AMENDMENT NO. 1 TO SHIPBUILDING CONTRACT

 

 

 

                    AMENDMENT NO. 1 TO SHIPBUILDING CONTRACT

                                   (Hull 003)

 

         THIS AMENDMENT NO. 1 TO SHIPBUILDING CONTRACT is made as of February

18, 2005, by and between KVAERNER PHILADELPHIA SHIPYARD INC., a corporation

organized under the laws of Pennsylvania, having its principal office at 2100

Kitty Hawk Avenue, Philadelphia, PA 19112 (the "BUILDER"), and MATSON NAVIGATION

COMPANY, INC., a corporation organized under the laws of Hawaii, having its

principal office at 555 12th Street, Oakland, CA 94607 (the "BUYER").

 

                                 R E C I T A L S

 

         WHEREAS, the parties entered into that certain Shipbuilding Contract

dated as of February 14, 2005 for the purchase one (1) Philadelphia CV 2600 type

container vessel, designated as Builder's Hull No. 003 (the "Shipbuilding

Contract"); and

 

         WHEREAS, the parties wish to amend the Shipbuilding Contract to correct

a few minor technical errors and to incorporate additional language agreed to by

the parties.

 

         NOW, THEREFORE, in consideration of the foregoing premises, and for

other good and valuable consideration, the receipt and adequacy of which are

acknowledged, the parties hereby agree to amend the Shipbuilding Contract as

follows:

 

         1. Description of Vessel. Paragraph 1 of Article I of the Shipbuilding

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Contract is hereby amended by deleting the reference to "January 21, 2005" in

the fifth line and replacing it with "February 3, 2005."

 

         2. Contract Price. Paragraph 1(a) of Article II is hereby deleted in

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its entirety and replaced with the following text:

 

         "The purchase price of the VESSEL is ONE HUNDRED FORTY FOUR MILLION

         THREE HUNDRED AND NINETY-ONE THOUSAND DOLLARS ($144,391,000) plus the

         cost incurred by the BUILDER with respect to the construction period

         financing for the VESSEL as provided for in paragraph (c) below, net

         receivable by the BUILDER, which is exclusive of the BUYER's Supplies

         as provided in Article XVIII hereof and shall be subject to upward or

         downward adjustment, if any, as hereinafter set forth in this Contract

         (herein called the "Contract Price"). The Contract Price shall be paid

         upon delivery of the Vessel by wire transfer to an account specified by

         the BUILDER; provided that such payment shall be subject to (i)

         deferral of payment of the amounts specified on the PROTOCOL OF

         DELIVERY AND ACCEPTANCE; (ii) the holdback described in Paragraph 4(f)

         of Article IX; (iii) disputed amounts deposited in the Disputes Escrow

         Account (as defined herein); and (iv) less any reduction in the

         Contract Price pursuant to Article III hereof."

 

         3. Effective Date.

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         (a) Paragraph 3(d) of Article II of the Shipbuilding Contract is hereby

amended by deleting the reference to "Article V" in the second line and

replacing it with "Article IV."

 

         (b) Paragraph 3(f) of Article II is hereby deleted in its entirety and

replaced with the following text:

 

         "By February 18, 2005, the BUILDER shall provide the BUYER with a

         guarantee of Kvaerner ASA of (i) the BUILDER's indemnification

         obligations under Paragraph 2 of Article XXI hereof, and (ii) the

         BUILDER's obligation under that certain Right of First Refusal

         Agreement dated of even date herewith signed by the parties relating to

         certain rights with respect to future CV 2600 and CV 2500 type

         container vessel building positions at the Shipyard (the "Right of

         First Refusal Agreement").

 

         4. Delivery. Paragraph 2 of Article VII of the Shipbuilding Contract

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references a PROTOCOL OF DELIVERY AND ACCEPTANCE that will be executed by the

parties in connection with the delivery of the Vessel. The parties agree that

the PROTOCOL OF DELIVERY AND ACCEPTANCE will be substantially in the form of

Exhibit A attached hereto.

 

         5. Warranty of Quality. Paragraph 4(f) of Article IX is hereby deleted

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in its entirety and replaced with the following text:

 

         "The BUYER may withhold ONE MILLION FIVE HUNDRED THOUSAND DOLLARS

         ($1,500,000) from the delivery payment (the "Guarantee Holdback"). At

         the time of the delivery of the Vessel, the BUYER shall deposit the

         full amount of the Guarantee Holdback into an escrow account. The BUYER

         shall pay to the BUILDER the entire Guarantee Holdback, less any amount

         to cover any outstanding guarantee deficiency, upon completion of the

         guarantee period for the VESSEL. Any amounts withheld beyond the end of

         the guarantee period pursuant to this paragraph shall be paid to the

         BUILDER upon the correction of all guarantee deficiencies for which

         such amounts were withheld. Any dispute with respect to the disposition

         of the Guarantee Holdback shall be settled pursuant to Article XIV of

         this Contract."

 

         6. Indemnification. Paragraph 2 of Article XXI is hereby deleted in its

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entirety and replaced with the following text:

 

                  "The BUILDER shall defend, indemnify and hold harmless the

         BUYER, its parent, subsidiaries, affiliates, agents, subcontractors,

         directors, officers and employees from and against any claims, demands,

         obligations, liens and suits of every nature whatsoever by OceanBlue

         Express, Inc. or any of its directors, officers, employees,

         shareholders, advisors or consultants, or any third party based upon a

         contractual relationship or binding commitment with OceanBlue Express

         Inc. or any third party whose claim is made on the basis of its