SOP Exhibits

Title:

Contract of Affreightment

SOP Number : GM-DL02

Annex A

CONTRACT OF AFFREIGHTMENT

KNOW ALL MEN BY THESE PRESENTS:

This contract, made and entered into by and between:

NATIONAL FOOD AUTHORITY, a corporation duly organized and existing under and by virtue of the laws of the Philippines with principal office located at Matimyas Building, 101 E. Rodriguez Sr. Avenue, Quezon City, hereinafter called "NFA",

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________________________, a corporation duly organized and existing under and by virtue of the laws of the Philippines, with principal office, located at _____________, hereinafter called the "CARRIER".

1. WHEREAS the NFA has conducted a bidding among vessels suitable to transport its grains products;

2. WHEREAS, the CARRIER has offered to serve the transportation needs of NFA;

3. WHEREAS, the CARRIER was adjusted the lowest bidder and is competent of transporting grains of NFA;

4. WHEREAS NFA has accepted the offer, the same being the most advantageous to the interest of the Authority;

NOW, THEREFORE, for and in consideration of the foregoing premises and of the mutual convenants and stipulations herein below stated, the parties hereto agreed as follows:

1. GENERAL PROVISIONS

1.1 The CARRIER shall provide the vessels (hereinafter called "vessel" in the singular although plural in character) enumerated in Annex A of this contract or their equal substitutes which conform to the operating requirements of NFA, to carry out the provisions of this Contract;

1.2 Cargo shall be grain (rice, corn or similar) and empty sacks, bulk and/or in bags, a total of about __________, metric tons per year, from the NFA load ports as follows:

LOAD PORT VOLUME
___________________________ _______________________
___________________________ _______________________
___________________________ _______________________

FUNDS AVAILABLE:

__________________________

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This quantity is intended for planning purposes only and given without guarantee nor commitment by NFA.

1.3 The first loading of cargo under this Contact shall commence not later than ninety (90) days from the date of signing of this Contract.

2. NFA'S RESPONSIBILITIES

2.1 The NFA shall submit to the CARRIER on the 16th day, or the next working day if it falls on a Saturday, Sunday or holiday, of each month during the effectivity of this Contract, the minimum/maximum cargo tonnage projected to be moved by the CARRIER for the following month.

2.2 NFA undertakes to load each nominated vessel and/or its substitute vessel always a full cargo provided, however, that short loading by ten (10%) percent or less of vessel's full cargo capacity shall be allowed and deemed as full loading and no dead freight therefore shall be charged. The formula for computing the vessel's full cargo capacity shall be based on the vessel's deadweight scale by deducting the full weight of fuel, water and ship constant from the full deadweight.

2.3 NFA shall pay for deadfreight for short loading in excess of ten (10%) percent of the full cargo capacity.

2.4 The deadfreight mentioned in the above Clause 2.3 shall not be charged if the Master exercises his option to reduce or shut-out cargo should any of the conditions in Clause 8.3, a penalty shall be imposed to the CARRIER AT 15% of the freight of the cargo not loaded.

2.5 NFA shall have the option to provide PC security guards or civilian escorts, and seals the vessel after loading but exercise if this shall not however be interpreted as exempting, diminishing or mitigating CARRIER's liability on any shortage that may be incurred while the cargoes/grains/containers of NFA are in transit.

3. CARRIER'S RESPONSIBILITIES

3.1 The CARRIER shall, one week after receipt of NFA's minimum/maximum projected shipments, submit to NFA a firm schedule of nominated vessels for
the minimum cargo tonnage to be moved. NFA shall advise the CARRIER of the confirmation of the shipments for the increment between the minimum and maximum tonnage seven (7) calendar days prior to loading schedule.

3.2 In case of any change of vessel nomination in the firm schedule submitted by the CARRIER to the NFA under Clause 3.1 above for any reason whatsoever, the CARRIER shall advise NFA of the revised schedule and changes in nominations at least two weeks prior to the effectivity of the loading schedule.

3.3 The CARRIER shall require the master or any officer of the vessel to be present to receive/deliver NFA's cargo during loading/unloading and, upon completion, to

FUNDS AVAILABLE:

__________________

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acknowledge receipt/delivery of the cargo, the weight and/or number of bags loaded, and the condition of the cargo on the Bill of Loading. Otherwise, the CARRIER shall be deemed to have waived the freight to raise any issue as to the receipt, quantity and condition of cargo. The CARRIER shall provide the necessary dunnage inside the vessel. The vessel shall be sealed in the presence of the NFA representative and the CARRIER's representative. The seal shall be broken only at the point of destination in the presence of the NFA representative and CARRIER's representative. the CARRIER shall be responsible/liable for any shortage in number of bags whether or not the seal is broken/tampered upon receipt at destination. In this case each bag is presumed to contained 50 kilograms each.

3.4 The CARRIER's vessel shall proceed to Load Port as she may safely get and lie always afloat, and there load a full and complete cargo, and being so loaded hence proceed to the discharge port as ordered on signing Bills of Loading or so near thereto as she may safely get and lie always afloat and there deliver the cargo on being paid freight on delivered quantity at the freight rate stated in Clause 4.1 hereof.

3.5 The CARRIER shall be responsible for loss of or damage to the goods in case the loss, damage or delay has been caused by the improper or negligent stowage of goods (even if stowage is performed by NFA or its stevedores or servants), or by personal want of due diligence on the part CARRIER or their manager to make the vessel in all respects seaworthy and to ensure that she is properly cleaned, manned, equipped and supplied, or by the personal act or default of the CARRIER or their manager. And the CARRIER shall be responsible for loss or damage or delay arising from the neglect or default of the Master or crew or some other persons employed by the CARRIER on board or ashore, or from unseaworthiness of the v vessel on loading or commencement of the voyage or at anytime whatsoever. Damage caused by contact with or leakage, smell or evaporation from other goods or by the inflammable or explosive nature or insufficient package of other goods shall be considered as caused by improper or negligent stowage for which the CARRIER is responsible.

Stevedores, although appointed by NFA shall work under the supervision of the CARRIER thru the vessel Master but a NFA's expense. NFA is not responsible for any negligence default or errors on judgment of the stevedores. Any damages to vessel by stevedores. However, NFA shall assist CARRIER in its best ability to obtain a reasonable settlement from stevedores if any damage so happened. If stevedores fail to comply with Master's instruction/direction, the Master shall immediately report the matter to NFA requiring the correction of stowage, etc., or whatever without delay.

3.6 The vessel has liberty to call at any port or ports in any order, for any purpose, to sail without pilots, to tow and/or assist vessels in all situations, and also to deviate for the purpose of saving life and/or property. However, the master shall advise the discharge Port immediately as possible thru any fastest available means.


FUNDS AVAILABLE:

________________________________

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3.7 The cargo shall be enough into the holds, issued, stowed and/or trimmed and taken from the holds and discharged by NFA or their agents for NFA's account. The CARRIER shall provide winches, motive power, and winchmen from the crew. The CARRIER shall provide hatch tents for normal cargo work in case of rain.

3.8 The CARRIER must provide a representative to witness the weighing of stocks for loading whether at NFA's warehouse or shipside truckscale wherever final weighing will be undertaken before loading and unloading. The witness shall sign the pertinent documents relative thereto.

3.9 The CARRIER has the light to reject cargoes on busted bags.

3.10 The Master , or CARRIER's agent authorized by the Master, shall sign Bills of Lading at such rate of freight as stipulated under Clause 4.1 hereof.

4. FREIGHT

4.1 The freight rate payable hereunder shall be based on the quantity received at disport, inclusive of all taxes, and shall be as follows:

Freight Rates
DISCHARGE per Kilogram
CARGO LOAD PORT PORT FIOST
----------- ----------------- ------------------ -------------------

______ _________ __________ __________
______ _________ __________ __________
______ _________ __________ __________
______ _________ __________ __________
______ _________ __________ __________

4.2 The freight rates stipulated under Clause 4.1 above shall be in effect for a period of at least three (3) months from date of first shipment based on loadport; thence subject to increase/decrease for the following three (3) months period by the application of the following formula:


Fn Wn
Rn = RC ( 0.35 x -- ) + (0.20 x --- ) + 0.45 )
Fc Wc

Where: Rn = New freight rate
Rc = Freight rate stipulated under Clause 4.1
of this Contract
Fn = Fuel price WPP Pandacan of ADO on the
date of escalation
Fc = Fuel price WPP Pandacan of ADO on (210
centistokes at 50 C) on the date of
signing this Contract (P2.8225/liter on
22 February 1988)
Wn = Minimum wage on the date of escalation
Wc = Minimum wage on the date of signing this
Contract

FUNDS AVAILABLE:

__________________
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4.3 Fifty percent (50%) of the freight shall be paid upon completion of loading of stocks to the vessel. Payment for remaining 50% shall be made within thirty (30) calendar days from receipt by NFA of the billing submitted by the CARRIER subject to completeness of documents as required by NFA as follows:

1. Original Statement of Accounts/bill/Invoice
2. Computation of freight payable including Laytime
Statement of Vessel certified correct by authorized
official from DMO
3. Bill of Lading

Should the CARRIER fail to submit complete documents, the reckoning date shall be from the date the documents are completed. All payments shall be subject to NFA and COA accounting and auditing rules and regulations.

5.0 LAYTIME, DEMURRAGE AND DESPATCH

5.1 The cargo shall be loaded at the rate as follows:

LOADING
VESSEL LOADPORT RATE_ DISPORT UNLOADING
______ __________ ________ ________ __________
______ __________ ________ ________ __________
______ __________ ________ ________ __________
______ __________ ________ ________ __________
______ __________ ________ ________ __________

Laytime for loading and discharging shall commence at 1:00 p.m. if notice of readiness is given before noon whether in berth or not, and at 8:00 a.m. next
working day if notice is given during office hours after noon. Time actually used before commencement of laytime shall count as loading or discharging time as the case may be. Cleaning of vessel either at loadport/disport should not be counted as laytime.

5.2 If vessel is required by NFA or port authority to shift beth at Load Port or Discharge Port, expenses shall be for CARRIER's account and time to count as laytime.

5.3 NFA may deduct the amount of despatch earned from any of the receivables of the carrier arising from this contract per Annex "A".

6.0 CANCELLING OF VESSEL

6.1 Should the vessel nominated by the CARRIER under Clause 3.1 be not ready to load (whether in berth or not) on or before the date scheduled, or if the vessel is expected to be delayed on account of average or otherwise for more than two (2) days after the date she is stated to be ready to load a scheduled cargo, NFA shall issue a written notice to the CARRIER that she has opted to
cancel the CARRIER's nominated vessel and plans to substitute another vessel not belonging to the CARRIER to lift such scheduled cargo. Should the hiring of substitute vessel materialized, the CARRIER shall pay the difference in freight rate if the substitute vessel has higher freight plus a penalty of 15% of freight of the cargo not loaded by the substitute vessel. If the rate is lower or the same as the CARRIER'S rate only the penalty shall be imposed.

7.0 CARGO GEAR

7.1 The vessel shall have and maintain current valid cargo gear certificates for winches and mechanical derricks up to their full safe working capacity and power to drive them. The CARRIER guarantees that the vessel is able to work all winches and derricks in all hatches simultaneously at all times. The vessel's cargo gear, winches and derricks shall be in good working order and shall comply with the regulations of the ports of loading and discharge. The vessel shall have the cargo derricks able to lift full pallets and/or clamshells for loading and discharge of the intended cargo.

7,2 Time lost in failure of cargo lights, breakdown or insufficiency of power, gear, winches shall not be counted as loading or discharge time, as the case may be, and laytime shall be deducted in proportion to the number of workable hatches and year of the ship.

Shore winchmen shall work under the supervision of and paid by NFA. NFA shall have the privilege of working all hatches simultaneously when required.

7.3 The vessel's cargo derricks, winches, or cranes shall be used to load and discharge cargo. Should the vessel's cargo gear be inoperational or out-of-order during loading or discharging, or in the event the CARRIER substitutes a gearless vessel or a vessel with insufficient lifting capacity, to load and discharge a scheduled cargo, the CARRIER shall provide shore cranes at its own account for loading and discharging operations.

CARRIER shall provide shore cranes at its own account for loading and discharging operations.

8.0 FORCE MAJEURE

8.1 Neither NFA nor the CARRIER shall be responsible for the consequences of any strikes, lock-outs or other industrial disturbances, war or warlike operations, fire, earthquake, explosion, flood, storm, perils of the sea, act of God, accident, rules of orders issued by any government authority or other similar situation preventing or delaying the fulfillment of any obligations under this Contract. However, the determination of force majeure shall be subject to the certification/determination of appropriate government agencies or NFA Office nearest the load/disport where such force majeure exist.

FUNDS AVAILABLE:

________________________

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8.2 If there is a force majeure situation affecting the discharge of the cargo on or after the vessel's arrival at or off the discharge port and the same has not been removed within 48 hours, NFA shall have the option of ordering the vessel to a safe port were she can safely discharge without risk of being detained by such force majeure situation affecting discharge. On delivery of the cargo at such port, all conditions of the Contract and of the Bill Lading shall apply and the vessel shall receive the same freight if she had discharged at the original port of the substituted port exceeds 100 nautical miles, the freight on the cargo delivered at the substituted port shall be increase din proportion.

8.3 The Master shall not be required to load cargo or to continue loading or to proceed on or to sign Bill(s) of Lading for any adventure on which or any port at which or any port at which it appears that the vessel, her Master and crew, or her cargo will be subjected to any of the above-mentioned force majeure situations or to war risks (the meaning of which includes by any organized body, sabotage, piracy and any actual or threathed war, hostilities, warlike operations, civil war, civil commotion, or revolution). In the event of the exercise of the Master of his right under this Clause after part or full cargo has discharge such cargo at the Load Port or to proceed therewith.

8.4 If at the time the Master elects to proceed with part or full cargo under the foregoing clause 8.3 or after the vessel has left the Load Port, it appears that further performance of this Contract will subject the vessel, her Master and crew, or her cargo, to any of the above force majeure situations, subject to provisions of 8.1, the cargo shall be discharged, or if the discharge has been commenced shall be completed, at any safe port in the vicinity of the discharge port as may be ordered by NFA. In the event of cargo being discharged at any such other port, the CARRIER shall be entitled to freight as if the discharge had been affected at the port or ports name in the Bill(s) of Lading or to which the vessel may have been ordered pursuant thereto.

9.0 GENERAL AVERAGE

9.1 In the event of accident, danger, damage or disaster, before or after commencement of the voyage, resulting from any cause whatsoever whether due to negligence or not, for which, or for the consequence of which the shipowner is not responsible by statute, contract or otherwise, the cargo, shippers, consignees or owners of the cargo shall contribute with the CARRIER in general average to the payment of any sacrifices, losses or expenses of a general average nature that may be made or incurred and shall pay salvage and special charges in respect of the cargo. If a salvaging ship is owned or operated by the CARRIER, salvage shall be paid foa as fully as if the said salvaging ship or ships belonged to strangers. Such deposit as the CARRIER or his agents may deem sufficient to cover the estimated contribution of the cargo, shippers, consignees or owners of the cargo before delivery.

FUNDS AVAILABLE:

_______________________

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9.2 General average shall be adjusted, stated, and settled according to York/Antwerp Rules 1974, as amended, and, as to matters not provided for by those rules, according to the laws and usages in the Philippines.

10.0 STEVODORES

10.1 First opening and last closing of hatches at Load Port and Discharge Port shall be for CARRIER's time and account but intermediate opening/closing of hatches shall be for NFA's time and account.

10.2 The cargo shall be loaded, stowed and discharged by stevedores appointed by and for account of NFA. Stevedores shall work under the supervision of the Master who will be responsible for proper and diligent stowage. Any stevedores damage to the vessel shall be settled directly between the CARRIER and the stevedores.

11.0 NOTICES

11.1 Notices shall be required as follows:

a) At Load Port-CARRIER to notify NFA in writing the vessel's ETA Load Port, stating actual time/date sailed last discharge port and declaring the quantity of cargo loadable, at least 72 hours of vessel's arrival. Thereafter, CARRIER to give NFA 48/24/12 hours.

b) At discharge Port-CARRIER to give NFA 24 hours and 12 hours notices in writing or by telephone of vessel's ETA and expected arrival draft.

12.0 INSURANCE AND CLAIMS

12,1 The vessel's hull and machinery insurance and P & I Club membership shall be secured by and for the account of the CARRIER.

12.2 Insurance of cargo shall be secured by and for the account of NFA without prejudice to the obligations and liabilities of the CARRIER under this Contract.

12.3 Equivalent amount of claims from insurance shall be withheld from the freight payable to the CARRIER, pending receipt of indemnity from the insurance agency.

13.0 SURETY BOND

13.1 The CARRIER agrees to post a surety bond with NFA as beneficiary within five (5) calendar days from the signing of this Contract secured in the amount of _______________________________________________(P________) pesos by a reputable insurance/surety company accredited by NFA, to guarantee the CARRIER's faithful performance of the terms and conditions of this Contract throughout its period of effectivity and to answer for any/all liability that may arise from this Contract.

FUNDS AVAILABLE:

____________________
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14.0 TERMINATION FOR CAUSE

14.1 In the event breach or violation or any of the provisions of this Contract is committed by either party and/or continues and/or is not made good within a period of thirty (30) days after a written notice thereof to the other party, the offended party may terminate this Contract upon thirty (30) days prior notice to the other party without prejudice to whatever legal action NFA may take under the premises.

15.0 EXCLUSION

15.1 All expenses, fees, taxes (except common carriers tax) and other charges imposed on the cargo shall be for the account of NFA. All expenses, fees, taxes, rentals, liens and other charges on the vessel, including 30% common carriers tax, shall be for the account of the CARRIER.

16.0 EFFECTIVITY

16.1 This Contract shall take effect upon its signing and shall be in full force and effect for a period of one (1) year from the date the first cargo was loaded under clause 1.3 hereof.
16.2 This Contract shall be subject to the approval of the appropriate government office depending on the total contract price involved.

IN WITNESS WHEREOF, the parties hereto caused this Contract to be signed by their respective representatives on this _____ day of ______, 19____ at ___________________.

NATIONAL FOOD AUTHORITY NAME OF CARRIER


PELAYO J. GABALDON AUTHORIZED SIGNATORY
Administrator Title

SIGNED IN THE PRESENCE OF:


______________________________ _______________________

FUNDS AVAILABLE:


___________________

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A C K N O W L E D G E M E N T


REPUBLIC OF THE PHILIPPINES)
Quezon City ) S.S.

BEFORE ME, a Notary Public, for and in ___________________________,
personally appeared this _________ day of ______________________________.

RESIDENCE
NAME CERT. NO. DATE/PLACE T.A.N.
------------------------------ ------------------- -------------------- ------------------
------------------------------ ------------------ -------------------- ------------------
----------------------------- ------------------ -------------------- ------------------

known to me and to me known to be the same persons who executed the foregoing Contract of Affreightment and acknowledged to me that the same is their free and voluntary act and deed as well as the corporations they respectively represent.

This Contract consists of ____ pages including this page where this acknowledgment is written and signed by the parties and their instrumental witnesses on each and every page thereof.

WITNESS MY HAND AND SEAL on the date and at the place above-written.


NOTARY PUBLIC
Until December 31, 19______

PTR No. _________________
Issued on _________________
At _______________________

Doc. No . ___________;
Page No. ___________;
Book No. ___________;
Series of ___________

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