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                                                                 OWNER: /s/ JBA
                                                                BUILDER: /s/ MJN


                           VESSEL CONVERSION AGREEMENT

HULL NUMBER:      S-137

MAXIMUM PRICE:    $6,454,432.00

REDELIVERY DATE:  March 21, 2000 at Langley, Washington

                                    CONTRACT

This Agreement entered into as of the 20th day of August 1999

                                     BETWEEN

                      NICHOLS BROTHERS BOAT BUILDERS, INC.
                         (hereinafter called "BUILDER").

                                       AND

                          THE DELTA QUEEN STEAMBOAT CO.
                          (hereinafter called "OWNER").

                                   WITNESSETH:


                                ARTICLE I - SCOPE

A.       All dates specified in this Agreement are material and of the essence
         unless otherwise stated. Subject to the terms of this Agreement and in
         exchange for the payment by OWNER to BUILDER on the Time and Materials
         basis hereafter defined but not to exceed the sum of Six Million Four
         Hundred Fifty Four Thousand Nine Hundred Four Hundred Thirty Two U.S.
         Dollars ($6,454,432.00), BUILDER agrees, at its own risk and expense,
         subject to and as qualified by the other terms and conditions of this
         Agreement, to complete the scope of conversion work defined herein and
         redeliver to OWNER afloat at the redelivery point specified in Article
         II-D below, on or before the REDELIVERY DATE specified above, the M/V
         Columbia Queen (hereinafter called the "Vessel") converted, outfitted,
         trialed and issued a temporary Certificate of Inspection ("COI") by the
         United States Coast Guard ("USCG") following ship conversion and outfit
         approval by the USCG Marine Safety Center ("MSC") in accordance with
         the following defined materials (collectively the "Contract Drawings"):

                  (1) A preliminary ship construction specification
         ("Preliminary Ship Construction Specification") prepared by the BUILDER
         and agreed to by the OWNER consisting of 27 pages but which excludes
         specifying the Interior of the Vessel;


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                                                                 OWNER: /s/ JBA
                                                                BUILDER: /s/ MJN

                  (2) A package prepared by Hopeman Brothers Marine Interiors
         ("Hopeman"), a subcontractor of the OWNER whose work and
         responsibilities are outside of the BUILDER's scope, agreed to by the
         OWNER and BUILDER, to describe the Interior of the Vessel consisting of
         74 pages of drawings and narrative matter amounting to an additional 12
         pages (the "Interior Specification"), and when the capitalized work
         "Interior" is used hereafter, it shall mean the Interior of the Vessel
         as is defined in the Interior Specification;

                  (3) A preliminary and unfinalized general arrangement drawing
         prepared by Rodney E. Lay & Associates (the "Architects"), the OWNER's
         naval architects, and a drawing of the transverse sections prepared by
         Andrea Piacentiai (together 5 pages called the "Preliminary GA");

                  (4) Additional technical drawings and accompanying technical
         narrative explanation as yet unprepared by the Architects in final form
         but which are listed in a 14 page writing for the conversion of the
         Vessel and for all of its systems and outfit excluding the Interior to
         be completed by the OWNER's Architects and agreed with the BUILDER
         under paragraph D(1) of this Article I and when so prepared to be known
         as the "Architects Technical Conversion Plans"; and

                  (5) A complete and final specification for the conversion and
         outfit including systems of the Vessel excluding the Interior (the
         "Final Ship Construction Specification"), as yet unprepared but to be
         completed by the BUILDER and agreed with the OWNER under paragraph C of
         this Article I.

         A true and complete copy of the Preliminary Ship Construction
         Specification, the Interior Specification, the Preliminary GA and the
         writing listing the drawings to be the Architects Technical Conversion
         Plans have been certified by the parties by initialing each page
         thereof and reflecting the date of certification as concurrent with
         execution of this Agreement and are sometimes referred to collectively
         hereafter as the Preliminary Conversion Scope. The Architects Technical
         Conversion Plans and the Final Ship Construction Specification when
         completed shall be likewise certified and when so completed, approved
         and certified shall together with the Interior Specification be
         sometimes collectively referred to hereafter as the Final Conversion
         Scope. Should Hopeman later prepare and the OWNER and BUILDER both
         assent to a more detailed specification and description of the Interior
         than that certified as of the date of this Agreement, then such later
         and more detailed matter shall be reduced to writing, referred to
         thereafter as the Final Interior Specification and considered within
         the Final Conversion Scope, and be likewise certified.

         Any Additional Work required of the BUILDER in the Architects Technical
         Conversion Plans or in any such Final Interior Specification which is
         additional to work required of or the capacity of systems to be
         supplied by the BUILDER under the Preliminary Ship Construction
         Specification and considering the Interior Specification certified as
         of the date of this Agreement (specifically including, without
         limitation, increased main



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                                                                 OWNER: /s/ JBA
                                                                BUILDER: /s/ MJN


         propulsion plant, electrical power generation requirements, or
         increased HVAC system cooling or heating requirements) will be subject
         to the provisions of Article VII hereof.

B.       OWNER shall at the times hereafter specified pay BUILDER (i) the sum of
         USD ___ per hour for all production and shipyard production management
         and engineering time spent on the Vessel under this Agreement; (ii) the
         BUILDER's actual cost (including freight and insurance in transit) to
         purchase all materials, equipment, systems and to pay all subcontract
         and professional work together with a markup of ___ thereon; and (iii)
         the premiums for the builder's risk and ship repairer's liability
         insurance coverages required of the BUILDER together with no markup;
         all not to exceed $6,454,432 (the "Maximum Price") unless the Maximum
         Price is increased pursuant to Article VII hereof. The BUILDER's scope
         of work within the Maximum Price and presently defined in the
         Preliminary Ship Construction Specification includes an allowance of
         ________ for types of support work identified in the Preliminary Ship
         Construction Specification on the part of the BUILDER for Hopeman's
         construction and installation of the Interior (hereafter the "Hopeman
         Builder Support Allowance"). If the final total of the Builder's
         charges under subclauses (i) through (iii) in this paragraph B upon
         Redelivery including the net expense of all changes under Article VII
         (the "Final Price") is less than the Maximum Price, the savings shall
         be shared equally by OWNER and BUILDER and the amount of the Article
         IV-B Redelivery Payment shall be adjusted accordingly. For the
         avoidance of doubt, the OWNER may not assert that BUILDER having
         accomplished one particular budgeted area of its work (such as, for
         example, piping) for less than the BUILDER's budgeted sum for such area
         operates, taken alone, to amount to a saving below the Maximum Price.
         To the contrary, the Final Price is measured and computed as provided
         in this paragraph and Article and under Article VII as a single
         aggregate number for all BUILDER work, then to be measured as a single
         Final Price number against the Maximum Price.

C.       BUILDER agrees to furnish a suitable  location at its shipyard for the
         conversion of the Vessel, and all labor, tools, equipment, materials,
         services and fees necessary for the conversion of said Vessel, except
         for the construction and installation and outfit of the Interior and
         except as otherwise indicated in the Preliminary or Final Conversion
         Scope. BUILDER agrees by not later than September 10, 1999, to complete
         and furnish to OWNER, for OWNER'S approval to be given or withheld
         within ten days of receipt thereof, and not to be withheld
         unreasonably, the Final Ship Construction Specification. The Final Ship
         Conversion Specification shall, except for any additional work not
         identified in the Preliminary Conversion Scope but identified by the
         BUILDER, OWNER or any regulatory body as necessary for USCG or U.S.
         Public Health Service ("USPHS") regulatory approvals and agreed to by
         both BUILDER and OWNER (which shall be deemed "Additional Work"),
         comport with the scope and quality and extent of conversion, outfit and
         finish work for the Vessel presently defined in The Preliminary Ship
         Construction Specification and the Preliminary GA and be consistent
         with the Vessel's system performance requirements derived from the
         Interior Specification (as distinguished from the Final Interior
         Specification); and shall comply with and be to a level of detail
         adequate for USCG MSC and USPHS regulatory approval for an overnight
         USCG Subchapter H vessel restricted to operate in protected harbors and
         navigable




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                                                                 OWNER: /s/ JBA
                                                                BUILDER: /s/ MJN


         inland waterways excepting the Great Lakes. Work by the BUILDER under
         this Agreement is based on the understanding that the OWNER intends to
         operate the Vessel east of Astoria in the Columbia/Snake/Willamette
         system.

D.       (1) OWNER  agrees to  furnish,  through  the  Architects  selected  and
         engaged by Owner, to BUILDER for BUILDER'S approval, to be given or
         withheld within ten days of receipt thereof, and not to be withheld
         unreasonably, by September 10, 1999, the entirety of the Architects
         Technical Conversion Plans completed to preliminary design level or to
         any greater level of detail necessary for USCG MSC and USPHS regulatory
         approval for an overnight USCG Subchapter H vessel restricted to
         operate in navigable inland waterways east of Astoria in the
         Columbia/Snake/Willamette system. Although the Interior Specification
         and not the Architects Technical Conversion Plans will specify the
         Interior, it shall be the responsibility of the Architects to include
         in the Architects Technical Conversion Plans such fire load and other
         safety aspects of the Interior as may be required by USCG for the USCG
         approvals sought. The Architects Technical Conversion Plans shall,
         except for any Additional Work identified by the Architects as
         necessary for USCG or USPHS Vessel regulatory approvals (which shall be
         included but noted as Additional Work), comport with the scope and
         quality and extent of conversion, outfit and finish work for the Vessel
         and her Interior presently defined in the Preliminary Conversion Scope
         and shall comply with the requirements of the USCG and USPHS for
         approval of an overnight USCG Subchapter H vessel to operate in
         navigable inland waterways east of Astoria in the
         Columbia/Snake/Willamette system. The OWNER and the Architects shall be
         solely responsible to provide in the Architects Technical Conversion
         Plans, and otherwise to notify the BUILDER in writing, of any changes
         or measures not already provided for in the Preliminary Conversion
         Scope which the OWNER desires or requires for accesses and measures
         responsive to such if any of the ADA Accessibility Guidelines as may be
         applicable to the Vessel and which, if so identified in the Architects
         Technical Conversion Plans or otherwise, shall be subject to the
         provisions of Article VII hereof together with any Additional Work
         identified in the Architects Technical Conversion Plans. The BUILDER
         shall have no responsibility for compliance with the ADA except to
         faithfully perform and not deviate from the scope of work identified in
         this Agreement. It shall be the responsibility of OWNER and the
         Architects to apply and pay all fees for and make all necessary
         submissions to USCG for MSC approval; but it shall be the
         responsibility of BUILDER to furnish timely to OWNER or the Architects
         all matters required of the BUILDER under this Agreement which are
         necessary to support such USCG MSC approval process.

         (2) Utilizing the Preliminary Conversion Scope documents and when
         completed and certified the Final Conversion Scope documents, BUILDER
         shall be responsible within the Maximum Price to prepare all Production
         Drawings which are necessary or useful for the personnel and vendors
         and subcontractors of the BUILDER to complete timely the conversion by
         the Redelivery Date in accordance with the Final Conversion Scope,
         except that this responsibility does not extend to preparing Production
         Drawings for Hopeman's work to construct the Interior. The BUILDER
         shall furnish any and all to-then completed Production Drawings
         requested by OWNER or the Architects to assist in any USCG MSC or other
         reviews, and BUILDER shall upon Redelivery furnish one copy




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                                                                 OWNER: /s/ JBA
                                                                BUILDER: /s/ MJN

         of all Production Drawings to the OWNER. BUILDER shall in addition be
         responsible to prepare drawings which reflect the Vessel and all of her
         converted systems as actually constructed, except for the Interior (the
         "As-Built Drawings"), and shall furnish to OWNER upon Redelivery one
         copy of the As-Built Drawings as are to-then completed and two copies
         of all of the final As-Built Drawings within 90 days after Redelivery.

         (3) If the Final Conversion Scope increases the amount of the Hopeman
         Builder Support Allowance or the OWNER determines to have it include
         any other contingency factor, the same shall be identified and the
         Maximum Price shall be increased accordingly. In such event the cost of
         any changes under Article VII shall not further increase the adjusted
         Maximum Price unless, if at all, aggregate costs of changes net of
         changes which decrease cost under Article VII exceed the amount of the
         increased allowance and/or any such added contingency factor.

E.       BUILDER will provide and install ready for use all parts,  equipment
         and appurtenances shown in the Final Conversion Scope and including
         such OWNER Furnished Items as are identified in the Final Conversion
         Scope but excepting all parts, equipment and appurtenances in the
         Interior Specification. The OWNER shall supply the OWNER Furnished
         Items identified in the Final Conversion Scope by the dates for the
         same listed in the Final Conversion Scope (or such other dates as may
         be later agreed in writing between OWNER and BUILDER). BUILDER shall
         store, safeguard and handle all OWNER Furnished Items both prior to and
         after placement on board and BUILDER shall allow sufficient working
         area and time to allow the timely and safe installation of equipment
         and loading of supplies by Redelivery.

F.       BUILDER will allow OWNER and the OWNER Representative at all reasonable
         times to examine the Vessel during conversion. The rights to inspect,
         if and when exercised, shall not be deemed a waiver of BUILDER's
         responsibilities hereunder, subject to the terms of Article XIII-B.

G.       BUILDER  shall,  by not later than  September  10, 1999,  provide to
         OWNER in writing for approval within five (5) business days, not to be
         withheld unreasonably, an initial Construction Schedule. The
         Construction Schedule shall be updated by BUILDER every thirty (30)
         days thereafter if necessary to reflect changed circumstances as a
         result of the Architects Technical Conversion Plans, any Final Interior
         Specification, Additional Work, or changes or events otherwise arising
         under Articles V or VII hereof. Any such updates to the Completion
         Schedule shall identify any changes reasonably required from dates in
         the Final Conversion Scope required for delivery by OWNER to BUILDER of
         OWNER Furnished Items. It shall be the responsibility of OWNER to
         insure that the construction and installation activities of Hopeman do
         not interfere with so as to delay the BUILDER's ability to meet the
         Construction Schedule. It shall be the responsibility of BUILDER timely
         to provide the support in the Hopeman Builder Support Allowance and to
         in good faith cooperate with the OWNER and its contractors.

H.       BUILDER will do all work hereunder in a good and workman-like manner in
         accordance with the Final Conversion Scope (and, in the interim, the
         Preliminary Conversion Scope).



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                                                                 OWNER: /s/ JBA
                                                                BUILDER: /s/ MJN


         All material and equipment shall be in accordance with the Final
         Conversion Scope (and, in the interim, the Preliminary Conversion
         Scope).

I.       Any dispute between OWNER and BUILDER as to whether the Builder has
         legitimately identified Additional Work in the Final Ship Construction
         Specification or whether either party has reasonably or unreasonably
         withheld their approval under paragraphs C, D(1) or G of this Article I
         shall be determined summarily pursuant to paragraph B of Article XI
         hereof.


                       ARTICLE II - DELIVERY & REDELIVERY

A.       OWNER shall, at its own expense and risk, transport and deliver the
         Vessel afloat on her own bottom positioned above BUILDER's launch/haul
         submerged apparatus to the BUILDER close inshore within Holmes Harbor
         for conversion in accordance with the terms and conditions of this
         Agreement to so arrive at the facility of the BUILDER no later than
         September 21, 1999, and by such date the OWNER shall have performed the
         OWNER's scope and extents of removal and preparatory work upon and
         within the Vessel as are specified in the Preliminary Conversion Scope.
         Upon delivery, the OWNER and the BUILDER shall execute a certificate of
         delivery and release.

B.       The BUILDER shall, at its own expense and risk, receive, store,
         protect, and install aboard the Vessel all Owner Furnished Items
         identified by the Final Conversion Scope (or, in the interim, the
         Preliminary Conversion Scope). The BUILDER shall be liable to the OWNER
         for any damage or loss of OWNER Furnished Items occurring during the
         BUILDER's custody thereof except as otherwise provided in this
         Agreement.

C.       BUILDER agrees,  subject to the other provisions of this Agreement,  to
         complete the conversion excepting the Interior and to redeliver the
         Vessel to OWNER free and clear of all liens, claims and encumbrances,
         except any arising by or through OWNER (including any of OWNER's
         subcontractors and/or vendors); and OWNER agrees to accept Redelivery
         and pay all unpaid sums due to the BUILDER under this Agreement upon
         completion of conversion of the Vessel, satisfactory trials specified
         in the Final Conversion Scope ("Trials"), and issuance of USCG
         regulatory approvals for the Vessel as converted and a temporary COI
         for her operation. It shall be the responsibility of the OWNER and not
         the BUILDER to create and submit the Architects Technical Conversion
         Plans to levels of detail and having content acceptable to MSC and
         USCG, to specify and construct and install the Interior to levels and
         in manners (including by selecting materials relative to fire load
         calculations) likewise acceptable to MSC and USCG, and to demonstrate
         to USCG the compliance and qualification of its crew and any of its
         management and training and monitoring systems and facilities relating
         to the Vessel which are necessary for issuance of the COI
         (collectively, the "OWNER Regulatory Responsibilities"). If lack of
         qualification, compliance or demonstration under the immediately
         preceding sentence or if delay or default by OWNER or its Architects or
         Hopeman under such OWNER Regulatory Responsibilities is the cause which
         prevents one or more such issuances, OWNER shall pay BUILDER the
         Redelivery



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                                                                 OWNER: /s/ JBA
                                                                BUILDER: /s/ MJN


         Payment notwithstanding the absence of such USCG regulatory approvals
         and notwithstanding that a temporary or permanent COI has not been
         issued.

D.       BUILDER agrees to redeliver the Vessel to OWNER in accordance with this
         Agreement at BUILDER's berth at Langley, Washington, safely afloat,
         following satisfactory completion of Trials, on or before the
         Redelivery Date specified on page 1 of this Agreement or such later
         date as may be allowed by reason of changes in the Vessel under Article
         VII hereof or Permitted Delays under Article V hereof.

E.       The Vessel shall be inspected by OWNER at BUILDER's shipyard and during
         Trials. BUILDER shall execute a Certificate of Completion and
         Redelivery in a form reasonably acceptable to OWNER which certifies
         compliance with and full performance of the obligations of the BUILDER
         under this Agreement at the time of Redelivery for such Vessel. OWNER
         shall accept the Vessel if it is completed in accordance with the Final
         Conversion Scope and any changes performed in accordance with Article
         VII hereof.

F.       In the event that any work  required of the BUILDER under this
         Agreement is not in fact completed at the time BUILDER tenders the
         Certificate of Completion and Redelivery, OWNER, shall have the option,
         if it in its sole discretion deems the Vessel fit for service, to take
         Redelivery of the Vessel and treat all "unfinished work" as a warranty
         obligation of the BUILDER under Article IX. In that event, Builder's
         Certificate of Completion and Redelivery shall specify all unfinished
         work. The parties shall agree as to the amount to be withheld from the
         Redelivery Payment and the Vessel shall be redelivered to OWNER upon
         OWNER paying the undisputed amount to BUILDER and by withholding the
         amount for "unfinished work" until such time that BUILDER completes the
         "unfinished work" and OWNER accepts the "unfinished work" as complete.
         BUILDER shall invoice OWNER for completion of "unfinished work" and,
         provided the work meets the standards of the Final Conversion Scope,
         OWNER shall, within ten (10) days of receipt of invoice, pay BUILDER.
         If OWNER does not exercise such option, BUILDER shall completely finish
         all contract work.

G.       BUILDER  shall  furnish  OWNER on  redelivery  of the Vessel a Bill of
         Sale for the Vessel excepting the Interior, together with an assignment
         of all warranties by makers and manufacturers and the originals of all
         such warranties, and with such other documents as may be required by
         law or by any other regulatory agency of the United States having
         jurisdiction in the premises in order for OWNER to redocument the
         Vessel (excepting that BUILDER has no such responsibility relating to
         the Interior); and will assist OWNER, or its agent, in acquiring all
         required information to enable OWNER to obtain all documentation
         necessary to operate the Vessel as intended. However, it is understood
         that the required USCG approved drawings, the Interior and the OWNER
         Regulatory Responsibilities are the responsibility of the OWNER and/or
         the Architects and/or Hopeman. Any expense in connection with
         documentation of the Vessel shall be paid by OWNER.



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                                                                 OWNER: /s/ JBA
                                                                BUILDER: /s/ MJN


                           ARTICLE III - DOWN PAYMENT

         Before the date of this Agreement OWNER paid BUILDER the sum of
         $150,000 US dollars towards the OWNER down payment. Concurrent with the
         execution of this Agreement, OWNER shall pay BUILDER by wire transfer
         to the bank and account designated by BUILDER the additional sum of
         $815,765 which, together with the $150,000 so paid, equals $965,765 or
         approximately 15% of the Maximum Price.


                        ARTICLE IV - SUBSEQUENT PAYMENTS

A.       OWNER agrees to pay to BUILDER by wire transfer at the place and in the
         manner specified in preceding Article III-A the following additional
         Interim Installment Payments for such Vessel:

         (i) 15% ($965,765) on September 2, 1999 provided that, by such date,
         the Vessel has been hauled at BUILDER's yard (unless the OWNER did not
         deliver it by September 1st in which case this element is eliminated),
         60% of all materials and equipment have been ordered, 15% of
         engineering is complete, and 10% of steel prefabrication is complete;
         and

         (ii) 15% ($965,765) on October 4, 1999 provided that, by such date, the
         BUILDER has delivered the proposed Final Ship Construction
         Specification to OWNER, 90% of all materials and equipment have been
         ordered, 30% of engineering is complete, 70% of steel prefabrication is
         complete, and 20% of steel construction is complete; and

         (iii) 10% ($643,843) on November 1, 1999 provided that, by such date,
         50% of engineering is complete, 70% of steel construction is complete,
         and 15% of all new Vessel systems preassembly or installation is
         complete; and

         (iv) 10% ($643,843) on November 29, 1999 provided that, by such date,
         75% of engineering is complete, 90% of steel construction is complete
         and 50% of all new Vessel systems preassembly or installation is
         complete; and

         (v) 10% ($643,843) on December 27, 1999 provided that, by such date,
         90% of engineering is complete, 70% of all new Vessel systems
         preassembly or installation is complete, and the main engines and
         reduction gears have been received at Builder's facility; and

         (vi) 10% ($643,843) on January 24, 2000 provided that, by such date,
         80% of all new Vessel systems preassembly or installation is complete,
         10% of exterior painting is complete, and 65% of deck equipment has
         been installed; and

         (vii) 10% ($643,843) on February 14, 2000 provided that, by such date,
         the main engines and reduction gears have been installed with the
         propulsion system 95% complete, 90% of all new Vessel systems
         installation is complete, 50% of exterior painting is complete,


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                                                                 OWNER: /s/ JBA
                                                                BUILDER: /s/ MJN


         90% of deck equipment has been installed, and 50% of the bridge
         equipment has been installed. In addition:

         B. Upon Redelivery of the Vessel in accordance with this Agreement, and
         upon acceptance thereof by OWNER at BUILDER's shipyard in accordance
         with the Agreement, OWNER agrees to pay the BUILDER against BUILDER's
         invoice the Redelivery Payment consisting of:

                  1.       $321,922 (5%).
                  2. Any applicable State or Local Sales and/or Use Taxes none
                  of which will be due for the State of Washington provided
                  OWNER timely executes and files its certificate of tax
                  exemption for a Vessel exported from such State's waters
                  within 45 days of completion.
                  3. Plus any changes resulting from agreed or determined
                  changes under Article VII in the Preliminary Conversion Scope
                  or in the Final Conversion Scope, or if the Final Price is
                  less than the Maximum Price, then instead Less one-half the
                  savings achieved.
                  4. Less any liquidated damages for delay in accordance with
                  Article VI below.

         The parties agree that the sum of the foregoing installment payments
         and the Down Payment are $16,000 less than the Maximum Price. The
         Maximum Price includes an allowance of $16,000 towards the estimated
         cost of the Builder's Risk Insurance premiums for 6 months for which
         OWNER is responsible under this Agreement but which are to be billed
         monthly by BUILDER to OWNER and paid by OWNER separate from the
         foregoing installment payments. Notwithstanding the foregoing, OWNER
         may initiate and BUILDER shall approve a change in accordance with
         Article VII for the full amount of any Builder's Risk premium included
         in the Maximum Price. In such case, OWNER shall be obligated to place
         the Builder's Risk Insurance required under this Agreement and tender
         the policy to the BUILDER.

C.       BUILDER will give OWNER notice of intended date of issuance of each
         "Stage Completion Certificate" not less than seven days calendar before
         issuance and OWNER's Representative shall forthwith inspect progress
         claimed in such Certificate so that payment for work if completed as
         claimed is not delayed. All Interim Installment Payments and the
         Redelivery Payment will be due by wire transfer to such bank and
         account for the BUILDER as BUILDER specifies to OWNER in writing.

D.       Each of the Interim Installment Payments shall be payable within seven
         calendar days after presentation of BUILDER's invoice and the
         accompanying BUILDER's Stage Completion Certificate provided that
         BUILDER is then not in breach of this Agreement; and the Redelivery
         Payment shall be payable upon BUILDER's invoice at time of Redelivery
         provided that BUILDER has fulfilled its obligations due under this
         Agreement to OWNER and owed at or before the time of Redelivery.

E.       The BUILDER shall furnish a Stage Completion Certificate for each
         Interim Installment Payment which shall state (i) the stage of contract
         work achieved in specific relation to


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                                                                 OWNER: /s/ JBA
                                                                BUILDER: /s/ MJN


         the subparts of paragraph A of Article IV hereof; (ii) that the
         contract work completed complies with the Final Conversion Scope (or,
         if before the Final Conversion Scope is defined, with the Preliminary
         Conversion Scope) and this Agreement; and (iii) that there are no liens
         or claims upon said Vessel for labor, materials or equipment for said
         Vessels, except those created by or through the OWNER. The Stage
         Completion Completion Certificate shall be executed and certified by an
         officer of BUILDER.

F.       If OWNER objects upon receipt of the Stage Completion Certificate on
         grounds that the pertinent stage has not been reached, or for any other
         bona fide reason, any such dispute shall be summarily determined under
         paragraph B of Article XI hereof. The OWNER shall be entitled to
         withhold payment until the matter is determined, but if the dispute is
         determined in favor of the BUILDER the OWNER shall be obligated to pay
         BUILDER (irrespective of whether or not expressly stated in the
         decision) forthwith the stage payment due and in addition interest at
         the prime rate plus two percent (on a per annum basis) for the period
         during which payment was withheld.

G.       The BUILDER shall certify in the Certificate of Completion and
         Redelivery that, excepting that no representation is made as to the
         Interior: (i) the Vessel has been completed; (ii) all Trials have been
         satisfactorily completed; (iii) the Vessel complies with the Final
         Conversion Scope and this Agreement and is free from defects in
         materials and workmanship; (iv) there are no liens or claims upon the
         Vessel for materials, equipment or labor for said Vessel except any
         created or incurred by or through the OWNER; and (v) the BUILDER has
         performed all obligations due from it to the OWNER under this Agreement
         at time of Redelivery.

H.       The making of the Interim Installment Payments or Redelivery Payment
         with respect to the Vessel shall not stop the OWNER from thereafter
         asserting any right or remedy accruing to it because of the failure of
         the BUILDER to convert and redeliver the completed Vessel in accordance
         with the terms hereof.


                          ARTICLE V - PERMITTED DELAYS

A.       All agreements of the BUILDER  contained in this Contract  respecting
         the Date of Redelivery of the Vessel shall be subject to extension by
         one day for each day: (i) after September 21, 1999 that the Vessel is
         delivered by OWNER to BUILDER; (ii) that the OWNER is in violation of
         its payment obligations under this Agreement (excluding any periods of
         withholding permitted under paragraph F of preceding Article IV); (iii)
         that the Architects Technical Conversion Plans are late, that activity
         by Hopeman delays BUILDER meeting the Construction Schedule, that
         Hopeman completes the Interior after March 20, 2000, or that the OWNER
         is late in delivering OWNER Furnished Items by the dates required under
         this Agreement; and (iv) by reason of "Force Majeure," which term is
         hereby declared to be actual delay (subject to the limitation on delay
         in paragraph B of this Article) in the course of conversion caused by
         natural forces, fire, explosion, or persons not under the control of
         BUILDER and not caused or contributed to by the negligence of the
         BUILDER and subject to the succeeding paragraphs of this Article V.



                                                                              10
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                                                                 OWNER: /s/ JBA
                                                                BUILDER: /s/ MJN


B.       Delays in receiving supplies, materials and equipment shall not be
         considered Force Majeure unless (a) caused by strikes or lockouts of
         workmen other than employees of the BUILDER or (b) BUILDER establishes
         to the reasonable satisfaction of OWNER that (1) BUILDER timely ordered
         such supplies, materials and equipment, (2) BUILDER exercised due
         diligence to obtain delivery, and (3) no other source of supply was
         reasonably available (relative price being a factor to be considered).

C.       Delays caused by weather conditions shall not be Force Majeure except
         where caused by lightning, flood, windstorm, hurricane, tornado,
         calamitous act of God or nature, or by extraordinary rains which
         prevent work for three (3) consecutive days.

D.       BUILDER may rely on the  provisions of this Article V to complete the
         conversion and redeliver without liquidated damages later than the
         Redelivery Date specified at page 1 of this Agreement provided that
         BUILDER informs the OWNER in writing of the occurrence of a
         circumstance of Permitted Delays within five (5) business days of its
         occurrence and to include with that notice a description of the event
         and its expected duration; but there shall be no such requirement for
         such notice or notice under the next following sentence as to any
         circumstance of Permitted Delay under subclauses (i) or (ii) of
         paragraph A of this Article. BUILDER shall inform OWNER of the end of a
         circumstance of Permitted Delay within five (5) business days of its
         cessation and include an estimate of the delay in Redelivery Date, if
         any, caused by that event. Failing such notices, BUILDER shall not have
         the benefit of this Article for said event. The BUILDER shall maintain
         records of such delays and allow OWNER to inspect same upon request at
         all reasonable times. The Redelivery Date for the Vessel shall
         automatically be extended for the period specified in paragraph A of
         this Article unless the OWNER, within five (5) business days after
         receiving either of the aforesaid notices, shall state with
         particularity its objections in writing to BUILDER, in which event any
         such dispute shall be determined summarily under the provisions of
         paragraph B of Article XI hereof.


                   ARTICLE VI - LIQUIDATED DAMAGES PROVISIONS

A.       All work on the Vessel  contemplated  hereunder shall be completed
         (including completion of satisfactory Trials) and redelivery on the
         Vessel effected on or before the Redelivery Date set forth on the first
         page of this Agreement or such extensions of time as are provided for
         herein, except that BUILDER has no responsibility for the Interior and
         no responsibility for late Redelivery if construction or installation
         of the Interior delays Redelivery, except that BUILDER must timely
         perform its defined work tasks within the Hopeman Builder Support
         Allowance. Both parties recognize that during conversion OWNER will
         make contracts depending upon the use of the Vessel so that redelivery
         time is of the essence and that redelivery delay will result in
         substantial damages not susceptible of accurate calculation. In the
         event the Vessel is not converted and redelivered to the OWNER on the
         Redelivery Date (or on such later date as is permitted to the BUILDER
         without liability under Article V hereof), OWNER will deduct from


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                                                                 OWNER: /s/ JBA
                                                                BUILDER: /s/ MJN


         Redelivery Payment for the Vessel the sum of _____________ U.S.
         Currency (US _________) per day for the first twenty-one (21) days
         after which redelivery was due but not made until the actual
         redelivery, and the additional sum of ____________________ U.S.
         currency ____________ per day for each day after the first twenty-one
         days after which redelivery was due but not made until actual
         redelivery, but with such deduction to in no event exceed in the
         aggregate the sum of ______________________________________ ($_______).
         This agreement for the payment of liquidated damages for late delivery
         is not a penalty but a good faith agreement to compensate the OWNER for
         foreseeable damages presently difficult or impossible later to
         calculate; is in lieu of all other damages, direct or consequential,
         which may result to OWNER from delay; and is OWNER'S sole and exclusive
         remedy for late redelivery.

B.       In the event the parties are unable to agree on the above reduction of
         the Redelivery Payment, the Vessel shall nevertheless be redelivered to
         OWNER upon OWNER paying the undisputed amount to BUILDER and by placing
         the disputed portion of the delivery in a Certificate of Deposit with a
         bank or in prime grade commercial paper of OWNER's choice, withdrawable
         only upon signatures of both OWNER's and BUILDER's attorneys, interest
         to be accumulated and payable in proportion to the resolution of the
         dispute, and the certificate to be held by BUILDER'S attorneys. Funds
         shall be disbursed according to the determination made as to the
         disputed portion under Article XI.


          ARTICLE VII - CHANGES IN SPECIFICATIONS AND CONTRACT DRAWINGS

A.       Subject to the  provisions of this Article,  the right is reserved by
         OWNER to make any deductions for or additions or substitutions to the
         Preliminary Conversion Scope and to the Final Conversion Scope on
         giving due notice in writing to BUILDER. If so, the cost (if any) of
         any such changes shall be paid to the BUILDER under this Article and if
         applicable added to the Maximum Price to the extent permitted under
         paragraph B of Article I hereof. If any such change will delay the
         completion of the work, BUILDER will be allowed additional time
         sufficient to cover such delay. Within three (3) business days after
         receiving a proposed change order from OWNER, the BUILDER shall advise
         the OWNER in writing of the increased or reduced cost and any
         additional time required or any reduction in conversion completion time
         occasioned by the change, if the change is performed, and the OWNER
         shall accept or reject the advised impacts from the BUILDER within
         three (3) further business days after receipt of the advised impacts
         from BUILDER. The provisions of the last sentence of paragraph B of
         Article I shall apply if aggregate changes decrease the Maximum Price
         of the Final Conversion Scope. BUILDER also may propose changes in
         writing to OWNER and if so shall include advised impacts. If so, OWNER,
         while hereby agreed to be under no obligation to agree to any of the
         same, promises to give good faith consideration to any changes proposed
         which will reduce cost without sacrifice in Vessel outfit, finish or
         performance.

B.       The BUILDER shall advise the cost (or reduced cost impact) of any
         change on a fixed price or fixed sum basis unless, in an unusual
         circumstance where the BUILDER states and the OWNER agrees that unknown
         variables involved with a change make fixed price

                                                                              12
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                                                                 OWNER: /s/ JBA
                                                                BUILDER: /s/ MJN


         performance not reasonably possible, the OWNER and BUILDER instead
         agree to effect a change on a time at ___/hour and
         materials/subcontract at cost plus ___ markup basis (with or without
         overtime at ___/hour to mitigate delay impacts), but in such event not
         to exceed a specified overall limit for the cost of the change.

C.       Changes from the Final  Conversion  Scope (or, when earlier
         applicable, from the Preliminary Conversion Scope) and which are
         Additional Work or are required by the Architects based upon regulatory
         considerations or required by the USCG or other regulatory body shall
         be performed by the BUILDER notwithstanding paragraph E of this
         Article. All such mandatory changes shall be considered as if coming
         from the OWNER under paragraph A of this Article and handled and
         determined under this Article; but if mandatory changes require work
         different from that specified in the Final Ship Construction
         Specification because the Final Ship Construction Specification failed
         or omitted to identify work required by regulatory considerations
         published as of the date of this Agreement, the cost of such work shall
         be absorbed by the BUILDER without charge or expense to the OWNER and
         without increase in the Maximum Price or extension of the Redelivery
         Date.

D.       BUILDER's scope of work under this Agreement assumes that  construction
         work previously performed by the first builder of the Vessel on those
         portions of the Vessel not to be repaired or modified by BUILDER under
         this Agreement were then and will remain acceptable to USCG. Rework in
         such areas to the extent required by USCG shall be deemed a change for
         purposes of this Article except for defects actually observed by the
         BUILDER during preliminary inspection of the Vessel at berth in
         Louisiana before the date of this Agreement and which were neither
         informally reported by BUILDER to OWNER as representing a risk of
         required work nor provided to be performed within the Preliminary
         Conversion Scope. Work and assistance by the BUILDER for Hopeman to the
         extent provided for in the ________ Hopeman Builder Support Allowance
         shall not be a change under this Article; but if work requested by
         Hopeman or by OWNER for Hopeman exceeds such Hopeman Builder Support
         Allowance and there is then no increase of such Allowance or other
         contingency factor in the Final Conversion Scope for such excess, then
         any such Additional Work request relating to Hopeman shall be deemed a
         request for a change coming from the OWNER under paragraph A of this
         Article and to be determined in accordance with the applicable
         provisions of this Article.

E.       Except for changes falling under paragraph C of this Article, BUILDER
         shall not be obligated to perform a change directed by OWNER unless the
         amount and impacts have first been agreed under this Article or have
         otherwise been summarily determined, as all such disputes over proposed
         changes under this Article shall be, under paragraph B of Article XI
         hereof.

F.       No provision has been made for the performance of overtime work by the
         BUILDER which, if authorized by the OWNER and performed, will require a
         labor charge of ___ per hour. The OWNER shall not be required to pay
         overtime labor rates unless OWNER expressly agrees or is otherwise
         specifically required to do so under this Article on account of a
         change.



                                                                              13
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                                                                 OWNER: /s/ JBA
                                                                BUILDER: /s/ MJN


G.       Notwithstanding any provision of this Article, the OWNER may not
         propose by change order to redesignate any major ship's systems
         specified by BUILDER in the Preliminary Ship Construction Specification
         or in the Final Ship Construction Specification (such as main
         propulsion, electrical power generation, HVAC, LSA, communications aids
         or navigation or monitoring/alarm systems, to be removed from the
         BUILDER's scope and responsibility and instead to be supplied as OWNER
         Furnished Items. For the avoidance of doubt, the OWNER may further
         specify the detail of Vessel systems and outfit but may not delete
         entire systems from BUILDER's scope.

H.       If aggregate OWNER changes so reduce the Final Conversion Scope as to
         reduce the Maximum Price below __________, then BUILDER is relieved of
         its agreement to have charged ___/hour for labor and shall instead be
         deemed to have charged, and the OWNER deemed to have agreed to pay,
         from inception, the sum of ___/hour for labor.


                       ARTICLE VIII - RISKS AND INSURANCE

A.       Excepting all labor and the value of work for Hopeman and all materials
         and components and equipment and elements intended to comprise the
         Interior, all risks of damage to or destruction of the Vessel, to all
         machinery, materials and equipment provided by BUILDER and any OWNER
         Furnished Items timely reported by OWNER to BUILDER under this Article,
         and all liability to or for labor employed by the BUILDER and
         subcontracted effort arranged for by the BUILDER on or about the Vessel
         from the time the Vessel is delivered and released to the BUILDER
         during conversion (including Trials) and up to redelivery and
         acceptance shall be the responsibility of the BUILDER. Full form
         Builder's Risk Insurance acceptable to OWNER (including loss or damage
         caused by strikes, locked-out workmen or persons taking part in labor
         disturbances or riots, or civil commotions, without deletions of
         protection and indemnity and collision clauses, and including risks of
         earthquakes, with endorsements attached covering losses or damage
         caused by vandalism and malicious mischief) will be maintained by
         BUILDER at BUILDER's expense and cover the cash value of BUILDER's work
         in progress, the value of timely reported OWNER Furnished Items and,
         notwithstanding the initial sentence of this paragraph excepting the
         Interior from BUILDER's uninsured risk, include in such coverage the
         timely reported value of work in progress by Hopeman. BUILDER shall
         invoice OWNER monthly for the premium cost of the Builder's Risk
         insurance for the declared Hopeman and Owner Furnished Items and OWNER
         shall pay such invoice with 14 days. BUILDER shall maintain Workmen's
         Compensation, Longshoreman's and Harborworker's Compensation not less
         than minimum required by statute, and Public Liability Insurance of
         $5,000,000. BUILDER shall provide relevant copies of insurance policies
         prior to signing of this Agreement. OWNER and OWNER's subcontractors,
         including specifically but without limitation Hopeman, shall maintain
         workman's compensation, longshoreman's and harbor worker's compensation
         insurance not less than the minimum required by statute, and public
         liability insurance of $5,000,000. OWNER and OWNER'S subcontractors
         shall provide relevant copies of insurance policies prior to commencing
         any work at BUILDER's shipyard or on Vessels.



                                                                              14
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                                                                 OWNER: /s/ JBA
                                                                BUILDER: /s/ MJN


         In addition, OWNER shall procure or otherwise require Hopeman to
         procure and maintain in full force and effect at all times from the
         date of this Agreement until redelivery, Ship Repairers Liability
         Insurance (that is, third party liability with products liability or
         completed operations coverage) meeting the same standards of coverage
         as are required of the BUILDER's coverage under paragraphs A and B of
         this Article, and which names BUILDER as an additional insured as
         interests may appear. This policy shall provide physical damage loss
         coverage in an amount and with insurance carriers reasonably acceptable
         to BUILDER and OWNER.

B.       The Builder's Risk  Insurance and Public  Liability  Insurance
         required of the BUILDER shall be taken out in the name of BUILDER and
         OWNER and any "Construction Financing Entity," and all casualty losses
         under such policies shall be payable to the BUILDER and OWNER and
         "Construction Financing Entity," as their interests may appear. The
         policy shall provide that there shall be no recourse against the OWNER
         for payment of premiums or other charges and shall further provide that
         at least thirty (30) days' prior written notice of any cancellation for
         the non-payment of premiums or other charges shall be given to the
         OWNER by the insurance underwriters. The originals of all cover notes
         and policies shall be delivered to the BUILDER, with duplicates thereof
         to OWNER. Policies not in conformance herewith shall be conformed or
         surrendered and canceled upon direction of the OWNER and new policies
         procured in conformance herewith.

C.       If,  prior to  Redelivery  and  Acceptance  by OWNER,  the Vessel,  its
         machinery, equipment or material including OWNER Furnished Items timely
         reported under this Article (but excluding the value of labor for and
         of all materials and equipment and components and elements of the
         Interior) shall be damaged, such damage shall be repaired by the
         BUILDER or replacement shall be supplied by the BUILDER at its sole
         cost and expense but in such event all proceeds of insurance covering
         such loss shall be payable only to the BUILDER. The BUILDER shall have
         no responsibility to repair damage to the Interior unless caused by or
         through the BUILDER and, if not so caused by or through the BUILDER,
         unless paid for such work by insurance proceeds or by the OWNER.

D.       For  actions  from the time of  Delivery  and  Release  of the  Vessel
         by the OWNER to the BUILDER up to Redelivery and Acceptance of the
         Vessels, the BUILDER shall at its own cost and expense indemnify,
         protect and defend the Vessel and the OWNER against any and all claims
         and costs and expenses incident thereto (including reasonable
         Attorney's fees and costs) arising from injury to, or death of,
         employees, workmen, BUILDER's subcontractors, trespassers, licensees,
         invitees (other than private entity invitees of OWNER) and all other
         persons (except for Hopeman and all employees, subcontractors, vendors,
         freight forwarders, and agents of Hopeman) and from property damage to
         the property of BUILDER, BUILDER's subcontractors, their employees,
         workmen, licensees, invitees or vendors, whether in or on or about the
         Vessel and the work to be performed hereunder regardless of cause
         unless caused by the active negligence of OWNER or OWNER's
         subcontractors, their employees, agents or vendors. It is expressly
         understood that workmen other than compensated employees or




                                                                              15
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                                                                 OWNER: /s/ JBA
                                                                BUILDER: /s/ MJN


         subcontractors of OWNER, engaged upon the work on the Vessel, shall at
         all times be employees or subcontractors of the BUILDER and not of the
         OWNER.

E.       For  actions  prior to  Redelivery  and  Acceptance  of the  Vessels,
         the OWNER shall at its own cost and expense indemnify, protect and
         defend the Vessel and the BUILDER against any claim and costs and
         expenses incident thereto (including reasonable Attorneys' fees and
         costs) arising from injury to or death of OWNER's and Hopeman's
         employees, workmen, subcontractors, vendors, freight and other agents,
         and private entity invitees; and from property damage to the property
         of OWNER and Hopeman, OWNER's subcontractors, their employees, workmen,
         freight and other agents, and private entity business invitees and
         vendors, whether in or on or about the Vessel and the work to be
         performed hereunder, regardless of cause but unless caused by the
         active negligence of BUILDER, BUILDER's subcontractors, their agents,
         employees or vendors.

F.       In the event there is an actual total loss or constructive total loss
         of the Vessel, this Agreement shall be terminated upon receipt of
         payment of any such loss to OWNER and BUILDER, and any "Construction
         Financing Entity" as interest may appear, of the proceeds of the
         insurance required pursuant to this Article VIII for such actual loss
         or constructive total loss, or if such actual total loss or
         constructive total loss shall occur through the operation of a risk not
         covered by insurance for which the BUILDER assumes the risk as herein
         set forth, upon receipt by OWNER of payment of the full amount as
         interest may appear.

G.       For purposes of this Article VIII, it is agreed that "as interest may
         appear" shall be construed to mean that OWNER and any "Construction
         Finance Entity" are entitled to a refund of amounts paid by OWNER as
         Down Payment and Interim Installment Payments, BUILDER is entitled to
         amounts owing for conversion work completed and/or damage repair work
         completed or due but not yet billed and paid, and OWNER is entitled to
         the balance of any insurance proceeds.

H.       OWNER shall identify and report to BUILDER the cash value and a
         description in detail sufficient to BUILDER's insurer of OWNER
         Furnished Items and of and for the Interior at least monthly to permit
         the BUILDER's reporting to same to its insurer in order to obtain
         Builder's Risk coverage therefor.

I.       OWNER shall assure that OWNER and OWNER's subcontractors and vendors
         and agents and private entity invitees, and all of their respective
         employees, while on the premises of the BUILDER, obey all identified
         shipyard safety rules and regulations (including specifically
         maintaining fire watch and fire safety provisions) and obey all
         applicable state and federal OSHA standards for worker safety; and do
         not damage or disrupt the facilities of the BUILDER or the BUILDER's
         various works in progress.




                                                                              16
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                                                                 OWNER: /s/ JBA
                                                                BUILDER: /s/ MJN


                         ARTICLE IX - BUILDER'S WARRANTY

A.       Except for the Interior,  BUILDER  warrants that the Vessel will be
         converted in accordance with the Final Conversion Scope in a good and
         workmanlike manner, free from defects in material and workmanship; and
         BUILDER agrees at BUILDER's expense including transporting labor and
         supplies to repair or replace any defects discovered within 365 days of
         Redelivery excepting defects in Owner Furnished Items or in machinery
         and equipment manufactured and warranted by others and excluded from
         BUILDER's express limited warranty under this Article; and BUILDER
         shall assign and subrogate to OWNER all warranties by said
         manufacturers and agrees to extend full cooperation to OWNER, as
         needed, to coordinate in enforcing such warranties. This express
         written limited warranty is in lieu of all other express or implied
         warranties.

         This limited warranty is Builder's only warranty to Owner that survives
or continues in force after the Redelivery of the Vessel and is expressly in
lieu of any other warranties. THE TERMS OF THIS EXPRESS, LIMITED WARRANTY
EXCLUDE ANY AND ALL WARRANTIES WHICH ARE OR MAY BE IMPLIED BY LAW INCLUDING,
WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND OF FITNESS FOR
A PARTICULAR USE OR SPECIFIED PURPOSE. TO THE MAXIMUM EXTENT PERMITTED BY LAW,
BUILDER SHALL NOT BE RESPONSIBLE FOR AND HEREBY DISCLAIMS ALL LIABILITY FOR ANY
INCIDENTAL OR CONSEQUENTIAL DAMAGES (INCLUDING WITHOUT LIMITATION ANY LOSS OF
TIME, REVENUE AND/OR USE IN OPERATING OR REPAIRING THE VESSEL) SUFFERED BY OWNER
OR ANY OTHER PERSON. Some states do not allow the exclusion or limitation of
incidental or consequential damages so the above limitation or exclusion may not
apply. This warranty gives Owner specific legal rights and Owner may have other
legal rights which vary from state to state. ALL RIGHTS GRANTED TO OWNER UNDER
THIS LIMITED WARRANTY ARE CONDITIONED UPON BEING EXERCISED IN THE TIME AND
MANNER SPECIFIED IN THIS AGREEMENT AND THERE IS A SOLE AND EXCLUSIVE REMEDY OF
REPAIR OR REPLACEMENT SPECIFIED IN THIS AGREEMENT.

         Builder's limited warranty does not apply to or include defects,
damages or claims related to or arising from:
                  (i) The Interior of the Vessel as defined in the Interior
         Specification;
                  (ii) failure of Owner to perform required maintenance and
         servicing;
                  (iii) abuse, misuse, accident, neglect, or improper operation
         by Owner;
                  (iv) repairs or replacements not authorized by Builder or in
         violation of warranty terms;
                  (v) normal wear and tear of any part that has a life
         inherently less than one year (for example: hoses, bulbs, belts,
         gaskets, filters, lubricants, etc.);
                  (vi) Owner Furnished Items and any items or systems which are
         separately warranted by their makers



                                                                              17
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                                                                 OWNER: /s/ JBA
                                                               BUILDER: /s/ MJN


         for periods of not less than 12 months from the date of delivery, such
         as main engines, reduction gears, propellers, generators, watermakers,
         HVAC, bilge and fire pumps, refrigerators, stoves, life rafts, radars,
         navigation systems and radios, and the Interior;
                  (vii) erroneous, inadequate or incomplete provisions in the
         Architects Technical Conversion Plans or in the Interior Specification
         or in any Final Interior Specification;
                  (viii) latent defects in the steel hull and/or decks of the
         Vessel existing upon initial delivery of the Vessel to the BUILDER and
         not within the scope of BUILDER's responsibilities under this
         Agreement; and
                  (ix) defects first appearing more than one year after
         Redelivery.

B.       No warranty is made by BUILDER with respect to paint, regardless of
         whether procured by BUILDER, except that same will be applied neatly in
         accordance with the manufacturer's recommendations and in accordance
         with Final Conversion Scope.

C.       In the event of any  defect  covered  by  BUILDER's  guarantee,
         BUILDER promptly will make repairs or replacements at the expense of
         BUILDER at its yard, if practical, without expense to BUILDER for
         transporting the Vessel to and from the yard. Should it be economically
         impractical to deliver the Vessel to BUILDER's yard for warranty work
         which it presumptively shall be for warranty work having a reasonably
         foreseeable cost of less than ________, or should the warranty defect
         be such that it is unsafe to deliver the Vessel to BUILDER's yard or if
         the Vessel is not within 300 miles of the yard, BUILDER will pay the
         cost of repair or replacement performed at a mutually agreed place at
         or nearby OWNER's area of Vessel operations including all costs of
         transporting labor and supplies; and if any part of warranty correction
         work is not so performed by the BUILDER promptly after due notice, the
         BUILDER shall reimburse the OWNER for any cost incurred by the OWNER in
         effecting such repairs including, without limitation, if it does so
         with its own personnel. On a warranty claim the following procedure
         shall be followed:

         1.       OWNER shall give prompt notice and BUILDER shall have
                  reasonable time and opportunity, under the circumstances, to
                  inspect the Vessel before work is undertaken;

         2.       BUILDER shall have the right, reasonable time, and
                  opportunity, under the circumstances, to negotiate price with
                  the shipyard or repairman; and

         3.       BUILDER, at its sole option and expense, may have a
                  representative present during repairs.

D.       BUILDER shall have no obligation under this guarantee unless such
         defect becomes manifest within 365 days after Redelivery and Acceptance
         of the Vessel and written notice of claim is given within ten (10) days
         thereafter. The BUILDER is specifically

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                                                                 OWNER: /s/ JBA
                                                                BUILDER: /s/ MJN


         relieved of any responsibility for a latent defect not discovered
         within 365 days after Redelivery and Acceptance of the Vessel. The
         BUILDER shall not be liable for any consequential or incidental damage
         occasioned by any defect.

E.       To  additionally  assure the faithful  performance  by the BUILDER of
         its obligations under this Article following Redelivery, the Builder
         shall, at time of Redelivery, cause a national banking association of
         BUILDER's choosing to issue a one-year irrevocable standby letter of
         credit ("SLC") in favor of OWNER in the amount of ________ which, upon
         any material payment default by BUILDER under this Agreement, may be
         presented by OWNER to such issuer for a single draw in the full amount
         of such SLC. As to the cash received from such issuer upon such
         presentment and as to the SLC, BUILDER hereby grants OWNER a security
         interest in the SLC and in its proceeds, and in and to all cash paid on
         presentment of such SLC, and further agrees that OWNER alone shall be
         entitled to hold and possess all such proceeds and cash and that such
         possession by OWNER constitutes perfection of OWNER's security
         interests. OWNER shall not be restricted as to its use and application
         of any and all of such proceeds and cash and may instead use and apply
         it in any manner permitted by law and consistent with the terms of this
         Agreement; and may (but only for the remainder of the warranty term)
         retain all cash from such a single SLC draw not expended to remedy the
         particular warranted defect not remedied by the BUILDER as cash
         collateral to secure BUILDER's future performance of any additional
         warranty obligations hereunder, returning any unexpended portion to
         BUILDER at the end of the warranty term. BUILDER agrees that OWNER
         shall at all times have recourse to BUILDER and agrees that any
         presentment of the SLC by OWNER shall not be deemed an election of one
         sole form or type of action or of an exclusive or preclusive remedy,
         except to the extent (if at all) that such presentment and receipt and
         use of proceeds and cash satisfies in full all compensatory damages to
         which OWNER was entitled on account of such BUILDER breach. BUILDER
         shall invoice OWNER for the BUILDER's actual cost to have such SLC
         issued and shall include with such invoice the issuer's actual record
         of charges for such issuance; whereupon the OWNER shall pay the BUILDER
         the amount so invoiced, not to exceed $5,000, within 14 days of the
         date of BUILDER's invoice therefor.


                         ARTICLE X - DEFAULT BY BUILDER

A.       BUILDER shall be considered in default under this Agreement in the
         event that (a) during a period of fifteen (15) consecutive days (plus
         the number of days from the beginning of such period when work has been
         prevented or its continuation excused under Article V hereof), except
         for progress on the Interior, no substantial progress has been made in
         the conversion of the Vessel; or (b) the Vessel has not been
         redelivered within forty-two (42) days after the Redelivery Date or
         later date permitted under this Agreement.

B.       BUILDER shall be considered in default under this Agreement if it does
         not perform its obligations under this Agreement.



                                                                              19
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                                                                 OWNER: /s/ JBA
                                                                BUILDER: /s/ MJN


C.       If BUILDER is in default as that word is defined in X-A above, then at
         OWNER's option OWNER may terminate this Agreement, in which event
         BUILDER shall promptly repay to OWNER the Down Payment and Interim
         Installment Payments made by OWNER under Articles III and IV above,
         plus interest from the date monies were paid to BUILDER at the Wall
         Street Journal prime rate, less any credit due the BUILDER at law or in
         equity on a quantum meruit basis for net benefit conferred to the
         OWNER's Vessel to the extent that OWNER or OWNER's successors or
         assigns have the use and benefit of such Vessel.

D.       Payment to OWNER of the Down Payment and Interim Installment Payments
         in accordance with this Article by the BUILDER will not prejudice OWNER
         as to all other rights and remedies available to OWNER in the event of
         default in respects set out in X-A above or in any other respects.

E.       X-A above lists the causes of default applicable only to the provision
         for repayment of the Down Payment and Interim Installment Payments. For
         any such default and any other default, OWNER shall have all rights and
         remedies otherwise available to it, including specifically (but not by
         way of limitation) any rights to specific performance or mandatory
         injunction.


                 ARTICLE XI - ARBITRATION, JURISDICTION AND LAW

A.       Any dispute or  controversy  arising under or related to this
         Agreement where the amount in controversy does not exceed $500,000.00,
         excepting disputes under paragraphs B and C of this Article, shall be
         submitted to binding arbitration before the person or entity agreed by
         the parties within 14 days of the date of this Agreement under
         paragraph D of this Article or, failing agreement under said paragraph
         D, then the Chief Surveyor of the American Bureau of Shipping ("ABS")
         in the City of Seattle, Washington who shall be the single arbitrator
         appointed jointly by the parties; or if such Chief Surveyor be
         unwilling or unable to act, then such other single qualified and
         unbiased individual as the ABS Chief Surveyor will name. Attorney's
         fees shall be awarded to the prevailing party together with their costs
         of the arbitration.

B.       All disputes to be summarily  determined under paragraphs B, D(1) or G
         of Article I concerning Additional Work or whether an approval was
         reasonably withheld, under Article V concerning Permitted Delays, or
         under Article VII concerning Changes, shall be solely determined by
         summary arbitration to be conducted at Builder's facility within five
         (5) calendar days of the time of the dispute arising, with the sole
         arbiter the same arbitrator designated or appointed to act under
         paragraph A of this Article; to be paid such firm or appointee's
         prevailing fees including actual travel costs but not to exceed fees of
         $1,500 per day. No rules of evidence shall apply. If either party to
         the dispute fails to attend the summary arbitration, the arbitrator
         shall rule in favor of the attending party without requirement of proof
         or argument by the attending party. The decision of the arbitrator
         respecting all matters within the scope of the dispute arbitrated shall
         absolutely bind the parties. The arbitrator's decision may be summary
         and need not detail reasons



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                                                                 OWNER: /s/ JBA
                                                                BUILDER: /s/ MJN


         but shall be in writing. The party which did not prevail on the dispute
         shall promptly pay all of the arbitrator's fees and costs. This
         paragraph B of this Article XI makes special provision for an extremely
         rapid summary arbitration to address special matters which, if not
         immediately resolved, are likely to frustrate both parties'
         expectations or the ability of each to govern their behavior under this
         Agreement.

C.       This  Agreement  shall  be  governed  by and  construed  in  accordance
         with the laws of the State of Washington. Except for disputes required
         to be submitted to arbitration under paragraph A or B of this Article,
         the sole forum to adjudicate any dispute arising under or related to
         this Agreement shall be the United States District Court for the
         District of Washington, at Seattle, or if such Court lacks subject
         matter jurisdiction, then the State Court of general jurisdiction for
         King County in Seattle; and each party hereby consents to such Court
         exercising jurisdiction over their person. Nothing in paragraph A or B
         of this Article shall preclude either party from resorting to the
         specified sole judicial forum to obtain permanent equitable remedies,
         or to seek provisional equitable remedies pending the outcome of
         arbitration, or to carry into effect any determination made by
         arbitration. Upon any dispute arising under or related to this
         Agreement, excepting matters within the scope of paragraph B of this
         Article XI, attorneys fees shall be awarded to the prevailing party.
         This exclusive forum provision shall not limit a party's ability to
         enforce any judgment rendered by the exclusive forum in any Court or
         jurisdiction useful or convenient for execution or enforcement.

D.       As of the date of this Agreement, BUILDER nominates Kirt Quick (or such
         other qualified person employed by Hainline & Associates) as arbitrator
         but such person and firm is unknown to OWNER. The parties agree to
         exchange nominations and information about the same and promise in good
         faith to attempt to agree in writing to an individual or entity as
         arbitrator within 14 days of the date of this Agreement; but in the
         absence of such agreement, the existing provisions of paragraphs A and
         B shall control.


                       ARTICLE XII - AGREEMENT CONTROLLING

A.       This Agreement together with the Contract Drawings contains the
         fully-integrated entire and final agreement between the BUILDER and the
         OWNER; and there are no promises or representations by either of them
         other than those set forth herein. This Agreement shall not be altered
         or modified except by an agreement in writing signed by the parties
         hereto, and no officer, agent, or employee of either the BUILDER or the
         OWNER shall have the power to waive any provisions hereof unless such
         waiver be in writing and signed by a duly authorized representative of
         each of the parties hereto.

B.       In the event of conflict between this Agreement and the Final
         Conversion Scope (or, for the period before the Final Conversion Scope
         comes into existence, then the Preliminary Conversion Scope), this
         Agreement governs; as between the Final Ship Construction Specification
         and the Architects Technical Conversion Plans, the former governs; and
         in case of internal conflict within the Interior Specification, its
         drawings govern over textual matters.




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                                                                 OWNER: /s/ JBA
                                                                BUILDER: /s/ MJN


       ARTICLE XIII - INSPECTION, ACCESS, TESTS AND OFFICIAL CERTIFICATES

A.       During  conversion,  BUILDER shall provide OWNER, or its appointed
         representative, facilities and access to inspect the Vessel, material,
         workmanship, plans, tests and movements. BUILDER shall provide a
         suitable office for OWNER's representative and BUILDER shall provide
         access to suitable facilities and conditions such as a telephone, fax,
         copy machine, heat and air conditioning. BUILDER will perform all of
         the tests and Trials required of BUILDER in the Final Conversion Scope
         and reasonably necessary for OWNER's acceptance of the Vessel. Except
         for OWNER Furnished Items (but as to which OWNER has informed BUILDER
         that no testing or vendor attendance will be necessary), BUILDER will
         supply all vendor representatives necessary for installation and
         Trials, and all crew, stores and ballast reasonably necessary for
         Trials and for transit to the place of Redelivery. OWNER will supply
         all fuel and lubricants for Trials and all licensed and employed crew
         reasonably necessary for tests or demonstrations relating to the crew
         or to OWNER's operations required by USCG for the COI. BUILDER will
         give OWNER at least ten (10) business days' notice of the date of
         commencement of Trials.

B.       All of the workmanship and material required under this Agreement,
         while the same is in the process of fabrication, erection,
         construction, installation and performance, shall be inspected promptly
         by the OWNER and his agents and shall be accepted promptly in
         accordance with this Agreement and the Exhibits hereto or rejected
         promptly in accordance therewith. The OWNER shall promptly notify the
         BUILDER if the OWNER's Representative has actual awareness of a
         particular defect.

C.       OWNER hereby  appoints  Thomas  Gourguechon  as the OWNER's
         Representative. Until BUILDER is notified in writing that such OWNER`s
         Representative's appointment has been revoked, said Representative
         shall have full and complete authority to act for the OWNER in any and
         every manner required, permitted or contemplated under this Agreement,
         except that unless specially notified by the OWNER in writing to the
         BUILDER the OWNER's Representative shall not have the authority to
         amend this Agreement on behalf of the OWNER. BUILDER hereby appoints
         Kevin Dallman as its Representative. Each party shall have one and only
         one Representative appointed at any given time for the entire period
         from the date of this Agreement until Redelivery and shall replace said
         Representative within seven (7) days in the event the position is
         vacated.

D.       BUILDER shall provide access to the Vessel while under conversion to
         inspectors from any public authority reasonably requested by OWNER and
         to private business invitees of the OWNER provided that all private
         business invitees are themselves or by the OWNER insured against injury
         and death from any cause while on the BUILDER's premises; and OWNER
         shall defend, indemnify and hold BUILDER harmless from any liability
         for injury asserted by or on behalf of any such private business
         invitee against BUILDER save to the extent caused by the BUILDER's
         active negligence.



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                                                                 OWNER: /s/ JBA
                                                                BUILDER: /s/ MJN


E.       During conversion, the OWNER will from time to time be required to make
         decisions on the selection of items to be purchased by the BUILDER to
         complete the conversion by the Redelivery Date. The OWNER agrees that
         the OWNER's Representative shall make decisions on all purchase items
         requested by BUILDER within 5 business days of BUILDER requesting such
         OWNER decision and having given a reasonable level of detail on the
         matters requiring decision. The OWNER hereby agrees that its consent
         shall be deemed given on the purchase source, color or particular item
         proposed by the BUILDER if OWNER's Representative fails to so decide
         within 5 business days of BUILDER making the decision request.


                    ARTICLE XIV - ASSIGNMENT OF THE AGREEMENT

         This Agreement shall inure to the benefit of the BUILDER and OWNER and
         their successors and assigns and shall be binding upon the BUILDER and
         OWNER and their successors and assigns; provided, however, that BUILDER
         shall not assign this Agreement or any interest hereunder without the
         prior written consent of OWNER, and any assignment without said prior
         written consent shall be null and void. OWNER may at any time sell,
         transfer or mortgage the Vessel and/or assign this Agreement, but shall
         at all times remain liable under the Agreement. BUILDER agrees that
         such a sale and/or assignment shall not be grounds for termination of
         this Agreement.


                     ARTICLE XV - COMPLIANCE WITH REGULATIONS

         The BUILDER shall comply with all laws, rules, regulations and
         requirements of the departments or agencies of the United Sates
         affecting the construction of works, plants and vessels in or on
         navigable waters and the shores thereof and all other waters subject to
         the control of the United States, and shall procure at its own expense
         such permits from the United States and from state and local
         authorities as may be necessary in connection with beginning or
         carrying on the completion of the contract work, and shall at all times
         comply with all applicable and legally enforceable United States, State
         and local laws in any way affecting the contract work. It shall be the
         responsibility of OWNER and not BUILDER to make provision in the Vessel
         and in any of OWNER's shoreside facilities for any compliance necessary
         with the ADA Accessibility Guidelines now or hereafter in force.
         Nothing in this Article shall reduce the OWNER's responsibility under
         Article I-D hereof.


                              ARTICLE XVI - PATENTS

         OWNER agrees to protect and hold harmless BUILDER against claims of
         third persons for damages sustained by reason of the infringement of
         the patent rights with respect to materials, processes, machinery,
         equipment, and hull form selected and used by OWNER, Hopeman, or the
         Architects in such works. OWNER agrees to protect and hold harmless
         BUILDER against claims of third persons for damages sustained by reason



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                                                                 OWNER: /s/ JBA
                                                                BUILDER: /s/ MJN


         of infringement of patent rights with respect to materials, processes,
         machinery and equipment supplied or specifically acquired by OWNER or
         required by the Preliminary GA, the Architects Technical Conversion
         Plans or the Interior Specification and any Final Interior
         Specification. BUILDER agrees to protect and hold harmless OWNER
         against claims of third persons for damages sustained by reason of
         infringement of patent rights with respect to materials, processes,
         machinery and equipment supplied or specifically acquired or applied by
         or through BUILDER.


           ARTICLE XVII - OWNERSHIP OF THE DRAWINGS AND SPECIFICATIONS

         The Interior Specification, any Final Interior Specification, the
         Preliminary GA and the Architects Technical Conversion Plans are and
         shall remain the sole property of the OWNER. The Preliminary and Final
         Ship Construction Specifications, the Production Drawings and the
         As-Built Drawings are and shall be deemed jointly owned by OWNER and
         BUILDER. BUILDER shall be entitled to retain permanently one archive
         copy of The Interior Specification, any Final Interior Specification,
         the Preliminary GA and the Architects Technical Conversion Plans.
         BUILDER shall not permit any third party who may wish to contract with
         BUILDER for the construction or conversion of an overnight riverboat to
         utilize the archive copy of the specified materials which are the sole
         or joint property of the OWNER for any material portion of a design for
         another vessel unless it has first obtained the OWNER's written consent
         to so allow, given or withheld in the Owner's sole and absolute
         discretion.


                   ARTICLE XVIII - NOTICES AND COMMUNICATIONS

         Communication and notices shall be in writing addressed to the OWNER
         under this agreement shall be addressed to the OWNER at the following
         address:

                                    The Delta Queen Steamboat Co.
                                    c/o American Classic Voyages Co.
                                    Two North Riverside Plaza, Suite 200
                                    Chicago, Illinois 60606
                                    Attn: Thomas Gourguechon
                                    Fax:  847-328-0336
                                    With a copy to: Jordan Allen
                                    Fax: 312-466-6151

         Communications and notices shall be in writing addressed to the BUILDER
         under this Agreement shall be addressed to the BUILDER at the following
         address:

                                    Nichols Brothers Boat Builders, Inc.
                                    P.O. Box 580, 5400 South Cameron Road
                                    Freeland, Washington 98249
                                    Attn: Matthew J. Nichols
                                    Fax: 360-331-7484

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                                                                 OWNER: /s/ JBA
                                                                BUILDER: /s/ MJN




         Notices shall be personally delivered or, if not, sent both by letter
         and by fax provided good transmission of the fax is electronically
         confirmed; and if not so confirmed, shall be sent by Federal Express or
         like overnight delivery service.


                   ARTICLE XIX - TITLE AND COLLATERAL SECURITY

A.       OWNER shall remain the owner of the Vessel to be converted pursuant to
         this Agreement. Title to all work performed, materials delivered, and
         components fabricated shall vest in the OWNER as and when performed,
         delivered to the shipyard, or fabricated. Title to all scrap and title
         to any material surplus to the requirements of this Agreement shall be
         and remain vested in the BUILDER.

B.       OWNER has disclosed to BUILDER that the Vessel at time of this
         Agreement is subject to a first preferred mortgage recorded in favor of
         a lender to OWNER in the approximate amount of $70 million, will remain
         subject to such mortgage throughout the conversion, and that such
         lender is unwilling to subordinate the lien of its mortgage to the lien
         of any security interest in favor of the BUILDER. To protect the
         interests of BUILDER under such circumstances, OWNER acknowledges that
         it has agreed to installment payments and a down payment under Articles
         III and IV hereof to make BUILDER's performance of work hereunder cash
         flow neutral instead of being in the nature of payments in arrears. To
         additionally protect BUILDER under such disclosed circumstances, OWNER
         agrees within 15 days of the date of this Agreement to cause a national
         banking association of OWNER's choosing to issue a one-year irrevocable
         standby letter of credit ("SLC") in favor of BUILDER in the amount of
         $500,000 which, upon any material payment default by OWNER under this
         Agreement, may be presented by BUILDER to such issuer for a single draw
         in the full amount of such SLC. As to the cash received from such
         issuer upon such presentment and as to the SLC, OWNER hereby grants
         BUILDER a security interest in the SLC and in its proceeds, and in and
         to all cash paid on presentment of such SLC, and further agrees that
         BUILDER alone shall be entitled to hold and possess all such proceeds
         and cash and that such possession by BUILDER constitutes perfection of
         BUILDER's security interests. BUILDER shall not be restricted as to its
         use and application of any and all of such proceeds and cash and may
         instead use and apply it in any manners permitted by law and not
         inconsistent with the terms of this Agreement. OWNER agrees that
         BUILDER shall at all times have recourse to OWNER and agrees that any
         presentment of the SLC by BUILDER shall not be deemed an election of
         one sole form or type of action or of an exclusive or preclusive
         remedy, except to the extent (if at all) that such presentment and
         receipt and use of proceeds and cash satisfies in full all compensatory
         damages to which BUILDER was entitled on account of such OWNER breach.
         OWNER shall invoice BUILDER for the OWNER's actual cost to have such
         SLC issued and shall include with such invoice the issuer's actual
         record of charges for such issuance; whereupon the BUILDER shall pay
         the OWNER the amount so invoiced, not to exceed $15,000, within 14 days
         of the date of OWNER's invoice therefor. If not



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                                                                 OWNER: /s/ JBA
                                                                BUILDER: /s/ MJN


         sooner presented and drawn against, the SLC shall be expressly released
         by the BUILDER on Redelivery.

C.       To  protect  the  OWNER's  interests  in having the  BUILDER  fully
         perform its obligations under this Agreement, BUILDER agrees within 15
         days of the date of this Agreement to cause a national banking
         association of BUILDER's choosing to issue a one-year irrevocable
         standby letter of credit ("SLC") in favor of OWNER in the amount of
         $1,000,000 which, upon any material payment default by BUILDER under
         this Agreement, may be presented by OWNER to such issuer for a single
         draw in the full amount of such SLC. As to the cash received from such
         issuer upon such presentment and as to the SLC, BUILDER hereby grants
         OWNER a security interest in the SLC and in its proceeds, and in and to
         all cash paid on presentment of such SLC, and further agrees that OWNER
         alone shall be entitled to hold and possess all such proceeds and cash
         and that such possession by OWNER constitutes perfection of OWNER's
         security interests. OWNER shall not be restricted as to its use and
         application of any and all of such proceeds and cash and may instead
         use and apply it in any manners permitted by law and not inconsistent
         with the terms of this Agreement. BUILDER agrees that OWNER shall at
         all times have recourse to BUILDER and agrees that any presentment of
         the SLC by OWNER shall not be deemed an election of one sole form or
         type of action or of an exclusive or preclusive remedy, except to the
         extent (if at all) that such presentment and receipt and use of
         proceeds and cash satisfies in full all compensatory damages to which
         OWNER was entitled on account of such BUILDER breach. BUILDER shall
         invoice OWNER for the BUILDER's actual cost to have such SLC issued and
         shall include with such invoice the issuer's actual record of charges
         for such issuance; whereupon the OWNER shall pay the BUILDER the amount
         so invoiced, not to exceed $30,000, within 14 days of the date of
         BUILDER's invoice therefor. If not sooner presented and drawn against,
         the SLC shall be expressly released by the OWNER on Redelivery.


                     ARTICLE XX - CERTAIN DEFAULT PROVISIONS

A.       On the eleventh calendar day following any material default by the
         OWNER in paying any sum due to the BUILDER under this Agreement and
         which has not been fully cured, the BUILDER shall be at liberty to stop
         all work in progress on the Vessel and shall be at liberty to cancel
         such of its vendor and subcontract agreements which relate to the
         Vessel as it is entitled to do or where affected third parties consent.

B.       If a payment default by OWNER continues for 11 days after the actual
         date when the defaulted payment was due and has not been fully cured:

                  (1) all remaining unpaid portions of the purchase price shall
         be accelerated and then be all due and payable together with interest
         on such sum at the rate of one and one-quarter percent (1.25%) per
         month until paid, but the total indebtedness due shall subtract any
         actual expense saved by the BUILDER on account of the breach from not
         having to perform the balance of the contract;



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                                                                 OWNER: /s/ JBA
                                                                BUILDER: /s/ MJN


                  (2) Owner shall in addition pay to BUILDER as liquidated
         damages for involuntary productive shipyard space consumption and for
         profit lost from other potential contracts delayed or prevented by the
         occupation the sum of ______ for each day, after the actual date of
         default, that the Vessel or the equipment and materials and components
         intended to become the Vessel continue to occupy space at the BUILDER's
         facility, and in addition a one-time work force demobilization fee of
         _______, but all amounts under this subparagraph shall not in any event
         exceed the sum of ________; and

                  (3) Respecting the sums specified in preceding subparagraph 2,
         the parties agree that the sums are not penalties but instead a good
         faith agreement to sums meant to compensate the BUILDER for damages
         foreseeable but presently impossible or difficult to calculate.


                    XXI: SPECIAL EARLY TERMINATION PROVISION

         Should the Vessel during transit from her present location in Louisiana
to the BUILDER's facility sink or be so damaged in transit that she is an actual
or implied constructive total loss for purposes of the expectations of the
parties under this Agreement (and if damage suffered in transit would
necessitate $1 million or more work beyond the scope of the Preliminary
Conversion Scope and delay the Redelivery Date by 30 days or more, the Vessel
shall conclusively be deemed an implied constructive total loss); then in such
event the OWNER may by written notice to the BUILDER declare this Agreement
terminated effective as of the date of BUILDER's receipt of such notice.
Forthwith upon receipt of such notice, the BUILDER shall notify its vendors and
subcontractors to, and shall itself, stop all work and activity under this
Agreement; and shall thereafter promptly notify the OWNER in writing of the
total of its labor, subcontract, equipment and materials charges actually paid
or incurred under this Agreement to such date less the amount of any refunds and
relief from liability insurance which BUILDER can actually effect with
commercially reasonable effort with its subcontractors, vendors and suppliers;
and if such total is greater than the sums paid by OWNER to BUILDER under
Articles III and IV of this Agreement, BUILDER shall invoice the OWNER for the
difference which OWNER shall pay within fourteen calendar days of date of
invoice; but if such total is less than such payments, BUILDER shall with such
notice refund the difference to the OWNER.

[Only a concluding single un-numbered paragraph and the signatures of the
parties appear on the single page following.]



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                                                                 OWNER: /s/ JBA
                                                                BUILDER: /s/ MJN





IN WITNESS WHEREOF the parties hereto have caused this Agreement to be executed
by their proper authorized representatives, thereunto duly authorized, with this
Agreement being deemed made and completed at Freeland, Washington. This
Agreement may be executed at different places and the signatures transmitted by
facsimile which, if so done, will bind a party transmitting their signature by
facsimile as fully as if their original signature had been delivered; and, or in
addition, this Agreement may be executed in original counterparts which, if so
done, shall when taken together bind the parties fully and as if both had
originally subscribed to a single instrument. Each person signing this Agreement
individually warrants their ability to bind the party on whose behalf each
signs.



                                NICHOLS BROTHERS BOAT BUILDERS, INC.


                                By: /s/ Matthew J. Nichols
                                    --------------------------------------------
                                Name/title: Matthew J. Nichols, President

                                THE DELTA QUEEN STEAMBOAT CO.


                                By: /s/ Jordan Allen
                                    --------------------------------------------
                                Name/title:  Jordan Allen, Senior Vice-President