THESHIPOWNERS CLAIMS BUREAU, INC., MANAGER AMERICAN ONE BATTERY PARK PLAZA - 31s~ FLOOR NEW YORK, NEW YORK 10004 USA TEL: +1.212.847.4500 FAX: + 1.212.847.4599 WEB: WWW.AMERICAN-CLUB.COM JANUARY 2,2007 CIRCULAR NO. 01107 TO MEMBERS OF THE ASSOCIATION Dear Member: CHANGES TO THE RULES OF THE ASSOCIATION FOR THE 2007 POLICY YEAR Please note that your Board of Directors recently approved the following changes to the Club's Rules to take effect from February 20, 2007. As in previous years, they derive from a continuing review of the language of the existing Rules and a desire to maintain good housekeeping in the interests of the clarity and efficacy of the terms on which Merr~bers are insured by the Club. Class I: Protection and lndemnitv Insurance A Member's duty to notify change of class and change of flag. This obligation was drawn to Members' attention through Circular No. 34/05 of December 12, 2005. At that stage it was necessary (for reasons of timing) to incorporate the provision by endorsement to Certificates of Entry, the wording thereof being set out in the Circular to which reference is made. However, for 2007, it has been considered more appropriate to incorporate the obligation by way of an addition to the Rules as a new Class I, Rule 1, Section 4 (General lnsurance Provisions), subsection 14 vi as follows: vi Notwithstanding anything to the contrary contained in these Rules, it is a condition of this insurance that the Member shall give the Managers prior notice in writing of any proposed change in the Classification Society of the insured vessel(s) andor of any change of flag of the insured vessel(s) as may be intended during the currency of the cover provided hereunder. In the event that: the Member shall have failed to give the required notice to the Managers of such change as aforesaid; or the Managers shall have notified the Member that they do not approve of the Classification Society andor flag to which the insured vessel(s) has been changed; cover hereunder shall be null, void and of no effect as of the date of such change, save to the extent that the Managers, in their sole discretion, may otherwise determine. THE AMERICAN General Limitations The potential limitation of cover for passenger and crew claims will demand that the General Limitations part of Class 1, Rule 1, Section 4 will require amendment 1 amplification. The matter is not as of yet finally resolved, but on the assumption that a limit will apply with effect from February 20, 2007, an appropriate wording will be drafted, submitted for Board approval and thereafter notified to the membership at large in due course. A new sub-section 40 to Class I, Rule 1, Section 4, will be added as follows, the intent of which is thought to be self-explanatory. 40 Notwithstanding anything contained in these Rules to the contrary, and unless and to the extent that the Managers shall otherwise agree, the failure by a Member to present a vessel for survey by such time and date as shall have been stipulated by the Managers shall have the effect of automatically terminating cover as from such time and date without further notice. A new sub-section 4.1 to Class I, Rule 1, Section 4, will be added as follows, its purpose being to conform the Rules to the provisions of the new Appendix VII to the International Group's Pooling Agreement as to the application of double retentions for substandard vessels. 41 By applying to enter or upon the entry or continuation of the entry of a ve