Gear Box

:

Waterjets

:

and shall be installed by the Builder in accordance with the directions of the said manufacturers or suppliers. Except as provided in Clause 14, no warranty or representation is made by the Builder in respect of the engines, gearboxes, generators, waterjets as to their availability or delivery. Any delay in the delivery of the Vessel attributable to a delay in the delivery of the engines, gearboxes, generators, waterjets will be deemed an Excusable Delay to which the provisions of Clause 11 shall apply.

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MARINTEKNIK SHIPBUILDERS (S) PTE LTD.

2.09

The purpose for which the Specification (including any drawings or designs therein or supplemental thereto) is supplied to the Buyer is to enable the Buyer to operate the Vessel and to effect its registration. The Buyer hereby acknowledges that all property in the design of the Vessel vests in Marinteknik Design (S) Pte Ltd and that the Builder is licensed to build vessels of the said design upon condition that each Shipbuilding Contract imposes an obligation on the Buyer NOT to use the drawings, designs or Specifications for any other purposes, and to keep the drawings, designs and Specification confidential. Accordingly, the Buyer hereby undertakes that it shall not use, or permit the use by any person, the drawings, designs and Specification for purposes other than the operation and registration of the Vessel. And hereby further undertakes that it shall keep, and shall procure that its employees, officers and associates keep confidential the drawings, designs and Specification. To assist the Buyer to sell or charter the Vessel, the Builder will consent, when reasonably requested, to a disclosure of the drawings, designs and Specification upon terms that the person to whom the same are shown shall also keep them confidential. All drawings, designs and Specification shall be returned to the Builder if this Contract is rescinded for any reason whatsoever.

2.10

If the Buyer's approval or decision is required pursuant to the Specification in relation to any plan, drawing, specification or other matter, the Buyer shall, in writing within seven (7) days of receiving any notice of such requirement, approve or reject or make a decision in respect of (as the case may be) the same. Any delay by the Buyer in giving its approval or in making its decision known to the Builder shall operate to postpone the Delivery Date for the Vessel by one full day for each day's delay in giving such approval or making such decision and shall be deemed an Excusable Delay to which the provisions of Clause 11.05 shall not apply.

3.

CONTRACT PRICE

3.01

The purchase price of the vessel is United States Dollars

 

only (US$

),

 

net receivable by the Builder (the "Contract Price") and shall be subject to upward or downward adjustments, if any, as hereinafter set forth in this Contract and Specification hereto.

3.02

Any increase or a decrease of the Contract Price, if any, due to adjustments made in accordance with the provisions of this Contract shall be made by way of an addition to or a subtraction from the Instalment of the Contract Price payable upon delivery of the Vessel.

3.03

Any and all payments by the Buyer to the Builder hereunder shall be made in United States Dollars.

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MARINTEKNIK SHIPBUILDERS (S) PTE LTD.

3.04 The Contract Price shall be paid by the Buyer to the Builder in instalments (the "Instalments") as follows:-

(

)

No. of

Date for

Percentage of

Amounts

Payment

Payment

Contract Price

First

Upon signing

20%

US$

Instalment

of this Contract

Second

Upon keel laying

20%

US$

Instalment

Third

Upon completion

20%

US$

Instalment

of the hulls

Fourth

Upon main engine

20%

US$

Instalment

delivery

Fifth

Upon Acceptance

20%

US$

Instalment

of delivery of the vessel

3.05 The Buyer shall, as a condition precedent to this Contract, deliver to the Builder a first class letter of credit in the amount of the First Instalment drawn in favour of the Builder and issued by a bank acceptable to the Builder. The letter of credit shall be in form and substance acceptable to the Builder.

3.06 In respect of all Instalments, payment shall be made on the due date.

3.07 All Instalments shall be paid in full without discount or set-off by the Buyer to the Builder by telegraphic transfer to such account, as the Builder shall direct by notice in writing.

3.08 The Second Instalment shall be paid by telegraphic transfer to the account of the Builder.

3.09 As a security for the payment of the Second Instalment, the Buyer hereby warrants and undertakes to grant to the Builder, simultaneously upon delivery of the Vessel to the Buyer hereunder, a first preferred mortgage (the "Mortgage") over the Vessel in favour of the Builder, in form and substance acceptable to the Builder.

3.10 Should the Buyer fail to make payment of the First Instalment of the Contract Price within ten (10) days of its due date, the Builder shall be entitled to charge interest at the rate of ten per cent (10%) per annum on the amount in default from the due date until the date of full payment. Should the buyer fail to make payment of the First Instalment within twenty (20) days of its due date, the Builder shall be entitled to rescind this Contract and the provisions of Clause 12 shall apply.

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MARINTEKNIK SHIPBUILDERS (S) PTE LTD.

3.11

Should the Buyer fail to pay the Second Instalment of the Contract Price when it is due, the Builder shall have the following rights, which shall be cumulative:-

(a)

seize the Vessel with or without notice;

(b)

sell the Vessel, whether by public auction or private treaty, on such terms and conditions as the Builder thinks fit without being answerable to the Buyer for any loss or damage occasioned thereby;

(c)

require the Buyer to transfer to the Builder all the Buyer's rights, title and interest in the Vessel;

(d)

retain all instalments received by the Builder from the Buyer and without prejudice recover the full amount of its losses and damages accruing as a result of the breach of this Contract; and

(e)

enforce and or all of its rights under the Mortgage.

3.12

In addition, the Delivery Date for the Vessel shall be postponed by one full day for each day's delay in the payment of the First Instalment of the Contract Price and such delay shall be deemed an Excusable Delay, but not one to which the provisions of Clause 11.05 shall apply.

4.

ADJUSTMENT OF CONTRACT PRICE

4.01

If the delivery of the Vessel is delayed due to the fault of the Builder (other than by reason of Excusable Delay) by more than thirty (30) days after the Delivery Date, then commencing at midnight of the thirtieth (30th) day after the Delivery Date, the Contract Price shall be reduced by deducting therefrom the sum of US$1,000.- (United States Dollars One Thousand Only) for each day's delay in effecting delivery of the Vessel to the Buyer (but excluding always any Excusable Delay). The total reduction in the Contract Price shall not in any event exceed the sum of US$60,000.- (United States Dollars Sixty Thousand Only) being in respect of a delay of sixty (60) days at the above specified rate of reduction.

4.02

If the delivery of the vessel is delayed (other than by reason of Excusable Delay) by more than sixty (60) days after the Delivery Date after taking into full account of any extension of the Delivery Date due to an agreed extension under this Contract or otherwise, the Buyer may, at its option, rescind this Contract by notice in writing given to the Builder, whereupon all Instalments of the Contract Price paid by the Buyer to the Builder shall be returned by the Builder to the Buyer, together with interest thereon calculated at ten percent (10%) per annum from the date of payment of the Instalment in question by the Buyer to the Builder to the date of return to the Buyer by the Builder.

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MARINTEKNIK SHIPBUILDERS (S) PTE LTD.

After the expiry of the said sixty (60) days' delay in the delivery of the Vessel, if the Buyer has not served notice of rescission of this Contract, it is deemed that the Buyer consents to take delivery of the Vessel at an agreed future date. If a future date for delivery is agreed, the rights of rescission herein contained shall apply to such new delivery date, but no further liquidated damages shall be payable in respect of delay after such new delivery date.

4.03

(a)

The contracted cruising speed of the Vessel shall be

knots

 

based on the disposable load as detailed in the Specification.

 

(b)

The trial speed, as determined during trials, shall only be knots by reason of:-

 

(i)

the trials being conducted in Singapore with an air

 

temperature of

;

and

 

(ii)

the power of the engines being reduced to approximately

 

1000 kW as a result of the higher temperature than that

set forth in the Specification. A trial speed of

knots

shall be conclusive evidence of the Vessel's cruising

speed being

knots.

 

(c)

The Contract Price shall not be changed by reason of the trial speed, as determined during trials and in accordance with the Specification, being less than the contracted speed specified in paragraph (b) above if the deficiency in speed is one full knot or less.

(d)

However, if such deficiency in the trial speed of the Vessel is more than one full knot below the contracted speed specified in

 

paragraph (a) above, then the Contract Price will be reduced by

deducting therefrom the sum of USD

(United States Dollars

 

Only) for each full knot's deficiency below

knots

 

provided that the maximum reduction in the Contract Price for

deficiency in the contracted speed shall in not event be more

than USD

(United States Dollars ---------------- Only), the

sum being the reduction in the Contract Price for a deficiency of four (4) full knots below the said contracted speed.

 

(e)

If the deficiency in the trial speed is more than four (4) full knots below the contracted speed specified in paragraph (b) above, then the Buyer may at its option reject the Vessel and rescind this Contract by notice in writing given to the Builder, whereupon all Instalments of the Contract Price paid by the Buyer to the Builder shall be returned by the Builder to the Buyer, together with interest on each Instalment calculated at ten percent (10%) per annum, from the date of payment of the Instalment in question by the Buyer to the Builder to the date of return to the Buyer by the Builder.

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MARINTEKNIK SHIPBUILDERS (S) PTE LTD.

4.04

If the actual speed of the Vessel on trials is adversely affected by

reason of the displacement of the Vessel exceeding [

]

tonnes and

the sole reason for the displacement exceeding [

]

tonnes is that

subsequent to the date hereof, modifications or changes have been made to the Specification at the request of the Buyer in accordance with Clause 7 or changes have been made in the rules, regulations or requirements of the Classification Society or of the country whose flag the Vessel shall fly which have increased the displacement of the Vessel, other than any modification or changes to the Specification occasioned by reason of a partial loss or damage to the Vessel, then the contracted speed referred to in Clause 4.03 (a) and the speed below which this Contract may be rescinded or the Contract Price reduced as referred to in this Clause 4 shall be decreased by the actual reduction of speed attributable to the increase in displacement caused by such modifications to the Specification.

4.05

The provisions of Clause 3.02 shall apply to any adjustments made to the Contract Price made under this Clause 4.

4.06

The remedies as provided in this Clause 4 for deficiency in speed or delay in delivery are exclusive remedies. All adjustments to the Contract Price shall be made by way of liquidated damages and not by way of penalty, representing as the parties hereto both acknowledge, a genuine pre-estimate of the loss and damage the Buyer is likely to incur by reason of such deficiency or delay.

4.07

If the Contract is rescinded by the Buyer under this Clause 4, no liquidated damages or compensation shall be payable or deemed payable by the Builder to the Buyer. The sole remedy of the Buyer will be the refund of the Instalments of the Contract Price previously paid plus interest thereon as provided in this Clause 4.

5.

SUBSIDIES, TAXES AND DUTIES

5.01

All taxes, fees, duties, charges or imposts which may be imposed in Singapore on or with respect to the sale of or the delivery and transfer of the Vessel to the Buyer shall be borne by the Builder.

5.02

All other taxes, duties, charges or imposts of whatsoever nature or kind, including all registration and other charges shall be borne by the Buyer and the Buyer shall pay, indemnify and hold harmless the Builder from and against, all such taxes, fees, duties, charges and imposts.

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MARINTEKNIK SHIPBUILDERS (S) PTE LTD.

5.03

In addition to the foregoing obligations of the Buyer under Clause 5.02, the Buyer will obtain, at its own expense before the Vessel is delivered hereunder, all import licenses or other permits (if any are required)

from the government of

authorising the import and

 

coastal

water

 

operation of the Vessel within the territory of and the registration of the Vessel in

Flag and the Buyer shall

pay any and all taxes, duties, charges or imposts imposed by the

government of

on the import or acquisition of the Vessel

and on any revenues derived from or arising by reason of the Buyer's operation and ownership of the Vessel. Failure to obtain any such licence required shall be at the risk of solely the Buyer and shall in no way release the Buyer from any of its obligations under this Contract.

6.

DELIVERY

6.01

The Vessel shall be delivered by the Builder to the Buyer at the

Builder's Shipyard not later than

,

except that, in the event

of delays in the construction of the Vessel or any performance required under this Contract due to causes which under the terms of the Contract permit extension of the time for delivery, the aforementioned

time for delivery of the Vessel shall be extended accordingly.

 

6.02

Provided that the Buyer shall have fulfilled all of its obligations as stipulated in this Contract, transfer of title and delivery of the Vessel shall be effected forthwith by the signing of the Protocol of Delivery and Acceptance, acknowledging delivery of the Vessel by the Builder and acceptance thereof by the Buyer.

6.03

The Builder shall simultaneously with such transfer of title under Clause 6.02 above provide the Buyer with:

(a)

The Builder's Certificate issued by the Builder in favour of the Buyer specifying brief particulars of the Vessel and that the Vessel is delivered to the Buyer free and clear of any liens, charges, claims, mortgages or other encumbrances upon the Buyer's title thereto;

(b)

Drawings and plans pertaining to the operation and maintenance of the Vessel as specified in the Specification;

(c)

Such interim classification and trading certificates issued by the Classification Society showing the Vessel being classified as specified in this Contract and the Specification, together with a confirmation that permanent certificates will be supplied when available; and

(d)

the export licence issued by the Government of Singapore permitting the sale of the Vessel to the Buyer and its export from Singapore (if any is required).

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MARINTEKNIK SHIPBUILDERS (S) PTE LTD.

6.04

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

6.05

Title to and risk of the Vessel shall pass to the Buyer only upon delivery thereof, as stated above, it being expressly understood that, until such delivery is effected, title to the Vessel and its equipment shall remain at all times with the Builder.

6.06

The Vessel shall be safely afloat at the place and time of delivery.

6.07

The Buyer shall remove the Vessel from the premises of the Builder's Shipyard within seven (7) days of delivery of the Vessel, failing which the Buyer shall pay to the Builder, or reimburse the Builder for, all mooring and other costs. Such payment shall not impose any obligation on the Builder to insure the Vessel or be responsible for the Vessel, the vessel being under the sole responsibility of and at the sole risk of the Buyer after delivery of the Vessel.

7.

MODIFICATIONS, CHANGES AND EXTRAS

7.01

The Specification and Plans under which the Vessel is constructed, may be modified and/or changed at any time hereafter by written agreement of the parties hereto. Provided, however, that such modifications and/or changes will not, in the Builder's reasonable judgement, adversely affect the Builder's other commitments and provided further that the Buyer shall assent to adjustment of the Contract Price, time of delivery of the Vessel, and other terms of this Contract as necessary. Subject to the above, the Builder hereby agrees to exert its best efforts (subject always to the Builder's other commitments and availability of labour, materials and time) to accommodate such reasonable requests by the Buyer, so that the said changes and/or modifications may be made at a reasonable cost and within the shortest period of time which is reasonable and possible. Any such agreement for modifications and/or changes shall include an agreement as to the increase or decrease, if any, in the Contract Price of the Vessel together with an agreement as to the speed of the Vessel and any extension in the time of delivery, or any other alterations in this Contract, or the Specification or Plans occassioned by such modifications and/or changes. The aforementioned agreement to modify and/or to change the Specification and/or Plans may be effected by an exchange of duly authenticated letters or fax manifesting such agreement. The letters and faxes exchanged by the parties hereto pursuant to the foregoing shall constitute an amendment of the Specifications and/or Plans under which the Vessel shall be built.

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MARINTEKNIK SHIPBUILDERS (S) PTE LTD.

Such letters and faxes shall be deemed to be incorporated into this Contract by reference and made a part hereof. Upon completion of the foregoing agreement to modify and/or to change the Specifications and/or Plans, the Builder shall alter the construction of the Vessel in accordance therewith, including any additions to, or deductions from, the work to be performed in connection with such construction.

7.02

If due to whatever reasons, the parties hereto fail to agree on the adjustment of the Contract Price or extension of time of delivery or modification of any terms of this Contract, which are necessitated, by such modifications and/or changes, then the Builder shall have no obligation to comply with the Buyer's request for any modification and/or changes.

7.03

Any extension of the Delivery Date agreed pursuant to the foregoing Clause 7.01 shall be deemed an Excusable Delay, but the provisions of Clause 11.05 shall not apply to such extension of the Delivery Date.

7.04

The provisions of Clause 3.02 shall apply to any adjustment in the Contract Price made under the foregoing Clause 7.01.

7.05

The Builder may make minor changes to the Specification after written notice to the Buyer, as may be found necessary for the introduction of improved production methods or otherwise or to comply with the requirements of the Classification Society, with the consent of the Buyer.

8.

BUYER'S ACCESS TO THE YARD

8.01

The Buyer's representative(s) shall, during normal working hours, have reasonable access to the Builder's Shipyard or other premises in which the Vessel is being constructed while the Vessel is under construction. They shall have the right to attend trials and tests of the Vessel and the engines thereof, provided that the Buyer and its representative(s) shall not obstruct the Builder or its subcontractors in their construction of the Vessel.

8.02

If the Buyer's representative(s) discover any item of construction, material or workmanship which does not conform with this Contract or the Specification, the Buyer shall promptly give notice in writing of such non-conformity to the Builder and the Builder shall promptly correct such non-conformity. The Buyer undertakes that it will carry out all inspections in such a way as to avoid any unnecessary increase in building costs or delays in the completion of the Vessel.

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MARINTEKNIK SHIPBUILDERS (S) PTE LTD.

8.03

The Buyer's representative(s) shall at all times be deemed to be in the employ of the Buyer. The Builder shall be under no liability whatsoever to the Buyer, or to the Buyer's representative(s) or the Buyer's employees or agents for personal injuries, including death, during the time when they, or any of them, are on the Vessel or within the premises of either the Builder or its subcontractors, or are otherwise engaged in and about the construction of the Vessel. Nor shall the Builder be under any liability whatsoever to the Buyer for damage to, or loss or destruction of property in Singapore of the Buyer or of the Buyer's representative(s), or of the Buyer's employees or agents.

8.04

All salaries and expenses of the Buyer's representative(s), or any others employed by the Buyer under this Contract, shall be for the Buyer's account.

9.

TRIALS

9.01

The Buyer shall receive from the Builder at least seven (7) days prior notice 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. The Buyer shall be entitled to have its representative on board the Vessel to witness such trial run and to ascertain if the Vessel meets the requirements of this Contract and the Specification. Failure of the representative of the Buyer to attend at the trial run of the Vessel for any reason whatsoever after due notice has been given to the Buyer as above provided shall be deemed to be a waiver by the Buyer of its right to have its representative on board the Vessel at the trial run. And the Builder may conduct the trial run without the representative of the Buyer being present. In such case, the Buyer shall be obliged to accept the Vessel on the basis of the certificate issued by the Builder to the effect that the Vessel based on the trial run is found to conform to this Contract and the Specification.

9.02

(a)

The trial run shall be carried out under such weather conditions, as the Builder in its sole discretion considers favourable for such trial run. 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 the weather conditions permit without the need for the Builder to give the Buyer any further or additional notice in relation thereto.

(b)

It is agreed that if the weather should suddenly become so unfavourable during the trial run of the Vessel that orderly conduct of the trial run can no longer be continued, the trial run shall be discontinued and postponed until the first favourable day next following, unless the Buyer shall consent in writing to the acceptance of the Vessel on the basis of the trial run already conducted before such discontinuance has occurred.

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MARINTEKNIK SHIPBUILDERS (S) PTE LTD.

(c) Any delay of the trial run caused by such unfavourable weather conditions shall operate to postpone the Delivery Date by the period of delay involved and such delay shall be deemed an Excusable Delay, but the provisions of Clause 11.05 shall not apply to such Excusable Delay.

(a)

9.03 The Builder shall provide at its own expense the necessary crew for the safe navigation of the Vessel during the trial run of the Vessel.

(b) The trial run shall be conducted in the manner prescribed in the Specification with the object of proving the Vessel's capability in fulfilling the performance requirements as to speed as set forth in the Specification.

(c) The trial run shall be conducted in the sea around Singapore.

(d) The cost of fuel oil, lubricating oil and greases necessary for the trial run of the Vessel shall be for the Builder's account.

(e) Save as aforesaid each party shall be responsible for its own costs during the trial run.

(a)

9.04 Upon satisfactory completion of the trial run, the Builder shall give the Buyer a notice by letter or by fax of completion of the trial run, indicating on the basis of the results of the trial run the Vessel's conformity with the requirements of this Contract and the Specification. If the Buyer does not accept the Vessel as being in conformity as aforesaid, the notice of rejection given by the Buyer shall specify in reasonable detail those aspects of the Vessel which the Buyer believe do not conform with the requirements of this Contract or the Specification.

(b) Should the results of the trial run indicate that the Vessel, or any part thereof or equipment therein, does not conform with the requirements of this Contract or the Specification, or if the Builder agrees with the Buyer as to any non-conformity specified in the Buyer's notice of rejection, then the Builder shall as soon as possible thereafter take the necessary steps to correct such non-conformity (subject to re-trials if necessary). In the event that the Builder is not in agreement with such non-conformity as specified by the Buyer, the provisions of Clause 9.04(e) below shall apply. Upon correction of such non-conformity, the Builder may hold a further trial run of the Vessel if necessary to demonstrate the correction of the non-conformity.

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MARINTEKNIK SHIPBUILDERS (S) PTE LTD.

If a further trial run is required, three (3) day's notice of the time and place of the trial run shall be given by the Builder to the Buyer. If no further trial run is held, the Builder shall notify the Buyer of the correction and the Buyer shall within seven (7) days after receipt of such notice from the Builder, notify the Builder of its acceptance or rejection of the Vessel.

(c)

If the Buyer rejects the Vessel, it shall indicate in its notice of rejection in what respect the Vessel, or any part thereof or equipment therein, does not conform to this Contract and/or Specification.

(d)

In the event that the Buyer fails to notify the Builder either by letter or fax of the acceptance or rejection of the vessel (together with the reason therefor) within the period provided in this Clause 9.04, the Buyer shall be deemed to have accepted the Vessel.

(e)

Any dispute as to the acceptance or rejection of the Vessel by the Buyer under this Clause which cannot be settled by the parties shall be submitted for final decision by expert opinion or arbitration, as the case may be, in accordance with Clause 16.

9.05

Acceptance of the Vessel by the Buyer as provided above shall be final and binding so far as conformity of the Vessel to this Contract and the Specification is concerned and shall preclude the Buyer from refusing formal delivery of the Vessel as herein provided.

10.

BUILDER'S RESPONSIBILITY

10.01

The Builder represents, warrants and covenants that on the Delivery Date, it will have good and marketable title to the Vessel free from all claims, charges or other encumbrances and free and clear of all taxes, duties, imposts or charges imposed by the Singapore Government and for which the Builder has accepted liability under this Contract.

10.02

The Builder and all officers, employees and agents of the Builder shall (subject to the provisions of the Warranty in Clause 14.01) have the full benefit of all provisions contained or incorporated herein which include or limit the liability of the Builder to the Buyer. This Clause also constitutes a separate contract made by the Builder, on its own behalf and as agent for all persons who are the Builder's officers, employees or agents from time to time, with the Buyer.

10.03

The Builder shall provide at its own expense suitable staff to assist the Buyer in training the onboard crew and maintenance personnel to operate the Vessel safely and competently. All travel and lodging expenses for the Buyer's crew and personnel shall be borne by the Buyer.

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11.

DELAYS AND EXTENSION OF TIME FOR DELIVERY (FORCE MAJEURE)

11.01

If, at any time before actual delivery, either the construction of the Vessel, or any performance required hereunder as a prerequisite of delivery of the Vessel, is or may be delayed, due to an act of princes or rulers, wars, blockade, revolution, insurrection, mobilization, civil commotion, riots, acts of God or public enemy, plague or other epidemics, quarantines, prolonged failure of electric current, freight, embargoes, earthquakes, tidal waves, rains, floods, typhoons, hurricanes, or storms, or conditions of similar nature, or other causes beyond control of the Builder or its sub-contractors including without limitations, delay in the delivery of the Buyer's supplied items or any major components in the construction of the Vessel howsoever caused including without limitation by congestion at manufacturer's plant, oversold conditions of the market, or late performance by sub- contractors caused by shortage of labour or supervisors or such other circumstances or due to inherent defects in such major components or by destruction of or damage to the Builder's Shipyard or of its sub- contractor premises, or of the Vessel or any part thereof, by fire, flood, theft, vandalism or other causes without the fault and privity of the Builder or its sub-contractors or beyond the control of the Builder or its sub-contractors, as the case may be, or for any other causes which, under the terms of this Contract, authorize and permit extension of the time for delivery of the Vessel, then, in the event of delays due to happening of any of the aforementioned contingencies, the time for delivery 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 and such delays shall be deemed Excusable Delays.

11.02

Notice of the occurrence of any Excusable Delay shall be given by the Builder to the Buyer within fourteen (14) days of it becoming known to the Builder and such notice shall specify the date upon which such Excusable Delay commenced, the reason therefor, the anticipated period of such delay and the action needed to remedy the situation, to the extent that it is within the power of the Builder to do so.

11.03

Likewise, the Builder shall, within fourteen (14) days after such Excusable Delay ends, notify the Buyer of the date upon which such Excusable Delay has ceased to have effect and the maximum period claimed by the Builder for which Delivery Date shall be postponed. Unless the Buyer shall, within fourteen (14) days of receipt of such notice, object to the said postponement, the Buyer shall be deemed to have agreed to the same.

11.04

Any dispute as to the entitlement or otherwise of the Builder to postpone the Delivery Date as aforesaid shall be referred to arbitration pursuant to Clause 16 hereof and shall be without prejudice to the obligation of the Buyer to accept delivery of the Vessel.

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11.05

If the total accumulated time of all such delays described in Clause 11.01 (excluding delays due to arbitration as provided for in Clause 16, or to defaults in performance by the Buyer of a nature which, under the terms of this Contract, permits extension of the time for delivery), amounts to ninety (90) days or more, then, in such event, the Buyer may rescind this Contract by serving upon the Builder a faxed notice of rescission, which shall be confirmed in writing. Such rescission shall be effective as of the date the faxed notice thereof is received by the Builder. The Builder upon receipt of such notice, shall refund immediately to the Buyer, the full amount of all sums paid to the Builder by the Buyer on account of the Vessel with no interest thereon whatsoever. The aforementioned refund by the Builder to the Buyer shall forthwith discharge all obligations, duties and liabilities of each of the parties to the other under this Contract. The Builder may, at any time after the accumulated time of the aforementioned delays justifies rescission by the Buyer as above provided for, demand in writing that the Buyer shall make an election, in which case the Buyer shall, within fourteen (14) days after such demand is received by the Buyer, either notify the Builder of its intention to rescind this Contract, or consent to an extension of the time for delivery to an agreed future date. It being understood and agreed by the parties hereto that, if any further delay occurs on account of causes justifying rescission as specified in this Clause, the Buyer shall have the same right of rescission upon the same terms as herein above provided. If the Buyer fails to elect within the prescribed time after having received the notice to elect as aforesaid, the Contract shall be deemed to be rescinded or continuing, at the option of the Builder.

11.06

Delays on account of such causes as provided for in Clause 11.01 and any other delays of a nature which the terms of this Contract permit postponement of the Delivery Date shall be understood to be Excusable Delays, and are to be distinguished from unauthorized delays on account of which the Contract Price of the Vessel is subject to adjustment as provided for in Clause 4.01.

12.

DEFAULT OF THE BUYER AND RESCISSION BY THE BUILDER

12.01

The Builder shall be entitled to rescind this Contract by reason of the default of the Buyer in making payment of any Instalment of the Contract Price or in taking delivery of the Vessel when required to do so by the terms of this Contract. The Builder shall give notice in writing to the Buyer that it is rescinding the Contract. Such notice to take effect on the date of receipt by the Buyer of the notice whereupon the Builder shall become entitled to claim against the Buyer for all loss or damage suffered or incurred by the Builder up to the date of rescission.

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Upon rescission of the Contract, all property in the form of equipment

or otherwise belonging to the Buyer, and which has been utilized by the

Builder in the construction of the Vessel, or which has been installed on the Vessel (whether as a fixed or movable installation), shall become the property of the Builder. And the Builder shall be entitled to retain, as security for any damages the Builder may be able to recover against

the Buyer. But the retention of the said Instalments shall be without prejudice to the rights of the Builder to recover the full amount of its losses arising as a result of the rescission of this Contract.

12.02

In the event of rescission of this Contract by the Builder, 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, whether in a completed or incomplete state, at a public or private sale on such terms and conditions as the Builder thinks fit without being answerable to the Buyer for any loss or damage occasioned thereby.

12.03

In the event of the sale of the Vessel in its completed state, the proceeds of 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 interest on any unpaid Instalments at the rate of ten percent (10%) per annum from the respective due dates thereof to the date of application and then to payment of all such Instalments.

12.04

In the event of the sale of the Vessel in its incomplete 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 for

construction of the Vessel less the Instalments so retained by the Builder, and compensation to the Builder for a reasonable loss of profit due to the rescission of this Contract.

12.05

In

either of the above events of sale, if the proceeds of sale exceeds

the total of the 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 Instalments

already paid by the Buyer and the cost of the Buyer's supplies, if any.

12.06

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 demand.

12.07

The provisions of Clause 2.09 and 8.03 shall remain in full force and effect notwithstanding a rescission of this Contract under this Clause 12 or under Clause 11.

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13.

RESCISSION BY THE BUYER

13.01

In the event that the Buyer shall exercise its rights of rescission of this Contract under or pursuant to any of the provisions of this Contract, and the Builder does not dispute the Buyer's purported rescission, upon refund by the Builder to the Buyer of the full amount of all sums paid by the Buyer to the Builder on account of the Vessel and the cost of the Buyer's supplies, if any, or return of such supplies where possible, all obligations, duties and liabilities of each of the parties hereto to the other under this Contract shall be forthwith completely discharged provided that the provisions of Clauses 2.09 and 8.03 shall remain in full force and effect notwithstanding any rescission of this Contract.

13.02

If the Buyer's rescission of this Contract is disputed by the Builder who institutes arbitration in accordance with Clause 16.03, then no refund shall be made by the Builder until the arbitration award or final court order declaring the Buyer's rescission as justified, is made and delivered to the Builder by the arbitration tribunal or final competent Singapore Court having jurisdiction on the dispute.

14.

WARRANTY

14.01

The Builder, for a period of twelve (12) months following delivery to the Buyer of the Vessel, guarantees the Vessel, her hull and machinery and all parts and equipment thereof that are manufactured or furnished or supplied by the Builder and/or its sub-contractors under this Contract, against all defects which are due to defective materials, and/or poor workmanship and/or inadequate or faulty design and/or structural miscalculation on the part of the Builder and/or its sub- contractors, and not due to the negligence on the part of the Buyer or its agents, servants or employees ("the Warranty").

14.02

The Builder shall endeavour to procure warranties or guarantees from the manufacturers or suppliers of the engines, gearboxes, waterjets and generators and hereby agrees to assign to the Buyer all its rights, benefits and powers under such warranties or guarantees. No representation or warranty is made or given by the Builder as to the terms and conditions upon which such warranties, or guarantees are given by the manufacturers or suppliers.

14.03

The Buyer or its authorized representative shall notify the Builder in writing of any claim under Clause 14.01, as promptly as possible but not later than fourteen (14) days after the discovery of any defects for which a claim is to be made under Clause 14.01. The Buyer's written notice shall describe the nature of the defect and the extent of the damage caused thereby in sufficient detail.

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14.04 The Builder shall have no obligation with respect to defects notified more than fourteen (14) days after the expiry of twelve (12) months following the actual date of delivery of the Vessel.

14.05 The Builder shall be liable to the Buyer for damages caused by any of the defects specified in Clause 14.01 provided that such liability of the Builder shall be limited to damage occasioned within the Warranty period specified in the same Clause. The Builder shall not be obliged to repair, or to be liable for, damages to the Vessel, or to any part of the equipment thereof, due to ordinary wear and tear or caused by the defects other than those specified in Clause 14.01. Nor shall there be any Builder's liability hereunder for defects in the Vessel, or any part of the equipment thereof, caused by fire or accidents, negligence, or neglect (wilful or otherwise), on the part of the Buyer, its employees or agents including the Vessel's officers, crew and passengers, or any persons on or doing work on the Vessel other than the Builder, its employees, agents or sub-contractors. Likewise, the Builder shall not be liable for defects in the Vessel, or the equipment or any part thereof, due to repairs or replacement which were made by those other than the Builder and/or its sub-contractors at the direction of the Buyer, as herein provided except in the case as described in Clause 14.07, i.e. that the repair cannot be practically carried out in the Builder's Shipyard, and the Builder has consented to such repair being made elsewhere.

14.06 Upon receiving the Second Instalment, in accordance with the terms of the Contract, the Builder shall thereby and thereupon be released of all responsibility and liability whatsoever and howsoever arising under or by virtue of this Contract save in respect of those obligations to the Buyer expressly provided for in this Clause 14. Upon delivery of the vessel, the Builder shall not, in any circumstances, be liable for any consequential loss or special loss, or expenses arising from any cause whatsoever including, without limitation, loss of time, loss of profit or earnings or demurrage directly from any commitments of the Buyer in connection with the Vessel.

14.07 The Warranty provided in this Clause and the obligation and the liabilities of the Builder hereunder are exclusive and in lieu of. And the Buyer hereby waives, all other remedies, warranties, guarantees or liabilities, expressed or implied, arising by law or otherwise (including without limitation any obligations of the Builder with respect to fitness, merchantability and consequential damages), whether or not occasioned by the Builder's negligence. The Warranty shall not be extended, altered or varied except by a written instrument signed by the duly authorized representatives of the Builder.

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14.08

The Builder shall remedy at its expense any defects, against which the Vessel, or any part of the equipment thereof, is warranted under this Clause by making all necessary repairs and/or replacements. Such repairs and/or replacements will be made by the Builder or its sub- contractors at the Builder's Shipyard (the cost of bringing the Vessel to the Builder's Shipyard being for the account of the Buyer). However, if it is impractical for the Builder to make the repair, and if forwarding by the Builder of replacement parts and materials cannot be accomplished without impairing or delaying the operation or working of the Vessel, then in any such event, the Buyer shall, with the prior written consent of the Builder, cause the necessary repairs or replacements to be made elsewhere at the discretion of the Buyer. Provided, however, that the Buyer shall first and in all events, as soon as possible, give the Builder notice in writing, or by telefax confirmed in writing of the time and place such repairs will be made and the Builder shall have the rights to verify by its own representative(s) or that of the Classification Society the nature and extent of the defects complained of. The Builder shall, in such cases, promptly advise the Buyer, by fax, after such examination has been completed, of its acceptance or rejection of the defects as ones that are subject to the Warranty.

14.09

In any circumstances as set out below, the Builder shall immediately pay to the Buyer in United States Dollars by telegraphic transfer the actual cost for such repairs or replacements or at the average cost for making similar repairs or replacements as quoted by other shipyards selected by the Builder, whichever is lower, and upon the Builder's acceptance of the defects as justifying remedy under this Clause. Any dispute shall be referred to arbitration in accordance with the provisions of Clause 16.

14.10

It is a condition of the Warranty contained in Clause 14.01 that the Buyer shall exercise due care and attention in the operation and maintenance of the Vessel, and shall operate the Vessel strictly in accordance with any operating manuals as may be supplied in connection with the Vessel or any restrictions imposed on the Vessel.

15.

INSURANCE

15.01

Until the delivery of the Vessel to the Buyer, the Vessel shall be at the risk of the Builder. From the time of keel-laying of the Vessel until the same is completed, delivered to and accepted by the Buyer, the Builder shall, at its own expense, keep the Vessel and/or such parts as shall be constructed and all materials, engines, machineries, outfit and equipment pertaining to this Contract and within the premises of the Builder insured by policies against fire and other risks (but excluding war risks) for not less than the amount for the time being paid by the Buyer to the Builder under Clause 3.

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15.02 The Builder's obligation to insure the Vessel hereunder shall cease and terminate forthwith upon delivery thereof to and acceptance by the Buyer.

15.03 If the Vessel is not delivered on time according to this Contract and the delay is caused by the act or omission of the Buyer, then the cost of insurance for the period of such delay shall be borne by the Buyer.

15.04 In the event the Vessel shall be damaged by any insured cause whatsoever prior to acceptance of delivery thereof by the Buyer, and in the further event that such damage shall not constitute an actual or a constructive total loss of the Vessel, the Builder shall apply the amount recovered under the insurance policy referred to in this Clause to the repair of such damage satisfactory to the Classification Society without marks, that is, without remarks, exceptions or recommendations, without additional expenses to the Buyer, and the Buyer shall accept the Vessel according to the terms of this Contract.

15.05 However, in the event that the Vessel is determined to be an actual or constructive total loss, the Buyer and the Builder shall mutually agree in writing to either:-

(a)

proceed in accordance with the terms of this Contract, in which case the amount recovered under the said insurance policy shall be applied to the reconstruction and repair of the Vessel's damage without additional expenses to the Buyer provided the parties hereto shall have first agreed in writing as to such reasonable postponement of the Delivery Date and reasonable modification of the terms of this Contract as may be necessary for the completion of such reconstruction and/or repair, or

(b)

refund immediately to the Buyer the amount of all Instalments paid to the Builder under this Contract with interest at five percent (5%) per annum, whereupon this Contract shall be deemed to be rescinded and all rights, duties, liabilities and obligations of each of the parties to the other shall terminate forthwith.

If the parties hereto shall fail to reach such agreement within two (2) months after the Vessel is determined to be actual or constructive total loss, the provisions of Clause 15.05(b) shall apply.

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16.

LAW OF THE CONTRACT AND REFERENCE TO EXPERT AND ARBITRATION

16.01

This Contract and all other agreements relating thereto shall be governed by and interpreted in accordance with the laws of Singapore.

16.02

Should any dispute arise between the parties in respect of the construction of the Vessel, its engines, materials, workmanship or quality of materials, such dispute shall forthwith be referred to such experts as the parties hereto shall mutually agree, or if the parties hereto are unable to agree as to the appointment of an expert, the Classification Society shall through its Surveyor appoint the expert. The expert's decision on any such matter shall in the absence of manifest error be final and binding upon both parties hereto.

16.03

In the event of any other dispute or difference between the parties hereto as to any matter or thing arising out of or relating to this Contract or its rescission or any stipulation herein not already covered in Clause 16.02, and which cannot be settled by agreement between the parties, the parties shall submit the matter in dispute to arbitration by three arbitrators. One arbitrator to be chosen by each party hereto and the third arbitrator to be chosen by the two arbitrators already chosen. In the event that one of the parties should fail to appoint an arbitrator within twenty (20) days after the other party has appointed its arbitrator, it is agreed that such party shall thereby be deemed to have accepted and appointed as its own arbitrator the one already appointed by the other party, and the arbitration shall proceed forthwith before this sole arbitrator. And in the further event that the two arbitrators appointed respectively by the parties hereto shall be unable to reach agreement on the appointment of the third arbitrator within twenty (20) days from the date on which the second arbitrator is appointed, either party of the said two arbitrators may apply to any court in Singapore or other official organization in Singapore having jurisdiction in such matter to appoint the third arbitrator. The award of the arbitration made by the sole arbitrator or by the majority of the three arbitrators as the case maybe, shall be final, conclusive and binding upon the parties hereto.

16.04

The arbitration shall be conducted in English and shall take place in Singapore, in accordance with the rules and regulations of the Singapore Arbitration Act.

16.05

Notice of any award shall immediately be given in writing or by fax confirmed in writing to the Builder and the Buyer.

16.06

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

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16.07

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

16.08

If the construction of the Vessel is affected by any arbitration or court proceeding, the Builder shall then be permitted to extend the Delivery

Date.

And the decision or the award shall include a finding as to the

extent to which the Builder shall be permitted to extend the Delivery Date.

17.

ENTIRETY OF CONTRACT AND PROHIBITION OF ASSIGNMENT

17.01

This Contract and the signed Specification (including any drawings) constitute the entire Contract between the parties in respect of the construction and supply of the Vessel and supersede all prior negotiations, representations, undertakings and agreements whatsoever in connection therewith.

17.02

Neither party may assign either the benefit or the burden of this Contract or of the Warranty under Clause 14.01 without the prior written consent of the other party (which consent shall not be unreasonably withheld).

17.03

This Contract come into effect upon the Builder receiving the First Instalment of the Contract Price.

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18.

NOTICES

18.01

All letters, demands, notices and other communications in connection with this Contract shall be written in English language and shall be addressed as follows:

To the Builders

 

MARINTEKNIK SHIPBUILDERS (S) PTE LTD. 31 Tuas Road Jurong Singapore 638493

Telephone

:

(+65) 861 1706

Telefax

:

(+65) 861 4244

To the Buyer

Telephone

:

Telefax

:

18.02

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

18.03

All such notices shall be sent by fax or by first class prepaid airmail. In the case of the former, receipt shall be deemed to coincide with despatch, and in the case of the latter, receipt shall be deemed to occur seven (7) days after the date of despatch.

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19.

COST

19.01

Each party shall bear its own costs in connection with the preparation, negotiation and execution of this Contract and the Appendices hereof.

IN WITNESS whereof the parties hereto, acting through their duly authorised representatives, have executed this Contract on the day and year first above written.

The Builder

SIGNED by

)

)

)

Name:

)

Designation:

)

for and on behalf of MARINTEKNIK SHIPBUILDERS (S) PTE LTD

 

)

In the presence of:

)

)

Name of Witness:

)

The Buyer

SIGNED by

)

)

)

Name:

)

Designation:

)

For and on behalf of

 

)

in the presence of:

)

)

Name of Witness:

)

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