Shipbuilding Contract (hull No. 5)

Exhibit 10.16

SHIPBUILDING CONTRACT

FOR

THE CONSTRUCTION OF

ONE (1)

180,000 DWT CLASS BULK CARRIER

HULL NO. 0005 BETWEEN

QUINTANA MARITIME LIMITED

(AS BUYER)

AND KOREA SHIPYARD CO., LTD.

(AS BUILDER)

SHIPBUILDING CONTRACT

THIS CONTRACT is made as of 3rd December, 2006 by and between QUINTANA MARITIME LIMITED, a company incorporated and existing under the laws of the Republic of the Marshall Islands having its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, the Republic of the Marshall Islands MH96960 (hereinafter called " QML" ) or a company to be nominated by QML pursuant to Article XV hereof (hereinafter called the " NOMINEE" )(QML until such nomination takes place and the NOMINEE following such nomination having taken place, in either case hereinafter called the " BUYER" ), the party of the first part and KOREA SHIPYARD CO ., LTD ., a company organized and existing under the laws of the Republic of Korea, having its registered office at 1243-1, Yonsan-bong, Mokpo-City, Jeollanam-Do, Korea (hereinafter called the ' BUILDER" ), the party of the second part, WITNESSETH:

In consideration of the mutual covenants contained herein, the BUILDER agrees to design, build, launch, equip and complete one (1) 180,000 DWT Class Bulk Carrier as described in Article 1 hereof (hereinafter called the " VESSEL" ) at the BUILDER' S shipyard in Jindo, Korea (hereinafter called the " SHIPYARD" ) and to deliver and sell the VESSEL to the BUYER, and the BUYER agrees to accept delivery of and purchase from the BUILDER the VESSEL, according to the terms and conditions hereinafter set forth:

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INDEX


ARTICLE I DESCRIPTION AND CLASS 4

ARTICLE II CONTRACT PRICE 7

ARTICLE III ADJUSTMENT OF THE CONTRACT PRICE 8

ARTICLE IV INSPECTION AND APPROVAL 13

ARTICLE V MODIFICATIONS CHANGES AND EXTRAS 19

ARTICLE VI TRIALS AND COMPLETION 22

ARTICLE VII DELIVERY 27

ARTICLE VIII DELAYS AND EXTENSIONS OF TIME (FORCE MAJEURE) 31

ARTICLE IX WARRANTY OF QUALITY 34

ARTICLE X PAYMENT 39

ARTICLE XI BUYER' S DEFAULT 45

ARTICLE XII BUYER' S SUPPLIES 48

ARTICLE XIII INSURANCE 50

ARTICLE XIV DISPUTES AND ARBITRATION 52

ARTICLE XV SUCCESSORS AND ASSIGNS 54

ARTICLE XVI TAXES AND DUTIES 56

ARTICLE XVII PATENTS, TRADEMARKS AND COPYRIGHTS 57

ARTICLE XVIII INTERPRETATION AND GOVERNING LAW 58

ARTICLE XIX NOTICES 59

ARTICLE XX EFFECTIVENESS OF THIS CONTRACT 60

ARTICLE XXI EXCLUSIVENESS 61

EXHIBIT A LETTER OF GUARANTEE 63

EXHIBIT B PERFORMANCE GUARANTEE 66


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ARTICLE I DESCRIPTION AND CLASS 1. Description

The VESSEL shall have the BUILDER' S Hull No. 0005 and shall be constructed, equipped and completed in accordance with the specifications (Ref. No. KSB-FS-002R0 dated 3 rd December, 2006) and the maker list (Ref. No. KSB-ML-002R0 dated 3 rd Dec., 2006) (hereinafter collectively called the " SPECIFICATIONS" ) and the general arrangement plan (Ref. No. KSB-GA-002R0 dated 3 rd Dec., 2006) (hereinafter called the " PLAN" ), which shall constitute an integral part of this CONTRACT.

The SPECIFICATIONS and the PLAN are intended to explain each other and anything shown on the PLAN and not stipulated in the SPECIFICATIONS or anything stipulated in the SPECIFICATIONS and not shown on the PLAN shall be deemed and considered as if included in both. Should there be any inconsistencies or contradictions between the SPECIFICATIONS and the PLAN, the SPECIFICATIONS shall prevail. Should there be any inconsistencies or contradictions between this CONTRACT and the SPECIFICATIONS, this CONTRACT shall prevail. 2. Basic Dimensions and Principal Particulars of the VESSEL

The basic dimensions anti principal particulars of the VESSEL shall be

Length, overall maximum 292.0 M Length, between perpendiculars 283.0 M Breadth, moulded 45.0 M Depth to Upper Deck, moulded 24.7 M

Design draft, moulded, in seawater of

specific gravity of 1.025 16.5 M

Scantling draft, moulded, in seawater of

specific gravity of 1.025 18.2 M Deadweight on the above moulded


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design draft of 16.5 M

about 159,000 M/T

Deadweight on the above moulded
scantling draft of 18.2 M, guaranteed

179,700 M/T

Main propelling machinery MAN-B&W 6S70 MC-C (Mark 7) MCR : 18,660 KW X 91.0 RPM NCR : 16,790 KW X 87.9 RPM

Service speed at 16.5 meters design draft at the condition of clean bottom and in calm and deep sea with main engine developing a NCR of 16,790 KW with fifteen per cent

(15 %) sea margin, guaranteed

15.4 Knots

Fuel consumption of the main engine applying I.S.O. reference conditions to the result of official shop test at a NCR of 16,790 KW using marine diesel oil having lower calorific value of 42,700 KJ per Kg, guaranteed

166.7 gr/KW.HR

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

3. Classification, Rules and Regulations


(a)

The VESSEL shall be built in compliance with the current rules and regulations of American Bureau of Shipping (hereinafter called the " CLASSIFICATION SOCIETY" ), to be classed and registered as +A1(E), +AMS, Bulk Carrier CSR, SafeShip-CM, BC-A (holds 2, 4, 6 and 8 may be empty with maximum cargo density: 3.0t/m 3 ), ESP, +ACCU, TCM, GRAB(20), UWILD, POT and also to comply with the rules, regulations and requirements of the other regulatory bodies described in the SPECIFICATIONS.


5 (b) The rules, regulations and requirements of the CLASSIFICATION SOCIETY and the regulatory bodies and the other relevant, regulations and requirement, if any, are to include their current ones that have been issued and are effective as of the date of signing this CONTRACT.

(c) The BUILDER shall arrange with the CLASSIFICATION SOCIETY for the assignment by the CLASSIFICATION SOCIETY of representative(s) to the VESSEL during construction. All fees and charges incidental to classification of the VESSEL in compliance with the above specified rules, regulations and requirements of this CONTRACT shall be for the account of the BUILDER. (d) The decision of the CLASSIFICATION SOCIETY as to whether the VESSEL complies with the regulations of the CLASSIFICATION SOCIETY shall be final and binding upon the BUILDER and the BUYER.

4. Nationality of the VESSEL

The VESSEL shall be built and completed by the BUILDER for registration in the Marshall Islands and shall be registered by the BUYER at its own cost and expense under the laws of the Marshall Islands with its home port of Majuro at the time of its delivery and acceptance hereunder.


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ARTICLE II CONTRACT PRICE The contract price of the VESSEL delivered to the BUYER at the SHIPYARD shall be United States Dollars Seventy Seven Million Seven Hundred Thousand (US $77,700,000) (hereinafter called the " CONTRACT PRICE" ) which shall be paid plus any increases or less any decreases due to adjustment or modifications, if any, as set forth in this CONTRACT . The CONTRACT PRICE shall include payment for services in the inspection, tests, survey and classification of the VESSEL which will be rendered by the CLASSIFICATION SOCIETY and shall not include the cost of the BUYER' s SUPPLIES as stipulated in Article XII. The CONTRACT PRICE also includes all costs and expenses for supplying all necessary drawings as stipulated in the SPECIFICATIONS except those to be furnished by the BUYER for the VESSEL in accordance with the SPECIFICATIONS.


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ARTICLE III ADJUSTMENT OF THE CONTRACT PRICE The CONTRACT PRICE of the VESSEL shall be adjusted as hereinafter set forth in the event of the following contingencies. It is hereby understood by both parties that any adjustment of the CONTRACT PRICE as provided for in this Article is by way of liquidated damages and not by way of penalty, the calculation of damage being deemed final. 1. Delayed Delivery

(a) No adjustment shall be made and the CONTRACT PRICE shall remain unchanged for the first thirty (30) days of the delay in delivery of the VESSEL [ending as of 12 o' clock midnight Korean Standard Time on the thirtieth (30th) day of delay] beyond the Delivery Date calculated as provided in Article VII.1. hereof.

(b) If delivery of the VESSEL is delayed more than thirty (30) days beyond the date upon which the delivery is due from the BUILDER under the terms of this CONTRACT, then, beginning at midnight of the thirtieth (30th) day after such due date, the CONTRACT PRICE of the VESSEL shall be reduced by United States Dollars Twenty Thousand (US $20,000) for each full day of delay. However, unless the parties agree otherwise, the total amount of deduction from the CONTRACT PRICE shall not exceed the amount due to cover the delay of two hundred and forty (240) days after thirty (30) days of the delay in delivery of the VESSEL at the rate of deduction as specified hereinabove.

(c)

But, if the delay in delivery of the VESSEL continues for a period of more than two hundred and seventy (270) days beyond the date upon which the delivery is due from the BUILDER under the terms of this CONTRACT then, in such event, and after such period has expired, the BUYER may, at its option, cancel this CONTRACT by serving upon the BUILDER a notice of cancellation by telegram, or facsimile to be confirmed by a


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registered letter via airmail directed to the BUILDER at the address given in this CONTRACT. Such cancellation shall be effective as of the date the notice thereof is received by the BUILDER. If the BUYER has not served the notice of cancellation after the aforementioned two hundred and seventy (270) days delay in delivery, the BUILDER may demand the BUYER to make an election in accordance with Article VIII.3. hereof.

(d) 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 extension of the Delivery Date or permissible delays as provided in Article V, VI, VIII, XI, XII or elsewhere in this CONTRACT, is delivered beyond the date upon which delivery would then be due under the terms of this CONTRACT. 2. Insufficient Speed

(a) The CONTRACT PRICE of the VESSEL shall not be affected or changed, if the actual speed, as determined by trial runs more fully described in Article VI hereof, is less than the speed guaranteed under the terms of this CONTRACT and the SPECIFICATIONS provided such deficiency in actual speed is not more than three-tenths (3/10ths) of one (1) knot below the guaranteed speed. (b) However, as for the deficiency of more than three-tenths (3/10ths) of one (1) knot in actual speed below the speed guaranteed under this CONTRACT, the CONTRACT PRICE shall be reduced as follows [Fractions of less than one-tenth (1/10th) of a knot shall be prorated]:

For the three-tenths (3/10ths) of a knot - a total sum of US $100,000

For the four-tenths (4/10ths) of a knot -- a total sum of US $175,000

For the five-tenths (5/10ths) of a knot -- a total sum of US $390,000

For the six-tenths (6/10ths) of a knot -- a total sum of US $520,000 For the seven-tenths (7/10ths) of a knot -- a total sum of US $650,000 For the eight-tenths (8/10ths) of a knot -- a total sum of US $780,000 * The above figures are not cumulative.


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However, unless the parties agree otherwise, the total amount of reduction from the CONTRACT PRICE shall not exceed the amount due to cover the deficiency of eight-tenths (8/10ths) of one (1) knot below the guaranteed speed at the rate of reduction as specified above. (c) If the deficiency in actual speed of the VESSEL is more than eight-tenths (8/10ths) of one (1) knot below the speed guaranteed under this CONTRACT, then the BUYER, at its option, may, subject to the BUILDER' s right to effect alterations or corrections as provided in Article VI 5 . hereof, cancel this CONTRACT or may accept the VESSEL at a reduction in the CONTRACT PRICE as above provided for eight-tenths (8/10ths) of one (1) knot of deficiency only.

3. Excessive Fuel Consumption

(a) The CONTRACT PRICE shall not be affected or changed by reason of the fuel consumption of the VESSEL' s main engine, as determined by the engine manufacturer' s shop trial as per the SPECIFICATIONS being more than the guaranteed fuel consumption of the VESSEL' s main engine, if such excess is not more than five per cent (5%) over the fuel consumption guaranteed in Article I. 2 hereof.

(b) However, as for the excess of more than five per cent (5%) in the actual fuel consumption over the guaranteed fuel consumption of the VESSEL' s main engine the CONTRACT PRICE shall be reduced by United States Dollars Ninety Thousand (US $90,000), for each full one per cent (1%) increase in fuel consumption in excess of the said five per cent (5%) increase in fuel consumption [fractions of less than one per cent (1%) shall be prorated] . However, unless the parties agree otherwise, the total amount of reduction from the CONTRACT PRICE shall not exceed the amount due to cover the excess of ten per cent (10%) over the guaranteed fuel consumption of the VESSEL' s main engine at the rate of reduction as specified above.


10 (c) If such actual fuel consumption exceeds the guaranteed fuel consumption of the VESSEL' s main engine by more than ten per cent (10%), the BUYER, at its option, may, subject to the BUILDER' s right to effect alterations or corrections as specified in Article VI . hereof, cancel this CONTRACT or may accept the VESSEL at a reduction in the CONTRACT PRICE as above provided for the ten per cent (10%) increase only.

4. Deadweight below Contract Requirements

(a) The CONTRACT PRICE of the VESSEL shall not be affected or changed, if actual deadweight, determined as provided in this CONTRACT and the SPECIFICATIONS, is below the guaranteed deadweight of 179,700 metric tons on the moulded design draft of 18.2 meters required by this CONTRACT and the SPECIFICATIONS by an amount of 2,000 metric tons or less. (b) However, should the deficiency in the actual deadweight of the VESSEL be in excess of 2,000 metric tons below the said guaranteed deadweight, then the CONTRACT PRICE of the VESSEL shall be reduced for each full one (1) metric ton [fractions of less than one (1) metric ton shall be disregarded] of decreased deadweight in excess of 2,000 metric tons by the sum of United States Dollars Seven Hundred (US $700) per metric ton. However, unless the parties agree otherwise, the total amount of deduction from the CONTRACT PRICE shall not exceed the amount due to cover the deficiency of 4,500 metric tons below the guaranteed deadweight hereinabove.

(c) If the deficiency in the deadweight of the VESSEL is more than 4,500 metric tons below the said guaranteed deadweight, then the BUYER, at its option, may, subject to the BUILDER' s right to effect alterations or corrections without the BUYER' s prior consent as specified in Article VI.5 . hereof, cancel this CONTRACT or may accept the VESSEL at a reduction in the CONTRACT PRICE as above provided for 4,500 metric tons of deficiency only.


11 5. EFFECT OF CANCELLATION

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


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ARTICLE IV INSPECTION AND APPROVAL 1. Appointment of BUYER' s Representative

The BUYER shall timely despatch to and maintain at the SHIPYARD, at its own cost, expense and risk, one or more representatives (hereinafter each called the " BUYER' S REPRESENTATIVE" ), who shall be duly accredited in writing by the BUYER to supervise adequately the construction by the BUILDER of the VESSEL, her equipment and all accessories. Before the commencement of any item of work under this CONTRACT, the BUILDER shall, whenever reasonably required, previously exhibit, furnish to, and within the limits of the BUYER' S REPRESENTATIVE' s authority, secure the approval from the BUYER' S REPRESENTATIVE of any and all plans and drawings prepared in connection therewith . Upon appointment of the BUYER' S REPRESENTATIVE, the BUYER shall notify the BUILDER in writing of the name and the scope of the authority of the BUYER' S REPRESENTATIVE.

2. Authority of the BUYER' s Representative

Such BUYER' S REPRESENTATIVE shall, at all times during working hours of the construction until delivery of the VESSEL, have the right to inspect the VESSEL, her equipment and all accessories, and work in progress, or materials utilized in connection with the construction of the VESSEL, wherever such work is being done or such materials are stored, for the purpose of determining that the VESSEL, her equipment and accessories are being constructed in accordance with the terms of this CONTRACT and/or the SPECIFICATIONS and the PLAN.

The BUYER' S REPRESENTATIVE shall, within the limits of the authority conferred upon him by the BUYER, make decisions or give advice to the BUILDER on behalf of the BUYER promptly on all problems arising out of, or in connection with, the construction of the VESSEL and generally act in a reasonable manner with a view to cooperating to the utmost with the BUILDER in the construction process of the VESSEL.


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The decision, approval or advice of the BUYER' S REPRESENTATIVE shall be deemed to have been given by the BUYER and once given shall not be withdrawn, revoked or modified except with consent of the BUILDER. Provided that the BUYER' S REPRESENTATIVE or his assistants shall comply with the foregoing obligations, no act or omission of the BUYER' S REPRESENTATIVE or his assistants shall, in any way, diminish the liability of the BUILDER under Article IX (WARRANTY OF QUALITY). The BUYER' S REPRESENTATIVE shall notify the BUILDER promptly in writing of his discovery of any construction or materials, which he believes do not or will not conform to the requirements of the CONTRACT, the SPECIFICATIONS and the PLAN and likewise advise and consult with the BUILDER on all matters pertaining to the construction of the VESSEL, as may be required by the BUILDER, or as he may deem necessary.

However, if the BUYER' S REPRESENTATIVE fails to submit to the BUILDER without delay any such demand concerning alterations or changes with respect to the construction, arrangement or outfit of the VESSEL, which the BUYER' S REPRESENTATIVE has examined, inspected or attended at the test thereof under this CONTRACT or the SPECIFICATIONS and the PLAN, the BUYER' S REPRESENTATIVE shall be deemed to have approved the same and shall be precluded from making any demand for alterations, changes, or complaints with respect thereto at a later date.

The BUILDER shall comply with any such demand which is not contradictory to this CONTRACT, the SPECIFICATIONS or the PLAN, provided that any and all such demands by the BUYER' S REPRESENTATIVE with regard to construction, arrangement and outfit of the VESSEL shall be submitted in writing to the authorized representative of the BUILDER. The BUILDER shall notify the BUYER' S REPRESENTATIVE of the names of the persons who are from time to time authorized by the BUILDER for this purpose .

It is agreed upon between the BUYER and the BUILDER that the modifications, alterations or changer and other measures necessary to comply with such demand may be effected at a convenient time and place at the BUILDER' s reasonable discretion in view of the construction schedule of the VESSEL.


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In the event that the BUYER' S REPRESENTATIVE shall advise the BUILDER that he has discovered or believes the construction or materials do not or will not conform to the requirements of this CONTRACT and the SPECIFICATIONS or the PLAN, and the BUILDER shall not agree with the views of the BUYER' S REPRESENTATIVE in such respect, either the BUYER or the BUILDER may, with the agreement of the other party, seek an opinion of the CLASSIFICATION SOCIETY or failing such agreement, request an arbitration in accordance with the provisions of Article XIV hereof. The Principal Surveyor of the CLASSIFICATION SOCIETY or the arbitration tribunal, as the case may be, shall determine whether or not a nonconformity with the provisions of this CONTRACT, the SPECIFICATIONS and the PLAN exists. 3. Approval of Drawings

(a) The BUILDER shall submit to the BUYER three (3) copies of each of the plans and drawings to be submitted to the BUYER for its approval at its address as set forth in Article XIX hereof. The BUYER shall, within twenty one (21) calendar days after receipt thereof return to the BUILDER one (1) copy of such plans and drawings with the approval or comments, if any, of the BUYER. A list of the plans and drawings to be so submitted to the BUYER shall be mutually agreed upon between the parties hereto.

(b) When and if the BUYER' S REPRESENTATIVE shall have been sent by the BUYER to the SHIPYARD in accordance with Paragraph 1 of this Article, the BUILDER may submit the remainder, if any, of the plans and drawings in the agreed list, to the BUYER' S REPRESENTATIVE for his approval, unless otherwise agreed upon between the parties hereto. The BUYER' S REPRESENTATIVE shall, within seven (7) days after receipt thereof, return to the BUILDER one (1) copy of such plans and drawings with his approval or comments written thereon, if any. Approval by the BUYER' S REPRESENTATIVE of the plans and drawings duly submitted to him shall be deemed to be the approval by the BUYER for all purposes of this CONTRACT.


15 (c) In the event that the BUYER or the BUYER' S REPRESENTATIVE shall fail to return the plans and drawings to the BUILDER within the time limit as hereinabove provided, such plans and drawings shall be deemed to have been automatically approved without any comment. In the event the plans and drawings submitted by the BUILDER to the BUYER or the BUYER' S REPRESENTATIVE in accordance with this Article do not meet with the BUYER' s or the BUYER' S REPRESENTATIVE' s approval, the matter may be submitted by either party hereto for determination pursuant to Article XIV hereof. If the BUYER' s comments on the plans and drawings that are returned to the BUILDER by the BUYER within the said time limit are not clearly specified or detailed, the BUILDER shall be entitled to place its own interpretation on such comments in implementing them. 4. Salaries and Expenses

All salaries and expenses of the BUYER' S REPRESENTATIVE or any other person or persons employed by the BUYER hereunder shall be for the BUYER' s account.

5. Responsibility of the BUILDER

(a) The BUILDER shall provide the BUYER' S REPRESENTATIVE and his assistants free of charge with suitably furnished office space equipped with air conditioning at, or in the vicinity of, the SHIPYARD together with access to telephone and facsimile facilities as may be necessary to enable the BUYER' S REPRESENTATIVE and his assistants to carry out their work under this CONTRACT. However, the BUYER shall pay for the telephone or facsimile facilities used by the BUYER' S REPRESENTATIVE or his assistants.

The BUILDER, its employees, agents and subcontractors, during its working hours until delivery of the VESSEL, shall arrange for them to have free and ready access to the VESSEL, her equipment and accessories, and to any other place (except the areas controlled for the purpose of national security) where work is being done, or materials are being processed or stored in connection with the construction of the VESSEL including the premises of sub-contractors.


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The BUYER' S REPRESENTATIVE or his assistants or employees shall observe the work' s rules and regulations prevailing at the BUILDER' s and its sub-contractor' s premises. The BUILDER shall promptly provide to the BUYER' S REPRESENTATIVE and/or his assistants and shall ensure that its sub-contractors shall promptly provide all such information as he or they may reasonably request in connection with the construction of the VESSEL and her engines, equipment and machinery.

(c) The BUYER' S REPRESENTATIVE and his assistants shall at all times remain the employees of the BUYER. The BUILDER shall not be liable to the BUYER or the BUYER' S REPRESENTATIVE or to his assistants or to the BUYER' s employees or agents for personal injuries, including death, during the time they, or any of them, are on the VESSEL, or within the premises of either the BUILDER or its sub-contractors, or are otherwise engaged in and about the construction of the VESSEL, unless, however, such personal injuries, including death, are caused by the gross negligence of the BUILDER, its sub-contractors, or its or their employees or agents. The BUILDER shall not be liable to the BUYER for damages to, or destruction of property of the BUYER or of the BUYER' S REPRESENTATIVE or his assistants or the BUYER' s employees or agents, unless such damages, loss or destruction is caused by the gross negligence of the BUILDER, its sub-contractors, or its or their employees or agents.

6. RESPONSIBILITY OF THE BUYER

The BUYER shall undertake and assure that the BUYER' S REPRESENTATIVE shall carry out his duties, hereunder in accordance with the normal international shipbuilding practice and in such way so 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.


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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 consider that such BUILDER' s request is justified, the BUYER shall effect such replacement as soon as conveniently arrangeable.


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ARTICLE V MODIFICATIONS, CHANGES AND EXTRAS 1. How Effected

Minor modifications or changes to the SPECIFICATIONS and the PLAN under which the VESSEL is to be constructed may be made at any time hereafter by written agreement of the parties hereto. Any modification or change requested by the BUYER which does not affect the frame-work of the SPECIFICATIONS shall be agreed to by the BUILDER if the BUYER agrees to adjustment of the CONTRACT PRICE, deadweight and/or cubic capacity, speed requirements, the DELIVERY DATE and other terms and conditions of this CONTRACT reasonably required as a result of such modification or change. The BUILDER has the right to continue construction of the VESSEL on the basis of the SPECIFICATIONS and the PLAN until the BUYER has agreed to such adjustments. The BUILDER shall be entitled to refuse: to make any alteration, change or modification of the SPECIFICATIONS and/or the PLAN requested by the BUYER, if the BUYER does not agree to the aforesaid adjustments within fourteen (14) days of the BUILDER' s notification of the same to the BUYER, or, if, in the BUILDER' s judgement, the compliance with such request of the BUYER would cause an unreasonable disruption of the normal working schedule of the SHIPYARD. The BUILDER, however, agrees to exert its efforts to accommodate such reasonable request by the BUYER so that the said change and modification shall be made at a reasonable cost and within the shortest period of time reasonably possible. The aforementioned agreement to modify and change the SPECIFICATIONS and the PLAN may be effected by exchange of letters or facsimiles manifesting the agreement.

The letters and facsimiles exchanged by the parties pursuant to the foregoing shall constitute an amendment to this CONTRACT, the SPECIFICATIONS or the PLAN under which the VESSEL shall be built. Upon consummation of such an agreement to modify and change the SPECIFICATIONS or the PLAN, the BUILDER shall alter the construction of the VESSEL in accordance therewith including any addition to, or deduction from, the work to be performed in connection with such construction.


19 2. Substitution of Material

If any materials, machinery of equipment required for the construction of the VESSEL by the SPECIFICATIONS and the PLAN or otherwise under this CONTRACT cannot be procured in time to meet the BUILDER' S construction schedule for the VESSEL, or are in short supply, or are unreasonably high in price compar ...