SHIPBUILDING CONTRACT Between SEABULK OFFSHORE TUG SUPPLY, INC. And LABROY SHIPBUILDING AND ENGINEERING PTE LTD

1.1

“Contract” or “this Contract” shall, unless the context otherwise requires, mean this Contract together with any addenda to this Contract, which may be mutually agreed between the Parties in writing.

1.5

“Contract Price” shall mean Price in Article 4 subject to adjustment in accordance with Article 7, 9 and 11 of this Contract.

1.6

“Protocol of Delivery and Acceptance” shall mean the Protocol to be executed by the Builder and the Owner on delivery of the Vessel as referred to in Article 3 and 7.

1.7

“Owner’s Furnished Equipment” shall mean the items to be furnished by the Owner as referred to in the Contract, and as per Exhibit “E”.

1.10

“Supervisors” shall mean the person or persons duly authorised by the Owner to act as its representative or representatives for construction supervision in conformity with the stipulations of Article 6 hereof.

1.11

“Technical Specification” shall mean Technical Specification prepared by Builder Naval Architect, Ms Khiam Chuan Marine Pte. Ltd ref Project: KCM/Q441, signed by both Parties and forming an integral part of the Contract.

1.12

“Makers List” shall mean the list as attached to the Technical Specification and signed by both Parties and forming an integral part of the Contract.

1.13

“Contract Documents” shall mean documents and drawings as per Exhibit “A” signed by both Parties and forming an integral part of the Contract.

1.14

”Working Days” shall mean days upon which both Owner’s lender and banks in Singapore are open for business.

1.16

“Effective Date” shall mean the date when the Contract becomes effective pursuant to Article 15.

1.18

“Delivery Date” shall mean the date when the completed Vessel shall be delivered, i.e. February 28, 2007, subject to modifications only in accordance with this Contract. Effective Date shall be the date when the first installment of 10% is paid to the Builder.

(ii)

The Vessel shall be built, equipped and certified complying with all the applicable laws, regulations, rules according to Article 2.9 hereof and international conventions of the Marshall Island flag of registry and requirements of the regulatory bodies in force at the date of signature of this Contract.

a)

Inventory as described in the Technical Specification which will be stored on board as provided for in the Vessel.

3.1

The Builder shall deliver the Vessel to the Owner afloat at a safe berth at Builder’s shipyard on the Delivery Date, i.e. February 28, 2007, or 22 months after the date of this Contract as set forth on page one, which ever is later, subject to modifications and permissible extensions as provided for in the Contract. The Builder shall give to the Owner written notice notifying when the Vessel will be ready for delivery approximately 21 (twenty-one) days before the anticipated Delivery Date. The Builder shall also give to the Owner written confirmation 7 (seven) days before the definite Delivery Date.

3.2

The agreed Delivery Date is subject to force majeure reservations, mentioned in Article 11.1. Force majeure shall be regarded as occurring if the delivery, after the Contract has been signed the Builder is prevented or delayed by extraordinary circumstances or events which the Builder could not reasonably have anticipated by exercising utmost due diligence when signing the Contract, e.g. such as but not limited to unforeseeable events within or outside the Builder’s shipyard as war or warlike conditions, embargoes, mobilizations, strikes or lockouts, natural catastrophes, fire or other extraordinary events, beyond the control of the Builder and not which are caused by the Builder’s fault, error, omission, negligence or imprudence. Force majeure shall moreover be regarded as occurring if the delivery is prevented or delayed by late deliveries of major parts (always provided, however, that these services and deliveries have been ordered by the Builder in a timely manner with due consideration that delay would be force majeure under this Article if it had affected the Builder’s obligations). This provision shall not affect the Builder’s obligation to exercise due diligence in avoiding or minimizing delays.

3.3

As soon as possible, but in any event within 7 days from the date of commencement of any delay on account of which the Builder claims that it is entitled under Article 3.2 hereof to an extension of time of delivery of the Vessel the Builder shall give notice to the Owner of the date such delay commenced, the reasons thereof and an estimate of the duration thereof. Similarly, as soon as possible, but in any event within 7 days after such delay expires, the Builder shall give notice to the Owner of the date such delay expired and shall specify the period of the time by which in his judgement the time for delivery of the Vessel should be extended. In the event of a dispute on the said period it may be referred to arbitration in accordance to Article 13.

3.4

The delivery of the Vessel shall be understood as effected upon signing the Protocol of Delivery and Acceptance as per Exhibit F on behalf of the Builder and the Owner and a Protocol of Delivery and Acceptance from the Owner’s lender if required. The Builder shall prepare or cause the preparation of and furnish to the Owner on delivery of the Vessel the documents referred to in Exhibit “B” attached hereto.

4.1

The Contract Price of the Vessel is United States Dollars: Ten million nine hundred and seventeen thousand only (US$10,917,000/-)

4.2

The Contract Price is fixed, i.e., not subject to any adjustment including but not limited to any rise or fall in rates of wages, cost of equipment or materials or currencies, save that it is subject only to adjustments as provided in Articles 7, 9 and 11 hereof.

4.3

All costs and fees, including taxes concerning payment imposed by authorities outside the Builder’s country, incurred or imposed by reason of the transfer of funds to the Builder referred to in paragraphs (a) to (c) of Article 5.2 hereof shall borne by the Owner provided that the corresponding costs and fees imposed within the Builder’s country shall be borne by the Builder.

(a)

in respect of the First Installment on 5 September 2005 provided the Invoice has been presented at least fifteen (15) banking days, prior to such date.

(b)

in respect of the Second Installment on 30 November 2005 provided the Invoice has been presented at least fifteen (15) banking days, prior to such date.

(c)

in respect of the Third Installment, upon presentation of Protocol of Delivery and Acceptance of Vessel Signed by both the Owner and the Builder.

(a)

100% of such sum for modifications agreed upon under Article 9 when the statement of the adjustment of price is made by the Builder and accepted by the Owner shall be settled together with the final payment at the Delivery Date.

(a)

As security for the obligation to refund installments made by Owner due to delays or deficiencies of the Vessel as set out in Article 11 or due to default under this Contract by Builder, Builder shall deliver to Owner a bank guarantee(s), in a form and with a first class bank reasonably acceptable to Owner, in amounts sufficient to cover each payment installment made under Articles 5.1 and 5.2. Builder may provide a series of bank guarantees covering the amounts of each installment, concurrent with and effective upon the payment of each such installment.

(b)

Notwithstanding the installment payment requirements set forth in Articles 5.1 and 5.2, no such installment shall be due unless and until the bank guarantee is delivered to Owner covering such installment as provided for in this Article 5.4.

(c)

Bank guarantee(s) shall be valid up until the delivery of the vessel to the Owner and shall be assignable to Owner’s lender.

6.1

Until delivery of the Vessel, the Owner shall be entitled to have permanent Supervisors present at the Builder’s shipyard in order to supervise the building of the Vessel in accordance with the Contract and the Contract Documents and to give in writing to the personnel appointed by the Builder reasonable remarks concerning any deficiency or defect in the building or testing of the Vessel. Upon receipt of such remarks the Builder shall correct such deficiencies or defects. However, if in the opinion of the Builder and supported by the Classification Society the remark does not concern any deficiency or defect in terms of this Contract, a written statement of the Builder will be forwarded to the Owner specifying the Builder’s reasons. If the parties cannot reach agreement, the dispute will be submitted to arbitration under Article 13.

6.2

The Owner shall be entitled to employ consultants to supervise from time to time with regard to the supervision as provided under this Article.

6.3

The Supervisors shall have the right to participate in any inspection, tests and trials including the Sea Trials, carried out by the Builder, the Builder’s subcontractors and/or the Classification Society. In the event of failure of the Supervisor to be present at any inspections, tests and trials after reasonable written notice to them of the time and place of such inspections, test and trials (such notice to be given within the period agreed upon between the Supervisor and the Builder, which will permit the Supervisors to be present; at a minimum this period will be 1 day in advance for test and trial at the Builder’s shipyard, Sea Trials in accordance with Article 6.1 hereof, and five (5) working days for test and trial conducted at any location other then the Builders shipyard) such inspections, test and trials shall be performed as if the Supervisor were present and the respective test shall not be repeated due to the absence of the Supervisor.

6.4

The Builder shall free of charge arrange for the Supervisors use of such office space and other reasonable facilities for the Supervisors located at the Builder’s shipyard or its close proximity as are necessary to enable the Supervisors to carry on their duties. The office space will be equipped with office furniture, high speed internet access and at lease two telephones with separate lines. The Owner shall be entitled to use of a separate facsimile machine for its own use and equipment to access the internet. The Builder shall assist the Owner in the installation of same. Costs of telephone, telefax and email will be borne by the Owner.

6.5

The Supervisors shall properly and reasonably execute their function but shall not interfere with normal practices of the Builder’s shipyard.

6.6

The procedure of approval of technical drawings is as follows. Approval of plans shall not affect Owner’s or Builder’s rights and obligations under this Contract.

(a)

The Builder shall submit to the Owner four (4) copies of each of the plans and drawings, including revised plans, to be submitted to the Owner for its approval at its address as set forth in Article 14.6 hereof. The Owner shall, within ten (10) working days after receipt thereof, return to the Builder the approval or comments, if any, of the Owner. A list of the plans and drawings to be so submitted to the Owner shall be mutually agreed upon between the parties hereto.

(b)

In the event that the Owner or the Owner’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 Owner or the Owner’s Representative in accordance with this Article do not meet with the Owner’s or the Owner’s Representative’s approval, the matter may be submitted by either party hereto for determination pursuant to Article 13 hereof. If the Owner’s comments on the plans and drawings that are returned to the Builder by the Owner within the said time limit are not clearly specified or detailed, the Builder shall promptly request, in writing, clarification from Owner or Owner’s Representative. If such clarification does not reach the Builder from the Owner within 5 working days of the Owner’s receipt of such request, the Builder shall be entitled to place its own reasonable interpretation on such comments in implementing them.

(c)

The Builder shall not submit or have submitted drawings that are pending Owner’s approval or comments, if any, in excess of ten (10) drawings. If the Builder submits more then ten (10) drawings, the Owner can request additional time for forwarding of the Owner’s approval or comments, if any, for the specific drawings in addition to the ten (10) working days stipulated above. The Owners request for additional time will be specific as to drawing and number, of additional days. Builder will not unreasonably withhold approval of Owners request for additional time for the Owner to forward approval and comments, if any. Drawings that the Owner has requested additional time will not be considered automatically approved until after the additional time has passed.

(d)

If the Builder thinks that any of the Owner’s comments require an Alteration to the Vessel as provided for in Article 9 hereof, the Builder will notify the Owner in writing. The Builder will respond, in writing, to each of the Owner’s comments.

6.7

The Owner shall inform the Builder in writing of the names and titles of the Owner’s Supervisors and of the extent of the Supervisors’ authorization to undertake decisions on behalf of the Owner. The Owner shall have the right to send a skeleton crew to the Builder’s shipyard for the purpose of becoming familiar with the equipment of the Vessel, ship schemes and systems. During the sea trials, Owner’s skeleton crew may be on board the Vessel but will neither take any active part in the sea trials nor interfere with the management of the Vessel by the Builder’s crew.

6.8

(a) The Builder shall indemnify the Owner against any action, claim or proceedings, and any costs or expenses incurred thereby, brought against the Owner or any of the Owner’s servants or agents by any of the Builder’s employees in connection with or rising from this Contract provided always that such action, claim or proceedings is not occasioned by the gross negligence or willful act or omission of the Owner or any of the Owner’s servants or agents.

(b)

The Owner shall indemnify the Builder against any action, claim or proceedings and any costs or expenses incurred thereby brought against the Builder or any of its servants or agents by the Owner’s employees or representative(s) in connection with or arising from this Contract, provided always that such an action, claim or proceedings is not occasioned by the gross negligence or willful act or omission of any of the Builder’s servants or agents.