Exhibit
4.18


Dated 20 February 2007


DANAOS
CORPORATION


as Borrower


- and -


THE
BANKS AND FINANCIAL INSTITUTIONS


listed
in Schedule 1


as Lenders


- and -


THE
ROYAL BANK OF SCOTLAND PLC


as Swap Bank


- and -


THE
ROYAL BANK OF SCOTLAND PLC


as Issuing Bank, Agent


and Security
Trustee


LOAN
AGREEMENT


relating to a revolving
credit facility


of up to US$700,000,000


to refinance certain existing indebtedness and equity
and


to (re)finance the
purchase price


of certain
approved ships/newbuildings


WATSON, FARLEY & WILLIAMS


Piraeus















INDEX


	
  Clause

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1

  	
   

  	
  INTERPRETATION

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2

  	
   

  	
  FACILITIES

  	
   

  	
  26

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3

  	
   

  	
  POSITION OF THE LENDERS, THE SWAP BANK AND THE
  MAJORITY LENDERS

  	
   

  	
  26

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4

  	
   

  	
  DRAWDOWN

  	
   

  	
  28

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5

  	
   

  	
  CURRENCY OPTION

  	
   

  	
  31

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6

  	
   

  	
  INTEREST

  	
   

  	
  35

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7

  	
   

  	
  INTEREST PERIODS

  	
   

  	
  38

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8

  	
   

  	
  DEFAULT INTEREST

  	
   

  	
  38

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9

  	
   

  	
  REPAYMENT, PREPAYMENT AND CANCELLATION

  	
   

  	
  39

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10

  	
   

  	
  CONDITIONS PRECEDENT

  	
   

  	
  46

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11

  	
   

  	
  REPRESENTATIONS AND WARRANTIES

  	
   

  	
  47

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12

  	
   

  	
  GENERAL UNDERTAKINGS

  	
   

  	
  49

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  13

  	
   

  	
  CORPORATE UNDERTAKINGS

  	
   

  	
  53

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  14

  	
   

  	
  INSURANCE

  	
   

  	
  54

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  15

  	
   

  	
  SHIP COVENANTS

  	
   

  	
  59

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  16

  	
   

  	
  SECURITY COVER

  	
   

  	
  63

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  17

  	
   

  	
  PAYMENTS AND CALCULATIONS

  	
   

  	
  65

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  18

  	
   

  	
  APPLICATION OF RECEIPTS

  	
   

  	
  67

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  19

  	
   

  	
  APPLICATION OF EARNINGS

  	
   

  	
  68

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  20

  	
   

  	
  EVENTS OF DEFAULT

  	
   

  	
  69

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  21

  	
   

  	
  FEES AND EXPENSES

  	
   

  	
  73

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  22

  	
   

  	
  INDEMNITIES

  	
   

  	
  74

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  23

  	
   

  	
  NO SET-OFF OR TAX DEDUCTION

  	
   

  	
  76

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  24

  	
   

  	
  ILLEGALITY, ETC

  	
   

  	
  77

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  25

  	
   

  	
  INCREASED COSTS

  	
   

  	
  77

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  26

  	
   

  	
  SET-OFF

  	
   

  	
  79

  



 


 











 


	
  27

  	
   

  	
  TRANSFERS AND CHANGES IN LENDING OFFICES

  	
  79

  
	
   

  	
   

  	
   

  	
   

  
	
  28

  	
   

  	
  VARIATIONS AND WAIVERS

  	
  82

  
	
   

  	
   

  	
   

  	
   

  
	
  29

  	
   

  	
  NOTICES

  	
  83

  
	
   

  	
   

  	
   

  	
   

  
	
  30

  	
   

  	
  REDUCTION OF GUARANTEES

  	
  84

  
	
   

  	
   

  	
   

  	
   

  
	
  31

  	
   

  	
  SETTLEMENT OF GUARANTEES

  	
  85

  
	
   

  	
   

  	
   

  	
   

  
	
  32

  	
   

  	
  INDEMNITY OF THE BORROWER

  	
  85

  
	
   

  	
   

  	
   

  	
   

  
	
  33

  	
   

  	
  INDEMNITIES OF THE LENDERS

  	
  88

  
	
   

  	
   

  	
   

  	
   

  
	
  34

  	
   

  	
  SUPPLEMENTAL

  	
  89

  
	
   

  	
   

  	
   

  	
   

  
	
  35

  	
   

  	
  LAW AND JURISDICTION

  	
  90

  
	
   

  	
   

  	
   

  	
   

  
	
  SCHEDULE 1 LENDERS AND COMMITMENTS

  	
  91

  
	
   

  	
   

  
	
  SCHEDULE 2 DRAWDOWN NOTICE / GUARANTEE ISSUE REQUEST

  	
  92

  
	
   

  	
   

  
	
  SCHEDULE 3 CONDITION PRECEDENT DOCUMENTS

  	
  94

  
	
   

  	
   

  
	
  SCHEDULE 4 TRANSFER CERTIFICATE

  	
  101

  
	
   

  	
   

  
	
  SCHEDULE 5 DESIGNATION NOTICE

  	
  105

  
	
   

  	
   

  
	
  SCHEDULE 6 FORM OF COMPLIANCE CERTIFICATE

  	
  106

  
	
   

  	
   

  
	
  SCHEDULE 7 MANDATORY COST FORMULA

  	
  107

  
	
   

  	
   

  
	
  EXECUTION PAGE

  	
  109

  



 


 
















THIS
LOAN AGREEMENT is made on 20 February 2007


BETWEEN:


(1)           DANAOS CORPORATION, as Borrower;


(2)           THE BANKS AND FINANCIAL INSTITUTIONS listed
in Schedule 1, as Lenders;


(3)           THE ROYAL BANK OF SCOTLAND PLC,  acting through its office at Akti Miaouli
45, 185 36 Piraeus, Greece, as Swap Bank;


(4)           THE ROYAL BANK OF SCOTLAND PLC,  acting through its office at Akti Miaouli
45, 185 36 Piraeus, Greece, as Issuing Bank;
and


(5)           THE ROYAL BANK OF SCOTLAND PLC, acting
through its office at Akti Miaouli 45, 185 36 Piraeus, Greece, as Agent and Security
Trustee.


WHEREAS:


(A)          The Lenders agreed to
make available to the Borrower a revolving credit facility of up to
US$700,000,000 divided into:


(i)            a
revolving credit facility of up to US$200,000,000 to be on-lent by the Borrower
to certain wholly-owned subsidiaries of the Borrower to assist such
subsidiaries in refinancing the Existing Indebtedness (as hereafter defined)
and the equity of such subsidiaries; and


(ii)           a
revolving credit facility of up to US$500,000,000 to be on-lent by the Borrower
to certain wholly-owned subsidiaries of the Borrower to assist such
subsidiaries in (re)financing the acquisition cost of certain Approved Ships.


(B)           The Swap Bank has
agreed to enter into interest rate swap and forward foreign exchange
transactions with the Borrower from time to time to hedge the Borrower’s
exposure under this Agreement to interest rate fluctuations and to exchange
rate fluctuations between any Optional Currencies (as hereafter defined) and
Dollars.


(C)           Each of the wholly-owned
subsidiaries of the Borrower mentioned above will execute in favour of the
Security Trustee a guarantee of the obligations and liabilities of the Borrower
under this Agreement.


(D)          The Lenders and the Swap
Bank have agreed to share pari passu in the security to be granted to the
Security Trustee pursuant to this Agreement.


IT IS
AGREED as follows:


1              INTERPRETATION


1.1          Definitions.  Subject to Clause 1.5, in this Agreement:


“Advance” means the
principal amount of each borrowing by the Borrower under this Agreement or (as
the case may be) the Outstanding Guarantee Amount of each Guarantee issued upon
request of the Borrower under this Agreement or, as the context may require,
the principal amount of each such borrowing from time to time outstanding;


“Advance 1
Grace Period”  means the
period commencing on the first Drawdown Date of an Advance in respect of the
Tranche A Advance 1 Ship and ending on the earlier of:


(a)           the date falling 5
years after such first Drawdown Date;













(b)           the first date on which
any Tranche A Advance 1 Ship has an Age of 19 years or more; or


(c)           the date on which the
Agent notifies the Borrower that any Tranche A Advance 1 Ship is not subject to
long-term time charter employment fully satisfactory to the Lenders;


“Advance 3
Grace Period”  means the
period commencing on the first Drawdown Date of an Advance in respect of the
Tranche A Advance 3 Ships and ending on the earlier of:


(a)           the date falling 1 year after such first
Drawdown Date;


(b)           the first date on which
any Tranche A Advance 3 Ship has an Age of 19 years or more; or


(c)           the date on which the
Agent notifies the Borrower that any Tranche A Advance 3 Ship is not subject to
long-term time charter employment fully satisfactory to the Lenders;


“Affected Lender” has the
meaning given in Clause 6.7;


“Age”  means, in relation to any ship on any date,
the number of years (rounded down to the nearest integer) from the year in
which the construction of that ship was completed until that date;


“Agency and Trust Agreement”  means the agency and trust agreement executed
or to be executed between the Borrower, the Lenders, the Swap Bank, the Issuing
Bank, the Agent and the Security Trustee in such form as the Lenders may
approve or require;


“Agent”  means The Royal Bank of Scotland plc, acting
in its capacity as agent for the Lenders, the Swap Bank and the Issuing Bank
under the Finance Documents through its office at Akti Miaouli 45, 185 36
Piraeus, Greece, or any successor of it in such capacity appointed under clause
5 of the Agency and Trust Agreement;


“Applicable
Accounts” means, in relation to a
Compliance Date or an accounting period, the consolidated balance sheets and
related consolidated statements of stockholders’ equity, income and cash flows,
together with related notes, of the Borrower’s Group set out in the annual
financial statements or quarterly financial statements of the Borrower’s Group
prepared as of the Compliance Date or, as the case may be, the last day of the
accounting period in question (and which the Borrower is obliged to deliver to
the Agent pursuant to Clause 12.6, which accounts are to be prepared in
accordance with Clause 12.7);


“Approved Broker”  means each of Arrow Sale & Purchase (UK)
Ltd., Braemer Seascope Ltd., Galbraith’s Limited, Howe Robinson & Co. Ltd.,
H. Clarkson & Company Limited, Simpson Spence & Young and any other
independent sale and purchase shipbroker as may be approved by the Agent from
time to time;


“Approved Flag”  means any of the Greek, Panamanian, Liberian,
Marshall Islands, Bahamas, Maltese, Cypriot or Singaporean flags or any other
flag as the Lenders may, in their absolute discretion, approve as the flag on
which a Ship may be registered;


“Approved Flag State”  means any of Greece, Panama, Liberia, the
Marshall Islands, the Commonwealth of the Bahamas, Malta, Cyprus or Singapore
or any other country in which the Lenders may, in their absolute discretion,
approve that a Ship may be registered;



 2
 









“Approved Guarantor”  means a company (acceptable in all respects
to the Lenders) which is a wholly-owned subsidiary of the Borrower incorporated
in an Approved Flag State and which shall be the owner of a Mortgaged Ship;


“Approved Manager”  means in relation to each Mortgaged Ship,
Danaos Shipping Co. Ltd., a company incorporated in the Republic of Cyprus
whose registered office is at Libra House, 16 P. Catelari Street, Nicosia,
Cyprus or any other company which the Agent may, with the authorisation of the
Majority Lenders, approve from time to time as the manager of that Ship;


“Approved Purchase Contract”  means, in relation to an Approved Ship, the
memorandum of agreement or, as the case may be, shipbuilding contract
(including in either case any amendments or supplements thereto) to be made
between the Approved Seller thereof and the Approved Guarantor who is the buyer
thereof on such terms and conditions to be approved by the Lenders (such
approval not to be unreasonably withheld) and, in the plural, means all of
them;


“Approved Seller”  means, in relation to an Approved Ship, the
seller or, as the case may be, builder of such Approved Ship and, in the
plural, means all of them;


“Approved Ship”  means:


(a)           any container vessel to
be purchased pursuant to an Approved Purchase Contract, which, on the
anticipated date of registration of the Mortgage relative thereto, has an Age
of not more than 15 years and will, on delivery to the relevant Approved
Guarantor, be subject to long-term employment fully satisfactory to the
Lenders;


(b)           any dry bulk carrier to
be purchased pursuant to an Approved Purchase Contract, which, on the
anticipated date of registration of the Mortgage relative thereto, has an Age
of not more than 15 years; or


(c)           any other vessel of an
Age and type acceptable to the Lenders (in their sole and absolute discretion)
and which will, on delivery to the relevant Approved Guarantor, be subject to
long-term employment satisfactory to the Lenders (in their sole and absolute
discretion),


in each case nominated by
the Borrower, and approved in writing by the Agent (such written approval to be
given by the Agent upon the instructions of all the Lenders (acting in their
sole and absolute discretion)), as an “Approved Ship” for the purposes of this
Agreement and, in the plural, means all of them;


“Availability Period”  means, in relation to an Advance, the period
commencing on the date of this Agreement and ending on:


(a)           subject to Clauses 4.2
and 4.8, the date falling 1 month before the final Reduction Date for that
Advance (or such later date as the Agent may, with the authorisation of all the
Lenders, agree with the Borrower); or


(b)           if earlier, the date on
which the Total Commitments are fully cancelled or terminated;


“Bareboat Charter Security Agreement”  means, in relation to any Mortgaged Ship
which is subject to a bareboat charter (including without limitation each
Existing Bareboat Charter) (such bareboat charter to be entered into by the
relevant Owner with the prior consent of the Agent pursuant to Clause
15.13(a)), an agreement or agreements whereby the Security Trustee receives an assignment
of the rights of the relevant Owner under the bareboat charter and certain
undertakings from that Owner and the relevant 



 3
 









charterer and, if so agreed by the Security Trustee (acting with the
authorisation of the Lenders), agrees to give certain undertakings to that
charterer, in each case, in such form as the Lenders may approve or require
and, in the plural, means all of them;


“Bareboat-equivalent Time Charter
Income”  means, in relation to
a Ship, the aggregate charter hire due and payable to the Owner of that Ship
for the remaining unexpired term of the charter or other contract of employment
relative to that Ship at the relevant time (excluding any option periods (as
that term is defined in Clause 16.5(a))) less the aggregate operating expenses
of the Ship as determined by the Borrower and certified to the satisfaction of
the Agent for the same period;


“Beneficiary” means, in
relation to a Guarantee, the person in whose favour the Guarantee has been
issued under this Agreement;


“Book Net Worth”  means, as of any Compliance Date, the
aggregate of value of the stockholders’ equity of the Group as shown in the
Applicable Accounts;


“Borrower”  means Danaos Corporation, a corporation
domesticated and existing under the laws of the Republic of the Marshall
Islands whose registered office is at Trust Company Complex, Ajeltake Road,
Ajeltake Island, Majuro, The Marshall Islands MH 96960 (and includes its
successors);


“Borrower’s Group” means
the Borrower and each of its subsidiaries;


“Business Day”  means a day on which banks are generally open
for business in London and Athens and, if on that day a payment or other
dealing is due to take place under this Agreement:


(a)           in Dollars, a day on
which commercial banks are open in New York City;


(b)           in an Optional Currency
(other than Euros), a day on which commercial banks are open in New York City
and the principal financial centre of the country of that Optional Currency;
and


(c)           in Euros, a Target Day;


“Cash and Cash Equivalents”  means the aggregate of:


(a)           the amount of freely
available credit balances on any deposit or current account;


(b)           the market value of
transferable certificates of deposit in a freely convertible currency
acceptable to the Lenders issued by a prime international bank; and


(c)           the market value of
equity securities (if and to the extent that the Agent is satisfied that such
equity securities are readily saleable for cash and that there is a ready
market therefor) and investment grade debt securities which are publicly traded
on a major stock exchange or investment market (valued at market value as at
any applicable date of determination);


in each case owned free of any Security Interest (other than a Security
Interest in favour of the Security Trustee) by the Borrower or any of its
subsidiaries where:


(i)            the market value of
any asset specified in paragraph (b) and (c) shall be the bid price quoted for
it on the relevant calculation date by the Agent; and


(ii)           the amount or value of
any asset denominated in a currency other than Dollars shall be converted into
Dollars using the Agent’s spot rate for the purchase of Dollars with that
currency on the relevant calculation date;



 4
 









“Cash
Collateral Account” means an account in the name of the Borrower
with the Agent in Piraeus designated “Danaos Corporation - Cash Collateral
Account”, or any other account (with that or another office of the Agent or
with a bank or financial institution other than the Agent) which is designated
by the Agent as the Cash Collateral Account for the purposes of this Agreement;


“Charterparty Assignment”  means, in relation to:


(a)           an Existing Ship (at
all times during the term of the Existing Time Charter relative thereto), an
assignment of the rights of the Owner of that Existing Ship under the Existing
Time Charter relative to that Existing Ship executed or to be executed by the
relevant Owner in favour of the Security Trustee; and


(b)           each other Mortgaged
Ship and each Existing Ship after the expiry of the Existing Time Charter or
Existing Bareboat Charter relative thereto, an assignment of the rights of the
relevant Owner under any time charterparty or contract of affreightment in
respect of such Ship of at least 12 consecutive months or under any time
charter and any guarantee of such charter or contract of employment in respect
of such Ship executed or to be executed by the relevant Owner in favour of the
Security Trustee,


in each case, in such form as the Lenders may approve or require and,
in the plural, means all of them;


“Commitment”  means, in relation to a Lender, the amount
set opposite its name in Schedule 1, or, as the case may require, the amount
specified in the relevant Transfer Certificate, as that amount may be reduced,
cancelled or terminated in accordance with this Agreement (and “Total Commitments” means the aggregate of
the Commitments of all the Lenders);


“Compliance Date” means 31
March, 30 June, 30 September and 31 December in each calendar year (or such
other dates as of which the Borrower prepares the consolidated financial
statements which it is required to deliver pursuant to Clause 12.6);


“Confirmation” and “Early Termination Date”, in relation to any
continuing Designated Transaction, have the meanings given in the Master
Agreement;


“Contractual Currency” has
the meaning given in Clause 22.5;


“Contribution”  means, in relation to a Lender, the part of
the Loan which is owing to that Lender (excluding, for the avoidance of doubt,
any Outstanding Guarantee Amount);


“Creditor Party”  means the Agent, the Security Trustee, the
Issuing Bank, the Swap Bank or any Lender, whether as at the date of this
Agreement or at any later time;


“Current Percentage”  means, in relation to a Lender and in respect
of a Guarantee, the proportion, expressed as a percentage, which the Lender’s
Commitment bore to the Total Commitments as at the Drawdown Date of the
Guarantee;


“Danaos AccountsAccount Charge” 
means the deed containing, inter alia, a charge in respect of the Danaos
Earnings Account and the
Cash Collateral Account executed or to be
executed by the Borrower in favour of the Security Trustee in such form as the
Lenders may approve or require;


“Danaos  Earnings Account”  means an account in the name of the Borrower
with the Agent in Piraeus designated “Danaos Corporation US$700m facility -
Earnings Account” or any other account (with that or another office of the
Agent) which is designated by the Agent as the Earnings Account for the
purposes of this Agreement;



 5
 









“Deed of Covenant”  means, in relation to any Mortgaged Ship
registered on the Maltese, Cyprus, Singapore or Bahamas flag, a deed of
covenant collateral to the Mortgage on such Ship, to be in such form as the
Lenders may approve or require and, in the plural, means all of them;


“Delivery Date”  means the date on which an Approved Ship is
delivered to, and accepted by, the Approved Guarantor under the Approved
Purchase Contract;


“Designated Transaction”
means a Transaction which fulfils the following requirements:


(a)           it is entered into by
the Borrower pursuant to the Master Agreement with the Swap Bank which, at the
time the Transaction is entered into, is also a Lender and the Borrower’s
rights under the Master Agreement are subject to a Master Agreement Assignment;


(b)           its purpose is the
hedging of the Borrower’s exposure (i) under this Agreement to fluctuations in
LIBOR or (as the case may be) EURIBOR arising from the funding of the Loan (or
any part thereof) for a period expiring no later than the final Reduction Date
or (ii) to fluctuations in the exchange rate between any of the Optional
Currencies and Dollars; and


(c)           it is designated by the
Borrower, by delivery by the Borrower to the Agent of a notice of designation
in the form set out in Schedule 5, as a Designated Transaction for the purposes
of the Finance Documents;


“Dollar Spot Rate of Exchange”  means, in relation to Dollars and in respect
of any Interest Period, the Agent’s spot rate of exchange for the purchase in
the London Interbank Market or, as the case may be, the European Interbank
Market of Dollars with an Optional Currency at or about 11.00 a.m. (London
time) on the Quotation Date for the relevant Interest Period;


“Dollars” and “$” 
means the lawful currency for the time being of the United States of
America;


“Drawdown Date”  means, in relation to an Advance, the date
requested by the Borrower for that Advance to be made (or, as the case may be,
for the issue of the Guarantee), or (as the context requires) the date on which
the Advance is actually made (or, as the case may be, the Guarantee is actually
issued);


“Drawdown Notice”  means a notice in the form set out in
Schedule 2 (or in any other form which the Agent approves or reasonably
requires);


“Earnings” means, in
relation to each Mortgaged Ship, all moneys whatsoever which are now, or later
become, payable (actually or contingently) to the Owner of that Ship or the
Security Trustee and which arise out of the use or operation of that Ship,
including (but not limited to):


(a)           all freight, hire and
passage moneys, compensation payable to the Owner of that Ship or the Security
Trustee in the event of requisition of that Ship for hire, remuneration for
salvage and towage services, demurrage and detention moneys and damages for
breach (or payments for variation or termination) of any charterparty or other
contract for the employment of that Ship;


(b)           all moneys which are at
any time payable under Insurances in relation to that Ship in respect of loss
of earnings; and



 6
 









(c)           if and whenever that
Ship is employed on terms whereby any moneys falling within paragraphs (a) or
(b) above are pooled or shared with any other person, that proportion of the
net receipts of the relevant pooling or sharing arrangement which is
attributable to that Ship;


“Earnings Accounts”  means, together, the Danaos Earnings Account
as the Owner’s Earnings Accounts and in the singular means any of them;


“Earnings Account Charge”  means, in relation to each Owner’s Earnings
Account, the deed containing, inter alia, a charge in respect of that Owner’s
Earnings Account executed or to be executed by the relevant Owner in favour of
the Security Trustee in such form as the Lenders may approve or require and in
the plural means all of them;


“EBITDA”  means, in respect of the relevant period, the
Net Income of the Borrower’s Group before interest, taxes, depreciation and
amortisation and any capital gains or losses realised from the sale of any
Fleet Vessels as shown in the Applicable Accounts;


“EMU Legislation”  means legislative measures of the Council of
the European Union for the introduction of, changeover to, or operation of, a single
or unified European currency being part of the implementation of the Third
Stage;


“Environmental Claim”  means:


(a)           any claim by any
governmental, judicial or regulatory authority which arises out of an
Environmental Incident or an alleged Environmental Incident or which relates to
any Environmental Law; or


(b)           any claim by any other
person which relates to an Environmental Incident or to an alleged
Environmental Incident;


and “claim” means a claim
for damages, compensation, fines, penalties or any other payment of any kind
whether or not similar to the foregoing; an order or direction to take, or not
to take, certain action or to desist from or suspend certain action; and any
form of enforcement or regulatory action, including the arrest or attachment of
any asset;


“Environmental Incident”  means, in relation to each Mortgaged Ship:


(a)           any release of
Environmentally Sensitive Material from that Ship; or


(b)           any incident in which
Environmentally Sensitive Material is released from a vessel other than that
Ship and which involves a collision between that Ship and such other vessel or
some other incident of navigation or operation, in either case, in connection
with which that Ship is actually or potentially liable to be arrested,
attached, detained or injuncted and/or that Ship and/or the Owner of that Ship
and/or any operator or manager of it is at fault or allegedly at fault or
otherwise liable to any legal or administrative action; or


(c)           any other incident in
which Environmentally Sensitive Material is released otherwise than from that
Ship and in connection with which that Ship is actually or potentially liable
to be arrested and/or where the Owner of that Ship and/or any operator or
manager of that Ship is at fault or allegedly at fault or otherwise liable to
any legal or administrative action;


“Environmental Law”  means any law relating to pollution or
protection of the environment, to the carriage of Environmentally Sensitive
Material or to actual or threatened releases of Environmentally Sensitive
Material;



 7
 









“Environmentally Sensitive Material”  means oil, oil products and any other
substance (including any chemical, gas or other hazardous or noxious substance)
which is (or is capable of being or becoming) polluting, toxic or hazardous;


“EURIBOR”  means, for an Interest Period (or any other
period for which an interest rate is to be determined under any provision of a
Finance Document):


(a)           the rate per annum
equal to the offered quotation for deposits in Euros for a period equal to, or
as near as possible equal to, the relevant Interest Period (or, as the case may
be, such other period) which appears on the appropriate page of the Reuters
Money News Service at or about 11.00 a.m. (Brussels time) on the Quotation Date
for that Interest Period (or, as the case may be, such other period); or


(b)           if no rate is quoted on
the appropriate page of the Reuters Money News Service, the rate per annum
determined by the Agent to be the arithmetic mean (rounded upwards, if
necessary, to the nearest one-sixteenth of one per cent.) of the rates per
annum notified to the Agent by each Lender as the rate at which deposits in
Euros are offered to that Lender by leading banks in the European Interbank
Market at that Lender’s request at or about 11.00 a.m. (Brussels time) on the
Quotation Date for that Interest Period (or, as the case may be, such other
period) for a period equal to that Interest Period (or, as the case may be,
such other period) and for delivery on the first Business Day of it;


“Euro”  and “Euros”
means, for the time being, the single currency of Participating Member States
as provided in the EMU Legislation;


“European Interbank Market”
means the interbank market for Euros operating in Participating Member States;


“Existing Bareboat Charter”  means, in relation to:


(a)           “SA SEDERBERG”, a
Barecon 89 bareboat charter dated 5 April 2002 and made between MC Robin
Shipping Limited as original owner and Safmarine as charterer (as the same may
be supplemented and amended from time to time);


(b)           “SA WINTERBERG”, a Barecon
89 bareboat charter dated 5 April 2002 and made between MC Eagle Shipping
Limited as original owner and Safmarine as charterer (as the same may be
supplemented and amended from time to time);


(c)           “SA HELDERBERG”, a
Barecon 89 bareboat charter dated 5 April 2002 and made between MC Canary
Shipping Limited as original owner and Safmarine as charterer (as the same may
be supplemented and amended from time to time); and


(d)           “MAERSK CONSTANTIA”, a
Barecon 89 bareboat charter dated 5 April 2002 and made between MC Seagull
Shipping Limited as original owner and Safmarine as charterer (as the same may
be supplemented and amended from time to time),


each of the charters in paragraphs (a) to (d) being supplemented by a
side letter dated 5 April 2002 and addenda numbered 1 to 4 thereto and novated
by a deed of novation dated 17 June 2003 in favour of the relevant Existing
Owner as owner and in the plural means all of them;


“Existing Charter”  means any Existing Bareboat Charter or any
Existing Time Charter;



 8
 









“Existing
Indebtedness”  means, at any
relevant time, the aggregate Financial Indebtedness under the Existing Loan
Agreement;


“Existing Loan
Agreement”  means the loan
agreement dated 11 April 2005 made between (inter alia) Sederberg, Winterberg,
Helderberg and Constantia as joint and several borrowers and The Royal Bank of
Scotland plc. as lender in respect of a loan facility of (originally)
$200,000,000 (of which an amount of $75,500,000 is outstanding by way of
principal on the date of this Agreement);


“Existing Owners”  means in relation to:


(a)           “MOL CONFIDENCE”,
Federal Marine Inc. (“Federal”);


(b)           “SA HELDERBERG”,
Helderberg Maritime Inc. (“Helderberg”);


(c)           “SA WINTERBERG”,
Winterberg Maritime Inc. (“Winterberg”);


(d)           “SA SEDERBERG”,
Sederberg Maritime Inc. (“Sederberg”);


(e)           “MAERSK CONSTANTIA”,
Constantia Maritime Inc. (“Constantia”);


(f)            “YM YANTIAN”,
Seacaravel Shipping Limited (“Seacaravel”);


(g)           “NORASIA HAMBURG”,
Seasenator Shipping Limited (“Seasenator”);


(h)           “VICTORY I”, Victory
Shipholding Inc. (“Victory”);


(i)            “YM MILANO”, Saratoga
Trading S.A. (“Saratoga”); and


(j)            any substitute vessel
referred to in the proviso to the definition of “Existing Ship”, the Approved
Guarantor which is the registered owner of such vessel,


being, in the case of each of Federal, Helderberg, Winterberg,
Sederberg, Constantia, Victory and Saratoga, a corporation incorporated under
the laws of the Republic of Liberia whose registered office is at 80 Broad
Street, Monrovia, Liberia and, in the case of each of Seacaravel and
Seasenator, a company incorporated under the laws of the Republic of Cyprus
whose registered office is at Tribune House, 10 Skopa Street, P.O. Box 4736,
Nicosia, Cyprus and, in the singular means any one of them;


“Existing Ships”  means each of:


(a)           the “Tranche A Advance 1 Ship”, being “MOL
CONFIDENCE”, a 1994-built container vessel of approximately 4,651 TEUs
container carrying capacity which is registered in the ownership of Federal
under Cyprus flag and having IMO number 9065625 (“MOL CONFIDENCE”);


(b)           the “Tranche A Advance 2 Ships”, being,


(i)            “SA HELDERBERG”, a
1977-built container vessel of approximately 3,101 TEUs container carrying
capacity which is registered in the ownership of Helderberg under Bahamas flag
(and dual registered on the Belgian flag) and having IMO number 7423029 (“SA HELDERBERG”);


(ii)           “SA WINTERBERG”, a 1978-built
container vessel of approximately 3,101 TEUs container carrying capacity which
is registered in the ownership of Winterberg under Bahamas flag (and dual
registered on the Belgian flag) and having IMO number 7422192 (“SA WINTERBERG”);



 9
 









(iii)          “SA SEDERBERG”, a 1978-built
container vessel of approximately 3,101 TEUs container carrying capacity which
is registered in the ownership of Sederberg under Bahamas flag (and dual registered
on the Belgian flag) and having IMO number 7423031 (“SA SEDERBERG”);
and


(iv)          “MAERSK CONSTANTIA”, a
1979-built container vessel of approximately 3,101 TEUs container carrying
capacity which is registered in the ownership of Constantia under Bahamas flag
(and dual registered on the Belgian flag) and having IMO number 7422207 (“MAERSK CONSTANTIA”);


(c)           the “Tranche A Advance 3 Ships”, being:


(i)            “YM YANTIAN”, a 1989-built
container vessel of approximately 3,908 TEUs container carrying capacity which
is registered in the ownership of Seacaravel under Cyprus flag and having IMO
number 8718110 (“YM YANTIAN”); and


(ii)           “NORASIA HAMBURG”, a
1989-built container vessel of approximately 3,908 TEUs container carrying
capacity which is registered in the ownership of Seasenator under Cyprus flag
and having IMO number 8718122 (“NORASIA
HAMBURG”); and


(d)           the “Tranche A Advance 4 Ships”, being:


(i)            “VICTORY I”, a 1988-built
container vessel of approximately 3,098 TEUs container carrying capacity which
is registered in the ownership of Victory under Panama flag and having IMO
number 8705486 (“VICTORY I”); and


(ii)           “YM MILANO”, a 1988-built
container vessel of approximately 3,129 TEUs container carrying capacity which
is registered in the ownership of Saratoga under Greek flag and having IMO
number 8707355 (“YM MILANO”),


and, in the singular, means any one of them Provided that the Lenders may, in their sole and absolute
discretion and at the request of the Borrower made prior to the first Advance
under Tranche A, agree to the substitution of any of the vessels set out above
with another vessel nominated by the Borrower and acceptable to the Lenders;


 “Existing
Time Charter”  means, in
relation to:


(a)           “MOL
CONFIDENCE”, a time charter dated 11 October 2004 and made between Federal
Maritime Limited as original owner and Hyundai Merchant Marine Co., Ltd. as
charterer as novated in favour of Federal as owner pursuant to a tripartite
deed dated 23 February 2006 (as the same may be supplemented and amended from
time to time);


(b)           “YM
YANTIAN”, a time charter dated 30 March 2005 and made between Seacaravel as
owner and Yangming (UK) Ltd. as charterer as supplemented by a side letter and
addenda numbered 1 and 2 thereto (as the same may be further supplemented and
amended from time to time);


(c)           “NORASIA
HAMBURG”, a time charter dated 11 January 2000 and made between Seasenator as
owner and Cosco Container Lines as charterer as supplemented by addenda
numbered 1 to 5 thereto (as the same may be further supplemental and amended
from time to time);



 10
 









(d)           “VICTORY
I”, a time charter dated 6 February 2004 and made between Victory as owner and
Norasia Container Lines Ltd. as charterer (as the same may be supplemented and
amended from time to time);


(e)           “YM
MILANO”, a time charter dated 9 October 2003 and made between Saratoga as owner
and Yangming (UK) Ltd. as charterer as supplemented by addenda numbered 1 to 4
thereto (as the same may be further supplemented and amended from time to
time); and


(f)            any
charter of each substitute vessel referred to in the proviso to the definition
of “Existing Ship” which will be continuing on the Drawdown Date of the Advance
relating to that vessel,


and in the plural means all of them;


“Event of Default”  means any of the events or circumstances
described in Clause 20.1;


“Finance Documents”  means:


(a)           this Agreement;


(b)           the Master Agreement;


(c)           the Agency and Trust
Agreement;


(d)           the Owner Guarantees;


(e)           the Mortgages;


(f)            the Deeds of Covenant;


(g)           the General
Assignments;


(h)           any Charterparty Assignment;


(i)            any Bareboat Charter
Security Agreement;


(j)            the Master Agreement
Assignment;


(k)           the Danaos AccountsAccount Charge;


(l)            the Earnings Account
Charges;


(m)          the Manager’s
Undertakings;


(n)           the Pre-Delivery
Security Assignments; and


(o)           any other document
(whether creating a Security Interest or not) which is executed at any time by
the Borrower, any Owner or any other person as security for, or to establish
any form of subordination or priorities arrangement in relation to, any amount
payable to the Lenders under this Agreement or any of the other documents
referred to in this definition;


“Finance Level”  means:


(a)           (save
for the part-financing of a pre-delivery instalment under an Approved Purchase
Contract to which paragraph (c) below shall apply instead) in the case of an
Approved Ship to be purchased pursuant to an Approved Purchase Contract, 



 11
 









which is a container vessel and which, on the anticipated date of
registration of the Mortgage relative thereto, has:


(i)            an
Age of 4 years or less, 80 per cent. of the lesser of (x) Market Value of the
Approved Ship and (y) the net contract price set out in the Approved Purchase
Contract for the Approved Ship (any such Approved Ship being a “New Container Vessel Type A”);


(ii)           an
Age of 5, 6, 7 or 8 years, 75 per cent. of the lesser of (x) the Market Value
of the Approved Ship and (y) the net contract price set out in the Approved
Purchase Contract for the Approved Ship (any such Approved Ship being a “New Container Vessel Type B”);


(iii)          an Age of 9, 10, 11, 12 or 13 years, 70 per
cent. of the lesser of (x) the Market Value of the Approved Ship and (y) the
net contract price set out in the Approved Purchase Contract for the Approved
Ship (any such Approved Ship being a “New
Container Vessel Type C”);


(iv)          an
Age of 14 or 15 years, 65 per cent. of the lesser of (x) the Market Value of
the Approved Ship and (y) the net contract price set out in the Approved
Purchase Contract for the Approved Ship (any such Approved Ship being a “New Container Vessel Type D”); or


(b)           (save
for the part-financing of a pre-delivery instalment under an Approved Purchase
Contract to which paragraph (c) below shall apply instead) in the case of an
Approved Ship to be purchased pursuant to an Approved Purchase Contract, which
is a dry bulk carrier and which, on the anticipated date of registration of the
Mortgage relative thereto, has:


(i)            an
Age of 4 years or less, 75 per cent. of the lesser of (x) the Market Value of
the Approved Ship and (y) the net contract price set out in the Approved
Purchase Contract for the Approved Ship (any such Approved Ship being a “New Bulk Vessel Type A”);


(ii)           an
Age of 5, 6, 7 or 8 years, 70 per cent. of the lesser of (x) the Market Value
of the Approved Ship and (y) the net contract price set out in the Approved
Purchase Contract for the Approved Ship (any such Approved Ship being a “New Bulk Vessel Type B”);


(iii)          an Age of 9, 10, 11, 12 or 13 years, 65 per
cent. of the lesser of (x) the Market Value of the Approved Ship and (y) the
net contract price set out in the Approved Purchase Contract for the Approved
Ship (any such Approved Ship being a “New
Bulk Vessel Type C”);


(iv)          an
Age of 14 or 15 years, 60 per cent. of the lesser of (x) the Market Value of
the Approved Ship and (y) the net contract price set out in the Approved
Purchase Contract for the Approved Ship (any such Approved Ship being a “New Bulk Vessel Type D”); or



 12
 









(c)           in
the case of a part-financing of a pre-delivery instalment under an Approved
Purchase Contract, 80 per cent. of the net contract price set out in the
Approved Purchase Contract; or


(d)           in
the case of any other Approved Ship, such figure as the Lenders shall determine
in their absolute discretion,


save
that, in the case of paragraphs (a), (b) or (c) above, the Lenders may in their
absolute discretion increase the “Finance Level” subject to the satisfaction of
any conditions (including, without limitation, the provision of additional
security) required by the Lenders;


“Financial Indebtedness”  means, in relation to a person (the “debtor”), a liability of the debtor:


(a)           for principal, interest
or any other sum payable in respect of any moneys borrowed or raised by the
debtor;


(b)           under any loan stock,
bond, note or other security issued by the debtor;


(c)           under any acceptance credit,
guarantee or letter of credit facility made available to the debtor;


(d)           under a financial
lease, a deferred purchase consideration arrangement or any other agreement
having the commercial effect of a borrowing or raising of money by the debtor;


(e)           under any foreign
exchange transaction, any interest or currency swap or any other kind of
derivative transaction entered into by the debtor; or


(f)            under a guarantee,
indemnity or similar obligation entered into by the debtor in respect of a
liability of another person which would fall within paragraphs (a) to (e) if
the references to the debtor referred to the other person;


“Financial Year”  means, in relation to the Borrower’s Group
and each Owner, each period of 1 year commencing on 1 January in respect of
which its audited accounts are or ought to be prepared;


“Fleet Vessels”  means, together, all of the vessels
(including, but not limited to, the Ships) from time to time owned or leased by
members of the Borrower’s Group which, at the relevant time, are included
within the Total Assets of the Borrower’s Group in the balance sheet of the
Applicable Accounts or which would be included within the balance sheet if the
Applicable Accounts were required to be prepared at that time;


“Forward Currency Swap”  means any Transaction made between the
Borrower and the Swap Bank pursuant to the Master Agreement for the forward
purchase or sale of one Optional Currency either with another Optional Currency
or with Dollars;


“General Assignment”  means, in relation to each Mortgaged Ship, a
general assignment of the Earnings, the Insurances and any Requisition
Compensation of that Ship executed or to be executed by the relevant Owner in
favour of the Security Trustee in such form as the Lenders may approve or
require and, in the plural, means all of them;


“Guarantee” means each
guarantee issued or to be issued by the Issuing Bank in favour of a Beneficiary
in a form which the Issuing Bank approves;



 13
 









“Guaranteed Obligations”
means, in relation to a Guarantee, the actual and contingent, certain and
future obligations and liabilities owed by the Borrower or (as the case may be)
the relevant Owner to the Beneficiary and secured by the Guarantee;


“Insurances”  means, in relation to each Mortgaged Ship:


(a)           all policies and contracts
of insurance, including entries of that Ship in any protection and indemnity or
war risks association, which are effected in respect of that Ship, her Earnings
or otherwise in relation to her; and


(b)           all rights and other
assets relating to, or derived from, any of the foregoing, including any rights
to a return of a premium;


“Interest Coverage Ratio”  means, in relation to a Compliance Date or an
accounting period, the ratio of (a) EBITDA for the most recent financial period
of the Borrower’s Group to (b) the Net Interest Expenses for that financial
period;


“Interest Period”  means a period determined in accordance with
Clause 7;


“Interest Rate Swap Rate”  means, for any applicable period:


(a)           the rate
per annum equal to the offered quotation for deposits in Dollars for a period
equal to, or as near as possible equal to, the relevant applicable period which
appears on the appropriate page of the Reuters Monitor Money Rates Service on
the second Business Day prior to the commencement of the applicable period; or


(b)           if no
rate is quoted on the appropriate page of the Reuters Monitor Money Rates
Service, the rate per annum determined by the Swap Bank to be the Interest Rate
Swap Rate for a period equal to, or as near as possible equal to, the relevant
applicable period;


“ISM Code” means, in relation to its
application to the Approved Manager, each Owner, the Mortgaged Ship owned by
that Owner and its operation:


(a)           ‘The
International Management Code for the Safe Operation of Ships and for Pollution
Prevention’, currently known or referred to as the ‘ISM Code’, adopted by the
Assembly of the International Maritime Organisation by Resolution A.741(18) on
4 November 1993 and incorporated on 19 May 1994 into chapter IX of the
International Convention for the Safety of Life at Sea 1974 (SOLAS 1974); and


(b)           all
further resolutions, circulars, codes, guidelines, regulations and
recommendations which are now or in the future issued by or on behalf of the
International Maritime Organisation or any other entity with responsibility for
implementing the ISM Code, including without limitation, the ‘Guidelines on
implementation or administering of the International Safety Management (ISM)
Code by Administrations’ produced by the International Maritime Organisation
pursuant to Resolution A.788(19) adopted on 25 November 1995,


as the same may be
amended, supplemented or replaced from time to time;


“ISM Code Documentation” includes, in
relation to each Mortgaged Ship:


(a)           the
document of compliance (DOC) and safety management certificate (SMC) issued
pursuant to the ISM Code in relation to that Ship within the periods specified
by the ISM Code; and



 14
 









(b)           all
other documents and data which are relevant to the ISM SMS and its
implementation and verification which the Agent may require; and


(c)           any
other documents which are prepared or which are otherwise relevant to establish
and maintain that Ship’s compliance or the compliance of the Owner of that Ship
with the ISM Code which the Agent may require;


“ISM SMS” means, in
relation to each Mortgaged Ship, the safety management system for that Ship
which is required to be developed, implemented and maintained by the Owner of
that Ship under the ISM Code;


“Issuing Bank”  means The Royal Bank of Scotland plc, acting
in its capacity as issuing bank through its office at Akti Miaouli 45, 185 36
Piraeus, Greece;


“Japanese Yen” means the
lawful currency for the time being of Japan;


“ISPS Code” 
means the International Ship and Port Facility Security Code adopted by
the International Maritime Organisation Assembly as the same may be amended or
supplemented from time to time;


“ISPS Code Documentation”  includes, in relation to each Mortgaged Ship:


(a)           the International Ship
Security Certificate issued pursuant to the ISPS Code in relation to that Ship
within the period specified in the ISPS Code; and


(b)           all other documents and
data which are relevant to the ISPS Code and its implementation and
verification which the Agent may require;


“Lender”  means, subject to Clause 27.6:


(a)           a bank or financial
institution listed in Schedule 1 and acting through its branch indicated in
Schedule 1 (or through another branch notified to the Agent under Clause 27.14)
unless it has delivered a Transfer Certificate or Certificates covering the
entire amounts of its Commitment and its Contribution; and


(b)           the holder for the time
being of a Transfer Certificate;


(and includes their respective successors);


“LIBOR” means, for an
Interest Period (or any other period for which an interest rate is to be
determined under any provision of a Finance Document):


(a)           the rate per annum
equal to the offered quotation for deposits in Dollars or, as the case may be,
the relevant Optional Currency for a period equal to, or as near as possible
equal to, the relevant Interest Period (or, as the case may be, such other
period) which appears on the appropriate page of the Reuters Money News Service
at or about 11.00 a.m. (London time) on the Quotation Date for that Interest
Period (or, as the case may be, such other period) or on such other service as
may be nominated by the British Bankers’ Association as the information vendor
for the purpose of displaying British Bankers’ Association Interest Settlement
Rates for Dollars or, as the case may be, the relevant Optional Currency); or


(b)           if no rate is quoted on
the appropriate page of the Reuters Money News Service, the rate per annum
determined by the Agent to be the arithmetic mean (rounded upwards, if
necessary, to the nearest one-sixteenth of one per cent.) of the rates per
annum notified to the Agent by each Lender as the rate at which deposits in
Dollars  or, as the case may be,
the relevant Optional Currency are offered to that



 15















                Lender
by leading banks in the London Interbank Market at that Lender’s request at or
about 11.00 a.m. (London time) on the Quotation Date for that Interest Period
(or, as the case may be, such other period) for a period equal to that Interest
Period (or, as the case may be, such other period) and for delivery on the
first Business Day of it;


“Loan”  means the aggregate principal amount of the
Advances for the time being outstanding under this Agreement (excluding, for
the avoidance of doubt, the Outstandings);


“Major Casualty”  means, in relation to each Mortgaged Ship,
any casualty to that Ship in respect of which the claim or the aggregate of the
claims against all insurers, before adjustment for any relevant franchise or
deductible, exceeds $1,000,000 or the equivalent in any other currency;


“Majority Lenders”  means:


(a)           at any time when no
Advances are outstanding, Lenders whose Commitments total 66.67 per cent. of
the Total Commitments; and


(b)           at any other time,
Lenders whose Contributions (plus, in the case of the Lender which is also the
Issuing Bank, its Outstandings) total 66.67 per cent. of the aggregate of the
Loan and the Outstandings;


“Management Agreement”  means, in relation to each Mortgaged Ship, an
agreement made or to be made between (i) the Owner of that Ship and (ii) the
Approved Manager in respect of the commercial and technical management of the
Ship and, in the plural, means all of them;


“Manager’s Undertaking”  means, in relation to each Mortgaged Ship, a
letter of undertaking executed or to be executed by the Approved Manager in
favour of the Security Trustee in such form as the Lenders may approve or
require agreeing certain matters in relation to the management of that Ship and
subordinating the rights of the Approved Manager against the Ship and the Owner
thereof to the rights of the Creditor Parties under the Finance Documents and,
in the plural, means all of them;


“Mandatory Cost”  means the percentage rate per annum
calculated by the Agent in accordance with Schedule 7;


“Market Value”  means, in relation to each Mortgaged Ship and
each Fleet Vessel, the market value thereof calculated in accordance with
Clause 16.4 or, as the case may be, Clause 16.5;


“Market Value Adjusted Net Worth”  means, at any time, the amount by which the
Market Value Adjusted Total Assets exceed the Total Liabilities;


“Market Value Adjusted Total Assets”  means, at any time, the Total Assets adjusted
to reflect the Market Value of all Fleet Vessels (by substituting the value of
each Fleet Vessel as specified in the Applicable Accounts with the Market Value
of that Fleet Vessel as at the relevant Compliance Date);


“Margin” means, 0.75 per
cent. per annum;



 16
 









“Master Agreement” means a
master agreement (on the 1992 or, as the case may be, 2002 ISDA (Multicurrency
- Crossborder) form) made between the Borrower and the Swap Bank and includes
all Designated Transactions from time to time entered into and Confirmations
from time to time exchanged under the master agreement;


“Master Agreement Assignment”
means the assignment of the Master Agreement in such form as the Lenders may
approve or require;


“Moratorium Period”  means the period commencing on the Drawdown
Date for the first Advance under Tranche A and ending 5 years thereafter;


“Mortgage” means, in
relation to each Mortgaged Ship, a first priority or preferred mortgage on that
Ship executed or to be executed by the relevant Owner in favour of the Security
Trustee or, as the case may be, the Lenders, in each case to be in such form as
the Lenders may approve or require and, in the plural, means all of them;


“Mortgaged Ship”  means a Ship which is subject to a Mortgage
at any relevant time and, in the plural, means all of them;


“Negotiation Period” has
the meaning given in Clause 6.10;


“Net Income” means, in
relation to each Financial Year of the Borrower, the aggregate income of the
Borrower’s Group appearing in the Applicable Accounts for that Financial Year
less the aggregate of:


(a)           the amounts incurred by
the Borrower’s Group during that Financial Year as expenses of its business;


(b)           depreciation,
amortisation and all interest in respect of all Financial Indebtedness of the
Borrower’s Group paid by all members of the Borrower’s Group during that
Financial Year;


(c)           Net Interest Expenses;


(d)           taxes; and


(e)           other items charged to
the Borrower’s consolidated profit and loss account for the relevant Financial
Year;


“Net Interest
Expenses”  means, as of any
Compliance Date, the aggregate of all interest, commitment and other fees,
commissions, discounts and other costs, charges or expenses accruing due from
all the members the Borrower’s Group during that accounting period less
interest income received, determined on a consolidated basis in accordance with
USGAAP and as shown in the consolidated statements of income for the Borrower’s
Group in the Applicable Accounts;


“New Bulk Vessel Type A”, “New Bulk Vessel Type B”, “New Bulk Vessel Type C”, “New Bulk Vessel Type D”, “New Container Vessel Type A”, “New Container Vessel Type B”, “New Container Vessel Type C” and “New Container Vessel Type D”  have the meanings given to them in the
definition of “Finance Level”;


“Nomination Date”  means the date determined in accordance with
Clause 4.8;


“Optional Currency” means
any one of Euro, Japanese Yen, Sterling or Swiss Francs or any other major
currency which may be approved by all the Lenders (in their sole and 



 17
 









absolute discretion) Provided that
such currency is for the time being freely transferable, freely convertible
into Dollars and dealt in on the London Interbank Market or, as the case may
be, the European Interbank Market;


“Outstanding Guarantee Amount”
means, in relation to a Guarantee, the maximum amount for which the Guarantee
was issued less the aggregate amount of all reductions to it which have been
made in accordance with the provisions of Clause 30.1;


“Outstandings” means, at
any time, the aggregate of each Outstanding Guarantee Amount at that time;


“Owner” means, in relation
to:


(a)           each Existing Ship, the
Existing Owner thereof; and


(b)           any other Mortgaged Ship,
the Approved Guarantor which (i) is the registered owner of such Mortgaged Ship
or (ii) acquired, or committed to acquire, such Mortgaged Ship pursuant to the
Approved Purchase Contract relative thereto,


and, in the plural, means all of them;


“Owner Guarantee”  means, in relation to each Owner, a guarantee
by that Owner of the Borrower’s liabilities under this Agreement and the other
Finance Documents executed or to be executed by the relevant Owner in favour of
the Security Trustee in such form as the Lenders may approve or require and, in
the plural, means all of them;


“Owner’s Earnings Account”  means, in relation to each Mortgaged Ship, an
amount in the name of the Owner of such Ship with the Agent in Piraeus
designated “[name of Ship] - Earnings Account” or any other account (with that
or another office of the Agent) which is designated by the Agent as the Owner’s
Earnings Account in relation to that Ship for the purposes of this Agreement
and, in the plural, means all of them;


“Participating Member State”  means each state so described in any EMU
Legislation;


“Payment Currency” has the
meaning given in Clause 22.5;


“Pertinent Jurisdiction”,
in relation to a company, means:


(a)           England and Wales;


(b)           the country under the
laws of which the company is incorporated or formed;


(c)           a country in which the
company’s central management and control is or has recently been exercised;


(d)           a country in which the
overall net income of the company is subject to corporation tax, income tax or
any similar tax;


(e)           a country in which
assets of the company (other than securities issued by, or loans to, related
companies) having a substantial value are situated, in which the company
maintains a permanent place of business, or in which a Security Interest
created by the company must or should be registered in order to ensure its
validity or priority; and


(f)            a country the courts
of which have jurisdiction to make a winding up, administration or similar
order in relation to the company or which would have such jurisdiction if their
assistance were requested by the courts of a country referred to in paragraphs
(b) or (c) above;



 18
 









“Potential Event of Default”  means an event or circumstance which, with
the giving of any notice, the lapse of time, a determination of the Majority
Lenders (in the case of any provision of this Agreement or any of the other
Finance Documents which is made subject to the determination of the Majority
Lenders) and/or the satisfaction of any other condition, would constitute an
Event of Default;


“Pre-Delivery Advance”  means an Advance under Tranche B which will
be used for the purpose of part-(re)financing the payment of a pre-delivery
instalment (other than the delivery instalment) for an Approved Ship under a
shipbuilding contract which is an Approved Purchase Contract;


“Pre-Delivery Security Assignment”  means, in relation to an Approved Ship, a
first priority assignment in favour of the Security Trustee of the Approved
Purchase Contract for that Approved Ship (save in the case of an Approved
Purchase Contract which is already the subject of an existing Pre-Delivery
Security Assignment) and the Refund Guarantee in respect of the instalment
which is to be financed by the Pre-Delivery Advance in such form as the Lenders
may approve or require;


“Quotation Date” means, in
relation to any Interest Period (or any other period for which an interest rate
is to be determined under any provision of a Finance Document):


(a)           in the case of deposits
in Dollars or an Optional Currency (other than Euros), the day on which
quotations would ordinarily be given by leading banks in the London Interbank
Market for deposits in the relevant currency to which such rate is to be
determined for delivery on the first day of that Interest Period or other
period; and


(b)           in the case of deposits
in Euros, the Target Day on which quotations would ordinarily be given by
leading banks in the European Interbank Market for deposits in Euros for
delivery on the first day of that Interest Period or other period;


“Receiving Bank”  means American Express Bank Limited, 3 World
Financial Centre, 23rd Floor, New York, NY 10285-2300, USA or such other bank
as may from time to time be notified by the Agent to the Borrower;


“Reduction Date”  means a date on which a reduction is required
to be made under Clause 9.1;


“Reference Rate” means:


(a)           in relation to an
Advance denominated in Dollars or in an Optional Currency (other than Euros),
LIBOR; and


(b)           in relation to an
Advance denominated in Euros, EURIBOR;


“Refund Guarantee”  means, in relation to an instalment of the
purchase price of an Approved Ship due to the Approved Seller under an Approved
Purchase Contract, an irrevocable guarantee issued or to be issued by the
Refund Guarantor in favour of the relevant Approved Guarantor under the Approved
Purchase Contract in respect of the refund of that instalment in such form as
the Lenders shall agree;


“Refund Guarantor”  means, in relation to a Refund Guarantee, the
issuer of that Refund Guarantee;


“Relevant Person” has the
meaning given in Clause 20.9;



 19
 









“Requisition Compensation”  includes all compensation or other moneys
payable by reason of any act or event such as is referred to in paragraph (b)
of the definition of “Total Loss”;


“Safmarine”  means Safmarine Container Lines NV of De
Gerlachekaai 20, 2000 Antwerp, Belgium;


“Secured Liabilities”  means all liabilities which the Borrower, the
Owners, the other Security Parties or any of them have, at the date of this
Agreement or at any later time or times, under or by virtue of the Finance
Documents or any judgement relating to the Finance Documents; and for this
purpose, there shall be disregarded any total or partial discharge of these
liabilities, or variation of their terms, which is effected by, or in
connection with, any bankruptcy, liquidation, arrangement or other procedure
under the insolvency laws of any country;


“Security Interest”  means:


(a)           a mortgage, charge
(whether fixed or floating) or pledge, any maritime or other lien or any other
security interest of any kind;


(b)           the rights of the plaintiff
under an action in rem in which
the vessel concerned has been arrested or a writ has been issued or similar
step taken; and


(c)           any arrangement entered
into by a person (A) the effect of which is to place another person (B) in a
position which is similar, in economic terms, to the position in which B would
have been had he held a security interest over an asset of A;


but this definition does not apply to a right of set off or combination
of accounts conferred by the standard terms of business of a bank or financial
institution;


“Security Party”  means each of the Owners and any other person
(except a Creditor Party) who, as a surety or mortgagor, as a party to any
subordination or priorities arrangement, or in any similar capacity, executes a
document falling within the last paragraph of the definition of “Finance
Documents”;


“Security Period”  means the period commencing on the date of
this Agreement and ending on the date on which the Agent notifies the Borrower,
the Security Parties, the Lenders and the other Creditor Parties (which notice
the Agent shall give when the conditions set out below are satisfied) that:


(a)           all amounts which have
become due for payment by the Borrower or any Security Party under the Finance
Documents have been paid;


(b)           no amount is owing or
has accrued (without yet having become due for payment) under any Finance
Document;


(c)           neither the Borrower
nor any Security Party has any future or contingent liability under Clause 21,
22 or 23 or any other provision of this Agreement or another Finance Document;


(d)           the Agent, the Security
Trustee and the Majority Lenders do not consider that there is a significant
risk that any payment or transaction under a Finance Document would be set
aside, or would have to be reversed or adjusted, in any present or possible
future bankruptcy of the Borrower or a Security Party or in any present or
possible future proceeding relating to a Finance Document or any asset covered
(or previously covered) by a Security Interest created by a Finance Document;
and



 20
 









(e)           each Guarantee has been
returned to the Issuing Bank by the relevant Beneficiary endorsed to the effect
that it is cancelled;


“Security Trustee”  means The Royal Bank of Scotland plc, in its
capacity as security trustee for the Lenders, the Swap Bank and the Issuing
Bank under the Finance Documents through its office at Akti Miaouli 45, 185 36
Piraeus, Greece, or any successor of it in such capacity appointed under clause
5 of the Agency and Trust Agreement;


“Settlement Amount” means, in relation to a
Guarantee, the amount payable by the Issuing Bank to the Beneficiary in respect
of the Guarantee;


“Settlement Date” means, in relation to a
Guarantee, the date on which payment of the Settlement Amount is due to the
Beneficiary in respect of the Guarantee;


“Ships” 
means, together, the Existing Ships and the Approved Ships and, in the
singular, means any of them;


“Spot Rate of Exchange”  means, in relation to an Optional Currency
and in respect of any Interest Period, the Agent’s spot rate of exchange for
the purchase in the London Interbank Market or, as the case may be, the
European Interbank Market, of that Optional Currency with Dollars at or about
11.00 a.m. (London Time) on the Quotation Date for the relevant Interest
Period;


“Sterling”  means
the lawful currency for the time being of the United Kingdom;


“Swap Bank”  means The Royal Bank of Scotland plc, acting
in its capacity as swap bank through its office at Akti Miaouli 45, 185 36
Piraeus, Greece;


“Swap Exposure” means, as
at any relevant date, the amount certified by the Swap Bank to the Agent to be
the aggregate net amount in Dollars which would be payable by the Borrower to
the Swap Bank under (and calculated in accordance with) section 6(e) (Payments
on Early Termination) of the Master Agreement if an Early Termination Date had
occurred on the relevant date in relation to all continuing Designated
Transactions entered into between the Borrower and the Swap Bank;


“Swiss Francs” means the
lawful currency for the time being of the Swiss Federation;


“Target Day” means a day
on which the Trans-European Automated Real-time Gross settlement Express
Transfer system is open, which is, at the date of this Agreement, any day
(other than a Saturday or Sunday) other than Christmas Day and New Year’s Day;


“Third Stage”  means the third stage of European economic
and monetary union pursuant to the Treaty on European Union;


“Total Assets”
means, as of any Compliance Date, the aggregate value of all assets of the
Borrower’s Group included in the Applicable Accounts as “current assets” and
the value of all investments (valued in accordance with USGAAP) and all other
tangible and intangible assets of the Borrower’s Group properly included in the
Applicable Accounts as “fixed assets” in accordance with USGAAP;


“Total Liabilities” means,
as of any Compliance Date, Total Assets less Book Net Worth;


“Total Loss”  means, in relation to each Mortgaged Ship:


(a)           actual, constructive,
compromised, agreed or arranged total loss of that Ship;



 21
 









(b)           any expropriation, confiscation,
requisition or acquisition of that Ship, whether for full consideration, a
consideration less than her proper value, a nominal consideration or without
any consideration, which is effected by any government or official authority or
by any person or persons claiming to be or to represent a government or
official authority, excluding a requisition for hire for a fixed period not
exceeding one year without any right to an extension;


(c)           any condemnation of
that Ship by any tribunal or by any person or person claiming to be a tribunal;
and any arrest, capture, seizure or detention of that Ship (including any
hijacking or theft) unless she is within 30 days redelivered to the full
control of the Owner of that Ship;


“Total Loss Date”  means, in relation to each Mortgaged Ship:


(a)           in the case of an
actual loss of that Ship, the date on which it occurred or, if that is unknown,
the date when that Ship was last heard of;


(b)           in the case of a
constructive, compromised, agreed or arranged total loss of that Ship, the
earliest of:


(i)            the date on which a
notice of abandonment is given to the insurers; and


(ii)           the date of any
compromise, arrangement or agreement made by or on behalf of the Owner of that
Ship with that Ship’s insurers in which the insurers agree to treat that Ship
as a total loss; and


(c)           in the case of any
other type of total loss, on the date (or the most likely date) on which it
appears to the Agent that the event constituting the total loss occurred;


“Tranches”  means Tranche A and Tranche B and, in the
singular, means either of them;


“Tranche A”  means, together, the Tranche A Additional
Advances, Tranche A Advance 1, Tranche A Advance 2, Tranche A Advance 3 and
Tranche A Advance 4;


“Tranche A Additional Advances”  means the aggregate principal amount of up to
$62,000,000 which may be drawn by the Borrower in accordance with Clause 4.2
consisting of each Advance under Tranche A in respect of a Tranche A Additional
Advance Ship or, as the context requires, the principal amount thereof for the
time being advanced and outstanding under this Agreement;


“Tranche A Additional Advance Ship”  means any Approved Ship which is financed by
a Tranche A Additional Advance and in the plural means all of them;


“Tranche A Advance 1”  means the aggregate principal amount of up to
$38,000,000 which may be drawn by the Borrower in accordance with Clause 4.2
consisting of each Advance under Tranche A in respect of the Tranche A Advance
1 Ship or, as the context requires, the principal amount thereof for the time
being advanced and outstanding under this Agreement;


“Tranche A Advance 1 Balloon”  means the balloon amount calculated in
accordance with Clauses 9.1(a) and 9.2;


“Tranche A Advance 2”  means the aggregate principal amount of up to
$22,000,000 which may be drawn by the Borrower in accordance with Clause 4.2
consisting of each Advance under Tranche A in respect of the Tranche A Advance
2 Ships or, as the context 



 22
 









requires, the principal amount thereof for the time being advanced and
outstanding under this Agreement;


“Tranche A Advance 2 Balloon”  means the balloon amount calculated in
accordance with Clauses 9.1(b) and 9.2;


“Tranche A Advance 3”  means the aggregate principal amount of up to
$46,000,000 which may be drawn by the Borrower in accordance with Clause 4.2
consisting of each Advance under Tranche A in respect of the Tranche A Advance
3 Ships or, as the context requires, the principal amount thereof for the time
being advanced and outstanding under this Agreement;


“Tranche A Advance 3 Balloon”  means the balloon amount calculated in
accordance with Clauses 9.1(c) and 9.2;


“Tranche A Advance 4”  means the aggregate principal amount of up to
$32,000,000 which may be drawn by the Borrower in accordance with Clause 4.2
consisting of each Advance under Tranche A in respect of the Tranche A Advance
4 Ships or, as the context requires, the principal amount thereof for the time
being advanced and outstanding under this Agreement;


“Tranche A Advance 4 Balloon”  means the balloon amount calculated in
accordance with Clauses 9.1(d) and 9.2;


“Tranche A Balloons”  means the Tranche A Advance 1 Balloon, the
Tranche A Advance 2 Balloon, the Tranche A Advance 3 Balloon and the Tranche A
Advance 4 Balloon and, in the singular, means any of them;


“Tranche A Limit”  means an amount not exceeding (initially)
$200,000,000 in aggregate which may be reduced by any cancellations or
reductions made pursuant to this Agreement;


“Tranche B” 
means the aggregate principal amount of up to $500,000,000 which may be
drawn by the Borrower in accordance with Clause 4.2 consisting of each Advance
under Tranche B in respect of an Approved Ship or, as the context requires, the
aggregate principal amount thereof for the time being advanced and outstanding
under this Agreement;


“Tranche B Limit”  means an amount not exceeding (initially)
$500,000,000 in aggregate which may be reduced by any cancellations or
reductions made pursuant to this Agreement;


“Transaction”  has the meaning given in the
Master Agreement;


“Transfer Certificate”  has the meaning given in Clause 27.2;


“Treaty on European Union”  means the Treaty of Rome of 25 March 1957, as
amended by the Single European Act 1986 and the Maastricht Treaty of 7 February
1992;


“Trust Property” has the
meaning given in clause 3.1 of the Agency and Trust Agreement; and


“USGAAP” means generally
accepted accounting principles as from time to time in effect in the United
States of America.



 23
 









1.2          Construction
of certain terms.  In this
Agreement:


“administration notice”
means a notice appointing an administrator, a notice of intended appointment
and any other notice which is required by law (generally or in the case
concerned) to be filed with the court or given to a person prior to, or in
connection with, the appointment of an administrator;


“approved”  means, for the purposes of Clause 14,
approved in writing by the Agent, with the authorisation of the Majority
Lenders;


“asset” includes every
kind of property, asset, interest or right, including any present, future or
contingent right to any revenues or other payment;


“company” includes any
partnership, joint venture and unincorporated association;


“consent” includes an
authorisation, consent, approval, resolution, licence, exemption, filing,
registration, notarisation and legalisation;


“contingent liability”
means a liability which is not certain to arise and/or the amount of which
remains unascertained;


“document” includes a
deed; also a letter or fax;


“excess risks”  means, in relation to each Mortgaged Ship,
(i) the proportion of claims for general average, salvage and salvage charges
which are not recoverable as a result of the value at which that Ship is
assessed for the purpose of such claims exceeding her hull and machinery
insured value and (ii) collision liabilities not recoverable in full under the
applicable hull and machinery insurance by reason of such liabilities exceeding
such proportion of the insured value of that Ship as is covered thereunder;


“expense” means any kind
of cost, charge or expense (including all legal costs, charges and expenses)
and any applicable value added or other tax;


“financial institution”  includes, without limitation, any trust, fund
or other entity whatsoever which has been established for, or is engaged in,
making, purchasing or investing in loans, securities or any other assets;


“law” includes any form of
delegated legislation, any order or decree, any treaty or international
convention and any regulation or resolution of the Council of the European
Union,  the European Commission, the
United Nations or its Security Council;


“legal or administrative
action” means any legal proceeding or arbitration and any administrative or
regulatory action or investigation;


“liability” includes every
kind of debt or liability (present or future, certain or contingent), whether
incurred as principal or surety or otherwise;


“months”  shall be construed in accordance with Clause
1.3;


“obligatory insurances”  means, in relation to each Mortgaged Ship,
all insurances effected, or which the Owner of that Ship is obliged to effect,
under Clause 14 or any other provision of this Agreement or another Finance
Document;


“parent company”  has the meaning given in Clause 1.4;


“person”  includes any company; any state, political
sub-division of a state and local or municipal authority; and any international
organisation;



 24
 









“policy”, in relation to
any insurance, includes a slip, cover note, certificate of entry or other
document evidencing the contract of insurance or its terms;


“protection and indemnity risks”
means the usual risks covered by a protection and indemnity association managed
in London, including, but not limited to, pollution, freight, demurrage and
detention risks and the proportion (if any) of any sums payable to any other
person or persons in case of collision which are not recoverable under the hull
and machinery policies by reason of the incorporation in them of Clause 6 of
the International Hull Clauses (1/11/02 or 1/11/03), clause 8 of the Institute
Time Clauses (Hulls) (1/11/95) or clause 8 of the Institute Time Clauses (Hulls)
(1/10/83) or the Institute Amended Running Down Clause (1/10/71) or the
Conditions and Plan of the Swedish Club or any equivalent provision;


“regulation” includes any
regulation, rule, official directive, request or guideline whether or not
having the force of law of any governmental, intergovernmental or supranational
body, agency, department or regulatory, self-regulatory or other authority or
organisation;


“subsidiary”  has the meaning given in Clause 1.4;


“successor” includes any
person who is entitled (by assignment, novation, merger or otherwise) to any
other person’s rights under this Agreement or any other Finance Document (or
any interest in those rights) or who, as administrator, liquidator or
otherwise, is entitled to exercise those rights; and in particular references
to a successor include a person to whom those rights (or any interest in those
rights) are transferred or pass as a result of a merger, division,
reconstruction or other reorganisation of it or any other person;


“tax”  includes any present or future tax, duty,
impost, levy or charge of any kind which is imposed by any state, any political
sub-division of a state or any local or municipal authority (including any such
imposed in connection with exchange controls), and any connected penalty,
interest or fine; and


“war risks” includes the
risk of mines, blocking and trapping, missing vessel, political risks,
deprivation, confiscation and all risks excluded by clause 29 of the
International Hull Clauses (1/11/02 or 1/11/03), clause 24 of the Institute
Time Clauses (Hulls)(1/11/95) or clause 33 of the Institute Time Clauses
(Hulls) (1/10/83) or in the Conditions and Plan of the Swedish Club.


1.3          Meaning of “month”.  A period of one or more “months” ends on the
day in the relevant calendar month numerically corresponding to the day of the
calendar month on which the period started (“the numerically corresponding day”),
but:


(a)           on the Business Day
following the numerically corresponding day if the numerically corresponding
day is not a Business Day or, if there is no later Business Day in the same
calendar month, on the Business Day preceding the numerically corresponding
day; or


(b)           on the last Business
Day in the relevant calendar month, if the period started on the last Business
Day in a calendar month or if the last calendar month of the period has no
numerically corresponding day;


and “month” and “monthly”
shall be construed accordingly.


1.4          Meaning of “subsidiary”.  A company (S) is a subsidiary of another
company (P) if:


(a)           a majority of the
issued shares in S (or a majority of the issued shares in S which carry
unlimited rights to capital and income distributions) are directly owned by P
or are indirectly attributable to P; or



 25
 









(b)           P has direct or
indirect control over a majority of the voting rights attaching to the issued
shares of S; or


(c)           P has the direct or
indirect power to appoint or remove a majority of the directors of S; or


(d)           P otherwise has the
direct or indirect power to ensure that the affairs of S are conducted in accordance
with the wishes of P;


and any company of
which S is a subsidiary is a parent company of S.


1.5          General
Interpretation.


(a)           In this Agreement:


(i)            references to, or to a
provision of, a Finance Document or any other document are references to it as
amended or supplemented, whether before the date of this Agreement or
otherwise;


(ii)           references to, or to a
provision of, any law include any amendment, extension, re-enactment or
replacement, whether made before the date of this Agreement or otherwise;


(iii)          words denoting the
singular number shall include the plural and vice versa; and


(iv)          where a determination or
opinion is stated to be “conclusive” it shall be binding on the relevant party
save for manifest error;


(b)           Clauses 1.1 to 1.4 and
paragraph (a) of this Clause 1.5 apply unless the contrary intention appears.


(c)           The clause headings
shall not affect the interpretation of this Agreement.


2              FACILITIES


2.1          Amount of
facilities.  Subject to the
other provisions of this Agreement (including, without limitation, Clause 4.2),
the Lenders shall make available to the Borrower a revolving credit facility
not exceeding $700,000,000 in aggregate at any time.


2.2          Lenders’
participations in Advances. 
Subject to the other provisions of this Agreement, each Lender shall
participate in each Advance in the proportion which, as at the relevant
Drawdown Date, its Commitment bears to the Total Commitments.


3              POSITION
OF THE LENDERS, THE SWAP BANK AND THE MAJORITY LENDERS


3.1          Interests of
Lenders, Swap Bank and Issuing Bank several.  The rights of the Lenders, the Swap Bank and
the Issuing Bank under this Agreement and the Master Agreement are several;
accordingly:


(a)           each Lender and the
Issuing Bank shall be entitled to sue for any amount which has become due and payable
by the Borrower to it under this Agreement; and


(b)           the Swap Bank shall be
entitled to sue for any amount which has become due and payable by the Borrower
to it under the Master Agreement,


without joining the Agent, the Security
Trustee, any other Lender, the Swap Bank or the Issuing Bank as additional
parties in the proceedings.



 26
 









3.2          Proceedings
by individual Lender, Swap Bank or Issuing Bank.  However, without the prior consent of the
Majority Lenders, no Lender nor the Swap Bank nor the Issuing Bank may bring
proceedings in respect of:


(a)           any other liability or
obligation of the Borrower or a Security Party under or connected with a
Finance Document or the Master Agreement; or


(b)           any misrepresentation
or breach of warranty by the Borrower or a Security Party in or connected with
a Finance Document or the Master Agreement.


3.3          Obligations
several.  The obligations of
the Lenders, the Swap Bank and the Issuing Bank under this Agreement and of the
Swap Bank under the Master Agreement are several; and a failure of a Lender,
the Swap Bank or the Issuing Bank to perform its obligations under this
Agreement or of the Swap Bank to perform its obligations under the Master
Agreement shall not result in:


(a)           the obligations of the
other Lenders or (as the case may be) the Swap Bank or (as the case may be) the
Issuing Bank being increased; nor


(b)           the Borrower, any
Security Party or any other Creditor Party being discharged (in whole or in
part) from its obligations under any Finance Document,


and in no circumstances shall a Lender, the Swap Bank
or the Issuing Bank have any responsibility for a failure of another Lender,
the Swap Bank or the Issuing Bank to perform its obligations under this
Agreement or the Master Agreement.


3.4          Parties
bound by certain actions of Majority Lenders.  Every Lender, the Swap Bank, the Issuing
Bank, the Borrower and each Security Party shall be bound by:


(a)           any determination made, or action taken, by
the Majority Lenders under any provision of a Finance Document;


(b)           any instruction or authorisation given by
the Majority Lenders to the Agent or the Security Trustee under or in
connection with any Finance Document (subject always to Clause 28.2);


(c)           any action taken (or in good faith
purportedly taken) by the Agent or the Security Trustee in accordance with such
an instruction or authorisation.


3.5          Reliance on
action of Agent.  However, the
Borrower and each Security Party:


(a)           shall be entitled to assume that the
Majority Lenders have duly given any instruction or authorisation which, under
any provision of a Finance Document, is required in relation to any action
which the Agent has taken or is about to take; and


(b)           shall not be entitled to require any
evidence that such an instruction or authorisation has been given.


3.6          Construction.  In Clauses 3.4 and 3.5 references to action
taken include (without limitation) the granting of any waiver or consent, an
approval of any document and an agreement to any matter.



 27
 









4              DRAWDOWN


4.1          Request for
Advance.  Subject to the
following conditions, the Borrower may request an Advance to be made under
either Tranche A or Tranche B by ensuring that the Agent receives a completed
Drawdown Notice not later than 11.00 a.m. (Greek time) 3 Business Days prior to
the intended Drawdown Date.


4.2          Availability.  The conditions referred to in Clause 4.1 are
that:


(a)           the Advance shall relate to one of the
following:


(i)            the Tranche A Additional Advance Ships;


(ii)           the Tranche A Advance 1 Ship;


(iii)          the Tranche A Advance 2 Ships;


(iv)          the Tranche A Advance 3 Ships;


(v)           the Tranche A Advance 4 Ships; or


(vi)          an Approved Ship;


(b)           the first drawdown of an Advance relating to
any of the Tranche A Additional Advance Ships, the Tranche A Advance 1 Ship,
the Tranche A Advance 2 Ships, the Tranche A Advance 3 Ships, the Tranche A
Advance 4 Ships shall be:


(i)            made not later than 28 February 2007 (or
such later date as Lenders may agree with the Borrower);


(ii)           applied first in refinancing the Existing
Indebtedness and then, once the Existing Indebtedness has been permanently
reduced to zero, applied in refinancing the equity of the Approved Guarantors
owning the Existing Ships;


(c)           the first drawdown of an Advance relating to
an Approved Ship shall be:


(i)            made on or after the first drawdown of an
Advance under Tranche A; and


(ii)           applied to assist an Approved Guarantor in
(re)financing the acquisition cost of that Approved Ship;


(d)           in the case of a second or subsequent
drawdown of an Advance relating to any of the Tranche A Additional Advance
Ships, the Tranche A Advance 1 Ship, the Tranche A Advance 2 Ships, the Tranche
A Advance 3 Ships, the Tranche A Advance 4 Ships or an Approved Ship, the
Drawdown Date of the Advance shall be a Business Day during the Availability
Period for that Advance;


(e)           the amount of the Advance shall not exceed:


(i)            in the case of an Advance under Tranche A
Advance 1 when aggregated with the Advance(s) under Tranche A Advance 1 already
drawn down and outstanding, the maximum aggregate amount determined in
accordance with Clause 9.1(a);


(ii)           in the case of an Advance under Tranche A
Advance 2 when aggregated with the Advance(s) under Tranche A Advance 2 already
drawn down and outstanding, the maximum aggregate amount determined in
accordance with Clause 9.1(b);



 28
 









(iii)          in the case of an Advance under Tranche A
Advance 3 when aggregated with the Advance(s) under Tranche A Advance 3 already
drawn down and outstanding, the maximum aggregate amount determined in
accordance with Clause 9.1(c);


(iv)          in the case of an Advance under Tranche A
Advance 4 when aggregated with the Advance(s) under Tranche A Advance 4 already
drawn down and outstanding, the maximum aggregate amount determined in
accordance with Clause 9.1(d);


(v)           in the case of a Tranche A Additional
Advance the lesser of (A) an amount, when aggregated with the Tranche A
Additional Advance(s) already drawn down and outstanding, equal to the maximum
aggregate amount determined in accordance with Clause 9.1(e) and (ii) an amount
which does not exceed 80 per cent. of the Market Value of the Approved Ship to
be financed by that Tranche A Additional Advance (with such Market Value being
determined in accordance with the valuations referred to in paragraph 13 of
Schedule 3, Part B);


(vi)          (save in the case of a Pre-Delivery Advance
to which Clause 4.2(e)(vii) applies instead) in the case of an Advance under
Tranche B in respect of an Approved Ship when aggregated with the Advance(s)
under Tranche B already drawn down and outstanding in respect of that Approved
Ship and the Outstanding Guarantee Amount of each Guarantee relating to that
Approved Ship, the maximum aggregate amount determined in accordance with
Clause 9.1(e); or


(vii)         in the case of a Pre-Delivery Advance under
Tranche B in respect of an Approved Ship:


(A)          when aggregated with the Advance(s) under
Tranche B already drawn down and outstanding in respect of that Approved Ship
and the Outstanding Guarantee Amount of each Guarantee relating to that
Approved Ship, the Finance Level; and


(B)           80 per cent. of the net amount of the pre-delivery
instalment which is the subject of such Pre-Delivery Advance;


(f)            when such Advance is aggregated with all
other then outstanding Advances under that Tranche, the aggregate amount of
such Advances does not exceed the Tranche A Limit or (as the case may be) the
Tranche B Limited;


(g)           in the case of a Pre-Delivery Advance when
aggregated with the Pre-Delivery Advance(s) already drawn down, the aggregate
amount of such Advances does not exceed $200,000,000 (or such higher amount as
may be agreed from time to time between the Lenders and the Agent (acting in
their sole and absolute discretion));


(h)           in the case of an Advance which is to be
drawndown on the Delivery Date of an Approved Ship to refinance part or all of
the Pre-Delivery Advance(s) in relation to that Approved Ship, the Borrower has
given the Agent at least 3 months’ notice of the Borrower’s intention to borrow
such Advance and the amount of such Advance;


(i)            each Advance shall be drawn down in an
amount of at least $1,000,000 or a higher integral multiple of $1,000,000;


(j)            if any part of the Total Commitments
relating to Tranche A or Tranche B have not been borrowed before the end of the
Availability Period applicable thereto, the Total Commitments shall on that
date be permanently cancelled by an amount equal to such undrawn amount;


(k)           the amount of, and Interest Period
applicable to, each Advance (including the requested Advance) is compatible
with the anticipated reductions pursuant to Clause 9.1; and



 29
 









(l)            if the Borrower has elected that an Advance
under Tranche B should take the form of a Guarantee to be issued by the Issuing
Bank and the Issuing Bank has (at its absolute discretion) agreed to such
election:


(i)            the Agent must receive, together with the
Drawdown Notice, a final draft of the form of Guarantee which the Borrower is
requesting to be issued on the intended Drawdown Date and which the Borrower
intends to use in the normal course of its business; and


(ii)           the form of the Guarantee has to be approved
by the Issuing Bank at least 2 Business Days prior to the intended Drawdown
Date but it must in any event contain express provisions:


(A)          limiting the Outstanding Guarantee Amount of
the Guarantee to an amount which, in the reasonable opinion of the Issuing
Bank, from time to time will not result in a breach of the maximum limits set
out in Clause 9.1;


(B)           limiting the total amount payable by the
Issuing Bank under that Guarantee to a stated maximum amount in Dollars; and


(C)           stating that that Guarantee shall expire or
be reduced to zero not later than the final Reduction Date,


save that, in
the case of a form of Guarantee which does not comply with paragraphs (A) or
(C), the Issuing Bank may in its absolute discretion approve such Guarantee
subject to any conditions it may require including, in any case, full cash
security for the additional exposure of the Issuing Bank.


4.3          Purpose of
Advances.  The Borrower
undertakes with each Creditor Party to use each Advance only for the purposes
stated in the Recitals to this Agreement.


4.4          Notification
to Lenders of receipt of Drawdown Notice.  The Agent shall promptly notify the Lenders
(and, if applicable, the Issuing Bank) it has received a Drawdown Notice and
the Agent shall inform each Lender (and, if applicable, the Issuing Bank) of:


(a)           the amount of the Advance and the Drawdown
Date;


(b)           the amount of that Lender’s participation in
the Advance; and


(c)           the duration of the first Interest Period
relative to such Advance.


4.5          Drawdown
Notice irrevocable.  A
Drawdown Notice must be signed by a duly authorised person on behalf of the
Borrower; and once served, a Drawdown Notice cannot be revoked without the
prior consent of the Agent, acting with the authorisation of the Majority
Lenders (which authorisation shall not be unreasonably withheld).


4.6          Lenders to
make available Contributions/Issuing Bank to make available Guarantee.


(a)           If the Borrower has elected for an Advance
to be made available in the form of a Guarantee, Clauses 4.6(b), 4.7, 6, 7 and
9 shall not apply in relation to such Advance.


(b)           Subject to the provisions of this Agreement,
each Lender shall, on and with value on each Drawdown Date, make available to
the Agent for the account of the Borrower the amount due from that Lender on
that Drawdown Date under Clause 2.2.



 30















4.7          Disbursement
of Advances.  Subject to the
provisions of this Agreement the Agent shall, on and with value on each
Drawdown Date, pay to the Borrower the amounts which the Agent receives from
the Lenders under Clause 4.6(b); and that payment to the Borrower shall be
made:


(a)           in the case of an
Advance under Tranche A which shall be used to refinance the Existing
Indebtedness, to such account of the Existing Owners (or any of them) as may be
specified by the Agent to the Borrower, with such Advance being applied to
fully prepay the Existing Indebtedness;


(b)           in the case of each
other Advance or any amount referred to in sub-clause (a) above in excess of
that required to fully prepay the Existing Indebtedness, to the Earnings
Account nominated by the Borrower in the relevant Drawdown Notice and, if
applicable, subject to such conditions or restrictions as the Agent may
reasonably impose; and


(c)           in each case, in the
like funds as the Agent received the payments from the Lenders.


4.8          Approval of
Ships.


(a)           Each Ship nominated by
the Borrower to be an Approved Ship for the purposes of this Agreement shall be
nominated by the Borrower no later than the date falling 364 days after the
date of this Agreement (as may be extended pursuant to Clause 4.8(b), the “Nomination Date”) and approved by all the Lenders as such Provided that if a Lender fails to respond to the Agent
within 10 Business Days of the Agent’s notice to the Lenders seeking their
approval of a Ship as an Approved Ship, that Lender shall be deemed to have
given its approval.


(b)           The Lenders shall be
entitled from time to time to review and consider the extension of the
Nomination Date in relation to all or any part of Tranche B.  If all the Lenders, acting in their sole and
absolute discretion, agree to extend the Nomination Date in accordance with
this Clause 4.8 the Agent shall send to the Borrower a notice in writing
advising it of the new Nomination Date and the available amount of Tranche B
during the period in which the Nomination Date has been extended Provided that the Lenders shall, in their sole and absolute
discretion, determine how much of the Tranche B Limit may be made available to
the Borrower during any such extended period and the length of any such
extended period and if the Lenders agree to make available less than the whole
of the Tranche B Limit, the balance shall be permanently cancelled and the
Commitments of the Lenders shall be permanently reduced by (in aggregate) the
amount which has been so cancelled.


5              CURRENCY
OPTION


5.1          Notice of
Optional Currency.  Subject to
the following provisions of this Clause 5 and the other provisions of this
Agreement, the Borrower may elect that up to 2 Advances each be denominated in
an Optional Currency during an Interest Period applicable to each such Advance
by ensuring that the Agent receives, not later than 11.00 a.m. (London time) on
the second Business Day before the commencement of the Interest Period, a
notice specifying the Optional Currency in which the Borrower wishes such
Advance to be denominated during the Interest Period and the amount (in
Dollars) to be denominated in such Optional Currency Provided
always that:


(a)           the Loan may be divided
at any time into Advances denominated in no more than 3 different currencies
with no more than 2 Advances being denominated in Optional Currencies;


(b)           the amount of each
Advance which is denominated in an Optional Currency shall not be less than the
higher of:



 31
 









(i)            the equivalent in the
relevant Optional Currency of $1,000,000 (determined by converting that
Optional Currency into Dollars at the applicable Dollar Spot Rate of Exchange);
or


(ii)           an amount equal to at
least 20 per cent. of the aggregate amount of all Advances denominated in
Optional Currencies (and the amounts referred to in this sub-Clause (ii) shall
be calculated by nominally converting into Dollars each Advance denominated in
an Optional Currency using the Dollar Spot Rate of Exchange applicable to the
relevant Interest Period or Interest Periods);


(c)           the aggregate amount of
the Advances denominated in Optional Currencies (when such Advances are
nominally converted into Dollars using the Dollar Spot Rate of Exchange
applicable to the relevant Interest Period or Interest Periods) shall not
exceed the lesser of:


(i)            $100,000,000; or


(ii)           50 per cent. of the
Loan;


(d)           no Event of Default or
Potential Event of Default shall have occurred or be continuing; and


(e)           the Lenders are
satisfied that funds in the Optional Currency requested by the Borrower are
available to them in the normal course of business for the duration of the
Interest Period.


5.2          Failure to
give notice.  If the Borrower
fails to give a notice in accordance with, and by the time mentioned in Clause
5.1 for any applicable Interest Period, the whole of the relevant Advance shall
be denominated in Dollars for the Interest Period.


5.3          Agent to
notify the Lenders.  The Agent
shall notify the Lenders, promptly upon receiving a notice under Clause 5.1, of
the Optional Currency requested by the Borrower in such notice.


5.4          Objection
by a Lender to requested Optional Currency.  
If, after the Borrower has requested that an Advance be denominated
in an Optional Currency during an Interest Period, any Lender notifies the
Agent by 11.00 a.m. (London time) on the Business Day falling immediately prior
to the commencement of the Interest Period that it is unable to fund itself in
the Optional Currency requested by the Borrower, the whole of the relevant
Advance shall be denominated in Dollars for the Interest Period.


5.5          Initial
advance in an Optional Currency.   If
an Advance is to be made available in an Optional Currency for the first
Interest Period applicable to that Advance, the Lenders will make available to
the Borrower in accordance with Clause 2.2 an amount determined by converting
into that Optional Currency the Dollar amount of the Advance at the Spot Rate
of Exchange applicable to the Interest Period.


5.6          Determination
of Continuing Balance at end of Interest Period.  At the end of each Interest Period in respect
of an Advance (the “preceding Interest Period”),
the Agent shall determine the amount of the Loan during the immediately
succeeding Interest Period for that Advance (the “succeeding
Interest Period”) (such amount being hereinafter referred to as the “Continuing Balance”). 
The Agent’s determination of the Continuing Balance shall be made in the
following manner (immediately after the Borrower has made any repayment and/or
prepayment of all or any part of the Loan which it is required to make at that
time, and any reduction of the Total Commitments, pursuant to Clause 9):



 32
 









(a)           by
notionally converting any Advances denominated in an Optional Currency into
Dollars at the Dollar Spot Rate of Exchange applicable to the
succeeding Interest Period and aggregating such Advances with any Advances at
that time denominated in Dollars (such aggregate amount being hereinafter
referred to as the “Dollar
Equivalent Amount of the Loan”);


(b)           by notionally converting any Advances under Tranche A
denominated in an Optional Currency into Dollars at the Dollar Spot Rate of
Exchange applicable to the succeeding Interest Period and aggregating such
Advances with any Advances under Tranche A at that time denominated in Dollars
(such aggregate amount being hereinafter referred to as the “Dollar Equivalent Amount of Tranche A”);


(c)           by notionally converting any Advances under Tranche B
denominated in an Optional Currency into Dollars at the Dollar Spot Rate of
Exchange applicable to the succeeding Interest Period and aggregating such
Advances with any Advances under Tranche B at that time denominated in Dollars
(such aggregate amount being hereinafter referred to as the “Dollar Equivalent Amount of Tranche B”); and


(d)           if, on the date on which the Agent makes its
determination:


(i)            the Dollar Equivalent Amount of the Loan exceeds the
Total Commitments, the Borrower shall forthwith prepay an amount equal to such
excess (and the provisions of sub-paragraphs (ii) and (iii) shall apply to the
balance of the Dollar Equivalent Amount of the Loan (after the application of
the prepayment to be made pursuant to this sub-paragraph (i));


(ii)           the Dollar Equivalent Amount of Tranche A exceeds the
Tranche A Limit (but not the Total Commitments), the Borrower shall prepay such
amount so that, following the application of such prepayment against Tranche A,
the Dollar Equivalent Amount of Tranche A does not exceed the Tranche A Limit;


(iii)          the Dollar Equivalent Amount of Tranche B exceeds the
Tranche B Limit (but not the Total Commitments), the Borrower shall prepay such
amount so that, following the application of such prepayment against Tranche B,
the Dollar Equivalent Amount of Tranche B does not exceed the Tranche B Limit;
and


(iv)          the circumstances referred to in sub-paragraphs (i),
(ii) and (iii) do not apply, the Continuing Balance shall be equal to the Loan
at that time.


5.7          Continuation of an Advance in the same
currency.  If an Advance is to be continued during the
succeeding Interest Period in the same Optional Currency in which it was
denominated during the preceding Interest Period, the Agent shall:


(a)           first determine the Continuing Balance of the Loan in
accordance with Clause 5.6; and


(b)           thereafter:


(i)            if the relevant Advance has been reduced by any
prepayment and/or repayment (pursuant to Clause 5.6 and/or Clause 9), the
Advance shall continue to be made available during the succeeding Interest
Period in the amount so reduced unless the effect of the prepayment and/or
repayment is to fully repay the Advance in which case the Advance shall not
continue to be made available in the succeeding Interest Period; and


(ii)           if no prepayment or repayment is required to be made
pursuant to this Agreement, the Advance will continue to be made available
during the succeeding Interest Period in the same amount as the Advance was
outstanding (in the relevant Optional Currency) at the end of the preceding
Interest Period.



 33
 









5.8          Continuation of an Advance in a different
currency.  If an Advance is to be continued during the
succeeding Interest Period in a different currency from that in which it was
denominated during the preceding Interest Period:


(a)           the Agent shall:


(i)            first determine the Continuing Balance of the Loan in
accordance with Clause 5.6;


(ii)           secondly:


(A)          if the relevant Advance has been reduced by any prepayment and/or repayment
(pursuant to Clause 5.6 and/or Clause 9), the Advance shall continue to be made
available during the succeeding Interest Period in the amount so reduced unless
the effect of the prepayment and/or repayment is to fully repay the Advance in
which case the Advance shall not continue to be made available in the
succeeding Interest Period; and


(B)           if no prepayment or repayment is required to be made pursuant to this
Agreement, the Advance will continue to be made available during the succeeding
Interest Period in the same amount as the Advance was outstanding (in the
relevant Optional Currency) at the end of the preceding Interest Period; and


(iii)          thirdly, conditional upon the repayments required by
paragraphs (a) and (b) and subject to the other provisions of this Agreement,
the relevant Advance shall be re-advanced forthwith on terms that:


(A)          if the Advance is to be denominated in Dollars during the succeeding
Interest Period, the Lenders shall make available to the Borrower in accordance
with Clause 2.2 an amount in Dollars (the “relevant Dollar amount”)
determined by converting into Dollars the amount of the relevant Advance (or,
if applicable pursuant to sub-paragraph (a)(ii)(A) of this Clause 5.8, its
remaining balance) in the currency in which it is then denominated on the basis
of the Dollar Spot Rate of Exchange applicable to the succeeding Interest
Period; and


(B)           if the relevant Advance is to be denominated in another Optional Currency
during the succeeding Interest Period, the Lenders shall make available to the
Borrower in accordance with Clause 2.2 an amount in the other Optional Currency
determined by converting into that other Optional Currency the relevant Dollar
amount on the basis of the Spot Rate of Exchange applicable to the succeeding
Interest Period;


(b)           the Lenders may, with value on the first day of the
succeeding Interest Period, apply a sum equal to the amount (determined as
aforesaid) to be advanced (or, as the case may be, so much of that amount as
may be necessary) in purchasing an amount in the currency in which the relevant
Advance is then outstanding sufficient to make the repayment (or so much of the
repayment as can be purchased with the amount to be advanced on that date) and
shall on receipt thereof apply the amount so purchased in or towards the
repayment;


(c)           (without prejudice to the other provisions of this
Clause 5) if:


(i)            after the purchase and application referred to in
Clause 5.8(b) any moneys remain owing to the Lenders or any moneys remain to be
advanced to the Borrower by the Lenders on that date in respect of the relevant
Advance; or


(ii)           for any reason the application is not or cannot be
effected on that date;



 34
 









the Agent shall promptly notify the Borrower of the
fact and of the amount so owing or to be advanced and the Borrower, subject to
Clause 5.6, shall forthwith pay the amount to the Agent for the account of the
Lenders or (as the case may be), and so long as no Event of Default has
occurred and is continuing, the Lenders shall forthwith in accordance with
Clause 2.2 advance the amount to the Borrower; and


(d)           the Borrower shall indemnify each Lender on demand
against all costs, expenses, liabilities and losses sustained as incurred as a
result of or in connection with the operation of this Clause 5.


5.9          Determination of Continuing Balance during
Interest Period.  The Agent may at any time during an Interest
Period during which an Advance is denominated in an Optional Currency determine
the Continuing Balance of the Loan by first determining the Dollar Equivalent
Amount of the Loan and if the Agent determines:


(a)           that the
Dollar Equivalent Amount of the Loan is greater than 110 per cent. of the Total
Commitments (for the purposes of this paragraph (a), the “excess”), the
Borrower shall, within 5 Business Days of notice from the Agent to such effect,
pay to a pledged deposit account to be opened in the name of the Borrower with
the Agent (for the account of the Lenders) an amount in Dollars equal to the
excess (but taking account of any moneys already paid pursuant to this Clause
5.9 and not then applied as referred to below) and the provisions of paragraphs
(b) and (c) below shall apply to the balance of the Dollar Equivalent Amount of
the Loan.  Amounts paid pursuant to this
Clause 5.9 shall be retained by the Agent and applied on the last day of each
Interest Period in respect of the whole of the relevant Advance and on each
Reduction Date in or towards satisfaction of the Borrower’s actual obligation
to make a payment in accordance with Clause 5.6;


(b)           that the
Dollar Equivalent Amount of Tranche A exceeds the Tranche A Limit (but not the
Total Commitments), the Borrower shall, on the first date on which interest is
payable in respect of any Advance under Tranche A pursuant to Clause 6, prepay
such amount so that, following the application of such prepayment against
Tranche A, the Dollar Equivalent Amount of Tranche A does not exceed the
Tranche A Limit;


(c)           that the
Dollar Equivalent Amount of Tranche B exceeds the Tranche B Limit (but not the
Total Commitments), the Borrower shall, on the first date on which interest is
payable in respect of any Advance under Tranche B pursuant to Clause 6, prepay
such amount so that, following the application of such prepayment against
Tranche B, the Dollar Equivalent Amount of Tranche B does not exceed the
Tranche B Limit; and


(d)           that the
circumstances referred to in paragraphs (a), (b) and (c) do not apply, the
Continuing Balance shall be equal to the Loan at that time.


5.10        Forward
Currency Swap.  The Borrower may,
subject to the other terms and conditions of this Agreement, at any time
pursuant to a Transaction under the Master Agreement enter into a Forward
Currency Swap whereby the Loan (or the relevant part thereof), whether
denominated in Dollars or in an Optional Currency is bought or sold forward for
conversion into an Optional Currency or, as the case may be, Dollars on the
first day of any Interest Period falling after the entry into of the Forward
Currency Swap.


6              INTEREST


6.1          Payment of
normal interest.  Subject to the
provisions of this Agreement, interest on each Advance in respect of each
Interest Period applicable to it shall be paid by the Borrower on the last day
of that Interest Period.


6.2          Normal rate of
interest.  Subject to the
provisions of this Agreement, the rate of interest on each Advance in respect
of an Interest Period applicable to it shall be the aggregate of the Margin,
the Mandatory Cost (if any) and the Reference Rate for that Interest Period.



 35
 









6.3          Payment of
accrued interest.  In the case of an
Interest Period longer than 3 months, accrued interest shall be paid every 3
months during that Interest Period and on the last day of that Interest Period.


6.4          Notification of
Interest Periods and rates of normal interest.  The Agent shall notify the Borrower and each
Lender of:


(a)           each rate
of interest; and


(b)           the
duration of each Interest Period,


as soon as
reasonably practicable after each is determined.


6.5          Obligation of
Lenders to quote.  Each Lender shall,
if the circumstances referred to in paragraph (b) of the definitions of either
LIBOR or EURIBOR arise at any time, use all reasonable efforts to supply any
quotation required of it for the purposes of fixing a rate of interest under
this Agreement.


6.6          Absence of
quotations by Lenders.  If any Lender fails
to supply a quotation when required, the Agent shall determine the relevant
Reference Rate on the basis of the quotations supplied by the other Lender or
Lenders; but if at least half of the total number of Lenders at any time fail
to provide a quotation, the relevant rate of interest shall be set in
accordance with the following provisions of this Clause 6.


6.7          Market
disruption.  The following
provisions of this Clause 6 apply if:


(a)           no rate is
quoted on the appropriate page of the Reuters Money News Service and at least
half of the total number of Lenders at any time do not, before 1.00 p.m.
(London time) on the Quotation Date for an Interest Period, provide quotations
to the Agent in order to fix the Reference Rate for that Interest Period; or


(b)           at least 1
Business Day before the start of an Interest Period, Lenders having
Contributions (excluding, for the purposes of this Clause, any Outstanding
Guarantee Amount) together amounting to more than 50 per cent. of the Loan (or,
if an Advance has not been made, Commitments amounting to more than 50 per
cent. of the Total Commitments) or at least half of the total number of Lenders
at any time notify the Agent that the Reference Rate for that Interest Period
fixed by the Agent would not accurately reflect the cost to those Lenders of
funding their respective Contributions (or any part of them) during the
Interest Period in the London Interbank Market or (as the case may be) the
European Interbank Market at or about 11.00 a.m. (London time) on the Quotation
Date for an Interest Period; or


(c)           at least 1
Business Day before the start of an Interest Period, the Agent is notified by a
Lender (the “Affected Lender”) that
for any reason it is unable to obtain Dollars or, as the case may be, the
relevant Optional Currency in the London Interbank Market or (as the case may
be) the European Interbank Market in order to fund its Contribution (or any
part of it) during the Interest Period.


6.8          Notification of
market disruption.  The Agent shall promptly
notify the Borrower and each of the Lenders stating the circumstances falling
within Clause 6.7 which have caused its notice to be given.


6.9          Suspension of
drawdown.  If the Agent’s
notice under Clause 6.8 is served on the Borrower before an Advance is made:


(a)           in a case
falling within paragraphs (a) or (b) of Clause 6.7, the Lenders’ obligations to
make, and the Borrower’s obligation to borrow, that Advance; and



 36
 









(b)           in a case
falling within paragraph (c) of Clause 6.7, the Affected Lender’s obligation to
participate in the Advance,


shall be
suspended while the circumstances referred to in the Agent’s notice continue.


6.10        Negotiation of
alternative rate of interest. If the Agent’s notice under Clause 6.8
is served on the Borrower after an Advance is made, the Borrower, the Agent and
the Lenders or (as the case may be) the Affected Lender shall use reasonable
endeavours to agree, within the 30 days after the date on which the Agent
serves its notice under Clause 6.8 (the “Negotiation Period”), an alternative
interest rate or (as the case may be) an alternative basis for the Lenders or
(as the case may be) the Affected Lender to fund or continue to fund their or
its Contribution during the Interest Period concerned.


6.11        Application of
agreed alternative rate of interest. 
Any alternative interest rate or an alternative basis which is agreed
during the Negotiation Period shall take effect in accordance with the terms
agreed.


6.12        Alternative
rate of interest in absence of agreement. 
If an alternative interest rate or alternative basis is not agreed
within the Negotiation Period, and the relevant circumstances are continuing at
the end of the Negotiation Period, then the Agent shall, with the agreement of
each Lender or (as the case may be) the Affected Lender, set an interest period
and interest rate representing the cost of funding of the Lenders or (as the
case may be) the Affected Lender in Dollars or, as the case may be, the
relevant Optional Currency, or in any available currency of their or its Contribution
plus the aggregate of the Margin and the Mandatory Cost (if any); and the
procedure provided for by this Clause 6.12 shall be repeated if the relevant
circumstances are continuing at the end of the interest period so set by the
Agent.


6.13        Notice of
prepayment.  If the Borrower does
not agree with an interest rate set by the Agent under Clause 6.12, the
Borrower may give the Agent not less than 5 Business Days’ notice of its
intention to prepay (and, if applicable, procure the cancellation of the
Outstandings).


6.14        Prepayment;
termination of Commitments.  A notice under
Clause 6.13 shall be irrevocable; the Agent shall promptly notify the Lenders
or (as the case may require) the Affected Lender of the Borrower’s notice of
intended prepayment; and:


(a)           on the
date on which the Agent serves that notice, the Total Commitments or (as the
case may require) the Commitment of the Affected Lender shall be cancelled;


(b)           if the
prepayment involves the Lenders or the Affected Lender which is the Issuing Bank,
no later than the last Business Day of the interest period set by the Agent,
the Borrower shall procure the cancellation of the Outstandings and the return
of each Guarantee to the Issuing Bank endorsed by the relevant Beneficiary to
the effect that it is cancelled; and


(c)           on the
date specified in its notice of intended prepayment, the Borrower shall prepay
(without premium or penalty) the Loan or, as the case may be, the Affected
Lender’s Contribution, together with accrued interest thereon at the applicable
rate plus the aggregate of the Margin and the Mandatory Cost (if any) and, if
the prepayment or repayment is not made on the last day of the interest period
set by the Agent, any sums payable under Clause 22.1(b).


6.15        Application of
prepayment.  The provisions of
Clause 9 shall apply in relation to the prepayment.



 37
 









7              INTEREST PERIODS


7.1          Commencement of
Interest Periods.  The first Interest
Period applicable to an Advance shall commence on the Drawdown Date for that
Advance and each subsequent Interest Period shall commence on the expiry of the
preceding Interest Period.


7.2          Duration of
normal Interest Periods.  Subject to Clauses
7.3 and 7.4, each Interest Period shall be:


(a)           3, 6 or 12
months as notified by the Borrower to the Agent not later than 11.00 a.m.
(London time) 3 Business Days before the commencement of the Interest Period;
or


(b)           in the
case of the first Interest Period applicable to the second and any subsequent
Advance relating to any of the Tranche A Advance 1 Ship, the Tranche A Advance
2 Ships, the Tranche A Advance 3 Ships, the Tranche A Advance 4 Ships or an
Approved Ship, a period ending on the last day of the Interest Period
applicable to the first Advance relating to that Ship or (as the case may be)
those Ships then current, whereupon all of the Advances relating to that Ship
or (as the case may be) those Ships shall be consolidated and treated as a
single Advance; or


(c)           3 months,
if the Borrower fails to notify the Agent by the time specified in paragraph
(a) above; or


(d)           such other
period as the Agent may, with the authorisation of all the Lenders, agree with
the Borrower,


Provided that no more than 6 Interest Periods in
aggregate may be current at any time.


7.3          Duration of
Interest Periods for repayment instalments. 
In respect of an amount due to be repaid under Clause 9 on a particular
Reduction Date, an Interest Period shall end on that Reduction Date.


7.4          Non-availability
of matching deposits for Interest Period selected.  If, after the Borrower has selected (and the
Lenders have agreed) an Interest Period longer than 6 months, any Lender
notifies the Agent:


(a)           in the
case of an Advance to be denominated in Dollars or an Optional Currency (other
than Euros), by 11.00 a.m. (London time) on the second Business Day before the
commencement of that Interest Period, that it is not satisfied that deposits in
the relevant currency for a period equal to that Interest Period will be
available to it in the London Interbank Market when that Interest Period
commences; and


(b)           in the case
of an Advance to be denominated in Euros, by 11.00 a.m. (Brussels time) on the
third Business Day before the commencement of that Interest Period, that it is
not satisfied that deposits in Euros for a period equal to that Interest Period
will be available to it in the European Interbank Market when that Interest
Period commences,


that
Interest Period shall be of a duration of 3 months.


8              DEFAULT INTEREST


8.1          Payment of
default interest on overdue amounts. 
The Borrower shall pay interest in accordance with the following
provisions of this Clause 8 on any amount payable by the Borrower under any
Finance Document which the Agent, the Security Trustee or the other designated
payee does not receive on or before the relevant date, that is:


(a)           the date
on which the Finance Documents provide that such amount is due for payment; or



 38
 









(b)           if a
Finance Document provides that such amount is payable on demand, the date on
which the demand is served; or


(c)           if such
amount has become immediately due and payable under Clause 20.4, the date on
which it became immediately due and payable.


8.2          Default rate of
interest.  Interest shall
accrue on an overdue amount from (and including) the relevant date until the
date of actual payment (as well after as before judgment) at the rate per annum
determined by the Agent to be 1.5 per cent plus:


(a)           in the
case of an overdue amount of principal, the higher of the rates set out at
paragraphs (a) and (b) of Clause 8.3; or


(b)           in the
case of any other overdue amount, the rate set out at paragraph (b) of Clause
8.3.


8.3          Calculation of
default rate of interest.  The rates referred
to in Clause 8.2 are:


(a)           the rate
applicable to the overdue principal amount immediately prior to the relevant
date (but only for any unexpired part of any then current Interest Period
applicable to it); and


(b)           the
aggregate of the Margin (only in the case of an Advance which has not been
drawn down in the form a Guarantee) and the Mandatory Cost (if any) plus, in
respect of successive periods of any duration (including at call) up to 3
months which the Agent may select from time to time:


(i)            the
Reference Rate; or


(ii)           if the
Agent (after consultation with all the Lenders) determines that deposits of the
currency in which the overdue amount is denominated for any such period are not
being made available to any Lender by leading banks in the London Interbank
Market or, as the case may be, the European Interbank Market in the ordinary
course of business, a rate from time to time determined by the Agent by reference
to the cost of funds to the Lender from such other sources as the Agent (after
consultation with all the Lenders) may from time to time determine.


8.4          Notification of
interest periods and default rates. 
The Agent shall promptly notify the Lenders and the Borrower of each
interest rate determined by the Agent under Clause 8.3 and of each period
selected by the Agent for the purposes of paragraph (b) of that Clause; but
this shall not be taken to imply that the Borrower is liable to pay such
interest only with effect from the date of the Agent’s notification.


8.5          Payment of
accrued default interest.  Subject to the other
provisions of this Agreement, any interest due under this Clause 8 shall be
paid on the last day of the period by reference to which it was determined; and
the payment shall be made to the Agent for the account of the Creditor Party to
which the overdue amount is due.


8.6          Compounding of
default interest.  Any such interest
which is not paid at the end of the period by reference to which it was
determined shall be compounded every 3 months.


8.7          Application to
Master Agreement.  For the avoidance of
doubt, this Clause 8 does not apply to any amount payable under the Master
Agreement in respect of any continuing Designated Transaction as to which
section 2(e) (Default Interest; Other Amounts) of the Master Agreement shall
apply.


9              REPAYMENT, PREPAYMENT AND CANCELLATION


9.1          Reduction and repayment.



 39
 









(a)           Tranche A
Advance 1.  Subject to any other
Clause of this Agreement, the maximum aggregate amount on the date of this
Agreement which may be outstanding at any time in respect of all Advance(s) in
respect of the Tranche A Advance 1 Ship shall be $38,000,000 and shall
thereafter reduce:


(i)            by 2
consecutive semi-annual reductions of $16,700,000 each, with the first such
reduction occurring on the date falling 6 months after the expiry of the
Advance 1 Grace Period; and


(ii)           a balloon
reduction of $4,600,000 (as such balloon may be reduced in accordance with
Clause 9.2, the “Tranche A Advance 1 Balloon”)
together with the final such semi-annual reduction.


(b)           Tranche A
Advance 2.  Subject to any other
Clause of this Agreement, the maximum aggregate amount on the date of this
Agreement which may be outstanding at any time in respect of all Advance(s) in respect
of the Tranche A Advance 2 Ships shall be $22,000,000 and shall thereafter
reduce:


(i)            by 4
consecutive semi-annual reductions of $750,000 each, with the first such
reduction occurring on the date falling 6 months after the first Drawdown Date
of an Advance in respect of the Tranche A Advance 2 Ships; and


(ii)           a balloon
reduction of $19,000,000 (as such balloon may be reduced in accordance with
Clause 9.2, the “Tranche A Advance 2 Balloon”)
together with the final such semi-annual reduction.


(c)           Tranche A
Advance 3.  Subject to any other
Clause of this Agreement, the maximum aggregate amount on the date of this
Agreement which may be outstanding at any time in respect of all Advance(s) in
respect of the Tranche A Advance 3 Ships shall be $46,000,000 and shall
thereafter reduce:


(i)            by 4
consecutive semi-annual reductions of $9,500,000 each, with the first such
reduction occurring on the date falling 6 months after the expiry of the
Advance 3 Grace Period; and


(ii)           a balloon
reduction of $8,000,000 (as such balloon may be reduced in accordance with
Clause 9.2, the “Tranche A Advance 3 Balloon”)
together with the final such semi-annual reduction.


(d)           Tranche A
Advance 4.  Subject to any other
Clause of this Agreement, the maximum aggregate amount on the date of this
Agreement which may be outstanding at any time in respect of all Advance(s) in
respect of the Tranche A Advance 4 Ships shall be $32,000,000 and shall
thereafter reduce:


(i)            by 4
consecutive semi-annual reductions of $6,500,000 each, with the first such
reduction occurring on the date falling 6 months after the first Drawdown Date
of an Advance in respect of the Tranche A Advance 4 Ships; and


(ii)           a balloon
reduction of $6,000,000 (as such balloon may be reduced in accordance with
Clause 9.2, the “Tranche A Advance 4 Balloon”)
together with the final such semi-annual reduction.


(e)           Tranche B and
Tranche A Additional Advances.


(i)            Subject to
any other Clause of this Agreement and save in respect of the financing of one
or more pre-delivery instalment(s) of an Approved Ship under an Approved
Purchase Contract (to which Clause 9.1(e)(v) applies instead), the maximum
aggregate amount on the date of this Agreement which may be



 40
 









outstanding at any time in respect
of all Advance(s) in respect of an Approved Ship which is, on the first
Drawdown Date applicable to that Ship, a newbuilding delivered on that date
shall be the Finance Level for that Approved Ship and shall thereafter reduce:


(A)          by
consecutive equal semi-annual reductions with the first such reduction
occurring on the date falling 6 months after the expiry of the Moratorium
Period and the final such reduction occurring on the date falling 120 months
after the first Drawdown Date applicable to that Ship; and


(B)           a balloon
reduction together with the final such semi-annual reduction,


with the amount of each equal semi-annual
reduction and the balloon reduction calculated so as to result in a 10 year
loan repayable on an 18 year “straight-line” profile (i.e. a 10 year profile of
equal semi-annual instalments reducing to zero at the end of year 18).


For the avoidance of doubt, an Advance
drawndown under Tranche B to refinance part or all of the Pre-Delivery
Advance(s) of an Approved Ship shall be considered as an Advance falling under
this Clause 9.1(e)(i).


(ii)           Subject to
any other Clause of this Agreement and save in respect of the financing of one
or more pre-delivery instalment(s) of an Approved Ship under an Approved
Purchase Contract (to which Clause 9.1(e)(v) applies instead), the maximum aggregate
amount on the date of this Agreement which may be outstanding at any time in
respect of all Advance(s) in respect of an Approved Ship which has, on the
first Drawdown Date applicable to that Ship, an Age of 8 years or less shall be
the Finance Level for that Approved Ship and shall thereafter reduce:


(A)          by
consecutive equal semi-annual reductions with the first such reduction
occurring on the date falling 6 months after the expiry of the Moratorium
Period and the final such reduction occurring on the date falling 10 years
after the first Drawdown Date applicable to that Ship; and


(B)           a balloon
reduction together with the final such semi-annual reduction,


with the amount of each equal semi-annual
reduction and the balloon reduction calculated so as to result in a 10 year
loan repayable on a “straight-line” full amortisation profile over a period
(the “Loan Profile Period”) equal
to:


(1)                           18 years;
less


(2)                           the Age of
that Ship on the first Drawdown Date applicable to it.


(iii)          Subject to
any other Clause of this Agreement, the maximum aggregate amount on the date of
this Agreement which may be outstanding at any time in respect of all
Advance(s) in respect of an Approved Ship which has, on the first Drawdown Date
applicable to that Ship, an Age of 9, 10, 11, 12, 13, 14 or 15 years shall be
the Finance Level for that Approved Ship and shall thereafter reduce by
consecutive equal semi-annual reductions, with the first such reduction
occurring on the date falling 6 months after the first Drawdown Date applicable
to that Ship and the final such reduction occurring on the date falling:


(A)          9 years;
less


(B)           1 year for
each year which the Age of the Ship exceeds 9 years on the first Drawdown Date,



 41
 









after such Drawdown Date and with the amount
of each reduction required so as to fully reduce such maximum aggregate amount
to zero by maturity.


(iv)          Notwithstanding
the foregoing provisions of this Clause 9.1(e), the Lenders may (in their sole
and absolute discretion based on the condition, characteristics and employment
of the relevant Approved Ship) modify the manner of reduction and repayment of
any Advance under Tranche B or any Tranche A Additional Advance so that the
scheduled reductions and repayments are subject to a moratorium period (the
duration of which shall be determined by the Lenders in their discretion);


(v)           In the
case of the financing of one or more pre-delivery instalment(s) of an Approved
Ship under a Purchase Contract and subject to any other Clause of this
Agreement, the maximum aggregate amount on the date of this Agreement which may
be outstanding at any time in respect of all Advance(s) in respect of that
Approved Ship shall be the Finance Level for that Approved Ship and shall
thereafter reduce to zero on the earlier of:


(A)          the
Delivery Date for that Approved Ship; or


(B)           the date
falling 3 years after the date of this Agreement.


(f)            Reduction of
Total Commitments, Tranche A Limit and Tranche B Limit.  Any reduction in any maximum aggregate amount
under this Clause 9.1 or any other Clause shall cause an equivalent amount of
the Total Commitments and the Tranche A Limit or (as the case may be) the
Tranche B Limit to be permanently cancelled, following which the Commitment of
each Lender shall be permanently reduced pro rata.


(g)           Repayment.  The Borrower shall ensure at all times that
each of Tranche A Advance 1, Tranche A Advance 2, Tranche A Advance 3, Tranche
A Advance 4 and all Advance(s) in respect of an Approved Ship (including, in
each case, the Outstanding Guarantee Amount of any Guarantee issued in respect
of any Ship to which any such Advance relates) is not greater than the relevant
maximum outstanding amount permitted pursuant to this Clause 9.1 and, without
prejudice to the generality of the foregoing, the Borrower shall if required pursuant
to this Clause 9.1(g) prepay some or all of the outstanding Advances (and/or
procure the cancellation of some or all of the Outstandings) so that the
aggregate amount of the Advances and the Outstandings thereafter remaining does
not and will not in the future (taking into account the scheduled reduction
under this Clause 9.1) exceed the limits set out in this Clause 9.1 as reducing
from time to time thereafter pursuant to this Clause 9.1.  Clauses 9.7 and 9.11 shall apply in relation
to any such prepayment.


9.2          Tranche A balloons.  If, at any time, the Agent determines that
any of the Tranche A Advance 1 Balloon, the Tranche A Advance 2 Balloon, the
Tranche A Advance 3 Balloon or the Tranche A Advance 4 Balloon exceeds 80 per
cent. of the aggregate of the prevailing scrap value of each Ship to which that
Tranche A Balloon relates, the Agent shall notify the Borrower and, on the 5
Business Day following the date of the Agent’s notification:


(a)           the
maximum aggregate amount which may be outstanding at any time in respect of all
Advance(s) in respect of the Ships to which that Tranche A Balloon relates
shall reduce by an amount equal to such excess;


(b)           that
Tranche A Balloon shall reduce by an amount equal to such excess; and


(c)           without
prejudice to Clause 9.1(g), the Borrower shall prepay some or all of the
outstanding Advances so that the amount of Tranche A Advance 1, Tranche A
Advance 2, Tranche A Advance 3 or (as the case may be) Tranche A Advance 4 does
not exceed



 42
 









the maximum aggregate amount as referred
to in, and reduced in accordance with, Clause 9.2(a).


9.3          Final reduction
date.  On the date on which
the maximum aggregate amount of any of the Tranche A Advance 1, Tranche A
Advance 2, Tranche A Advance 3, Tranche A Advance 4 or all Advance(s) in respect
of an Approved Ship reduces to zero in accordance with Clause 9.1, the Borrower
shall additionally pay to the Agent for the account of the Creditor Parties all
other sums (if any) then accrued or owing under such Advance(s).


9.4          Optional facility cancellation.  The Borrower shall be entitled, upon giving
to the Agent not less than 14 Business Days (or such shorter notice as the
Lenders may agree) prior written notice (which notice shall be irrevocable), to
cancel, in whole or in part, and, if in part, by an amount not less than
$1,000,000 or a higher integral multiple of $1,000,000, the undrawn balance of
Tranche A Advance 1, Tranche A Advance 2, Tranche A Advance 3, Tranche A
Advance 4 or all Advance(s) in respect of an Approved Ship.  Upon such cancellation taking effect on
expiry of such notice Clause 9.1(f) shall apply, the commitment fee referred to
in Clause 21.1(c)) on such portion shall cease to accrue and the amounts by
which the relevant maximum aggregate amount outstanding shall periodically
reduce pursuant to Clause 9.1 shall be reduced pro rata or (at the Borrower’s
option if notified to the Agent) in order of maturity by the amount of such
cancellation.


9.5          Voluntary
prepayment.  Subject to the
following conditions, the Borrower may prepay the whole or any part of any
Advance on the last day of an Interest Period applicable to that Advance.


9.6          Conditions for
voluntary prepayment.  The conditions
referred to in Clause 9.5 are that:


(a)           a partial
prepayment shall be $1,000,000 or a higher integral multiple of $1,000,000;


(b)           the Agent
has received from the Borrower at least 5 (at any time during the Moratorium
Period) or 15 (at any time thereafter) days’ prior written notice specifying
the amount to be prepaid and the date on which the prepayment is to be made;


(c)           the
Borrower has provided evidence satisfactory to the Agent that any consent
required by the Borrower or any Security Party in connection with the
prepayment has been obtained and remains in force.


9.7          Effect of
notice of prepayment.  A prepayment notice
may not be withdrawn or amended without the consent of the Agent, given with
the authorisation of the Majority Lenders, and the amount specified in the
prepayment notice shall become due and payable by the Borrower on the date for
prepayment specified in the prepayment notice Provided that the
Borrower may, during the Moratorium Period, withdraw or amend a prepayment
notice up to 3 days prior to the date of prepayment specified in the relevant
prepayment notice subject to the Borrower indemnifying the Lenders (or any of
them) in respect of any costs, liabilities or losses which they may incur in
connection with the withdrawal of, or amendment to, a prepayment notice by the
Borrower.


9.8          Notification of
notice of prepayment.  The Agent shall
notify the Lenders promptly upon receiving a prepayment notice, and shall
provide any Lender which so requests with a copy of any document delivered by
the Borrower under Clause 9.6(c).


9.9          Mandatory
prepayment/reductions.


(a)           If a
Mortgaged Ship is sold or becomes a Total Loss or the Mortgage on that Ship is
discharged pursuant to Clause 9.9(C):



 43
 









(i)            in the
case of an Existing Ship, the Borrower shall ensure that all the sale or Total
Loss proceeds are paid to the Agent or, as the case may be, the Security
Trustee and the Agent shall apply all (or, in the sole and absolute discretion
of the Lenders, part) of such proceeds in repayment of the Loan;


(ii)           in the
case of an Approved Ship, the Borrower shall be obliged to prepay all of the
Advance(s) in respect of that Approved Ship whereupon the portion of the Total
Commitments in respect of those Advance(s) (together with any other outstanding
Total Commitments in respect of that Approved Ship) shall be permanently
cancelled and Clause 9.1(f) shall apply.


(b)           In the
case of an Approved Ship which has been financed by a Pre-Delivery Advance, the
Borrower shall be obliged to prepay all of the Advance(s) in respect of that
Approved Ship (whereupon the portion of the Total Commitments in respect of
those Advance(s) (together with any other outstanding Total Commitments in
respect of that Approved Ship) shall be permanently cancelled and Clause 9.1(f)
shall apply) if any of the following occurs, on demand by the Agent:


(i)            an event
or circumstance occurs which under the Approved Purchase Contract results in
either party to the Approved Purchase Contract having the right to cancel or
rescind the Approved Purchase Contract; or


(ii)           either the
Approved Purchase Contract or any Refund Guarantee issued under the Approved
Purchase Contract is cancelled, terminated, rescinded or suspended or otherwise
ceases to remain in force for any reason; or


(iii)          the
Approved Purchase Contract is amended or varied without the prior written
consent of the Lenders except for any such amendment or variation as is
permitted by this Agreement or any other relevant Finance Document; or


(iv)          the
Approved Ship has not for any reason been delivered to, and accepted by, the
Approved Guarantor under the Approved Purchase Contract by the earlier of (x)
the date set out in the Approved Purchase Contract (as extended by permissible
delays pursuant to the Approved Purchase Contract), (y) the final Reduction
Date and (z) the date falling 3 years after the date of this Agreement.


(c)           If any
Existing Charter or any other charter approved by the Lenders for the purposes
of long-term employment under the definition of “Approved Ship” is terminated,
becomes invalid or unenforceable or otherwise ceases to be in full force and
effect for any reason (other than by effluxion of time or following the sale or
Total Loss of the Ship to which that charter relates) or the relevant Owner
under any such charter is in breach such that the other party is entitled to
terminate unilaterally or hire payable under any such charter is not paid on
the due date or is suspended (a “charter termination date”), the
Borrower shall prepay in full the Advance relative to the relevant Ship within
3 days of the relevant charter termination date unless (i) the relevant Owner
enters into a new charterparty in respect of its Ship with a charterer
acceptable to the Lenders (in their Sole and absolute discretion) on terms, for
a period and at a daily charterhire rate which are equivalent or no less
favourable that those in the Existing Charter or such other charter, with such
substitute charter being entered into within 30 days from the charter
termination date relative to the Existing Charter or such other charter or (ii)
the Majority Lenders are satisfied that the security cover ratio (as determined
in accordance with Clause 16.1) is sufficient to allow the Lenders to maintain
the Advance (without requiring any prepayment of the same).


(d)           If any of
the circumstances referred to in the foregoing provisions of this Clause 9.9
which trigger a mandatory prepayment or reduction pursuant to this Clause 9.9
should arise, the Borrower hereby agrees to pay to the Agent any amount, in
addition to that required to be paid pursuant to the applicable foregoing
provisions of this Clause 9.9, 



 44
 









which the Agent (acting upon the
instructions of the Majority Lenders) may notify to the Borrower in writing
from time to time, which amount will be paid at the same time as the applicable
prepayment or reduction required to be made pursuant to the applicable foregoing
provisions of this Clause 9.9 and will be applied in prepayment of the Loan
(and the Borrower hereby irrevocably authorises the Agent to make such
application).


For the
avoidance of doubt, references in this Clause 9.9 to the Advance(s) in respect
of a Ship shall include (if relevant) the Outstanding Guarantee Amount of any
Guarantee issued in relation to that Ship and references in this Clause 9.9 to
prepaying the Advance(s) in respect of a Ship shall include (if relevant)
procuring the cancellation of the Outstanding Guarantee Amount of any Guarantee
issued in relation to that Ship.


The
prepayments and/or, as the case may be, permanent cancellations referred to in
Clause 9.9(a) shall be made:


(A)          in the
case of a sale, on or before the date on which the sale is completed by
delivery of the relevant Ship to its buyer; or


(B)           in the
case of a Total Loss, on the earlier of the date falling 120 days after the
Total Loss Date and the date of receipt by the Security Trustee of the proceeds
of insurance relating to such Total Loss; or


(C)           in the
case the Mortgage on the relevant Ship is discharged (other than in the
circumstances referred to in paragraph (A) above and where the Borrower and the
Security Parties have discharged all their obligations under the Finance
Documents), on or before the date on which the Mortgage is discharged.


9.10        Currency of payment.  Each repayment or prepayment of the Loan or
any part thereof shall be made in the currency in which the Loan or the
relevant part thereof was outstanding on the relevant date of repayment or (as
the case may be) prepayment (in such proportions as between the currencies in
which the Loan is denominated at the time of the relevant repayment or
prepayment as the Advance or Advances in the one currency bear to the Advance
or Advances in the other currency) and on the basis of the Spot Rate of
Exchange applicable to the Interest Period expiring on such repayment date or
date of prepayment or, if not the last day of an Interest Period, applicable to
the then current Interest Period.


9.11        Amounts payable
on repayment or prepayment.  A
repayment or prepayment shall be made together with accrued interest (and any
other amount payable under Clause 22 or otherwise) in respect of the amount
repaid or prepaid and, if the repayment or prepayment is not made on the last
day of an applicable Interest Period together with:


(a)           any sums
payable under Clause 22.1(b); and


(b)           as an
agreed compensation for the loss of the Lender’s anticipated return on capital,
a fee equal to the Margin (plus the Mandatory Cost, if any) on the amount
prepaid for the balance of the applicable Interest Period,


but otherwise without premium or penalty.


9.12        Reborrowing.  Subject to the terms of this Agreement, any
amount of the Loan repaid or prepaid may be reborrowed.


9.13        Unwinding of
Designated Transactions.  On or prior to any
repayment or prepayment of the Loan under this Clause 9 or any other provision
of this Agreement, the Borrower shall wholly or partially reverse, offset,
unwind or otherwise terminate one or more of the continuing Designated
Transactions to the extent necessary to ensure that the notional



 45















principal amount of the continuing
Designated Transactions thereafter remaining does not and will not in the
future (taking into account the scheduled amortisation) exceed the amount of
the Loan as reducing from time to time thereafter pursuant to Clause 9.1.


9.14        Prepayment of
swap benefit.  If a Designated
Transaction is terminated in circumstances where the Swap Bank would be obliged
to pay an amount to the Borrower under the Master Agreement, the Borrower
hereby agrees that such payment shall be applied in prepayment of the Loan in
accordance with Clause 9.5 and authorises the Swap Bank to pay such amount to
the Agent for such purpose.


10           CONDITIONS PRECEDENT


10.1        Documents, fees
and no default.  Each Lender’s
obligation to contribute to an Advance (and, in the case of the Lender which is
the Issuing Bank, to issue any Guarantee) is subject to the following
conditions precedent:


(a)           that, on
or before the Drawdown Date relative to the Advance which will be used in fully
refinancing the Existing Indebtedness, the Agent receives the documents
described in Part A of Schedule 3 in form and substance satisfactory to the
Agent and its lawyers;


(b)           that, on
or before the Drawdown Date relative to each Advance which will be used in
financing an Approved Ship (other than in the case of a Pre-Delivery Advance to
which Clause 10.1(c) applies instead), the Agent receives the documents
described in Part B of Schedule 3 in form and substance satisfactory to the
Agent and its lawyers;


(c)           that, on
or before the Drawdown Date relative to a Pre-Delivery Advance which will be
used in financing an Approved Ship, the Agent receives the documents described
in Part C of Schedule 3 in form and substance satisfactory to the Agent and its
lawyers;


(d)           that each
Drawdown Notice contains irrevocable instructions from the Borrower to pay on
the Drawdown Date relative to the relevant Advance all fees payable at that
time (including, without limitation, any accrued guarantee commitment and
commitment commission fees) pursuant to Clause 21.1;


(e)           that both
at the date of each Drawdown Notice and at each Drawdown Date:


(i)            no Event
of Default or Potential Event of Default has occurred and is continuing or
would result from the borrowing of the relevant Advance or (as the case may be)
the issue of the Guarantee;


(ii)           the
representations and warranties in Clause 11 and those of the Borrower or any
Security Party which are set out in the other Finance Documents would be true
and not misleading if repeated on each of those dates with reference to the
circumstances then existing; and


(iii)          none of
the circumstances contemplated by Clause 6.7 has occurred and is continuing;


(f)            that, if
the ratio set out in Clause 16.1 were applied immediately following the making
of the Advance or (as the case may be) the issue of the Guarantee, the Borrower
would not be obliged to provide additional security or prepay part of the Loan
or procure the cancellation of any of the Outstandings under that Clause; and


(g)           that the
Agent has received, and found to be acceptable to it, any further opinions,
consents, agreements and documents in connection with the Finance Documents
which



 46
 









the Agent may, with the
authorisation of the Majority Lenders, reasonably request by notice to the
Borrower prior to the relevant Drawdown Date.


10.2        Waiver of
conditions precedent.  If the Majority
Lenders, at their discretion, permit an Advance to be borrowed and/or (as the
case may be) a Guarantee to be issued before certain of the conditions referred
to in Clause 10.1 are satisfied, the Borrower shall ensure that those
conditions are satisfied within 10 Business Days after the relevant Drawdown
Date (or such longer period as the Agent, with the authorisation of the
Majority Lenders, specify).


11           REPRESENTATIONS AND WARRANTIES


11.1        General. The
Borrower represents and warrants to each Creditor Party as follows.


11.2        Status. The
Borrower is a corporation domesticated in and validly existing and in good
standing under the laws of the Republic of the Marshall Islands.


11.3        Share capital
and ownership.  The Borrower has an
authorised share capital divided into 205,000,000 shares of $0.01 each divided
into 200,000,000 shares of common stock and 5,000,000 shares of preferred
stock.  The Borrower is the indirect and
ultimate owner of all of the issued share capital of each Existing Owner.


11.4        Corporate
power.  The Borrower (or in
the case of paragraphs (a) and (b), each Existing Owner) has the corporate
capacity, and has taken all corporate action and obtained all consents
necessary for it:


(a)           to own and
register the Existing Ship owned by it in its name on the relevant Approved
Flag;


(b)           to enter
into, and perform its obligations under, the Existing Charter to which it is a
party;


(c)           to execute
the Finance Documents to which the Borrower is a party; and


(d)           to borrow
under this Agreement, to enter into Designated Transactions under the Master
Agreement and to make all the payments contemplated by, and to comply with,
those Finance Documents to which the Borrower is a party.


11.5        Consents in
force.  All the consents
referred to in Clause 11.4 remain in force and nothing has occurred which makes
any of them liable to revocation.


11.6        Legal validity;
effective Security Interests. 
The Finance Documents to which the Borrower is a party, do now or, as the
case may be, will, upon execution and delivery (and, where applicable,
registration as provided for in the Finance Documents):


(a)           constitute
the Borrower’s legal, valid and binding obligations enforceable against the
Borrower in accordance with their respective terms; and


(b)           create
legal, valid and binding Security Interests enforceable in accordance with
their respective terms over all the assets to which they, by their terms,
relate;


subject to
any relevant insolvency laws affecting creditors’ rights generally.


11.7        No third party
Security Interests.  Without limiting the
generality of Clause 11.6, at the time of the execution and delivery of each
Finance Document:


(a)           the
Borrower will have the right to create all Security Interests which that Finance
Document purports to create; and



 47
 









(b)           no third party will have any Security
Interest or any other interest, right or claim over, in or in relation to any
asset to which any such Security Interest, by its terms, relates.


11.8        No conflicts.  The execution by the Borrower of each Finance
Document to which it is a party, the borrowing by the Borrower of the Loan
(including, without limitation, any request for issue of a Guarantee), and its
compliance with each Finance Document to which it is a party, will not involve
or lead to a contravention of:


(a)           any law or
regulation; or


(b)           the
constitutional documents of the Borrower; or


(c)           any
contractual or other obligation or restriction which is binding on the Borrower
or any of its assets.


11.9        No withholding
taxes.  All payments which
the Borrower is liable to make under the Finance Documents to which it is a
party may be made without deduction or withholding for or on account of any tax
payable under any law of any Pertinent Jurisdiction.


11.10      No default. 
No Event of Default or Potential Event of Default has occurred and is
continuing.


11.11      Information.  All information which has been provided in
writing by or on behalf of the Borrower or any Security Party to any Creditor
Party in connection with any Finance Document satisfied the requirements of
Clause 12.5.


11.12      No litigation.  No legal or administrative action involving
the Borrower has been commenced or taken or, to the Borrower’s knowledge, is
likely to be commenced or taken which, in either case, would be likely to have
a material adverse effect on the Borrower’s ability to satisfy and discharge in
a timely manner any of its liabilities or obligations under any Finance
Document.


11.13      Compliance with
certain undertakings.  At the date of this
Agreement, the Borrower is in compliance with Clauses 12.2, 12.4, 12.9 and
12.14.


11.14      Taxes paid. The
Borrower has paid all taxes applicable to, or imposed on or in relation to, the
Borrower and its business.


11.15      Validity and
completeness of Existing Charters. The copy of each Existing Charter
delivered to the Agent before the date of this Agreement is a true and complete
copy and:


(a)           each
Existing Charter constitutes valid, binding and enforceable obligations of the
parties thereto respectively in accordance with its terms; and


(b)           no
amendments or additions to any Existing Charter have been agreed (other than
those notified to the Agent prior to the date of this Agreement) nor has any
party thereto waived any of their respective rights under any Existing Charter.


11.16      ISM Code and
ISPS Code compliance.  The Borrower will
procure that the Owners of the Existing Ships and the Approved Manager obtain
all necessary ISM Code Documentation and ISPS Code Documentation in connection
with the Existing Ships and comply with the ISM Code and the ISPS Code.


11.17      No money
laundering.  Without prejudice to
the generality of Clause 4.3, in relation to the borrowing by the Borrower of
the Loan, the issue of any Guarantee on request of the Borrower, the
performance and discharge of its obligations and liabilities under the Finance
Documents, and the transactions and other arrangements effected or contemplated
by the Finance Documents to which the Borrower is a party, the Borrower



 48
 









confirms that it is acting for its
own account and that the foregoing will not involve or lead to contravention of
any law, official requirement or other regulatory measure or procedure
implemented to combat “money laundering” (as defined in Article 1 of the
Directive (91/308/EEC) of the Council of the European Communities).


12           GENERAL UNDERTAKINGS


12.1        General. The
Borrower undertakes with each Creditor Party to comply with the following
provisions of this Clause 12 at all times during the Security Period except as
the Agent may, with the authorisation of the Majority Lenders, otherwise permit
(which permission will not be unreasonably withheld in the circumstances
referred to in Clause 12.3 where the permission of the Agent is required).


12.2        Title; negative
pledge and pari passu ranking. 
The Borrower will:


(a)           Indirectly
hold the entire beneficial interest in, each Owner, free from all Security
Interests and other interests and rights of every kind, except for those
created by the Finance Documents;


(b)           not create
or permit to arise any Security Interest over any other asset, present or
future (including, but not limited to the Borrower’s rights against the Swap
Bank under the Master Agreement or all or any part of the Borrower’s interest
in any amount payable to the Borrower by the Swap Bank under the Master
Agreement) other than in the normal course of its business of acquiring,
financing and operating vessels; and


(c)           procure
that its liabilities under the Finance Documents to which it is a party do and
will rank at least pari passu with all its other present and future unsecured
liabilities, except for liabilities which are mandatorily preferred by law.


12.3        No disposal of
assets. The Borrower will not transfer, lease or otherwise dispose
of:


(a)           all or a
substantial part of its assets (including, without limitation, the shares of
the Owners), whether by one transaction or a number of transactions, whether
related or not; or


(b)           any debt
payable to it or any other right (present, future or contingent) to receive a
payment, including any right to damages or compensation,


if such
transfer, lease or disposal results in a reduction of the Market Value Adjusted
Total Assets by at least 50 per cent. (in all other circumstances the Borrower
shall be deemed to have complied with its obligations under this Clause 12.3 by
providing the Agent with prior written notice of its decision to transfer,
lease or otherwise dispose of its assets as aforesaid).


12.4        No other
liabilities or obligations to be incurred. The Borrower will not, and will procure
that none of the Owners will, incur any liability or obligation except
liabilities and obligations:


(a)           under the
Finance Documents and the Approved Purchase Contracts to which each is a party;


(b)           under the
Master Agreement (but in such case, only in connection with any Designated
Transactions);


(c)           incurred,
in the case of each Owner, in the normal course of its business of operating
vessels; and



 49
 









(d)           incurred, in the case of the Borrower, in
the normal course of its business of acquiring and financing vessels through
its wholly-owned subsidiaries.


12.5        Information
provided to be accurate.  All financial and
other information which is provided in writing by or on behalf of the Borrower
under or in connection with any Finance Document will be true and not
misleading and will not omit any material fact or consideration.


12.6        Provision of
financial statements. The Borrower will send to the Agent:


(a)           as soon as
possible, but in no event later than 180 days after the end of each Financial
Year of the Borrower (commencing with the Financial Year ended 31 December
2005), the audited consolidated accounts of the Borrower’s Group for that
Financial Year and the audited individual accounts of the Borrower for that
Financial Year; and


(b)           as soon as
possible, but in no event later than 90 days after the end of each financial
quarter in each Financial Year of the Borrower, the unaudited consolidated
accounts of the Borrower’s Group for that 3-month period.


12.7        Form of
financial statements.  All accounts
(audited and unaudited) delivered under Clause 12.6 will:


(a)           be
prepared in accordance with all applicable laws and USGAAP consistently
applied;


(b)           give a
true and fair view of the state of affairs of the Borrower or (as the case may
be) the Borrower’s Group at the date of those accounts and of their or its
profit for the period to which those accounts relate; and


(c)           fully
disclose or provide for all significant liabilities of the Borrower or (as the
case may be) the Borrower’s Group.


12.8        Shareholder and
creditor notices. The Borrower will send the Agent, at the same time as they
are despatched, copies of all documents which are despatched:


(a)           to the
Borrower’s creditors generally;


(b)           if there
is no Event of Default, to its shareholders (or any class of them) which the
Borrower is required to despatch by law; and


(c)           if there
is an Event of Default which is continuing, all documents despatched by the
Borrower to its shareholders (or any class of them).


12.9        Consents.  The Borrower will maintain in force and
promptly obtain or renew (or, as the case may be, will procure that there is
maintained in force and promptly obtained or renewed), and will promptly send
certified copies to the Agent of, all consents required:


(a)           for the
Borrower and each Owner to perform its obligations under any Finance Document
to which it is a party;


(b)           for the
validity or enforceability of any Finance Document to which it is a party; and


(c)           for each
Owner to continue to own and operate the Ship owned by it;


and the
Borrower will comply (or procure compliance) with the terms of all such
consents.


12.10      Maintenance of Security Interests. The
Borrower will:



 50
 









(a)           at its own cost, do all that it
reasonably can to ensure that any Finance Document validly creates the
obligations and the Security Interests which it purports to create; and


(b)           without
limiting the generality of paragraph (a) at its own cost, promptly register,
file, record or enrol any Finance Document with any court or authority in the
Marshall Islands, Liberia, Greece, Panama, Bahamas or Cyprus or such other
jurisdiction which the Lenders may reasonably require (including, without
limitation, any Approved Flag State if at the relevant time a Ship is
registered under the laws of such Approved Flag State), pay any stamp,
registration or similar tax in any such country in respect of any Finance
Document, give any notice or take any other step which, in the opinion of the
Majority Lenders, is or has become necessary or desirable for any Finance
Document to be valid, enforceable or admissible in evidence or to ensure or
protect the priority of any Security Interest which it creates.


12.11      Notification of
litigation. The Borrower will provide the Agent with details of any
legal or administrative action involving the Borrower, any Security Party, the
Approved Manager, any Ship, their Earnings or their Insurances as soon as such
action is instituted or it becomes apparent to the Borrower that it is likely
to be instituted, unless it is clear that the legal or administrative action
cannot be considered material in the context of any Finance Document.


12.12      No amendment to
Master Agreement;  Transactions.  The Borrower will not:


(a)           agree to
any amendment or supplement to, or waive or fail to enforce, the Master
Agreement or any of its provisions; or


(b)           enter into
any Transaction pursuant to the Master Agreement except Designated
Transactions.


12.13      No amendment to
the Existing Charters and Approved Purchase Contracts.  The Borrower will ensure that:


(a)           no
Existing Owner shall agree to any amendment or supplement to, or waive or fail
to enforce, any Existing Charter or any of its provisions; and


(b)           no
Approved Guarantor shall agree to any amendment or supplement to, or waive or
fail to enforce, an Approved Purchase Contract to which such Approved Guarantor
is a party or any of its provisions.


12.14      Principal place
of business. The Borrower will maintain its place of business, and keep
its corporate documents and records, at the address stated in Clause 29.2(a);
and the Borrower will not establish, or do anything as a result of which it
would be deemed to have, a place of business in any other country.


12.15      Confirmation of
no default. The Borrower will, within 3 Business Days after service by
the Agent of a written request, serve on the Agent a notice which is signed by
an authorised officer of the Borrower and which:


(a)           states
that no Event of Default or Potential Event of Default has occurred; or


(b)           states
that no Event of Default or Potential Event of Default has occurred, except for
a specified event or matter, of which all material details are given.


The Agent
may serve requests under this Clause 12.15 from time to time but only if asked
to do so by a Lender or Lenders having aggregate Contributions and Outstandings
exceeding 10 per cent. of the aggregate of the Loan and the Outstandings or (if
no Advance is outstanding at the relevant time) Commitments exceeding 10 per
cent. of the



 51
 









aggregate
of the Total Commitments; and this Clause 12.15 does not affect the Borrower’s
obligations under Clause 12.16.


12.16      Notification of
default. The Borrower will notify the Agent as soon as it becomes
aware of:


(a)           the
occurrence of an Event of Default or a Potential Event of Default; or


(b)           any matter
which indicates that an Event of Default or a Potential Event of Default may
have occurred;


and will
thereafter keep the Agent fully up-to-date with all developments.


12.17      Provision of
further information. The Borrower will, as soon as practicable after receiving
the request, provide the Agent with any additional financial or other
information relating:


(a)           to the
Borrower, the Owners, the Ships, their Earnings or their Insurances; or


(b)           to any
other matter relevant to, or to any provision of, an Approved Purchase
Contract, any Existing Charter or a Finance Document;


which may
be requested by the Agent or the Security Trustee or (through the Agent) by any
Lender at any time.


12.18      Provision of
copies and translation of documents. 
The Borrower will supply the Agent with a sufficient number of copies of
the documents referred to above to provide 1 copy for each Creditor Party; and
if the Agent so requires in respect of any of those documents, the Borrower
will provide a certified English translation prepared by a translator approved
by the Agent.


12.19      Time charter
assignment.  Without prejudice
to Clause 15.13, the Borrower shall procure that if any Owner enters into a
time charterparty or contract of affreightment in respect of its Ship which is
of 12 or more months in duration, or is capable of exceeding 12 months in
duration or any bareboat charter in respect of its Ship, such Owner shall at
the request of the Agent, execute in favour of the Security Trustee a
Charterparty Assignment and (in the case of any bareboat charter of a Ship) a
Bareboat Charter Security Agreement in respect of such charter and shall
deliver to the Agent such other documents equivalent to those referred to at
paragraphs 3, 4 and 5 of Part A of Schedule 3 hereof.


12.20      Purchase of
further tonnage.  The Borrower shall
procure that no Owner shall purchase any vessel other than an Approved Ship.


12.21      Provision of
confirmations.  The Borrower shall
provide to the Creditor Parties (or any of them) such documentation and
evidence as may be required by that Creditor Party from time to time to comply
with applicable law and regulations and its own internal guidelines in relation
to the opening of bank accounts and the identification of its customers.


12.22      Right of first
refusal in relation to refinancing of Pre-Delivery Advances.


(a)           The
Borrower shall not, and shall procure that no Approved Guarantor will, enter
into any discussion with any person in relation to the refinancing of any Pre-Delivery
Advance without first discussing the same with the Lenders and giving the
Lenders the option to refinance such Pre-Delivery Advance on terms to be agreed
between the Borrower and the Lenders.



 52
 









(b)           The
Borrower shall not, and shall procure that no Approved Guarantor will,
refinance any Pre-Delivery Advance with any person (other than the Lenders) on
terms agreed with that person unless the Lenders have first been given the
option pursuant to Clause 12.23(a) to refinance such Pre-Delivery Advance on
the same (or substantially similar) terms.


12.23      Tax Lease
Structure.  The Borrower may
place any Mortgaged Ship within a tax lease structure, with the prior written
consent of the Agent (to be given with the authorisation of, and upon such
terms and conditions as may be requested by, all the Lenders (acting in their
sole and absolute discretion, which shall include, without limitation, a
requirement that the Borrower pay an administration fee to the Agent (for and
on behalf of itself and the Lenders) in a reasonable amount to be agreed
between the Borrower and the Agent (acting with the authorisation of all the
Lenders (such authorisation not to be unreasonably withheld)) to compensate the
Agent and the Lenders for all additional work which will be required to
implement the tax lease structure).


13           CORPORATE UNDERTAKINGS


13.1        General. The
Borrower also undertakes with each Creditor Party to comply with the following
provisions of this Clause 13 at all times during the Security Period except as
the Agent may, with the authorisation of the Majority Lenders, otherwise permit
(such permission not to be unreasonably withheld in the case of Clause
13.3(e)).


13.2        Maintenance of
status. The Borrower will maintain its separate corporate existence
and remain in good standing under the laws of the Republic of the Marshall
Islands.


13.3        Negative
undertakings. The Borrower will not:


(a)           change the
nature of its business; or


(b)           pay any
dividend or make any other form of distribution at any time when an Event of
Default or a Potential Event of Default has occurred and is continuing or will
result from the payment of any dividend or the making of any other form of
distribution;


(c)           effect any
form of redemption, purchase or return of share capital at any time when an
Event of Default or a Potential Event of Default has occurred or is continuing
or will result from any form of redemption, purchase or return of share
capital; or


(d)           provide
any form of credit or financial assistance to:


(i)            a person
who is directly or indirectly interested in the Borrower’s share or loan
capital; or


(ii)           any
company in or with which such a person is directly or indirectly interested or
connected;


or enter
into any transaction with or involving such a person or company on terms which
are, in any respect, less favourable to the Borrower than those which it could
obtain in a bargain made at arms’ length Provided
that this shall not prevent or restrict the Borrower from on-lending
the Loan to the Owners; or


(e)           enter into
any form of amalgamation, merger or de-merger or any form of reconstruction or
reorganisation; or


(f)            cause the
shares of the Borrower to cease to be listed on the New York Stock Exchange.


13.4        Financial covenants.  The Borrower shall ensure that at all times:



 53
 









(a)           the ratio
of Total Liabilities (after deducting all Cash and Cash Equivalents) to Market
Value Adjusted Total Assets (after deducting all Cash and Cash Equivalents)
shall not exceed 0.7:1;


(b)           the
aggregate of all Cash and Cash Equivalents shall not be less than $30,000,000;


(c)           the
Interest Coverage Ratio shall not be less than 2.5:1; and


(d)           the Market
Value Adjusted Net Worth of the Borrower’s Group shall not be less than
$400,000,000.


13.5        Compliance
check.  Compliance with the
undertakings contained in Clause 13.4 shall be determined in each Financial
Year:


(a)           at the
time the Agent receives the Applicable Accounts of the Borrower’s Group for the
first 6-month period of the Borrower’s Group in each Financial Year (pursuant
to Clause 12.6(b)), by reference to the unaudited Applicable Accounts for the
first two financial quarters in the relevant Financial Year and, in the case of
the second 6-month period, by reference to the audited Applicable Accounts of
the Borrower’s Group in each Financial Year;


(b)           at any
other time as the Agent may reasonably request by reference to such evidence as
the Lenders may require to determine and calculate the financial covenants
referred to in Clause 13.4.


At the
same time as it delivers the Applicable Accounts referred to in this Clause
13.5, the Borrower shall deliver to the Agent a certificate in the form set out
in Schedule 6 demonstrating its compliance (or not, as the case may be) with
the provisions of Clause 13.4 signed by the chief financial officer of the
Borrower.


13.6        Subordination
of rights of Borrower.  All rights which the
Borrower at any time has (whether in respect of the on-lending of the Loan or
any other transaction) against any Owner or their respective assets shall be
fully subordinated to the rights of the Creditor Parties under the Finance
Documents;  and in particular, the
Borrower shall not during the Security Period:


(a)           claim, or
in a bankruptcy of any Owner prove for, any amount payable to the Borrower by
an Owner, whether in respect of the on-lending of the Loan or any other
transaction;


(b)           take or
enforce any Security Interest for any such amount; or


(c)           claim to
set-off any such amount against any amount payable by the Borrower to any
Owner.


13.7        Maintenance of ownership of
Owners.  The
Borrower shall remain the ultimate legal and beneficial owner of the entire
issued and allotted share capital of each Owner which at the relevant time is party
to an Owner Guarantee free from any Security Interest.


14           INSURANCE


14.1        General. The
Borrower also undertakes with each Creditor Party to procure that each Owner
will comply with the following provisions of this Clause 14 at all times during
the Security Period except as the Agent may, with the authorisation of the
Majority Lenders, otherwise permit.


14.2        Maintenance of
obligatory insurances.  The Borrower shall
procure that each Owner shall keep the Ship owned by it insured at the expense
of that Owner against:



 54
 









(a)           fire and
usual marine risks (including hull and machinery and excess risks);


(b)           war risks;


(c)           protection
and indemnity risks;


(d)           any other
risks against which the Security Trustee considers, having regard to practices
and other circumstances prevailing at the relevant time, it would in the
opinion of the Security Trustee be reasonable for that Owner to insure and
which are specified by the Security Trustee by notice to that Owner.


14.3        Terms of
obligatory insurances. The Borrower shall procure that each Owner shall effect
such insurances:


(a)           in
Dollars;


(b)           in the
case of fire and usual marine risks and war risks, in an amount on an agreed
value basis being at least the greater of (i) the Market Value of the Ship
owned by it and (ii) together with the other Mortgaged Ships, 120 per cent. of:


(i)            the
aggregate of the Loan and the Outstandings; less


(ii)           the
aggregate of all Pre-Delivery Advances;


(c)           in the
case of oil pollution liability risks, for an aggregate amount equal to the
highest level of cover from time to time available under basic protection and
indemnity club entry and in the international marine insurance market;


(d)           in
relation to protection and indemnity risks in respect of the full tonnage of
the Ship owned by it;


(e)           on approved
terms; and


(f)            through
approved brokers and with approved insurance companies and/or underwriters or,
in the case of war risks and protection and indemnity risks, in approved war
risks and protection and indemnity risks associations.


14.4        Further protections
for the Creditor Parties.  In addition to the
terms set out in Clause 14.3, the Borrower shall procure that the obligatory
insurances shall:


(a)           (except in
relation to risks referred to in Clause 14.2(c)) if the Security Trustee so
requires, name (or be amended to name) the Security Trustee as additional named
assured for its rights and interests, warranted no operational interest and
with full waiver of rights of subrogation against the Security Trustee, but
without the Security Trustee thereby being liable to pay (but having the right
to pay) premiums, calls or other assessments in respect of such insurance;


(b)           name the
Security Trustee as loss payee with such directions for payment as the Security
Trustee may specify;


(c)           provide
that all payments by or on behalf of the insurers under the obligatory
insurances to the Security Trustee shall be made (other than in respect of
premiums due in relation to the Ships) without set-off, counterclaim or
deductions or condition whatsoever;


(d)           provide that
such obligatory insurances shall be primary without right of contribution from
other insurances which may be carried by the Security Trustee or any other
Creditor Party; and



 55
 









(e)           provide
that the Security Trustee may make proof of loss if any Owner fails to do so.


14.5        Renewal of
obligatory insurances. The Borrower shall procure that each Owner shall:


(a)           at least
21 days before the expiry of any obligatory insurance effected by it:


(i)            notify the
Security Trustee of the brokers (or the insurers) and any protection and
indemnity or war risks association through or with whom that Owner proposes to
renew that insurance and of the proposed terms of renewal; and


(ii)           seek the
Security Trustee’s approval to the matters referred to in paragraph (i);


(b)           at least
14 days before the expiry of any obligatory insurance effected by it, renew the
insurance in accordance with the Security Trustee’s approval pursuant to
paragraph (a); and


(c)           procure
that the approved brokers and/or the war risks and protection and indemnity
associations with which such a renewal is effected shall promptly after the
renewal notify the Security Trustee in writing of the terms and conditions of
the renewal.


14.6        Copies of
policies; letters of undertaking. The Borrower shall procure that each
Owner shall ensure that all approved brokers provide the Security Trustee with
pro forma copies of all policies relating to the obligatory insurances which
they are to effect or renew and with a letter or letters of undertaking in a
form required by the Security Trustee and including undertakings by the
approved brokers that:


(a)           they will
have endorsed on each policy, immediately upon issue, a loss payable clause and
a notice of assignment complying with the provisions of Clause 14.4;


(b)           they will
hold such policies, and the benefit of such insurances, to the order of the
Security Trustee in accordance with the said loss payable clause;


(c)           they will
advise the Security Trustee immediately of any material change to the terms of
the obligatory insurances;


(d)           they will
notify the Security Trustee, not less than 14 days before the expiry of the
obligatory insurances, in the event of their not having received notice of
renewal instructions from that Owner or its agents and, in the event of their
receiving instructions to renew, they will promptly notify the Security Trustee
of the terms of the instructions; and


(e)           they will
not (other than in respect of premiums due in relation to the other Mortgaged
Ships) set off against any sum recoverable in respect of a claim relating to
the Ship owned by that Owner under such obligatory insurances any premiums or
other amounts due to them or any other person whether in respect of that Ship
or otherwise, they waive any lien on the policies or any sums received under them,
which they might have in respect of such premiums or other amounts, and they
will not cancel such obligatory insurances by reason of non-payment of such
premiums or other amounts, and will arrange for a separate policy to be issued
in respect of that Ship forthwith upon being so requested by the Security
Trustee.


14.7        Copies of
certificates of entry. The Borrower shall procure that each Owner shall ensure
that any protection and indemnity and/or war risks associations in which the
Ship owned by it is entered provides the Security Trustee with:


(a)           a
certified copy of the certificate of entry for that Ship;


(b)           a letter
or letters of undertaking in such form as may be required by the Security
Trustee;



 56
 









(c)           where
required to be issued under the terms of insurance/indemnity provided by that
Owner’s protection and indemnity association, a certified copy of each United
States of America voyage quarterly declaration (or other similar document or
documents) made by that Owner in relation to that Ship in accordance with the
requirements of such protection and indemnity association; and


(d)           a
certified copy of each certificate of financial responsibility for pollution by
oil or other Environmentally Sensitive Material issued by the relevant
certifying authority in relation to that Ship.


14.8        Deposit of
original policies. The Borrower shall procure that each Owner shall ensure
that all policies relating to obligatory insurances effected by it are
deposited with the approved brokers through which the insurances are effected
or renewed.


14.9        Payment of
premiums. The Borrower shall procure that each Owner shall punctually
pay all premiums or other sums payable in respect of the obligatory insurances
effected by it and produce all relevant receipts when so required by the Security
Trustee.


14.10      Guarantees. The
Borrower shall procure that each Owner shall ensure that any guarantees
required by a protection and indemnity or war risks association are promptly
issued and remain in full force and effect.


14.11      Compliance with
terms of insurances. The Borrower shall procure that no Owner shall do nor omit
to do (nor permit to be done or not to be done) any act or thing which would or
might render any obligatory insurance invalid, void, voidable or unenforceable
or render any sum payable thereunder repayable in whole or in part; and, in
particular that:


(a)           each Owner
shall take all necessary action and comply with all requirements which may from
time to time be applicable to the obligatory insurances, and (without limiting
the obligation contained in Clause 14.7(c)) ensure that the obligatory
insurances are not made subject to any exclusions or qualifications to which
the Security Trustee has not given its prior approval;


(b)           no Owner
shall make any changes relating to the classification or classification society
or manager or operator of the Ship owned by it unless approved (where
applicable) by the underwriters of the obligatory insurances;


(c)           each Owner
shall make all quarterly or other voyage declarations which may be required by
the protection and indemnity risks association to maintain cover for trading to
the United States of America and Exclusive Economic Zone (as defined in the
United States Oil Pollution Act 1990 or any other applicable legislation); and


(d)           no Owner
shall employ the Ship owned by it, nor allow it to be employed, otherwise than
in conformity with the terms and conditions of the obligatory insurances,
without first obtaining the consent of the insurers and complying with any
requirements (as to extra premium or otherwise) which the insurers specify.


14.12      Alteration to
terms of insurances.  The Borrower shall
procure that no Owner shall neither make or agree to any alteration to the
terms of any obligatory insurance nor waive any right relating to any obligatory
insurance.


14.13      Settlement of
claims.  The Borrower shall
procure that no Owner shall settle, compromise or abandon any claim under any
obligatory insurance for Total Loss or (subject as hereinafter provided) for a
Major Casualty, and shall do all things necessary and provide all documents,
evidence and information to enable the Security Trustee to collect or recover
any moneys which at any time become payable in respect of the obligatory
insurances.



 57
 









14.14      Provision of
copies of communications. If the Security Trustee shall so request in respect of an
Owner, the Borrower shall procure that that Owner shall provide the Security
Trustee, at the time of each such communication or as otherwise specified by
the Security Trustee, copies of all written communications which may be
reasonably requested by the Security Trustee between that Owner and:


(a)           the
approved brokers; and


(b)           the
approved protection and indemnity and/or war risks associations; and


(c)           the
approved insurance companies and/or underwriters;


which
relate directly or indirectly to:


(i)            that Owner’s
obligations relating to the obligatory insurances including, without
limitation, all requisite declarations and payments of additional premiums or
calls; and


(ii)           any credit
arrangements made between that Owner and any of the persons referred to in
paragraphs (a) or (b) above relating wholly or partly to the effecting or
maintenance of the obligatory insurances.


14.15      Provision of
information.  In addition, the
Borrower shall procure that each Owner shall promptly provide the Security
Trustee (or any persons which it may designate) with any information which the
Security Trustee (or any such designated person) reasonably requests for the
purpose of:


(a)           obtaining
or preparing any report from an independent marine insurance broker as to the
adequacy of the obligatory insurances effected or proposed to be effected;
and/or


(b)           effecting,
maintaining or renewing any such insurances as are referred to in Clause 14.16
below or dealing with or considering any matters relating to any such
insurances;


and the
Borrower shall, forthwith upon demand, indemnify the Security Trustee in
respect of all fees and other expenses reasonably incurred by or for the
account of the Security Trustee in connection with any such report as is
referred to in paragraph (a) above.


14.16      Mortgagee’s
interest and additional perils insurances. 
The Security Trustee shall maintain and renew all or any of the
following insurances on such terms, conditions, through such insurers and
generally in such manner as the Security Trustee may from time to time consider
appropriate:


(a)           a
mortgagee’s interest marine insurance in an amount of not less than 120 per
cent. of the aggregate of the Loan and the Outstandings providing for the
indemnification of the Creditor Parties for any losses under or in connection
with any Finance Document which directly or indirectly result from loss of or
damage to any Ship or a liability of any Ship or of any Owner, being a loss or
damage which is prima facie covered by an obligatory insurance but in respect
of which there is a non-payment (or reduced payment) by the underwriters by
reason of, or on the basis of an allegation concerning:


(i)            any act or
omission on the part of any Owner, of any operator, charterer, manager or
sub-manager of any Ship or of any officer, employee or agent of any Owner or of
any such person, including any breach of warranty or condition or any
non-disclosure relating to such obligatory insurance;


(ii)           any act or
omission, whether deliberate, negligent or accidental, or any knowledge or
privity of any Owner, any other person referred to in paragraph (i)



 58
 









above, or of any officer, employee
or agent of any Owner or of such a person, including the casting away or
damaging of any Ship and/or any Ship being unseaworthy; and/or


(iii)          any other
matter capable of being insured against under a mortgagee’s interest marine
insurance policy whether or not similar to the foregoing; and


(b)           a
mortgagee’s interest additional perils policy in an amount of not less than 120
per cent. of the aggregate of the Loan and the Outstandings providing for the
indemnification of the Creditor Parties against, among other things, any
possible losses or other consequences of any Environmental Claim, including the
risk of expropriation, arrest or any form of detention of any Ship, or the
imposition of any Security Interest over any Ship and/or any other matter
capable of being insured against under a mortgagee’s interest additional perils
policy,


and the
Borrower shall upon demand fully indemnify the Security Trustee in respect of
all premiums and other reasonable expenses which are incurred in connection
with or with a view to effecting, maintaining or renewing any such insurance or
dealing with, or considering, any matter arising out of any such insurance.


14.17      Review of
insurance requirements.  The Security Trustee
shall be entitled to review after prior consultation with the Borrower the
requirements of this Clause 14 from time to time in order to take account of
any changes in circumstances after the date of this Agreement which are, in the
opinion of the Security Trustee, significant and capable of affecting the
Owners or the Ships and its or their insurance (including, without limitation,
changes in the availability or the cost of insurance coverage or the risks to
which the Owners may be subject).


14.18      Modification of
insurance requirements.  The Security Trustee
shall promptly notify the Borrower and the Owners of any proposed modification
under Clause 14.17 to the requirements of this Clause 14 which the Security
Trustee reasonably considers appropriate in the circumstances, and such
modification shall take effect on and from the date it is notified in writing
to the Borrower and the Owners as an amendment to this Clause 14 and shall bind
the Borrower accordingly.


14.19      Compliance with
mortgagee’s instructions.  The Security Trustee
shall be entitled (without prejudice to or limitation of any other rights which
it may have or acquire under any Finance Document) to require any Ship to
remain at any safe port or to proceed to and remain at any safe port designated
by the Security Trustee until the Owners implement any amendments to the terms
of the obligatory insurances and any operational changes required as a result
of a notice served under Clause 14.18 and the Borrower shall procure that the
Owners comply with any such requirement within a reasonable period of time in
the context of the then prevailing circumstances.


15           SHIP COVENANTS


15.1        General. The
Borrower also undertakes with each Creditor Party to procure that each Owner
shall comply with the following provisions of this Clause 15 at all times
during the Security Period except as the Agent, with the authorisation of the
Majority Lenders (such authorisation not to be unreasonably withheld in the
case of a proposed change of name or port of registry under the same flag of a
Ship), may otherwise permit.


15.2        Ship’s name and
registration. Each Owner shall keep the Ship owned by it registered in
its name as a ship registered under an Approved Flag and shall not do or allow
to be done anything as a result of which such registration might be cancelled
or imperilled; and shall not change the port of registry or the name of that
Ship.



 59
 









15.3        Repair and
classification. Each Owner shall keep the Ship owned by it in a good and
safe condition and state of repair:


(a)           consistent
with first-class ship ownership and management practice;


(b)           so as to
maintain the highest class with a classification society which is a member of
the International Association of Classification Societies and which is
acceptable to the Agent (acting upon the instructions of the Majority Lenders)
free of all overdue recommendations and conditions affecting class; and


(c)           so as to
comply with all laws and regulations applicable to vessels registered on an
Approved Flag or to vessels trading to any jurisdiction to which that Ship may
trade from time to time including, but not limited to, the ISM Code, the ISM
Code Documentation, the ISPS Code and the ISPS Code Documentation.


15.4        Classification
society undertaking. The Borrower shall procure that each Owner shall instruct
the classification society of the Ship owned by it to do all or any of the
following after the occurrence of an Event of Default or a Potential Event of
Default (and procure that the classification society undertakes with the
Security Trustee at such time):


(a)           to send to
the Security Trustee, following receipt of a written request from the Security
Trustee, certified true copies of all original class records held by the
classification society in relation to that Ship;


(b)           to allow
the Security Trustee (or its agents),  at
any time and from time to time, to inspect the original class and related
records of that Owner and that Ship at the offices of the classification
society and to take copies of them;


(c)           to notify
the Security Trustee immediately in writing if the classification society:


(i)            receives
notification from that Owner or any person that that Ship’s classification
society is to be changed; or


(ii)           becomes
aware of any facts or matters which may result in or have resulted in a change,
suspension, discontinuance, withdrawal or expiry of that Ship’s class under the
rules or terms and conditions of that Owner’s or that Ship’s membership of the
classification society;


(d)           following
receipt of a written request from the Security Trustee:


(i)            to confirm
that that Owner is not in default of any of its contractual obligations or
liabilities to the classification society and, without limiting the foregoing,
that it has paid in full all fees or other charges due and payable to the
classification society; or


(ii)           if that
Owner is in default of any of its contractual obligations or liabilities to the
classification society, to specify to the Security Trustee in reasonable detail
the facts and circumstances of such default, the consequences thereof, and any
remedy period agreed or allowed by the classification society.


15.5        Modification. The
Borrower shall procure that no Owner shall make any modification or repairs to,
or replacement of, the Ship owned by it or equipment installed on her which
would or might materially alter the structure, type or performance
characteristics of that Ship or materially reduce her value.


15.6        Removal of
parts. The Borrower shall procure that no Owner shall remove any
material part of the Ship owned by it, or any item of equipment installed on,
that Ship unless the part or item so removed is forthwith replaced by a
suitable part or item which is in the



 60















same condition as or better condition than
the part or item removed, is free from any Security Interest or any right in
favour of any person other than the Security Trustee and becomes on
installation on that Ship the property of that Owner and subject to the
security constituted by the relevant Mortgage Provided that an Owner may install
equipment owned by a third party if the equipment can be removed without any
risk of damage to the Ship owned by it.


15.7                        Surveys. The Borrower shall procure
that each Owner shall submit the Ship owned by it regularly to all periodical
or other surveys which may be required for classification purposes and, if so
required by the Security Trustee provide the Security Trustee, with copies of
all survey reports.


15.8                        Inspection.  The Borrower shall:


(a)                                  ensure that each Owner shall
permit the Security Trustee (by surveyors or other persons appointed by it for
that purpose) to board the Ship (at the risk of the relevant Owner save where
any loss is shown to have been directly and mainly caused by the gross
negligence or wilful misconduct of such surveyor or other person) owned by it
at all reasonable times to inspect her condition or to satisfy themselves about
proposed or executed repairs or to prepare a survey report (at the reasonable
cost of the Borrower) in respect of such Ship and shall afford all proper
facilities for such inspections Provided that
such boarding and inspection does not materially disrupt the relevant Ship’s
reasonable operation, repairs or maintenance; and


(b)                                 ensure that each Ship shall,
both at the time of the survey referred to in this Clause 15.8 and at all other
times throughout the Security Period, be in a good and safe condition and state
of repair.


15.9                        Prevention of and release from
arrest. The
Borrower shall procure that each Owner shall promptly discharge or settle:


(a)                                  all liabilities which give
or may give rise to maritime or possessory liens on or claims enforceable
against the Ship owned by it, her Earnings or her Insurances other than such
liens and claims arising in the ordinary course of business (which must in any
event be discharged in accordance with best ship management practice);


(b)                                 all taxes, dues and other
amounts charged in respect of the Ship owned by it, her Earnings or her
Insurances; and


(c)                                  all other outgoings
whatsoever in respect of the Ship owned by it, her Earnings or her Insurances;


and, forthwith upon
receiving notice of the arrest of that Ship, or of her detention in exercise or
purported exercise of any lien or claim, the Borrower shall procure that the
Owner of that Ship shall procure her release within 5 Business Days of
receiving such notice by providing bail or otherwise as the circumstances may
require.


15.10                 Compliance with laws etc. The Borrower shall procure
that each Owner and the Approved Manager shall:


(a)                                  comply, or procure
compliance with, the ISM Code, the ISPS Code, all Environmental Laws and all
other laws or regulations relating to the Ship owned by it, its ownership,
operation and management or to the business of that Owner;


(b)                                 not employ the Ship owned by
it nor allow her employment in any manner contrary to any law or regulation in
any relevant jurisdiction including, but not limited to, the ISM Code and the
ISPS Code; and



 61
 









(c)                                  in the event of hostilities
in any part of the world (whether war is declared or not), not cause or permit
the Ship owned by it to enter or trade to any zone which is declared a war zone
by any government or by that Ship’s war risks insurers unless, in the case of
such a zone where an additional premium would be payable, that Owner has (at
its expense) effected any special, additional or modified insurance cover
required for it to enter or trade to any war zone.


15.11                 Provision of information. The Borrower shall procure
that each Owner shall promptly provide the Agent with any information which it
reasonably requests regarding:


(a)                                  the Ship owned by it, her
employment, position, engagements and her Insurances;


(b)                                 the Earnings and payments
and amounts due to the master and crew of the Ship owned by it;


(c)                                  any expenses incurred, or
likely to be incurred, in connection with the operation, maintenance or repair
of the Ship owned by it and any payments made in respect of that Ship;


(d)                                 any towages and salvages;
and


(e)                                  that Owner’s compliance, the
Approved Manager’s compliance, or the compliance of the Ship owned by it, with
the ISM Code and the ISPS Code;


and, upon the Agent’s
request, provide copies of any current charter relating to the Ship owned by
it, of any current charter guarantee and, of the ISM Code Documentation and the
ISPS Code Documentation.


15.12                 Notification of certain events. The Borrower shall procure
that each Owner shall, as soon as it becomes aware of any of the events
referred to in this Clause 15.12, notify the Agent by fax, confirmed forthwith
by letter, of:


(a)                                  any casualty which is or is
likely to be or to become a Major Casualty;


(b)                                 any occurrence as a result
of which the Ship owned by it has become or is, by the passing of time or
otherwise, likely to become a Total Loss;


(c)                                  any requirement or
recommendation made by any insurer or classification society or by any
competent authority which is not complied with in accordance with its terms
(including, without limitation, any time limit specified by any insurer or classification
society or any competent authority);


(d)                                 any arrest or detention of
the Ship owned by it (if the arrest or detention has not been released within 3
Business Days of its imposition or the Borrower or the relevant Owner considers
that the arrest or detention will not be released within 3 Business Day of its
imposition), any exercise or purported exercise of any lien on that Ship or her
Earnings or her Insurances or any requisition of that Ship for hire;


(e)                                  any intended dry docking of
the Ship owned by it which the Owner knows, or reasonably determines, will or
may exceed (or has exceeded) 10 days in total;


(f)                                    any Environmental Claim made
against that Owner or in connection with the Ship owned by it, or any
Environmental Incident;


(g)                                 any claim for breach of the
ISM Code or the ISPS Code being made against that Owner and, to the extent that
that Owner is aware of such claim, the Approved Manager or otherwise in
connection with the Ship owned by it; or



 62
 









(h)                                 any other matter, event or
incident, actual or threatened the effect of which will or could lead to the
ISM Code or the ISPS Code not being complied with;


and that that Owner shall
keep the Agent advised in writing on a regular basis and in such detail as the
Agent shall require of that Owner’s or any other person’s response to any of
those events or matters.


15.13                 Restrictions on chartering,
appointment of managers etc. The Borrower shall procure that no Owner shall, in
relation to the Ship owned by it:


(a)                                  save for any Existing
Charter existing on the date of this Agreement which is a bareboat charter, let
the Ship owned by it on demise charter for any period;


(b)                                 enter into any time or
consecutive voyage charter in respect of the Ship owned by it for a term of at
least, or which by virtue of any optional extensions may be at least, 12
months;


(c)                                  charter the Ship owned by it
otherwise than on bona fide arm’s length terms at the time when that Ship is
fixed;


(d)                                 appoint (or permit the
appointment of) a manager of the Ship owned by it other than the Approved
Manager or agree to any alteration to the terms of the Approved Manager’s
appointment;


(e)                                  de-activate or lay up the
Ship owned by it; or


(f)                                    put the Ship owned by it
into the possession of any person for the purpose of work being done upon her
in an amount exceeding or likely to exceed $1,000,000 (or the equivalent in any
other currency) unless that person has first given to the Security Trustee and
in terms satisfactory to it a written undertaking not to exercise any lien on
that Ship or her Earnings or her Insurances for the cost of such work or
otherwise or other arrangements satisfactory to the Security Trustee are made
to ensure that no such lien will be exercised.


15.14                 Notice of Mortgage. The Borrower shall procure
that each Owner shall keep the relevant Mortgage registered against the Ship
owned by it as a valid first priority mortgage, carry on board that Ship a
certified copy of the relevant Mortgage and place and maintain in a conspicuous
place in the navigation room and the Master’s cabin of that Ship a framed
printed notice stating that that Ship is mortgaged by that Owner to the
Lenders.


15.15                 Sharing of Earnings. The Borrower shall procure
that no Owner shall:


(a)                                  enter into any agreement or
arrangement for the sharing of any Earnings;


(b)                                 enter into any agreement or
arrangement for the postponement of any date on which any Earnings are due; the
reduction of the amount of any Earnings or otherwise for the release or adverse
alteration of any right of that Owner to any Earnings; or


(c)                                  enter into any agreement or
arrangement for the release of, or adverse alteration to, any guarantee or
Security Interest relating to any Earnings.


16                                  SECURITY COVER


16.1                        Provision of additional security
cover; prepayment.  The Borrower undertakes with each Creditor
Party that, if at any time the Agent notifies the Borrower that:


(a)                                  the aggregate of the Market
Values of the Mortgaged Ships; plus


(b)                                 the net realisable value of
any additional security previously provided under this Clause 16,



 63
 









is below 125 per cent. of
the aggregate of the Loan, the Swap Exposure and the Outstandings less the
aggregate of all Pre-Delivery Advances, the Borrower will, within 14 Business
Days after the date on which the Agent’s notice is served, either:


(i)                                     provide, or ensure that a
third party provides, additional security acceptable to the Lenders which, in
the opinion of the Majority Lenders, has a net realisable value at least equal
to the shortfall and which, if it consists of or includes a Security Interest,
covers such asset or assets and is documented in such terms as the Agent may,
with authorisation from the Majority Lenders, approve or require; or


(ii)                                  prepay in accordance with
Clause 9 such part (at least) of the Loan and/or procure cancellation of such
part of the Outstandings as will eliminate the shortfall.


16.2                        Meaning of additional security.  In Clause 16.1 “security” means a Security Interest over an asset or assets
acceptable to the Lenders (whether securing the Borrower’s liabilities under
the Finance Documents or a guarantee in respect of those liabilities), or a
guarantee, letter of credit or other security in respect of the Borrower’s
liabilities under the Finance Documents.


16.3                        Requirement for additional
documents.  The Borrower shall not be deemed to have
complied with paragraph (i) of Clause 16.1 until the Agent has received in
connection with the additional security certified copies of documents of the
kinds referred to in paragraphs 3, 4 and 5 of Schedule 3 Part A and such legal
opinions in terms acceptable to the Majority Lenders from such lawyers as they
may select.


16.4                        Valuation of Ship not subject to
a long-term charter.  The Market Value of a Mortgaged Ship which at
the relevant time is not subject to a charter or other contract of employment
having an unexpired term of at least 12 months with a first class acceptable
charterer (in the absolute discretion of the Agent) is that shown by taking the
average of two valuations prepared:


(a)                                  as at a date not more than 6
weeks previously;


(b)                                 by 2 Approved Brokers
appointed by the Borrower, with both reporting to the Agent;


(c)                                  with or without physical
inspection of that Ship (as the Agent may require);


(d)                                 on the basis of a sale for
prompt delivery for cash on normal arm’s length commercial terms as between a
willing seller and a willing buyer, free of any existing charter or other
contract of employment; and


(e)                                  after deducting the
estimated amount of the usual and reasonable expenses which would be incurred
in connection with the sale.


Provided that if the difference between the 2 valuations obtained at any
one time pursuant to this Clause 16.4 is greater than 10 per cent. a valuation
shall be commissioned from a third Approved Broker appointed by the Agent.  Such valuation shall be conducted in accordance
with this Clause 16.4 and the Market Value of the Ship in such circumstances
shall be the average of the initial 2 valuations and the valuation provided by
the third Approved Broker.


16.5                        Valuation of Ship subject to
long-term charter.  The Market Value of a
Mortgaged Ship which at the relevant time is subject to a charter or other
contract of employment having an unexpired term of at least 12 months with a
first class charterer acceptable to the Agent (which acceptance shall not be
unreasonably withheld) shall be the aggregate of the present values (as may be
conclusively determined by the Agent) of:



 64
 









(a)                                  the Bareboat-equivalent Time
Charter Income of the Ship in respect of the remaining unexpired term of the
relevant charter or other contract of employment excluding any periods for
which the relevant charter or contract of employment may be renewed at the
option of any party (for the purposes of this Clause 16.5, an “option period”); and


(b)                                 the current charter-free
market value (determined in accordance with Clause 16.4 but subject to the
adjustments referred to in this Clause 16.5) of a vessel with identical
characteristics to the Ship other that its age which shall, for the purposes of
this Clause 16.5, be considered to be the age of the Ship at the expiration of
the charter or other contract of employment to which the Ship is subject at the
relevant time (excluding any option periods), as such value may be adjusted to
take into account the terms of any commitments undertaken by the Owner of the
Ship which may affect its value.


For the purposes of this
Clause 16.5, the discount rate which will apply in calculating the present
value of the amounts referred to in paragraphs (a) and (b) will be the
applicable Interest Rate Swap Rate for a period equal to the unexpired term of
the Ship’s time charter or other contract of employment (excluding any option
periods (rounded up to the nearest integral year)) unless the unexpired term of
the Ship’s charter or other contract of employment (excluding any option periods)
is less than 12 months in which the Interest Rate Swap Rate for a period of 12
months will apply.


16.6                        Value of additional security.  The net realisable value of any additional
security which is provided under Clause 16.1 and which consists of a Security
Interest over a vessel shall be that shown by a valuation complying with the
requirements of Clause 16.4.


16.7                        Valuations binding.  Any valuation under paragraph (i) of Clause
16.1, Clauses 16.4, 16.5 or 16.6 shall, in the absence of manifest error, be binding
and conclusive as regards the Borrower, as shall be any valuation which the
Majority Lenders make of a security which does not consist of or include a
Security Interest.


16.8                        Provision of information.  The Borrower shall promptly provide the Agent
and any Approved Broker or expert acting under Clause 16.4, 16.5 or 16.6 with
any information which the Agent or the Approved Broker or expert may reasonably
request for the purposes of the valuation; and, if the Borrower fails to
provide the information by the date specified in the request, the valuation may
be made on any basis and assumptions which the Approved Broker or the Majority
Lenders (or the expert appointed by them) consider prudent.


16.9                        Payment of valuation expenses.  Without prejudice to the generality of the
Borrower’s obligations under Clauses 21.2, 21.3 and 22.3, the Borrower shall,
on demand, pay the Agent the amount of the fees and expenses of any Approved
Broker or expert instructed or approved by the Agent under this Clause and all
legal and other expenses incurred by any Creditor Party in connection with any
matter arising out of this Clause.


16.10                 Frequency of Valuations.  The Borrower acknowledges and agrees that the
Agent may commission valuations of the Mortgaged Ships at such times as the
Majority Lenders shall deem necessary and, in any event, not less often than
once during each 3-month period of the Security Period Provided that in each calendar year one
set of valuations of each Ship may be obtained from the electronic services provided
by an Approved Broker subject to such electronic services having been
previously approved by the Agent (acting upon the instructions of the Majority
Lenders) in writing.


17                                  PAYMENTS AND CALCULATIONS


17.1                        Currency and method of payments.  All payments to be made:


(a)                                  by the Lenders to the Agent;
or



 65
 









(b)                                 by the Borrower to the
Agent, the Security Trustee or any Lender,


under a Finance Document
shall be made to the Agent or to the Security Trustee, in the case of an amount
payable to it:


(i)                                     if in Dollars, by not later
than 11.00 a.m. (New York City time) and if in an Optional Currency, by not
later than 11.00 a.m. (in the principal financial centre for that Optional
Currency), in each case on  the
due date;


(ii)                                  if in Dollars, in same day
Dollar funds settled through the New York Clearing House Interbank Payments
System and if in an Optional Currency, in immediately available funds (or in
each case in such other funds and/or settled in such other manner as the Agent
shall specify as being customary at the time for the settlement of
international transactions of the type contemplated by this Agreement
denominated in Dollars or the relevant Optional Currency);


(iii)                               in the case of an amount
payable by a Lender to the Agent or by the Borrower to the Agent or any Lender,
if in Dollars, to the account of the Agent at the Receiving Bank (Account No
000261123) with reference “Danaos Corporation - US$700m facility”, or if in an
Optional Currency to such account of the Agent with such bank as the Agent
shall have notified to the Borrower and the other Creditor Parties, or in each
case to such other account with such other bank as the Agent may from time to
time notify to the Borrower and the other Creditor Parties; and


(iv)                              in the case of an amount
payable to the Security Trustee, to such account as it may from time to time
notify to the Borrower and the other Creditor Parties.


17.2                        Payment on non-Business Day.  If any payment by the Borrower under a
Finance Document would otherwise fall due on a day which is not a Business Day:


(a)                                  the due date shall be
extended to the next succeeding Business Day; or


(b)                                 if the next succeeding
Business Day falls in the next calendar month, the due date shall be brought
forward to the immediately preceding Business Day;


and interest shall be
payable during any extension under paragraph (a) at the rate payable on the
original due date.


17.3                        Basis for calculation of periodic
payments.  All interest and commitment fee and any other
payments under any Finance Document which are of an annual or periodic nature
shall accrue from day to day and shall be calculated on the basis of the actual
number of days elapsed and a 360 day year or (in relation to any amount
denominated in Sterling) a 365 day year.


17.4                        Currency of Interest Payments.  All payments of interest in respect of the
Loan or any part thereof shall be made in the currency in which the Loan or the
relevant part thereof is outstanding at the relevant time.


17.5                        Distribution of payments to
Creditor Parties.  Subject to Clauses 17.6, 17.7 and 17.8:


(a)                                  any amount received by the
Agent under a Finance Document for distribution or remittance to a Lender, the
Issuing Bank or the Security Trustee shall be made available by the Agent to
that Lender, the Issuing Bank or, as the case may be, the Security Trustee by
payment, with funds having the same value as the funds received, to such
account as the Lender, the Issuing Bank or the Security Trustee may have
notified to the Agent not less than 5 Business Days previously; and



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(b)                                 amounts to be applied in
satisfying amounts of a particular category which are due to the Lenders
generally shall be distributed by the Agent to each Lender pro rata to the
amount in that category which is due to it.


17.6                        Permitted deductions by Agent.  Notwithstanding any other provision of this
Agreement or any other Finance Document, the Agent may, before making an amount
available to a Lender or the Issuing Bank, deduct and withhold from that amount
any sum which is then due and payable to the Agent from the Issuing Bank or
that Lender under any Finance Document or any sum which the Agent is then
entitled under any Finance Document to require that Lender or the Issuing Bank
to pay on demand.


17.7                        Agent only obliged to pay when
monies received.  Notwithstanding any other provision of this
Agreement or any other Finance Document, the Agent shall not be obliged to make
available to the Borrower, the Issuing Bank or any Lender any sum which the
Agent is expecting to receive for remittance or distribution to the Borrower, the
Issuing Bank or that Lender until the Agent has satisfied itself that it has
received that sum.


17.8                        Refund to Agent of monies not
received.  If and to the extent that the Agent makes
available a sum to the Borrower, the Issuing Bank or a Lender, without first
having received that sum, the Borrower, the Issuing Bank or (as the case may
be) the Lender concerned shall, on demand:


(a)                                  refund the sum in full to
the Agent; and


(b)                                 pay to the Agent the amount
(as certified by the Agent) which will indemnify the Agent against any funding
or other loss, liability or expense incurred by the Agent as a result of making
the sum available before receiving it.


17.9                        Agent may assume receipt.  Clause 17.8 shall not affect any claim which
the Agent has under the law of restitution, and applies irrespective of whether
the Agent had any form of notice that it had not received the sum which it made
available (except an express notice from a Lender that it will not fund its
Contribution).


17.10                 Creditor Party accounts.  Each Creditor Party shall maintain accounts
showing the amounts owing to it by the Borrower and each Security Party under
the Finance Documents and all payments in respect of those amounts made by the
Borrower and any Security Party.


17.11                 Agent’s memorandum account.  The Agent shall maintain a memorandum account
showing the amounts advanced by the Lenders and all other sums owing to the
Agent, the Security Trustee, the Issuing Bank and each Lender from the Borrower
and each Security Party under the Finance Documents and all payments in respect
of those amounts made by the Borrower and any Security Party.


17.12                 Accounts prima facie evidence.  If any accounts maintained under Clauses
17.10 and 17.11 show an amount to be owing by the Borrower or a Security Party
to a Creditor Party, those accounts shall be prima facie evidence that that
amount is owing to that Creditor Party.


18                                  APPLICATION OF RECEIPTS


18.1                        Normal order of application. Except as any Finance
Document may otherwise provide, any sums which are received or recovered by any
Creditor Party under or by virtue of any Finance Document after the service of
a notice on the Borrower under Clauses 20.2(a)(i) or (ii) shall be applied:


(a)                                  FIRST: in or towards
satisfaction of any amounts then due and payable under the Finance Documents
and the Master Agreement in the following order and proportions:



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(i)                                     first, in or towards
satisfaction pro rata of all amounts then due and payable to the Creditor
Parties under the Finance Documents other than those amounts referred to at
paragraphs (ii) and (iii) (including, but without limitation, all amounts
payable by the Borrower under Clauses 21, 22 and 23 of this Agreement or by the
Borrower or any Security Party under any corresponding or similar provision in
any other Finance Document or in the Master Agreement);


(ii)                                  secondly, in or towards
satisfaction pro rata of any and all amounts of interest or default interest
payable to the Creditor Parties under the Finance Documents and the Master
Agreement (and, for this purpose, the expression “interest” shall include any net amount which the Borrower shall
have become liable to pay or deliver under section 2(e) (Obligations) of the
Master Agreement but shall have failed to pay or deliver to the Swap Bank at
the time of application or distribution under this Clause 18); and


(iii)                               thirdly, in or towards
satisfaction pro rata of the Loan and the Swap Exposure (in the case of the
latter, calculated as at the actual Early Termination Date applying to each
particular Designated Transaction, or if no such Early Termination Date shall
have occurred, calculated as if an Early Termination Date occurred on the date
of application or distribution hereunder);


(b)                                 SECONDLY: in retention of an
amount equal to any amount not then due and payable under any Finance Document
or the Master Agreement but which the Agent, by notice to the Borrower, the
Security Parties and the other Creditor Parties, states in its opinion will or
may become due and payable in the future and, upon those amounts becoming due
and payable, in or towards satisfaction of them in accordance with the
provisions of Clause 18.1(a); and


(c)                                  THIRDLY: any surplus shall
be paid to the Borrower or to any other person appearing to be entitled to it.


18.2                        Variation of order of application.  The Agent may, with the authorisation of all
the Lenders, the Issuing Bank and the Swap Bank, by notice to the Borrower, the
Security Parties and the other Creditor Parties provide for a different manner
of application from that set out in Clause 18.1 either as regards a specified
sum or sums or as regards sums in a specified category or categories.


18.3                        Notice of variation of order of
application.  The Agent may give notices under Clause 18.2
from time to time in respect of sums which may be received or recovered in the
future.


18.4                        Appropriation rights overridden.  This Clause 18 and any notice which the Agent
gives under Clause 18.2 shall override any right of appropriation possessed,
and any appropriation made, by the Borrower or any Security Party.


19                                  APPLICATION OF EARNINGS


19.1                        Payment of Earnings.  The Borrower undertakes with each Creditor
Party that, throughout the Security Period it will ensure that (subject only to
the provisions of the General Assignments), all the Earnings of each Mortgaged
Ship are paid to the Owner’s Earnings Account relative to such Ship or, at the
option of the Borrower, to the Danaos Earnings Account Provided that at  any time after the
occurrence of an Event of Default the Agent (acting with the authorisation of
the Majority Lenders) may, by notice to the Borrower, direct that the Earnings
of the Ships (or any of them) be paid to a particular Earnings Account or
Earnings Accounts and the Borrower shall comply or ensure that the relevant
Owner or Owners comply with the Agent’s direction forthwith.


19.2                        Location of accounts.  The Borrower shall, and shall ensure each
Owner shall, promptly:



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(a)                                  comply with any requirement
of the Agent as to the location or re-location of the Earnings Accounts and
the Cash Collateral Account (or any of them); and


(b)                                 execute any documents which
the Agent specifies to create or maintain in favour of the Security Trustee a
Security Interest over (and/or rights of set-off, consolidation or other rights
in relation to) the Earnings Accounts and the Cash Collateral Account (or
any of them).


20                                  EVENTS OF DEFAULT


20.1                        Events of Default.  An Event of Default occurs if:


(a)                                  the Borrower or any Security
Party fails to pay when due or (if so payable) on demand any sum payable under
a Finance Document or under any document relating to a Finance Document;  such failure shall not constitute an Event of
Default if:


(i)                                     such failure is due to a
bank payment transmission error; and


(ii)                                  the Borrower or the relevant
Security Party remedies such failure within 3 days of the due date of payment
of the relevant amount; or


(b)                                 any breach occurs of Clause
10, 12.3, 13.2, 13.3, 13.4, 14.2 or 16.1; or


(c)                                  any breach by the Borrower
or any Security Party occurs of any provision of a Finance Document (other than
a breach covered by paragraphs (a) or (b)) unless, in the opinion of the
Majority Lenders, such default is capable of remedy, and such default is
remedied within 14 Business Days after written notice from the Agent requesting
action to remedy the same; or


(d)                                 (subject to any applicable
grace period specified in the Finance Document) any breach (which the Security
Trustee considers, in its discretion, to be material) by the Borrower or any
Security Party occurs of any provision of a Finance Document (other than a breach
covered by paragraphs (a), (b) or (c)); or


(e)                                  any representation, warranty
or statement (which the Security Trustee considers, in its discretion, to be
material) made by, or by an officer of, the Borrower or a Security Party in a
Finance Document or in a Drawdown Notice or any other notice or document
relating to a Finance Document is untrue or misleading when it is made such
failure shall not constitute an Event of Default if an innocent
misrepresentation has been made and which, if capable of remedy, is remedied
within 10 Business Days of its occurrence unless such innocent
misrepresentation is made on a Drawdown Date; or


(f)                                    any of the following occurs
in relation to any Financial Indebtedness of a Relevant Person (other than the
Borrower) or any Financial Indebtedness of the Borrower of at least $1,000,000
(or the equivalent in another currency) in aggregate in the case of any
Financial Indebtedness falling within paragraph (a) of the definition of that
term or any Financial Indebtedness falling within all other paragraphs of the
definition of that term (or, when aggregated with any Financial Indebtedness
falling within paragraph (a) of that term) of at least $10,000,000 in aggregate
(or the equivalent in another currency):


(i)                                     any Financial Indebtedness
of a Relevant Person is not paid when due or, if so payable, on demand; or


(ii)                                  any Financial Indebtedness
of a Relevant Person becomes due and payable or capable of being declared due
and payable prior to its stated maturity date as a consequence of any event of
default; or



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(iii)                               a lease, hire purchase
agreement or charter creating any Financial Indebtedness of a Relevant Person
is lawfully terminated by the lessor or owner or becomes capable of being
lawfully terminated as a consequence of any termination event; or


(iv)                              any overdraft, loan, note
issuance, acceptance credit, letter of credit, guarantee, foreign exchange or
other facility, or any swap or other derivative contract or transaction,
relating to any Financial Indebtedness of a Relevant Person ceases to be
available or becomes capable of being terminated as a result of any event of
default, or cash cover is required, or becomes capable of being required, in
respect of such a facility as a result of any event of default; or


(v)                                 any Security Interest
securing any Financial Indebtedness of a Relevant Person becomes enforceable;
or


(g)                                 any of the following occurs
in relation to a Relevant Person:


(i)                                     a Relevant Person becomes
unable to pay its debts as they fall due; or


(ii)                                  any assets of a Relevant Person
are subject of any form of execution, attachment, arrest, sequestration or
distress in respect of a sum of, or sums aggregating, $100,000 (or $10,000,000
in the case of the Borrower) or more or the equivalent in another currency; or


(iii)                               any administrative or other
receiver is appointed over any asset of a Relevant Person; or


(iv)                              a Relevant Person makes any
formal declaration of bankruptcy or any formal statement to the effect that it
is insolvent or likely to become insolvent, or a winding up or administration
order is made in relation to a Relevant Person, or the members or directors of
a Relevant Person pass a resolution to the effect that it should be wound up,
placed in administration or cease to carry on business, save that this
paragraph does not apply to a fully solvent winding up of a Relevant Person
other than the Borrower or an Owner which is, or is to be, effected for the
purposes of an amalgamation or reconstruction previously approved by the
Majority Lenders and effected not later than 3 months after the commencement of
the winding up; or


(v)                                 a petition is presented in
any Pertinent Jurisdiction for the winding up or administration, or the
appointment of a provisional liquidator, of a Relevant Person unless, in the
case of an involuntary petition, the petition is being contested in good faith
and on substantial grounds and is dismissed or withdrawn within 30 days of the
presentation of the petition; or


(vi)                              a Relevant Person petitions
a court, or presents any proposal for, any form of judicial or non-judicial
suspension or deferral of payments, reorganisation of its debt (or certain of
its debt) or arrangement with all or a substantial proportion (by number or
value) of its creditors or of any class of them or any such suspension or
deferral of payments, reorganisation or arrangement is effected by court order,
contract or otherwise; or


(vii)                           any meeting of the members
or directors of a Relevant Person is summoned for the purpose of considering a
resolution or proposal to authorise or take any action of a type described in
paragraphs (iii), (iv), (v) or (vi); or


(viii)                        in a Pertinent Jurisdiction
other than England, any event occurs or any procedure is commenced which, in
the reasonable opinion of the Majority Lenders, is similar to any of the
foregoing; or



 70
 









(h)                                 the Borrower ceases, or
threatens to cease, to carry on all or a substantial part of its business or,
as a result of intervention by or under the authority of any government, the
business of the Borrower is wholly or partially curtailed or suspended, or all
or a substantial part of the assets or undertaking of the Borrower is seized,
nationalised, expropriate of compulsorily acquired; or


(i)                                     it becomes unlawful in any
Pertinent Jurisdiction or impossible:


(i)                                     for the Borrower or any Security
Party to discharge any liability under a Finance Document or to comply with any
other obligation which the Majority Lenders consider material under a Finance
Document; or


(ii)                                  for the Agent, the Security
Trustee or the Lenders to exercise or enforce any right under, or to enforce
any Security Interest created by, a Finance Document; or


(j)                                     any consent necessary to
enable any Owner to own, operate or charter the Ship owned by it or to enable
the Borrower, any Owner or any Security Party to comply with any provision
which the Majority Lenders consider material of a Finance Document, any
Existing Charter, any charter referred to in paragraph (b) of the definition of
“Charterparty Assignment” or an Approved Purchase Contract is not granted,
expires without being renewed, is revoked or becomes liable to revocation or
any condition of such a consent is not fulfilled if this materially affects the
security position of the Creditor Parties (or any of them) or the ability of
the Borrower or a Security Party to timely discharge and/or perform its or
their liabilities and obligations (or any of them) under any Finance Document;
or


(k)                                  if, without the prior
consent of the Majority Lenders, members of the Coustas family (either directly
and/or through companies beneficially owned by members of the Coustas family
and/or trusts or foundations of which members of the Coustas family are
beneficiaries) own and control less than 51 per cent. of the issued voting
share capital of the Borrower; or


(l)                                     if, without the prior consent
of the Majority Lenders, the shares of the Borrower cease to be listed on the
New York Stock Exchange; or


(m)                               it appears to the Majority
Lenders that, without their prior consent, a change has occurred or probably
has occurred after the date of this Agreement in the ultimate beneficial
ownership of any of the shares in any Owner or in the ultimate control of the
voting rights attaching to any of those shares; or


(n)                                 any provision which the
Majority Lenders consider material of a Finance Document proves to have been or
becomes invalid or unenforceable, or a Security Interest created by a Finance
Document proves to have been or becomes invalid or unenforceable or such a
Security Interest proves to have ranked after, or loses its priority to,
another Security Interest or any other third party claim or interest; or


(o)                                 the security constituted by
a Finance Document is in any way imperilled or in jeopardy unless within 14
Business Days of the security being so imperilled or jeopardised (i) the
Borrower or a Security Party provides to the Security Trustee security in the
form of a new Finance Document which, in the opinion of the Lenders, is
equivalent to that constituted by the Finance Document which has become
imperilled or jeopardised or (ii) the security ceases to be imperilled or in
jeopardy; or


(p)                                 the Master Agreement is
terminated, cancelled, suspended, rescinded or revoked or otherwise ceases to
remain in full force and effect for any reason except with the consent of the
Agent, acting with the authorisation of the Majority Lenders; or



 71
 









(q)                                 for any reason whatsoever,
any Ship ceases to be managed by the Approved Manager on terms in all respects
approved by the Majority Lenders; or


(r)


(s)                                  an Event of Default (as
defined in Section 14 of the Master Agreement) occurs; or


(t)                                    any other event occurs or
any other circumstances arise or develop including, without limitation:


(i)                                     a change in the financial
position, state of affairs or prospects of the Borrower or any Owner; or


(ii)                                  any accident or other event involving
any Ship or another vessel owned, chartered or operated by a Relevant Person;


in the light of which the
Majority Lenders consider that there is a material risk that the Borrower is,
or will later become, unable to discharge its liabilities under the Finance
Documents as they fall due.


20.2                        Actions following an Event of
Default.  On, or at any time after, the occurrence of
an Event of Default which is continuing:


(a)                                  the Agent may, and if so
instructed by the Majority Lenders, the Agent shall:


(i)                                     serve on the Borrower a
notice stating that the Commitments and all other obligations of each Lender
and the Issuing Bank to the Borrower under this Agreement are terminated;
and/or


(ii)                                  serve on the Borrower a
notice stating that the Loan (excluding, for the avoidance of doubt, any
Guarantee), all accrued interest and all other amounts accrued or owing under
this Agreement are immediately due and payable or are due and payable on
demand; and/or


(iii)                               take any other action which,
as a result of the Event of Default or any notice served under paragraph (i) or
(ii), the Agent and/or the Lenders and/or the Issuing Bank are entitled to take
under any Finance Document or any applicable law; and/or


(b)                                 the Security Trustee may,
and if so instructed by the Agent, acting with the authorisation of the
Majority Lenders, the Security Trustee shall take any action which, as a result
of the Event of Default or any notice served under paragraph (a) (i) or (ii),
the Security Trustee, the Agent and/or the Issuing Bank and/or the Lenders are
entitled to take under any Finance Document or any applicable law.


20.3                        Termination of Commitments.  On the service of a notice under paragraph
(a)(i) of Clause 20.2, the Commitments and all other obligations of each Lender
and the Issuing Bank to the Borrower under this Agreement shall terminate.


20.4                        Acceleration.  On the service of a notice under paragraph
(a)(ii) of Clause 20.2, the Loan (excluding, for the avoidance of doubt, any
Guarantee), all accrued interest and all other amounts accrued or owing from
the Borrower or any Security Party under this Agreement and every other Finance
Document shall become immediately due and payable or, as the case may be,
payable on demand.


20.5                        Multiple notices; action without
notice.  The Agent may serve notices under paragraphs
(a) (i) and (ii) of Clause 20.2 simultaneously or on different dates and it
and/or the



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Security Trustee may take any action referred
to in that Clause if no such notice is served or simultaneously with or at any
time after the service of both or either of such notices.


20.6                        Notification of Creditor Parties
and Security Parties.  The Agent shall send to each Lender, the
Security Trustee, the Issuing Bank and each Security Party a copy or the text
of any notice which the Agent serves on the Borrower under Clause 20.2; but the
notice shall become effective when it is served on the Borrower, and no failure
or delay by the Agent to send a copy or the text of the notice to any other
person shall invalidate the notice or provide the Borrower or any Security
Party with any form of claim or defence.


20.7                        Creditor Party rights unimpaired.  Nothing in this Clause shall be taken to
impair or restrict the exercise of any right given to individual Lenders under
a Finance Document or the general law; and, in particular, this Clause is
without prejudice to Clause 3.1.


20.8                        Exclusion of Creditor Party
liability.  No Creditor Party, and no receiver or manager
appointed by the Security Trustee, shall have any liability to the Borrower or
a Security Party:


(a)                                  for any loss caused by an
exercise of rights under, or enforcement of a Security Interest created by, a
Finance Document or by any failure or delay to exercise such a right or to
enforce such a Security Interest; or


(b)                                 as mortgagee in possession
or otherwise, for any income or principal amount which might have been produced
by or realised from any asset comprised in such a Security Interest or for any
reduction (however caused) in the value of such an asset;


except that this does not
exempt a Creditor Party or a receiver or manager from liability for losses
shown to have been caused by the gross negligence or the wilful misconduct of
such Creditor Party’s own officers and employees or (as the case may be) such
receiver’s or manager’s own partners or employees.


20.9                        Relevant Persons.  In this Clause 20 a “Relevant Person” means the Borrower, a
Security Party (other than any bareboat charterer which is a party to a
Bareboat Charter Security Agreement) and any company which is a subsidiary of
the Borrower or a Security Party or of which a Security Party is a subsidiary
but excluding any company which is dormant and the value of whose gross assets
is $50,000 or less.


20.10                 Interpretation.  In Clause 20.1(f) references to an event of
default or a termination event include any event, howsoever described, which is
similar to an event of default in a facility agreement or a termination event
in a finance lease; and in Clause 20.1(g) “petition” includes an application.


21                                  FEES AND EXPENSES


21.1                        Arrangement, guarantee commission
and commitment commission fees.  The Borrower shall
pay to the Agent arrangement fees, guarantee commission and commitment
commission of the amounts, at the rates, and at the times, previously agreed in
writing between the Agent and the Borrower for distribution among the Lenders
in the proportions agreed.


21.2                        Costs of negotiation, preparation
etc.  The Borrower shall pay to the Agent on its
demand the amount of all expenses reasonably incurred by the Agent, the Lenders
or the Security Trustee in connection with the negotiation, preparation,
execution or registration of any Finance Document or any related document or
with any transaction contemplated by a Finance Document or a related document.



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21.3                        Costs of variations, amendments,
enforcement etc.  The Borrower shall pay to the Agent, on the
Agent’s demand, the amount of all expenses incurred by a Lender in connection
with:


(a)                                  any amendment or supplement
to a Finance Document, or any proposal for such an amendment to be made;


(b)                                 any consent or waiver by the
Lenders, the Issuing Bank, the Majority Lenders or the Lender concerned under
or in connection with a Finance Document, or any request for such a consent or
waiver;


(c)                                  the valuation of any
security provided or offered under Clause 16 or any other matter relating to
such security; or


(d)                                 any step taken by the Lender
concerned with a view to the protection, exercise or enforcement of any right
or Security Interest created by a Finance Document or for any similar purpose.


There shall be recoverable
under paragraph (d) the full amount of all legal expenses, whether or not such
as would be allowed under rules of court or any taxation or other procedure
carried out under such rules.


21.4                        Documentary taxes.  The Borrower shall promptly pay any tax
payable on or by reference to any Finance Document, and shall, on the Agent’s
demand, fully indemnify each Creditor Party against any liabilities and
expenses resulting from any failure or delay by the Borrower to pay such a tax.


21.5                        Certification of amounts.  A notice which is signed by an officer of a
Creditor Party, which states that a specified amount, or aggregate amount, is
due to that Creditor Party under this Clause 21 and which indicates (without
necessarily specifying a detailed breakdown) the matters in respect of which
the amount, or aggregate amount, is due shall be prima facie evidence that the
amount, or aggregate amount, is due save in the case of manifest error.


22                                  INDEMNITIES


22.1                        Indemnities regarding borrowing
and repayment of Loan.  The Borrower shall fully indemnify the Agent,
the Issuing Bank and each Lender on the Agent’s demand and the Security Trustee
on its demand in respect of all expenses, liabilities and losses (including,
without limitation, any loss of Margin) which are incurred by that Creditor
Party, or which that Creditor Party reasonably and with due diligence estimates
that it will incur, as a result of or in connection with:


(a)                                  an Advance not being
borrowed, and/or a Guarantee not being issued, on the date specified in the
Drawdown Notice for any reason other than a default by the Lender claiming the
indemnity;


(b)                                 the receipt or recovery of
all or any part of the Loan or an overdue sum otherwise than on the last day of
an Interest Period applicable to it or other relevant period;


(c)                                  any failure (for whatever
reason) by the Borrower to make payment of any amount due under a Finance
Document on the due date or, if so payable, on demand (after giving credit for
any default interest paid by the Borrower on the amount concerned under Clause
8);


(d)                                 the occurrence and/or
continuance of an Event of Default or a Potential Event of Default and/or the
acceleration of repayment of the Loan under Clause 20;



 74
 









and in respect of any tax (other than tax on its overall
net income) for which a Creditor Party is liable in connection with any amount
paid or payable to that Creditor Party (whether for its own account or
otherwise) under any Finance Document.


22.2                        Breakage costs.  Without limiting its generality, Clause 22.1
covers any liability, expense or loss, including a loss of a prospective
profit, incurred by a Lender:


(a)                                  in liquidating or employing
deposits from third parties acquired or arranged to fund or maintain all or any
part of its Contribution and/or any overdue amount (or an aggregate amount
which includes its Contribution or any overdue amount); and


(b)                                 in terminating, or otherwise
in connection with, any interest and/or currency swap or any other transaction
entered into (whether with another legal entity or with another office or
department of the Lender concerned) to hedge any exposure arising under this
Agreement or that part which the Lender concerned determines is fairly
attributable to this Agreement of the amount of the liabilities, expenses or
losses (including losses of prospective profits) incurred by it in terminating,
or otherwise in connection with, a number of transactions of which this
Agreement is one.


22.3                        Miscellaneous indemnities.  The Borrower shall fully indemnify each
Creditor Party severally on their respective demands in respect of all claims,
demands, proceedings, liabilities, taxes, losses and expenses of every kind (“liability items”) which may be made or
brought against, or incurred by, the Creditor Party concerned, in any country,
in relation to:


(a)                                  any action taken, or omitted
or neglected to be taken, under or in connection with any Finance Document by
the Creditor Party concerned or by any receiver appointed under a Finance
Document;


(b)                                 any other event, matter or
question which occurs or arises at any time during the Security Period and
which has any connection with, or any bearing on, any Finance Document, any
payment or other transaction relating to a Finance Document or any asset
covered (or previously covered) by a Security Interest created (or intended to
be created) by a Finance Document,


other than liability items
which are shown to have been caused by the gross negligence or the wilful
misconduct of the officers or employees of the Creditor Party concerned.


22.4                        Extension of indemnities;
environmental indemnity.  Without prejudice to its generality, Clause
22.3 covers:


(a)                                  any matter which would be
covered by Clause 21.3 if any of the references in that Clause to a Lender were
a reference to the Agent or (as the case may be) to the Security Trustee; and


(b)                                 any liability items which
arise, or are asserted, under or in connection with any law relating to safety
at sea, pollution or the protection of the environment.


22.5                        Currency indemnity.  If any sum due from the Borrower or any Security
Party to a Creditor Party under a Finance Document or under any order or
judgment relating to a Finance Document has to be converted from the currency
in which the Finance Document provided for the sum to be paid (the “Contractual Currency”) into another currency
(the “Payment
Currency”)
for the purpose of:


(a)                                  making or lodging any claim
or proof against the Borrower or any Security Party, whether in its
liquidation, any arrangement involving it or otherwise; or


(b)                                 obtaining an order or
judgment from any court or other tribunal; or



 75















(c)           enforcing
any such order or judgment;


the
Borrower shall indemnify the Creditor Party concerned against the loss arising
when the amount of the payment actually received by that Creditor Party is
converted at the available rate of exchange into the Contractual Currency.


In this
Clause 22.5 the “available rate of exchange”
means the rate at which the Creditor Party concerned is able at the opening of
business (London time) on the Business Day after it receives the sum concerned
to purchase the Contractual Currency with the Payment Currency.


This
Clause 22.5 creates a separate liability of the Borrower which is distinct from
its other liabilities under the Finance Documents and which shall not be merged
in any judgement or order relating to those other liabilities.


22.6        Application to
Master Agreement.  For the avoidance of
doubt, Clause 22.5 does not apply in respect of sums due from the Borrower to
the Swap Bank under or in connection with the Master Agreement as to which sums
the provisions of section 8 (Contractual Currency) of the Master Agreement
shall apply.


22.7        Certification
of amounts.  A notice which is
signed by an officer of a Creditor Party, which states that a specified amount,
or aggregate amount, is due to that Creditor Party under this Clause 22 and
which indicates (without necessarily specifying a detailed breakdown) the
matters in respect of which the amount, or aggregate amount, is due shall be
prima facie evidence that the amount, or aggregate amount, is due.


22.8        Sums deemed due
to a Lender or the Issuing Bank. 
For the purposes of this Clause 22, a sum payable by the Borrower to the
Agent or the Security Trustee for distribution to a Lender or the Issuing Bank
shall be treated as a sum due to that Lender or the Issuing Bank save in the case
of manifest error.


22.9        Receiving Bank.  The Borrower shall indemnify the Agent on
demand against all costs and expenses arising out of the role of the Receiving
Bank in relation to the Loan.


23           NO SET-OFF OR TAX DEDUCTION


23.1        No deductions.  All amounts due from the Borrower under a
Finance Document shall be paid:


(a)           without
any form of set-off, cross-claim or condition; and


(b)           free and
clear of any tax deduction except a tax deduction which the Borrower is
required by law to make.


23.2        Grossing-up for
taxes.  If the Borrower is
required by law to make a tax deduction from any payment:


(a)           the
Borrower shall notify the Agent as soon as it becomes aware of the requirement;


(b)           the
Borrower shall pay the tax deducted to the appropriate taxation authority
promptly, and in any event before any fine or penalty arises;


(c)           the amount
due in respect of the payment shall be increased by the amount necessary to
ensure that each Creditor Party receives and retains (free from any liability
relating to the tax deduction) a net amount which, after the tax deduction, is
equal to the full amount which it would otherwise have received.



 76
 









23.3        Evidence of
payment of taxes.  Within 1 month after
making any tax deduction, the Borrower shall deliver to the Agent documentary
evidence satisfactory to the Agent that the tax had been paid to the
appropriate taxation authority.


23.4        Exclusion of
tax on overall net income.  In this Clause 23 “tax deduction” means
any deduction or withholding for or on account of any present or future tax
except tax on a Creditor Party’s overall net income.


23.5        Application to
the Master Agreement.  For the avoidance of
doubt, Clause 23 does not apply in respect of sums due from the Borrower to the
Swap Bank under or in connection with the Master Agreement as to which sums the
provisions of section 2(d) (Deduction or Withholding for Tax) of the Master
Agreement shall apply.


24           ILLEGALITY, ETC


24.1        Illegality.  This Clause 24 applies if a Lender (the “Notifying
Lender”) notifies the Agent that it has become, or will with
effect from a specified date, become:


(a)           unlawful
or prohibited as a result of the introduction of a new law, an amendment to an
existing law or a change in the manner in which an existing law is or will be
interpreted or applied; or


(b)           contrary
to, or inconsistent with, a regulation;


for the
Notifying Lender to maintain or give effect to any of its obligations under
this Agreement or any Guarantee in the manner contemplated by this Agreement.


24.2        Notification of
illegality.  The Agent shall
promptly notify the Borrower, the Security Parties, the Security Trustee, the
Issuing Bank and the other Lenders of the notice under Clause 24.1 which the
Agent receives from the Notifying Lender.


24.3        Prepayment;
termination of Commitment.  On the Agent
notifying the Borrower under Clause 24.2:


(a)           the
Notifying Lender’s Commitment shall terminate;


(b)           if the
Notifying Lender is the Issuing Bank, the Borrower shall procure the prompt
cancellation of the Outstandings and the return of each Guarantee issued to the
Issuing Bank endorsed by the relevant Beneficiary to the effect that it is
cancelled; and


(c)           thereupon
or, if later, on the date specified in the Notifying Lender’s notice under
Clause 24.1 as the date on which the notified event would become effective the
Borrower shall prepay the Notifying Lender’s Contribution in accordance with
Clause 9 (other than Clause 9.5).


25           INCREASED COSTS


25.1        Increased
costs.  This Clause 25
applies if a Lender or the Issuing Bank (the “Notifying Lender”) notifies
the Agent that the Notifying Lender considers that as a result of:


(a)           the
introduction or alteration after the date of this Agreement of a law, or a
regulation or an alteration after the date of this Agreement in the manner in
which a law or regulation is interpreted or applied (disregarding any effect
which relates to the application to payments under this Agreement of a tax on
the Notifying Lender’s overall net income); or


(b)           the effect
of complying with any law or regulation (including any which relates to capital
adequacy or liquidity controls or which affects the manner in which the
Notifying Lender allocates capital resources to its obligations under this
Agreement (including, without



 77
 









limitation,
the implementation of any regulations which shall replace, amend and/or
supplement those set out in the statement of the Basle Committee on Banking
Regulations and Supervisory Practices dated July 1988 and entitled “International
Convergence of Capital Measurement and Capital Structures”) (the “Basle Accord”)) which
is introduced, or altered, or the interpretation or application of which is
altered, after the date of this Agreement,


the
Notifying Lender (or a parent company of it) has incurred or will incur an “increased cost”, that is to say:


(i)            an additional
or increased cost incurred as a result of, or in connection with, the Notifying
Lender having entered into, or being a party to, this Agreement or a Transfer
Certificate, of funding or maintaining its Commitment or its Contribution or
Outstandings or performing its obligations under this Agreement, or of having
outstanding all or any part of its Contribution or Outstandings or other unpaid
sums;


(ii)           a
reduction in the amount of any payment to the Notifying Lender under this
Agreement or in the effective return which such a payment represents to the
Notifying Lender or on its capital;


(iii)          an
additional or increased cost of funding or maintaining all or any of the
advances comprised in a class of advances formed by or including the Notifying
Lender’s Contribution and/or Outstandings or (as the case may require) the
proportion of that cost attributable to the Contribution and/or the
Outstandings; or


(iv)          a
liability to make a payment, or a return foregone, which is calculated by
reference to any amounts received or receivable by the Notifying Lender under
this Agreement;


but not an
item attributable to a change in the rate of tax on the overall net income of
the Notifying Lender (or a parent company of it) or an item covered by the
indemnity for tax in Clause 22.1 or by Clause 23.


For the
purposes of this Clause 25.1 the Notifying Lender may in good faith allocate or
spread costs and/or losses among its assets and liabilities (or any class
thereof) on such basis as it considers appropriate.


In the
event that it appears to the Agent that an increased cost will arise pursuant
to this Clause 25.1 as a result of the implementation of the Basle Accord, the
Agent shall consult with the Borrower but without prejudice to the obligations
and liabilities of the Borrower under the above provisions of this Clause 25.1.


25.2        Notification to
Borrower of claim for increased costs. 
The Agent shall promptly notify the Borrower and the Security Parties of
the notice which the Agent received from the Notifying Lender under Clause
25.1.


25.3        Payment of
increased costs.  The Borrower shall
pay to the Agent, on the Agent’s demand, for the account of the Notifying
Lender the amounts which the Agent from time to time notifies the Borrower that
the Notifying Lender has specified to be necessary to compensate the Notifying
Lender for the increased cost.


25.4        Notice of
prepayment.  If the Borrower is
not willing to continue to compensate the Notifying Lender for the increased
cost under Clause 25.3, the Borrower may give the Agent not less than 3
Business Days’ notice of its intention to prepay the Notifying Lender’s
Contribution and, if the Notifying Lender is the Issuing Bank, to cancel the
Outstandings.



 78
 









25.5        Prepayment;
termination of Commitment.  A notice under
Clause 25.4 shall be irrevocable; the Agent shall promptly notify the Notifying
Lender of the Borrower’s notice of intended prepayment; and:


(a)           on the
date on which the Agent serves that notice, the Commitment of the Notifying
Lender shall be cancelled;


(b)           if the
Notifying Lender is the Issuing Bank, the Borrower shall procure the prompt
cancellation of the Outstandings and the return of each Guarantee to the
Issuing Bank endorsed by the relevant Beneficiary to the effect that it is
cancelled; and


(c)           on the
date specified in its notice of intended prepayment, the Borrower shall prepay
(without premium or penalty) the Notifying Lender’s Contribution, together with
accrued interest thereon at the applicable rate plus the aggregate of the
Margin and the Mandatory Cost (if any) (but subject to Clause 22.1).


25.6        Application of
prepayment.  Clause 9 shall apply
in relation to the prepayment.


26           SET-OFF


26.1        Application of
credit balances.  Each Creditor Party
may without prior notice but following the occurrence of an Event of Default
which is continuing:


(a)           apply any
balance (whether or not then due) which at any time stands to the credit of any
account in the name of the Borrower at any office in any country of that
Creditor Party in or towards satisfaction of any sum then due from the Borrower
to that Creditor Party under any of the Finance Documents; and


(b)           for that
purpose:


(i)            break, or
alter the maturity of, all or any part of a deposit of the Borrower;


(ii)           convert or
translate all or any part of a deposit or other credit balance into Dollars;
and/or


(iii)          enter into
any other transaction or make any entry with regard to the credit balance which
the Creditor Party concerned considers appropriate.


26.2        Existing rights
unaffected.  No Creditor Party
shall be obliged to exercise any of its rights under Clause 26.1; and those
rights shall be without prejudice and in addition to any right of set-off,
combination of accounts, charge, lien or other right or remedy to which a
Creditor Party is entitled (whether under the general law or any document).


26.3        Sums deemed due
to a Lender.  For the purposes of
this Clause 26, a sum payable by the Borrower to the Agent or the Security
Trustee for distribution to, or for the account of, a Lender shall be treated
as a sum due to that Lender; and each Lender’s proportion of a sum so payable
for distribution to, or for the account of, the Lenders shall be treated as a
sum due to such Lender.


26.4        No Security
Interest.  This Clause 26 gives
the Creditor Parties a contractual right of set-off only, and does not create
any equitable charge or other Security Interest over any credit balance of the
Borrower.


27           TRANSFERS AND CHANGES IN LENDING OFFICES


27.1        Transfer by
Borrower. The Borrower may not, without the prior consent of the
Agent, given with the authorisation of all the Lenders:



 79
 









(a)           transfer
any of its rights or obligations under any Finance Document; or


(b)           enter into
any merger, de-merger or other reorganisation, or carry out any other act, as a
result of which any of its rights or liabilities would vest in, or pass to,
another person.


27.2        Transfer by a
Lender.  Subject to Clause
27.4, a Lender (the “Transferor Lender”) may at
any time, with the prior consent of the Agent but without needing the consent
of the Borrower or any Security Party, cause:


(a)           its rights
in respect of all or part of its Contribution; and


(b)           an equal
proportion of its obligations in respect of all or part of its Commitment,


to be (in
the case of its rights) transferred to, or (in the case of its obligations)
assumed by, another bank or financial institution or special purpose vehicle
established by any Lender (a “Transferee
Lender”) by delivering to the Agent a completed certificate in the
form set out in Schedule 4 with any modifications approved or required by the
Agent (a “Transfer Certificate”)
executed by the Transferor Lender and the Transferee Lender.


However
any rights and obligations of the Transferor Lender in its capacity as Agent,
the Agent or Security Trustee will have to be dealt with separately in accordance
with the Agency and Trust Agreement.


27.3        Transfer
Certificate, delivery and notification. 
As soon as reasonably practicable after a Transfer Certificate is
delivered to the Agent, it shall (unless it has reason to believe that the
Transfer Certificate may be defective):


(a)           sign the
Transfer Certificate on behalf of itself, the Agent, the Borrower, the Security
Parties, the Security Trustee and each of the other Lenders;


(b)           on behalf
of the Transferee Lender, send to the Borrower and each Security Party letters
or faxes notifying them of the Transfer Certificate and attaching a copy of it;
and


(c)           send to
the Transferee Lender copies of the letters or faxes sent under paragraph (b).


27.4        Effective Date
of Transfer Certificate.  A Transfer Certificate
becomes effective on the date, if any, specified in the Transfer Certificate as
its effective date Provided that it is
signed by the Agent under Clause 27.3 on or before that date.


27.5        No transfer
without Transfer Certificate. 
No assignment or transfer of any right or obligation of a Lender under
any Finance Document is binding on, or effective in relation to, the Borrower,
any Security Party, the Agent or the Security Trustee unless it is effected,
evidenced or perfected by a Transfer Certificate.


27.6        Lender
re-organisation; waiver of Transfer Certificate.  If a Lender enters into any merger,
de-merger or other reorganisation as a result of which all its rights or
obligations vest in a successor, the successor shall automatically and without
any further act being necessary become a Lender with the same Commitment and
Contribution as were held by the predecessor Lender.


27.7        Effect of
Transfer Certificate.  A Transfer
Certificate takes effect in accordance with English law as follows:


(a)           to the
extent specified in the Transfer Certificate, all rights and interests
(present, future or contingent) which the Transferor Lender has under or by
virtue of the Finance Documents are assigned to the Transferee Lender
absolutely;



 80
 









(b)           the
Transferor Lender’s Commitment is discharged to the extent specified in the
Transfer Certificate;


(c)           the
Transferee Lender becomes a Lender with a Contribution and a Commitment of an
amount specified in the Transfer Certificate;


(d)           the
Transferee Lender becomes bound by all the provisions of the Finance Documents
which are applicable to the Lenders generally, including those about pro-rata
sharing and the exclusion of liability on the part of, and the indemnification
of, the Agent and the Security Trustee and, to the extent that the Transferee
Lender becomes bound by those provisions (other than those relating to
exclusion of liability), the Transferor Lender ceases to be bound by them;


(e)           any part
of the Loan which the Transferee Lender advances after the Transfer Certificate’s
effective date ranks in point of priority and security in the same way as it
would have ranked had it been advanced by the Transferor Lender;


(f)            the
Transferee Lender becomes entitled to all the rights under the Finance
Documents which are applicable to the Lenders generally, including but not
limited to those relating to the Majority Lenders and those under Clause 6.7
and Clause 21, and to the extent that the Transferee Lender becomes entitled to
such rights, the Transferor Lender ceases to be entitled to them; and


(g)           in respect
of any breach of a warranty, undertaking, condition or other provision of a
Finance Document or any misrepresentation made in or in connection with a
Finance Document, the Transferee Lender shall be entitled to recover damages by
reference to the loss incurred by it as a result of the breach or
misrepresentation, irrespective of whether the original Lender would have
incurred a loss of that kind or amount.


The rights
and equities of the Borrower or any Security Party referred to above include,
but are not limited to, any right of set off and any other kind of cross-claim.


27.8        Maintenance of
register of Lenders.  During the Security
Period the Agent shall maintain a register in which it shall record the name,
Commitment, Contribution and administrative details (including the lending
office) from time to time of each Lender, the Outstandings from time to time
and the effective date (in accordance with Clause 27.4) of each Transfer
Certificate; and the Agent shall make the register available for inspection by
any Lender, the Security Trustee and the Borrower during normal banking hours,
subject to receiving at least 3 Business Days prior notice.


27.9        Reliance on
register of Lenders.  The entries on that
register shall, in the absence of manifest error, be conclusive in determining
the identities of the Lenders and the amounts of their Commitments and
Contributions, the amount of the Outstandings and the effective dates of
Transfer Certificates and may be relied upon by the Agent and the other parties
to the Finance Documents for all purposes relating to the Finance Documents.


27.10      Authorisation
of Agent to sign Transfer Certificates. The Borrower, the Security Trustee and
each Lender irrevocably authorises the Agent to sign Transfer Certificates on
its behalf.


27.11      Registration
fee.  In respect of any
Transfer Certificate, the Agent shall, following its request and at its option,
be entitled to recover a registration fee of $2,500 from the Transferor Lender
or (at the Agent’s option) the Transferee Lender.


27.12      Sub-participation;
subrogation assignment.  A Lender may sub-participate
all or any part of its rights and/or obligations under or in connection with
the Finance Documents without the consent of, or any notice to, the Borrower, any
Security Party, the Issuing Bank, the Agent or the Security Trustee; and the
Lenders may assign, in any manner and



 81
 









terms
agreed by the Majority Lenders, the Issuing Bank, the Agent and the Security
Trustee, all or any part of those rights to an insurer or surety who has become
subrogated to them.


27.13      Disclosure of
information.  A Lender may provide
or disclose to an actual or potential Transferee Lender, any proposed or actual
assignee or sub-participant or any person who may otherwise enter into (or
propose to enter into) contractual relations with that Lender in connection
with this Agreement or to any other person as required by any applicable law or
regulation, a copy of this Agreement, copies of all information provided by the
Borrower or any of the Security Parties under or in connection with each
Finance Document, details of drawings made by the Borrower under this Agreement
and information regarding the performance by the Borrower and the Security
Parties of their obligations under this Agreement and the other Finance
Documents.  Any Creditor Party may,
disclose the size and term of the Total Commitments and the Loan and the name
of the Borrower and each of the Security Parties to any investor or a potential
investor in a securitisation (or similar transaction of broadly equivalent
economic effect) of that Creditor Party’s rights or obligations under the
Finance Documents (or any of them).


27.14      Change of
lending office.  A Lender may change
its lending office and may change its booking office by giving notice to the
Agent and the change shall become effective on the later of:


(a)           the date
on which the Agent receives the notice; and


(b)           the date,
if any, specified in the notice as the date on which the change will come into
effect.


27.15      Notification.  On receiving such a notice, the Agent shall
notify the Borrower and the Security Trustee; and, until the Agent receives
such a notice, it shall be entitled to assume that a Lender is acting through
the lending office or is acting through the booking office of which the Agent
last had notice.


28           VARIATIONS AND WAIVERS


28.1        Variations,
waivers etc. by Majority Lenders. 
Subject to Clause 28.2, a document shall be effective to vary, waive,
suspend or limit any provision of a Finance Document, or any Creditor Party’s
rights or remedies under such a provision or the general law, only if the
document is signed, or specifically agreed to by fax, by the Borrower, by the
Agent on behalf and with the consent of the Majority Lenders, by the Issuing
Bank, by the Agent and the Security Trustee in their own rights, and, if the
document relates to a Finance Document to which a Security Party is party, by
that Security Party.


28.2        Variations,
waivers etc. requiring agreement of all Lenders.  However, as regards the following, Clause
28.1 applies as if the words “by the Agent on behalf and with the consent of
the Majority Lenders” were replaced by the words “by or on behalf and with the
consent of every Lender, the Swap Bank and the Issuing Bank”:


(a)           a change
in the definition of the Margin, the Mandatory Cost or in the definition of
LIBOR or EURIBOR;


(b)           a change
to the date for, or the amount of, any payment of principal, interest, fees, or
other sum payable under this Agreement;


(c)           a change
to any Lender’s Commitment;


(d)           an
extension of the Availability Period for any Advance;


(e)           a change
to the definition of “Majority Lenders” or “Finance Documents”;



 82
 









(f)            a change
to the preamble or to Clause 2, 3, 4, 6.1, 9.1, 12, 13.4, 18, 19, 20, 30, 31,
32, 33 or 35;


(g)           a change
to this Clause 28;


(h)           any
release of, or material variation to, a Security Interest, guarantee, indemnity
or subordination arrangement set out in a Finance Document; and


(i)            any other
change or matter as regards which this Agreement or another Finance Document
expressly provides that each Lender’s consent is required.


28.3        Exclusion of
other or implied variations. 
Except for a document which satisfies the requirements of Clauses 28.1
and 28.2, no document, and no act, course of conduct, failure or neglect to
act, delay or acquiescence on the part of the Creditor Parties or any of them
(or any person acting on behalf of any of them) shall result in the Creditor
Parties or any of them (or any person acting on behalf of any of them) being
taken to have varied, waived, suspended or limited, or being precluded
(permanently or temporarily) from enforcing, relying on or exercising:


(a)           a
provision of this Agreement or another Finance Document; or


(b)           an Event
of Default; or


(c)           a breach
by the Borrower or a Security Party of an obligation under a Finance Document
or the general law; or


(d)           any right
or remedy conferred by any Finance Document or by the general law;


and there
shall not be implied into any Finance Document any term or condition requiring
any such provision to be enforced, or such right or remedy to be exercised,
within a certain or reasonable time.


29           NOTICES


29.1        General.  Unless otherwise specifically provided, any
notice under or in connection with any Finance Document shall be given by
letter or fax; and references in the Finance Documents to written notices,
notices in writing and notices signed by particular persons shall be construed
accordingly.


29.2        Addresses for
communications.  A notice shall be
sent:


	
  (a)

  	
  to the Borrower:

  	
  c/o the Approved Manager

  
	
   

  	
   

  	
  Akti Kondyli 14

  
	
   

  	
   

  	
  185 45 Piraeus

  
	
   

  	
   

  	
  Greece

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Fax No: +30 210 422 0855

  
	
   

  	
   

  	
   

  
	
  (b)

  	
  to a Lender:

  	
  at the address below its name in Schedule 1 or (as

  
	
   

  	
   

  	
  the case may require) in the relevant Transfer

  
	
   

  	
   

  	
  Certificate

  
	
   

  	
   

  	
   

  
	
  (c)

  	
  to the Agent,

  	
  The Royal Bank of Scotland plc

  
	
   

  	
  the Security

  	
  Akti Miaouli 45

  
	
   

  	
  Trustee or

  	
  185 36 Piraeus

  
	
   

  	
  the Issuing Bank:

  	
  Greece

  
	
   

  	
   

  	
  Attn: Shipping Department

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Fax No: +30 210 459 6600

  



 



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or to such
other address as the relevant party may notify the Agent or, if the relevant
party is the Agent or the Security Trustee, the Borrower, the Lenders and the
Security Parties.


29.3        Effective date
of notices.  Subject to Clauses
29.4 and 29.5:


(a)           a notice
which is delivered personally or posted shall be deemed to be served, and shall
take effect, at the time when it is delivered;


(b)           a notice
which is sent by fax shall be deemed to be served, and shall take effect, 2
hours after its transmission is completed.


29.4        Service outside
business hours.  However, if under
Clause 29.3 a notice would be deemed to be served:


(a)           on a day
which is not a business day in the place of receipt; or


(b)           on such a
business day, but after 5 p.m. local time;


the notice
shall (subject to Clause 29.5) be deemed to be served, and shall take effect,
at 9 a.m. on the next day which is such a business day.


29.5        Illegible
notices.  Clauses 29.3 and
29.4 do not apply if the recipient of a notice notifies the sender within one
hour after the time at which the notice would otherwise be deemed to be served
that the notice has been received in a form which is illegible in a material
respect.


29.6        Valid notices.  A notice under or in connection with a
Finance Document shall not be invalid by reason that the manner of serving it
does not comply with the requirements of this Agreement or, where appropriate,
any other Finance Document under which it is served if the failure to serve it
in accordance with the requirements of this Agreement or other Finance
Document, as the case may be, has not caused any party to suffer any
significant loss or prejudice.


29.7        English
language.  Any notice under or
in connection with a Finance Document shall be in English.


29.8        Meaning of “notice”.  In this Clause “notice” includes any demand,
consent, authorisation, approval, instruction, waiver or other communication.


30           REDUCTION OF GUARANTEES


30.1        Reduction of
Outstanding Guarantee Amounts. 
The Outstanding Guarantee Amount of a Guarantee shall not be treated as
reduced for the purposes of this Agreement unless and until:


(a)           the
Issuing Bank, or the Agent on its behalf, has received a written confirmation
from the Beneficiary of the amount of such reduction; or


(b)           the
Issuing Bank has notified the Agent in writing that (notwithstanding the
absence of a written confirmation from the Beneficiary) it is satisfied that
its liability under the Guarantee has been irrevocably reduced or discharged;
or


(c)           the amount
of the Guarantee irrevocably and unconditionally reduces in accordance with its
terms; or



 84
 









(d)           the expiry
date of the Guarantee elapses and the Issuing Bank has notified the Borrower in
writing, through the Agent, that it is satisfied that no claim or demand has
been made, or may thereafter be made, under the Guarantee.


31           SETTLEMENT OF GUARANTEES


31.1        Notification of
Settlement Amount.  The Issuing Bank
shall, immediately after receiving a demand from, or after being notified by,
the Beneficiary that it is required to make payment under a Guarantee, notify
the Agent that such payment is due and of the Settlement Amount and the
Settlement Date, and the Agent shall promptly notify the Borrower.


31.2        Borrower’s
settlement.  The Borrower shall:


(a)           immediately
after notification from the Agent under Clause 31.1, acknowledge to the Agent
that it will reimburse the Settlement Amount; and


(b)           pay to the
Agent, for the account of the Issuing Bank, the Settlement Amount in Dollars on
the Settlement Date.


31.3        Borrower’s
failure to reimburse.  If the Borrower
fails to reimburse the Settlement Amount to the Agent, for the account of the
Issuing Bank, on the Settlement Date pursuant to Clause 31.2, it shall pay to
the Agent, for the account of the Issuing Bank, interest on the Settlement
Amount from the Settlement Date to the date the Issuing Bank is reimbursed by
the Borrower at the rate described in Clause 8 such interest to be compounded
in accordance with Clause 8.6 and payable on demand.


32           INDEMNITY OF THE BORROWER


32.1        Borrower’s
undertaking to indemnify.  The Borrower agrees
that it shall:


(a)           pay to the
Agent, for the account of the Issuing Bank, upon demand by the Agent an amount
equal to each amount:


(i)            demanded
from or paid by the Issuing Bank under a Guarantee;


(ii)           paid by
the Issuing Bank to a Beneficiary under Clause 32.9;


and which
is not otherwise fully reimbursed, paid or repaid by the Borrower under this
Agreement;


(b)           pay to the
Agent, for the account of the Lenders, upon demand by the Agent an amount equal
to each amount paid by the Lenders to the Issuing Bank, or the Agent on its
behalf, pursuant to Clause 33.1;


(c)           indemnify,
as a principal and independent debtor, the Issuing Bank and each of the Lenders
severally on demand against all actions, claims, demands, liabilities, costs,
losses, damages and expenses incurred, suffered or sustained or any penalty or
other expenditure which may result or which the Issuing Bank or any Lender may
incur, suffer or sustain in connection with or arising out of or in relation to
any Guaranteed Obligations and/or the payment under or other performance of a
Guarantee or Clause 33.


32.2        Payment to
Lenders.  The Borrower shall
pay to the Agent, for the account of the Lender concerned, upon demand by the
Agent an amount equal to each amount paid by a Lender to the Issuing Bank, or
the Agent on its behalf, pursuant to Clause 33 notwithstanding that:



 85
 









(a)           that
amount may not properly be due whether because the corresponding amount was not
properly due to the Beneficiary under a Guarantee or for any other reason
whatsoever (other than in the case of gross negligence or wilful misconduct of
the Issuing Bank); or


(b)           any
Guarantee and/or any Guaranteed Obligations and/or the indemnities contained in
Clause 33 is or are void or invalid or not binding on or enforceable against
the Borrower or the Issuing Bank or a Beneficiary (as the case may be) for any
reason whatsoever (other than in the case of gross negligence or wilful
misconduct of the Issuing Bank) including (without limitation) the effect of
any enactment, any legal limitation, illegality, disability, lack of corporate
capacity or lack of powers of any party thereto or of any of its directors or
officers.


32.3        Guarantee
payments.  The Borrower:


(a)           irrevocably
authorises the Issuing Bank to make any payment demanded from it pursuant to a
Guarantee if that demand is made in accordance with its terms;


(b)           accepts
that any demand for payment made by the Beneficiary pursuant to a Guarantee and
which is made in accordance with its terms shall be conclusive evidence that
the Issuing Bank was liable to make payment under the Guarantee and any payment
which the Issuing Bank makes pursuant to any such demand shall be accepted by
the Borrower as binding upon the Borrower; and


(c)           acknowledges
and agrees that the Issuing Bank shall not in any circumstances whatsoever be
liable to the Borrower in respect of any loss or damage suffered by the
Borrower by reason of the Issuing Bank making a payment to the Beneficiary in
connection with any payment demanded under a Guarantee.


32.4        Continuing
indemnities.  The liabilities and
obligations of the Borrower under the indemnities set out in Clause 32.1 shall
remain in force as a continuing security until:


(a)           the full,
prompt and complete performance of all the terms of such indemnities including
the proper and valid payment of all amounts that may become due to the Issuing
Bank and each of the Lenders under this Clause 32.4; and


(b)           subject to
Clause 32.5, an absolute discharge or release of the Borrower signed by the
Issuing Bank or the Lender concerned,


and
accordingly the Borrower shall not have, as regards those indemnities, any of
the rights or defences of a surety.


32.5        Discharges.  Any such discharge or release referred to in
Clause 32.4, and any composition or arrangement which the Borrower may effect
with the Issuing Bank or any Lender shall be deemed to be made subject to the
condition that it will be void if any payment or security which any Creditor
Party may previously have received or may thereafter receive is set aside under
any applicable law or proves to have been for any reason invalid.


32.6        Waiver of
rights and defences.  Without limiting the
generality of Clauses 32.4 and 32.5, the Borrower shall neither be discharged
from any of its liabilities or obligations under Clause 32.1 by, nor have any
claim against any Creditor Party in respect of:


(a)           any
misrepresentation or non-disclosure respecting the affairs or condition of the
Issuing Bank or any Lender made to the Borrower by any person; or


(b)           a
Beneficiary and/or any Creditor Party releasing or granting any time or any
indulgence whatsoever or making any settlement, composition or arrangement with
the Borrower, a Beneficiary or any other person; or



 86
 









(c)           a
Beneficiary and/or any Creditor Party asserting or pursuing, failing or
neglecting to assert or pursue, or delaying in asserting or pursuing, or
waiving, any of their rights or remedies against the Borrower, a Beneficiary or
any other person; or


(d)           a
Beneficiary and/or any Creditor Party and/or the Borrower, with the consent of
the Borrower (or with or without the consent of the Borrower in the case of any
variation agreed between a Beneficiary and the Borrower or the person whose
obligations are guaranteed thereby), making, whether expressly or by conduct,
any variation to any Guaranteed Obligations or a Guarantee; or


(e)           a Beneficiary
and/or any Creditor Party and/or the Borrower:


(i)            taking,
accepting, varying, dealing with, enforcing, abstaining from enforcing,
surrendering or releasing any security in relation to a Beneficiary or the
Issuing Bank or any Lender or the Borrower or any other person in such manner
as it or they think fit; or


(ii)           claiming,
proving for, accepting or transferring any payment in respect of the
obligations and liabilities of the Borrower and/or a Beneficiary relative to
any Guaranteed Obligations or under this Agreement in any composition by, or
winding up of, the Borrower and/or any third party or abstaining from so
claiming, proving, accepting or transferring; or


(f)            any
assignment or transfer by a Beneficiary of, or any succession to, any of its
rights relative to any Guaranteed Obligations or a Guarantee.


32.7        Provision of
cash collateral security.  Forthwith upon, or
at any time following:


(a)           the
occurrence of an Event of Default or a Potential Event of Default; or


(b)           a
shortfall in the level of security cover required to be maintained pursuant to
Clause 16.1;


(c)           the
service of a notice under paragraph (a)(ii) of Clause 20.2; or


(d)           the
service of a notice under Clause 24.2 or Clause 25.4,


then in any such circumstances the
Agent on behalf of the Issuing Bank and the Lenders shall be entitled (but not
obliged) to demand payment by the Borrower of, and the Borrower forthwith upon
such demand shall pay to the Agent on behalf of the Issuing Bank and the
Lenders such amount as shall be, the aggregate of:


(i)            any
Settlement Amount then due from the Borrower to the Issuing Bank pursuant to
Clause 31.2 and not reimbursed; and


(ii)           the
Outstandings.


32.8        Application of
cash collateral security.  Subject always to
the overriding provisions of Clause 18, moneys received by the Agent for the
account of the Issuing Bank and the Lenders pursuant to Clause 32.7 shall be
applied (as between the Borrower on the one hand and the Issuing Bank and the
Lenders on the other) in the following manner:


(a)           firstly,
in or towards payment of any Settlement Amount then due from the Borrower to
the Lenders pursuant to Clause 31.2 and not reimbursed;


(b)           secondly,
in payment to an account or accounts of the Agent for application from time to
time by the Agent (and the Borrower hereby irrevocably authorises the Agent so
to apply



 87
 









any
such moneys) in or towards payment of, or reimbursement to the Issuing Bank
for, any amount which the Issuing Bank shall or may at any time and from time
to time thereafter pay or be or become liable to pay to the Beneficiary under
or pursuant to or in connection with a Guarantee; and


(c)           thirdly,
in or towards payment of all other sums which may be owing to the Issuing Bank
and each Lender under or in connection with a Guarantee.


32.9        Negotiation
with Beneficiaries.  The Borrower:


(a)           irrevocably
authorises the Agent (acting on the instructions of the Majority Lenders) to
negotiate with any Beneficiary at any time after the occurrence of any Event of
Default or Potential Event of Default with a view to arranging for the
prepayment by the Issuing Bank, for the account of the Borrower, of any
Guaranteed Obligations;


(b)           agrees
that at any time after the occurrence of any Event of Default or Potential
Event of Default the Issuing Bank shall be entitled (but not, so far as the
Borrower is concerned, bound) to pay to any Beneficiary, in such manner and
upon such terms as the Issuing Bank and the Beneficiary shall agree, any
Guaranteed Obligations.


33           INDEMNITIES OF THE LENDERS


33.1        Lenders’
undertakings to indemnify.  Each Lender
severally agrees that it shall:


(a)           indemnify,
as a principal and independent debtor, the Issuing Bank on demand in an amount
equal to its Current Percentage of any amount payable by the Borrower to or for
the account of the Issuing Bank under Clause 32.1(a) or (c) but unpaid; and


(b)           pay to the
Agent (for the account of the Issuing Bank) interest upon any amounts payable
by it pursuant to this Clause 33.1 from the date of demand to the date of
actual payment by it at a rate from time to time determined by the Issuing Bank
by reference to the cost of funds of the Issuing Bank from such sources as the
Issuing Bank may from time to time determine.


33.2        Continuing
indemnities.  The liabilities and
obligations of each Lender under the indemnities set out in Clause 33.1 shall
remain in force as a continuing security until the full, prompt and complete
performance of all the terms of those indemnities including the proper and
valid payment of all amounts that may become due to the Issuing Bank under this
Agreement and accordingly no Lender shall have, as regards those indemnities,
any of the rights or defences of a surety.


33.3        Discharges.  Any discharge or release granted to any
Lender in respect of the foregoing indemnities and any composition or
arrangement which the Agent or the Security Trustee on behalf of the Lenders
may effect with the Issuing Bank, shall be deemed to be made subject to the
condition that it will be void to the extent that any payment or security which
the Issuing Bank may previously have received or may thereafter receive is set
aside under any applicable law or proves to have been for any reason invalid.


33.4        Waiver of
rights and defences.  Without limiting the
generality of Clause 33.2, no Lender shall be discharged from any of its
liabilities or obligations under Clause 33.1 by, nor shall any Lender have any
claim against any other Creditor Party in respect of:


(a)           the
Issuing Bank releasing or granting any time or any indulgence whatsoever or
making any settlement, composition or arrangement with the Borrower or a
Beneficiary or any other person; or


(b)           a
Beneficiary and/or any Creditor Party and/or the Borrower, making, whether
expressly or by conduct, any variation to any Guaranteed Obligations or a
Guarantee; or



 88
 









(c)           a
Beneficiary and/or the Issuing Bank and/or the Borrower and/or the Agent and/or
the Security Trustee:


(i)            taking,
accepting, varying, dealing with, enforcing, abstaining from enforcing,
surrendering or releasing any security in relation to a Beneficiary or the
Issuing Bank or the Borrower or any other person in such manner as it or they
may think fit; or


(ii)           claiming,
proving for, accepting or transferring any payment in respect of the
obligations and liabilities of the Borrower and/or a Beneficiary relative to
any Guaranteed Obligations or under this Agreement in any composition by, or
winding up of, the Borrower and/or any third party or abstaining from so
claiming, proving, accepting or transferring; or


(d)           any
assignment or transfer by a Beneficiary of, or any succession to, any of its
rights relative to any Guaranteed Obligations or a Guarantee.


33.5        Transfer of
benefit of security on Lender’s failure to pay.  If any Lender fails to make any payment to
the Agent for account of the Issuing Bank pursuant to Clause 33.1 on the due
date then until such Lender’s failure has been remedied in full the Issuing
Bank shall be entitled to:


(a)           the
benefit of such Lender’s share of the Borrower’s indemnity under Clause 32 and
the benefit of all security then existing or thereafter created to secure the
obligations of the Borrower under this Agreement to which such Lender would
have been entitled had it performed its obligations in full as aforesaid; and


(b)           such
Lender’s rights to commissions and fees in respect of the Guarantee in respect
of which it has failed to perform its obligations.


The rights
conferred upon the Issuing Bank by this Clause 33.5 shall be in addition and
without prejudice to its other rights against such Lender under this Clause 33.


34           SUPPLEMENTAL


34.1        Rights
cumulative, non-exclusive.  The rights and
remedies which the Finance Documents give to each Creditor Party are:


(a)           cumulative;


(b)           may be
exercised as often as appears expedient; and


(c)           shall not,
unless a Finance Document explicitly and specifically states so, be taken to
exclude or limit any right or remedy conferred by any law.


34.2        Severability of
provisions.  If any provision of
a Finance Document is or subsequently becomes void, unenforceable or illegal,
that shall not affect the validity, enforceability or legality of the other
provisions of that Finance Document or of the provisions of any other Finance
Document.


34.3        Counterparts.  A Finance Document may be executed in any
number of counterparts.


34.4        Benefit and
binding effect.  The terms of this
Agreement shall be binding upon, and shall enure to the benefit of, the parties
hereto and their respective (including subsequent) successors and permitted
assigns and transferees.



 89
 









34.5        Third party
rights.  A person who is not
a party to this Agreement has no right under the Contracts (Rights of Third
Parties) Act 1999 to enforce or to enjoy the benefit of any term of this
Agreement.


35           LAW AND JURISDICTION


35.1        English law.  This Agreement shall be governed by, and
construed in accordance with, English law.


35.2        Exclusive
English jurisdiction.  Subject to Clause
35.3, the courts of England shall have exclusive jurisdiction to settle any
disputes which may arise out of or in connection with this Agreement.


35.3        Choice of forum
for the exclusive benefit of the Creditor Parties.  Clause 35.2 is for the exclusive benefit of
the Creditor Parties, each of which reserves the right:


(a)           to
commence proceedings in relation to any matter which arises out of or in
connection with this Agreement in the courts of any country other than England
and which have or claim jurisdiction to that matter; and


(b)           to
commence such proceedings in the courts of any such country or countries
concurrently with or in addition to proceedings in England or without commencing
proceedings in England.


The
Borrower shall not commence any proceedings in any country other than England
in relation to a matter which arises out of or in connection with this
Agreement.


35.4        Process agent. The
Borrower irrevocably appoints Danaos Management Consultants at their office for
the time being, presently at 4 Staple Inn, Holborn, London WC1V 7QU, England,
to act as its agent to receive and accept on its behalf any process or other
document relating to any proceedings in the English courts which are connected
with this Agreement.


35.5        Creditor Party
rights unaffected.  Nothing in this
Clause 35 shall exclude or limit any right which any Creditor Party may have
(whether under the law of any country, an international convention or
otherwise) with regard to the bringing of proceedings, the service of process,
the recognition or enforcement of a judgment or any similar or related matter
in any jurisdiction.


35.6        Meaning of “proceedings”.  In this Clause 35, “proceedings” means
proceedings of any kind, including an application for a provisional or
protective measure.


THIS AGREEMENT has been
entered into and amended and restated on the dates stated at the beginning of
this Agreement.



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SCHEDULE 1


LENDERS AND COMMITMENTS


	
  Lender and Lending Office

  	
   

  	
  Tranche A

  Commitment

  (US Dollars)

  	
   

  	
  Tranche B

  Commitment

  (US Dollars)

  	
   

  
	
  The Royal Bank of Scotland plc

  Akti Miaouli 45

  185 36 Piraeus

  Greece

  

  Fax No: +30 210 459 6600

  	
   

  	
  200,000,000

  	
   

  	
  500,000,000

  	
   

  



 



 91
 









SCHEDULE 2


DRAWDOWN NOTICE / GUARANTEE ISSUE REQUEST


	
  To:

  	
  The Royal
  Bank of Scotland plc

  
	
   

  	
  Akti
  Miaouli 45

  
	
   

  	
  185 36
  Piraeus

  
	
   

  	
  Greece

  
	
   

  	
   

  
	
  Attention:
  

  	
  Shipping
  Department

  



 


2007


DRAWDOWN NOTICE / GUARANTEE ISSUE REQUEST


1              We refer to the loan
agreement dated 20 February 2007 (the “Loan
Agreement”) and made between (amongst others) ourselves, as
Borrower, the Lenders referred to therein and yourselves as Agent and Security
Trustee in connection with revolving credit facilities of up to US$700,000,000
in aggregate.  Terms defined in the Loan
Agreement have their defined meanings when used in this Drawdown Notice.


2              We request to borrow an
Advance under [Tranche A][Tranche B] as follows:


(a)           Amount: US$[  ];


(b)           The Advance shall be drawn in [$] or [Optional Currency];


(c)           The Advance relates to the vessel[s] [·];


(d)           Drawdown Date: [                ]2007;


(e)           Duration of the first Interest Period shall be [ ] months;
and


(f)            Payment instructions:
[account in the name of [·] and numbered [·] with [·] of [·]]/[ the [Danaos] Earnings
Account [in respect of [·]].


3              [We request the issue of a
Guarantee in the form attached as follows:


(a)           Amount of the Guarantee: [·];


(b)           Guarantee Issue Date (“Drawdown
Date”):  [·];


(c)           Expiry date of the Guarantee: [·];


(d)           Delivery Instructions: 
[·].]


4              We represent and warrant
that:


(a)           the representations and warranties in Clause 11 of the Loan
Agreement and in the other Finance Documents would remain true and not
misleading if repeated on the date of this notice with reference to the
circumstances now existing;


(b)           no Event of Default or Potential Event of Default has
occurred or will result from [the borrowing of the Advance][the issue of the
Guarantee].


4              This notice cannot be
revoked without the prior consent of the Majority Lenders.



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5              We authorise you to deduct
from the Advance the amount of all fees payable pursuant to Clause 21.1.


	
  

  	
  [Name of signatory]

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  for and on behalf of

  	
   

  
	
   

  	
  DANAOS CORPORATION

  	
   

  



 



 93
 









SCHEDULE 3


CONDITION PRECEDENT DOCUMENTS


PART A


The
following are the documents referred to in Clause 10.1(a) required before the
Drawdown Date of the Advance which will be used in fully refinancing the
Existing Indebtedness.


1              A duly executed original of
each of:


(a)           this Agreement;


(b)           the Agency and Trust Deed;


(c)           the Master Agreement;


(d)           the Master Agreement
Assignment;


(e)           the Owner Guarantees to be
entered into by the Existing Owners;


(f)            the Mortgages, the Deeds of
Covenant, the General Assignments and the Charterparty Assignments relative to
the Existing Ships;


(g)           the Danaos AccountsAccount
Charge; and


(h)           the Earnings Account Charges
relative to the Existing Ships unless the Borrower elects that all the Earnings
of the Existing Ships shall be paid to the Danaos Earnings Account.


2              Copies of the certificate of
incorporation and constitutional documents of the Borrower and each Existing
Owner.


3              Copies of resolutions of the
directors of the Borrower and the directors and shareholders of each Existing
Owner authorising the execution of each of the Finance Documents to which the
Borrower or that Owner is a party and, in the case of the Borrower, authorising
named officers to give the Drawdown Notices and other notices under this
Agreement.


4              The original of any power of
attorney under which any Finance Document is executed on behalf of the Borrower
or an Existing Owner.


5              Copies of all consents which
the Borrower or any Existing Owner requires to enter into, or make any payment
under, any Finance Document.


6              The originals of any
mandates or other documents required in connection with the opening or
operation of the Danaos Earnings Account, and each Owner’s
Earnings Account relative to an Existing Ship and the Cash Collateral
Account.


7              Evidence satisfactory to the
Agent that each Existing Owner is a direct or indirect wholly-owned subsidiary
of the Borrower.


8              Documentary evidence that:


(a)           each Existing Ship is definitively and permanently
registered in the name of its Owner under the flag on which it is registered;



 94
 









(b)           each Existing Ship is in the absolute and unencumbered
ownership of its Owner save as contemplated by the Finance Documents to which
that Owner is a party;


(c)           each Existing Ship maintains the highest available class
with a classification society which is a member of the IACS as the Agent may
approve free of all overdue recommendations and conditions of such
classification society;


(d)           each Mortgage relative to an Existing Ship has been duly
registered against that Existing Ship as a valid first preferred or (as the
case may be) priority mortgage in accordance with the laws of the flag on which
that Ship is registered; and


(e)           each Existing Ship is insured in accordance with the provisions
of this Agreement and all requirements therein in respect of such insurances
have been complied with.


9              A copy of the Management
Agreement and a duly executed original of the Manager’s Undertaking in relation
to each Existing Ship.


10            Copies of:


(a)           the document of compliance (DOC) and safety management
certificate (SMC) referred to in paragraph (a) of the definition of the ISM
Code Documentation in respect of each Existing Ship and the Approved Manager
certified as true and in effect by the Owner of such Existing Ship; and


(b)           the ISPS Code Documentation in respect of each Existing
Ship and the Owner thereof certified as true and in effect by that Owner.


11            Two valuations (at the cost
of the Borrower) of each Existing Ship addressed to the Agent, stated to be for
the purpose of this Agreement and dated not earlier than 6 weeks before the
Drawdown Date for the first Advance, each from an Approved Broker (such
valuations to be made in accordance with Clause 16.4 or, as the case may be,
Clause 16.5).


12            Evidence of the lightweight
of each Existing Vessel.


13            All documentation required
by each Creditor Party in relation to the Borrower and any Security Party
pursuant to that Creditor Party’s “know your customer” requirements.


14            In relation to each Existing
Ship, a letter from the Owner of the Ship to the protection and indemnity
association in which the Ship is or is to be entered instructing it to provide
the Security Trustee with a copy of the certificate of entry of the Ship and
any other information relating to the entry of the Ship in such protection and
indemnity association.


15            A written confirmation from
the Borrower as to which individuals are authorised to give verbal and/or
written instructions to the Agent on behalf of the Borrower in respect of the
selection of any Interest Period pursuant to Clause 7.2.


1516       Such documents and evidence as any Creditor Party shall
require in relation to the Borrower or any Security Party, based on applicable
law and regulations and that Creditor Party’s own internal guidelines, relating
to that Creditor Party’s knowledge of its customers.


1617       Documentary evidence of the Existing Indebtedness which
will be refinanced by the Advance(s).



 95















1718       In relation to each Advance to be made, notification by the
Agent of the reduction amounts, term and amortisation/reduction profile to
apply to that Advance for the purposes of Clause 9.1 and an acknowledgement by
the Borrower of such amounts and dates.


1819       Documentary evidence that the agent for service of process
named in Clause 35 has accepted its appointment.


1920       Favourable legal opinions from lawyers appointed by the
Agent on such matters concerning the laws of the Marshall Islands, Liberia, Panama,
Greece, Cyprus, Bahamas, Belgium and such other relevant jurisdictions as the
Agent may require.


2021       A favourable opinion from an independent insurance
consultant acceptable to the Agent on such matters relating to the insurances
of the Existing Ships as the Agent may require.


2122       If the Agent so requires, in respect of any of the
documents referred to above, a certified English translation prepared by a
translator approved by the Agent.


PART B


The following are the documents referred to in Clause 10.1(b)
required before the Drawdown Date of each Advance which shall be used in
part-financing an Approved Ship (other than in the case of a Pre-Delivery
Advance to which Part C below applies instead).


In Part B of Schedule 3, the following definitions shall
have the following meanings:


(a)              “Relevant Advance” means the Advance which shall be used to
part-finance the acquisition of the Approved Ship;


(b)             “Relevant Owner” means the Approved Guarantor which is the
owner or (as the case may be) buyer of the Relevant Ship; and


(c)              “Relevant Ship” means the Approved Ship which is to be financed
by the Relevant Advance.


1              Copies of resolutions of the
shareholders and directors of the Relevant Owner and the Borrower authorising
the execution of each of the Finance Documents to which the Relevant Owner is a
party and, in the case of the Borrower, approving the borrowing of the Relevant
Advance and authorising named directors or attorneys to give the Drawdown
Notices and other notices under this Agreement and, in the case of the Relevant
Owner, ratifying the execution of the Approved Purchase Contract to which it is
a party.


2              The original of any power of
attorney under which any Finance Document is executed on behalf of the Relevant
Owner.


3              Copies of all consents which
the Relevant Owner or the Borrower requires to enter into, or make any payment
under, any Finance Document or the Approved Purchase Contract.


4              The written confirmation of
the Agent that the Relevant Ship has been approved by the Lenders as an
Approved Ship for the purposes of this Agreement pursuant to Clause 4.8.


5              Copies of the Approved
Purchase Contract in respect of the Relevant Ship and of all documents issued
by the Relevant Owner and the relevant Approved Seller under or in connection
therewith.



 96
 









6              A duly executed original of
the Owner Guarantee of the Relevant Owner and of the Mortgage, the General
Assignment, the relevant Earnings Account Charge (only if the Earnings of the
Relevant Ship are not to be paid to the Danaos Earnings Account) and, if required
by the relevant Approved Flag State, the Deed of Covenant, relative to the
Relevant Ship and of each document to be delivered pursuant to each such
Finance Document.


7              If applicable, a duly
executed original of the Charterparty Assignment and the Bareboat Charter
Security Agreement in respect of the Relevant Ship and of each document to be
delivered pursuant to each such Finance Document.


8              Evidence satisfactory to the
Agent that the Relevant Owner is a direct or indirect wholly-owned subsidiary
of the Borrower.


9              Documentary evidence that:


(a)           in the case of a financing of the purchase of the Relevant
Ship, the Relevant Ship has been unconditionally delivered by the Approved
Seller thereof to, and accepted by, the Relevant Owner under the Approved Purchase
Contract, and the full purchase price payable under the Approved Purchase
Contract (in addition to the part of the purchase price to be financed by the
Relevant Advance) has been duly paid;


(b)           the Relevant Ship is registered in the ownership of the
Relevant Owner under an Approved Flag;


(c)           the Relevant Ship is in the absolute and unencumbered
ownership of the Relevant Owner save as contemplated by the Finance Documents;


(d)           the Relevant Ship maintains the highest available class
with a classification society which is a member of the IACS as the Agent may
approve free of all overdue recommendations and conditions of such
classification society;


(e)           the Mortgage relating to the Relevant Ship has been duly
registered or recorded against the Relevant Ship as a valid first priority ship
mortgage in accordance with the laws of the relevant Approved Flag State; and


(f)            the Relevant Ship is insured
in accordance with the provisions of this Agreement and all requirements
therein in respect of insurances have been complied with.


10            A copy of the Management
Agreement and duly executed original of the Manager’s Undertaking in relation
to the Relevant Ship.


11            Copies of:


(a)           the document of compliance (DOC) and safety management certificate
(SMC) referred to in paragraph (a) of the definition of the ISM Code
Documentation in respect of the Relevant Ship and the Approved Manager
certified as true and in effect by the Relevant Owner; and


(b)           the ISPS Code Documentation in respect of the Relevant Ship
and the Relevant Owner certified as true and in effect by the Relevant Owner.


12            In the case of a financing
of the purchase of the Relevant Ship, such documentary evidence as the Agent
and its legal advisers may require in relation to the due authorisation and
execution by the relevant Approved Seller of the Approved Purchase Contract and
of all documents to be executed by such Approved Seller under the Approved
Purchase Contract.



 97
 









13            Two valuations (at the cost
of the Borrowers) of the Relevant Ship, addressed to the Agent, stated to be
for the purposes of this Agreement and dated not earlier than 6 weeks before
the Drawdown Date relative to the Relevant Advance, each from an Approved
Broker (such valuations to be made in accordance with Clause 16.4 or, as the
case may be, Clause 16.5).


14            If required by the Lenders,
a satisfactory (in the absolute opinion of the Lenders) survey report (at the
cost of the Borrower) in respect of the Relevant Ship, addressed to the Agent,
stated to be for the purposes of this Agreement and dated not earlier than 6
weeks before the Drawdown Date relative to the Relevant Advance, from an
independent marine surveyor selected by the Lenders who shall have conducted a
physical inspection of the Relevant Ship.


15            The originals of any
documents required in connection with the opening of the Owner’s Earnings
Account in respect of the Relevant Ship (only if the Earnings of the Relevant
Ship are not to be paid to the Danaos Earnings Account).


16            Confirmation that the
conditions (if any) required by the Lenders and referred to in the proviso to
the definition of “Finance Level” have been satisfied.


17            Notification by the Agent of
the reduction amounts, term and amortisation/reduction profile to apply to the
Relevant Advance for the purposes of Clause 9.1 and an acknowledgement by the
Borrower of such amounts and dates.


18            At the cost of the Borrower,
a favourable opinion from an independent insurance consultant acceptable to the
Lenders on such matters relating to the insurances for the Relevant Ship as the
Agent may require.


19            Documentary evidence that
the agent for service of process named in the Owner Guarantee of the Relevant
Owner has accepted its appointment.


20            Favourable legal opinions
from lawyers appointed by the Lender on such matters concerning the laws of the
Approved Flag State, the jurisdiction of incorporation of the Approved
Guarantor and such other relevant jurisdictions as the Agent may require.


21            If the Agent so requires, in
respect of any of the documents referred to above, a certified English
translation prepared by a translator approved by the Agent.


PART C


The following are the documents referred to in Clause
10.1(c) required before the Drawdown Date of each Pre-Advance which shall be
used in part-financing the payment of a pre-delivery instalment for an Approved
Ship under a shipbuilding contract which is an Approved Purchase Contract.


In Part C of Schedule 3, the following definitions shall
have the following meanings:


(a)              “Relevant Advance” means the Pre-Delivery Advance which shall
be used to part-finance the payment of the relevant pre-delivery instalment of
the Approved Ship;


(b)             “Relevant Instalment” 
means the instalment of the purchase price under the Approved Purchase
Contract which is to be part-financed by the Relevant Advance;


(c)              “Relevant Owner” means the Approved Guarantor which is the
buyer of the Relevant Ship; and



 98
 









(d)             “Relevant Ship” means the Approved Ship which is to be financed
by the Relevant Advance.


1              Copies of resolutions of the
shareholders and directors of the Relevant Owner and the Borrower authorising
the execution of each of the Finance Documents to which the Relevant Owner is a
party and, in the case of the Borrower, approving the borrowing of the Relevant
Advance and authorising named directors or attorneys to give the Drawdown
Notices and other notices under this Agreement and, in the case of the Relevant
Owner, ratifying the execution of the Approved Purchase Contract to which it is
a party.


2              The original of any power of
attorney under which any Finance Document is executed on behalf of the Relevant
Owner.


3              Copies of all consents which
the Relevant Owner or the Borrower requires to enter into, or make any payment
under, any Finance Document or the Approved Purchase Contract.


4              The written confirmation of
the Agent that the Relevant Ship has been approved by the Lenders as an
Approved Ship for the purposes of this Agreement pursuant to Clause 4.8.


5              Copies of the Approved
Purchase Contract in respect of the Relevant Ship and of all documents issued
by the Relevant Owner and the relevant Approved Seller under or in connection
therewith.


6              The original of the Refund
Guarantee in respect of the Relevant Instalment.


7              A duly executed original of
the Owner Guarantee of the Relevant Owner and of the Pre-Delivery Security
Assignment relative to the Relevant Ship and of each document to be delivered
pursuant to each such Finance Document.


8              Evidence satisfactory to the
Agent that the Relevant Owner is a direct or indirect wholly-owned subsidiary
of the Borrower.


9              Such documentary evidence as
the Agent and its legal advisers may require in relation to the due
authorisation and execution by the relevant Approved Seller of the Approved
Purchase Contract and of all documents to be executed by such Approved Seller
under the Approved Purchase Contract.


10            A duly issued invoice from the
Approved Seller showing the amount due and payable to the Approved Seller
pursuant to the Approved Purchase Contract in respect of the Relevant
Instalment together with evidence that all amounts payable thereunder (in
addition to the part to be paid by the requested Pre-Delivery Advance) have
been duly paid.


11            Documentary evidence that the
construction of the Approved Ship has reached the stage required (if any) for
payment of the Relevant Instalment under the Approved Purchase Contract.


12            Written confirmation from the
Relevant Owner to the Agent that the Relevant Owner has irrevocably accepted
and approved the building works (if any) which have been completed on the
Approved Ship up to the stage of construction referred to in the previous
paragraph.


13            Stage certificates issued by such
classification society as the Agent may approve in a form acceptable to the
Agent, confirming that the building works (if any) carried out up to and including
the stage of construction referred above of the Approved Ship have been
completed to the satisfaction of such classification society.



 99
 









14            Confirmation that the
conditions (if any) required by the Lenders and referred to in the proviso to
the definition of “Finance Level” have been satisfied.


15            Documentary evidence that
the agent for service of process named in the Owner Guarantee of the Relevant
Owner has accepted its appointment.


16            Favourable legal opinions
from lawyers appointed by the Lender on such matters concerning the laws of the
jurisdiction of incorporation of each of the Approved Guarantor, the Approved
Seller and the Refund Guarantor and such other relevant jurisdictions as the
Agent may require.


17            If the Agent so requires, in
respect of any of the documents referred to above, a certified English
translation prepared by a translator approved by the Agent.


Every copy document delivered under this Schedule shall be
certified as a true and up to date copy by a director or the secretary of the Borrower.



 100
 









SCHEDULE 4



TRANSFER CERTIFICATE


The Transferor and the Transferee accept
exclusive responsibility for ensuring that this Certificate and the transaction
to which it relates comply with all legal and regulatory requirements
applicable to them respectively.


To:          THE ROYAL
BANK OF SCOTLAND PLC
for itself and for and on behalf of the Borrower, each Security Party, the
Security Trustee, and each Lender, as defined in the Loan Agreement referred to
below.


[·] 200[·]


1              This Certificate relates to
a Loan Agreement dated [·] 2007 (as amended and/or
supplemented from time to time, the “Agreement”)
and made between (1) Danaos Corporation (the “Borrower”),
(2) certain banks and financial institutions as lenders (together in such
capacity, the “Lenders”), (3) The
Royal Bank of Scotland plc as swap bank (in such capacity, the “Swap Bank”), (4) The Royal Bank of Scotland
plc as issuing bank (in such capacity, the “Issuing
Bank”) and (5) The Royal Bank of Scotland plc as agent (in such
capacity, the “Agent”) and as
security trustee (in such capacity, the “Security
Trustee”) for revolving credit facilities of up to $700,000,000 in
aggregate.


2              In this Certificate, terms
defined in the Agreement shall, unless the contrary intention appears, have the
same meanings when used in this Certificate and in addition:


“Relevant Parties” means the Agent, the Borrower, each Security
Party, the Security Trustee, each Lender, the Swap Bank and the Issuing Bank;


“Transferor” means [full
name] of [lending office];
and


“Transferee” means [full
name] of [lending office].


3              The effective date of this
Certificate is [·] Provided that this Certificate shall not come into effect
unless it is signed by the Agent on or before that date.


4              The Transferor assigns to
the Transferee absolutely and without recourse all rights and interests
(present, future or contingent) which the Transferor has as Lender under or by
virtue of the Agreement and every other Finance Document in relation to [·] per cent. of its
Contribution, which amounts to $[·].


5              By virtue of this
Certificate and Clause 27 of the Agreement, the Transferor is discharged
[entirely from its Commitment which amounts to $[·]]
[from [·] per cent. of its
Commitment which percentage represents $[·]].


6              The Transferee undertakes
with the Transferor and each of the Relevant Parties that the Transferee will
observe and perform all the obligations under the Finance Documents which
Clause 27 of the Agreement provides will become binding on it upon this
Certificate taking effect.



 101
 









7              The Agent, at the request of
the Transferee (which request is hereby made) accepts, for the Agent itself and
for and on behalf of every other Relevant Party, this Certificate as a Transfer
Certificate taking effect in accordance with Clause 27 of the Agreement.


8              The Transferor:


(a)           warrants to the Transferee and each Relevant Party:


(i)            that the Transferor has full
capacity to enter into this transaction and has taken all corporate action and
obtained all consents which it needs in connection with this transaction; and


(ii)           that this Certificate is valid and binding as regards the
Transferor;


(b)           warrants to the Transferee that the Transferor is
absolutely entitled, free of encumbrances, to all the rights and interests
covered by the assignment in paragraph 4 above; and


(c)           undertakes with the Transferee that the Transferor will, at
its own expense, execute any documents which the Transferee reasonably requests
for perfecting in any relevant jurisdiction the Transferee’s title under this
Certificate or for a similar purpose.


9              The Transferee:


(a)           confirms that it has received a copy of the Agreement and
of each other Finance Document;


(b)           agrees that it will have no rights of recourse on any
ground against either the Transferor, the Agent, the Security Trustee, any
Lender, the Issuing Bank or the Swap Bank in the event that:


(i)            any Finance Document proves
to be invalid or ineffective;


(ii)           the Borrower or any Security Party fails to observe or
perform its obligations, or to discharge its liabilities, under any Finance
Document; or


(iii)          it proves impossible to realise any asset covered by a
Security Interest created by a Finance Document or the proceeds of such assets
are insufficient to discharge the liabilities of the Borrower or any Security
Party under the Finance Documents;


(c)           agrees that it will have no rights of recourse on any
ground against the Agent, the Security Trustee, any Lender, the Issuing Bank or
the Swap Bank in the event that this Certificate proves to be invalid or
ineffective;


(d)           warrants to the Transferor and each Relevant Party:


(i)            that it has full capacity to
enter into this transaction and has taken all corporate action and obtained all
consents which it needs to take or obtain in connection with this transaction;
and


(ii)           that this Certificate is valid and binding as regards the
Transferee; and


(e)           confirms the accuracy of the administrative details set out
below regarding the Transferee.


10            The Transferor and the
Transferee each undertake with the Agent and the Security Trustee severally, on
demand, fully to indemnify the Agent and/or the Security Trustee in 



 102
 









respect of
any claim, proceeding, liability or expense (including all legal expenses)
which they or either of them may incur in connection with this Certificate or
any matter arising out of it, except such as are shown to have been mainly and
directly caused by the gross and culpable negligence or dishonesty of the Agent’s
or the Security Trustee’s own officers or employees.


11            The Transferee shall repay
to the Transferor on demand so much of any sum paid by the Transferor under
paragraph 10 above as exceeds one-half of the amount demanded by the Agent or
the Security Trustee in respect of a claim, proceeding, liability or expense
which was not reasonably foreseeable at the date of this Certificate; but
nothing in this paragraph shall affect the liability of each of the Transferor
and the Transferee to the Agent or the Security Trustee for the full amount
demanded by it.


12            This Certificate shall be
governed by, and construed in accordance with, English law.


	
  [Name of Transferor]

  	
  [Name of
  Transferee]

  
	
   

  	
   

  
	
  By:

  	
  By:

  
	
   

  	
   

  
	
  Date:

  	
  Date:

  



 


Agent


Signed for itself and for
and on behalf of itself


as Agent and for every other Relevant Party


THE ROYAL BANK OF SCOTLAND PLC


By:


Date:



 103
 









Administrative Details of Transferee


Name of Transferee:


Lending Office:


Contact Person


(Loan Administration Department):


Telephone:


Fax:


Contact Person


(Credit Administration Department):


Telephone:


Fax:


Account for payments:


NOTE:                  THIS TRANSFER CERTIFICATE ALONE
MAY NOT BE SUFFICIENT TO TRANSFER A PROPORTIONATE SHARE OF THE TRANSFEROR’S
INTEREST IN THE SECURITY CONSTITUTED BY THE FINANCE DOCUMENTS IN THE
TRANSFEROR’S OR TRANSFEREE’S JURISDICTION OR IN THE JURISDICTION OF THE LAW
WHICH GOVERNS A PARTICULAR SECURITY INTEREST. 
IT IS THE RESPONSIBILITY OF EACH LENDER TO ASCERTAIN WHETHER ANY OTHER
DOCUMENTS ARE REQUIRED FOR THIS PURPOSE.



 104
 









SCHEDULE 5



DESIGNATION NOTICE


	
  To:

  	
  The Royal
  Bank of Scotland plc

  
	
   

  	
  Akti Miaouli 45

  
	
   

  	
  185 36 Piraeus

  
	
   

  	
  Greece

  



 


[·] 2007


Dear
Sirs


Loan agreement dated 20 February 2007 (as amended and/or
supplemented from time to time, the “Loan Agreement”) made between (inter alia)
(i) ourselves as Borrower, (ii) the Lenders, (iii) yourselves as Agent and
Security Trustee and (iv) The Royal Bank of Scotland plc as Swap Bank in
respect of revolving credit facilities of up to US$700,000,000 in aggregate


We
refer to:


1              the Loan Agreement;


2              the Master Agreement dated
as of February 2007 made between ourselves and The Royal Bank of Scotland plc;
and


3              a Confirmation delivered
pursuant to the said Master Agreement dated February 2007 and addressed by The
Royal Bank of Scotland plc to us.


In
accordance with the terms of the Loan Agreement, we hereby give you notice of
the said Confirmation and hereby confirm that the Transaction evidenced by it
will be designated as a “Designated Transaction” for the purposes of the Loan
Agreement and the Finance Documents.


	
  Yours faithfully

  
	
   

  
	
   

  	
   

  
	
   

  
	
  for and on behalf of

  
	
  DANAOS CORPORATION

  



 



 105
 









SCHEDULE 6



FORM OF COMPLIANCE CERTIFICATE


	
  To:

  	
  The Royal
  Bank of Scotland plc

  
	
   

  	
  Akti Miaouli 45

  
	
   

  	
  185 36 Piraeus

  
	
   

  	
  Greece

  



 


2007


Dear Sirs,


We refer to a loan agreement 20 February 2007 (as amended
and/or supplemented from time to time, the “Loan
Agreement”) made between (amongst others) yourselves and ourselves
in relation to revolving credit and term facilities of up to $700,00000 in
aggregate.


Words and expressions defined in the Loan Agreement shall
have the same meaning when used in this compliance certificate.


We enclose with this certificate a copy of the
[audited]/[unaudited] consolidated accounts for the Borrower’s Group for the
[Financial Year] [6-month period] ended [·].  The accounts (i) have been prepared in
accordance with all applicable laws and USGAAP all consistently applied, (ii)
give a true and fair view of the state of affairs of the Borrower’s Group at
the date of the accounts and of its profit for the period to which the accounts
relate and (iii) fully disclose or provide for all significant liabilities of
the Borrower’s Group.


We also enclose copies of the valuations of all the Fleet
Vessels which were used in calculating the Market Value Adjusted Total Assets
of the Borrower’s Group as at [·].


The Borrower represents that no Event of Default or
Potential Event of Default has occurred as at the date of this certificate
[except for the following matter or event [set
out all material details of matter or event]].  In addition as of [·], the Borrower confirms
compliance with the financial covenants set out in Clause 13.4 of the Loan
Agreement for the [12][6] months ending as of the date to which the enclosed
accounts are prepared.


We now certify that, as at [·]:


(a)           the ratio of Total Liabilities (after deducting all Cash
and Cash Equivalents) to Market Value Adjusted Total Assets (after deducting
all Cash and Cash Equivalents) is [·]:[·];


(b)           the aggregate of all Cash and Cash Equivalents is $[·];


(c)           the Interest Coverage Ratio is [·]:[·]; and


(d)           the Market Value Adjusted Net Worth is $[·].


This certificate shall be governed by, and construed in
accordance with, English law.


	
  

  	
   

  
	
  [·]

  
	
  Chief Financial Officer of

  
	
  Danaos Corporation

  



 



 106
 









SCHEDULE 7



MANDATORY COST FORMULA


1              The Mandatory Cost is an
addition to the interest rate to compensate Lenders for the cost of compliance
with (a) the requirements of the Financial Services Authority (or any other
authority which replaces all or any of its functions) or (b) the requirements
of the European Central Bank.


2              On the first day of each
Interest Period (or as soon as possible thereafter) the Agent shall calculate,
as a percentage rate, a rate (the “Additional
Cost Rate”) for each Lender, in accordance with the paragraphs set
out below.  The Mandatory Cost will be
calculated by the Agent as a weighted average of the Lenders’ Additional Cost
Rates (weighted in proportion to the percentage participation of each Lender in
the relevant Advance) and will be expressed as a percentage rate per annum.


3              The Additional Cost Rate for
any Lender lending from a lending office in a Participating Member State will
be the percentage notified by that Lender to the Agent.  This percentage will be certified by that
Lender in its notice to the Agent to be its reasonable determination of the
cost (expressed as a percentage of that Lender’s participation in all Advances
made from that lending office) of complying with the minimum reserve
requirements of the European Central Bank in respect of loans made from that
lending office.


4              The Additional Cost Rate for
any Lender lending from a lending office in the United Kingdom will be
calculated by the Agent as follows:


	
  

  	
  E x 0.01

  	
   

  	
   

  
	
   

  	
  300

  	
   

  	
  per cent. per annum

  



 


where:


E              is
designed to compensate Lenders for amounts payable under the Fees Rules and is
calculated by the Agent as being the average of the most recent rates of charge
supplied by the Lenders to the Agent pursuant to paragraph 6 below and
expressed in pounds per £1,000,000.


5              For the purposes of this
Schedule:


(a)           (a)_         “Eligible Liabilities” and “Special Deposits” have the meanings given to
them from time to time under or pursuant to the Bank of England Act 1998 or (as
may be appropriate) by the Bank of England;


(b)           “Fees Rules”  means the rules on periodic fees contained in
the FSA Supervision Manual or such other law or regulation as may be in force
from time to time in respect of the payment of fees for the acceptance of
deposits;


(c)           “Fee Tariffs”  means the fee tariffs specified in the Fees
Rules under the activity group A.1 Deposit acceptors (ignoring any minimum fee
or zero rated fee required pursuant to the Fees Rules but taking into account
any applicable discount rate);


(d)           “Participating Member State”  means any member state of the European Union
that adopts or has adopted the euro as its lawful currency in accordance with
legislation of the European Union relating to European Monetary Union; and



 107
 









(e)           “Tariff Base”  has the meaning given to it in, and will be
calculated in accordance with, the Fees Rules.


6              If requested by the Agent,
each Lender shall, as soon as practicable after publication by the Financial
Services Authority, supply to the Agent, the rate of charge payable by that
Lender to the Financial Services Authority pursuant to the Fees Rules in
respect of the relevant financial year of the Financial Services Authority
(calculated for this purpose by that Lender as being the average of the Fee
Tariffs applicable to that Lender for that financial year) and expressed in
pounds per £1,000,000 of the Tariff Base of that Lender.


7              Each Lender shall supply any
information required by the Agent for the purpose of calculating its Additional
Cost Rate.  In particular, but without
limitation, each Lender shall supply the following information in writing on or
prior to the date on which it becomes a Lender:


(a)           the jurisdiction of its lending office; and


(b)           any other information that the Agent may reasonably require
for such purpose.


Each Lender shall promptly
notify the Agent in writing of any change to the information provided by it
pursuant to this paragraph.


8              The rates of charge of each
Lender for the purpose of E above shall be determined by the Agent based upon
the information supplied to it pursuant to paragraph 6 above and on the
assumption that, unless a Lender notifies the Agent to the contrary, each
Lender’s obligations in relation to cash ratio deposits and special Deposits
are the same as those of a typical bank from its jurisdiction of incorporation
with a lending office in the same jurisdiction as its lending office.


9              The Agent shall have no
liability to any person if such determination results in an Additional Cost
Rate which over or under compensates any Lender and shall be entitled to assume
that the information provided by any Lender pursuant to paragraphs 3, 6 and 7
above is true and correct in all respects.


10            The Agent shall distribute
the additional amounts received as a result of the Mandatory Cost to the
Lenders on the basis of the Additional Cost Rate for each Lender based on the
information provided by each Lender pursuant to paragraphs 3, 6 and 7 above.


11            Any determination by the
Agent pursuant to this Schedule in relation to a formula, the Mandatory Cost,
an Additional Cost Rate or any amount payable to a Lender shall, in the absence
of manifest error, be conclusive and binding on all parties.


12            The Agent may from time to
time, after consultation with the Borrowers and the Lenders, determine and
notify to all parties any amendments which are required to be made to this
Schedule in order to comply with any change in law, regulation or any
requirements from time to time imposed by the Financial Services Authority or
the European Central Bank (or, in any case, any other authority which replaces
all or any of its functions) and any such determination shall, in the absence
of manifest error, be conclusive and binding on all parties.



 108
 









EXECUTION PAGE


BORROWER


	
  SIGNED by John Coustas

  	
  )

  
	
  for and on behalf of

  	
  )   /s/ John Coustas

  
	
  DANAOS CORPORATION

  	
  )

  
	
   

  	
   

  
	
   

  	
   

  
	
  LENDERS

  	
   

  
	
   

  	
   

  
	
  SIGNED by Alexios Rodopoulos

  	
  )

  
	
  for and on behalf of

  	
  )   /s/
  Alexios Rodopoulos

  
	
  THE ROYAL BANK

  	
  )

  
	
  OF SCOTLAND PLC

  	
  )

  
	
   

  	
   

  
	
   

  	
   

  
	
  SWAP BANK

  	
   

  
	
   

  	
   

  
	
  SIGNED by Alexios
  Rodopoulos

  	
  )

  
	
  for and on behalf of

  	
  )   /s/
  Alexios Rodopoulos

  
	
  THE ROYAL BANK

  	
  )

  
	
  OF SCOTLAND PLC

  	
  )

  
	
   

  	
   

  
	
   

  	
   

  
	
  ISSUING BANK

  	
   

  
	
   

  	
   

  
	
  SIGNED by Alexios
  Rodopoulos

  	
  )

  
	
  for and on behalf of

  	
  )   /s/
  Alexios Rodopoulos

  
	
  THE ROYAL BANK

  	
  )

  
	
  OF SCOTLAND PLC

  	
  )

  
	
   

  	
   

  
	
   

  	
   

  
	
  AGENT AND SECURITY TRUSTEE

  	
   

  
	
   

  	
   

  
	
  SIGNED by Alexios
  Rodopoulos

  	
  )

  
	
  for and on behalf of

  	
  )   /s/
  Alexios Rodopoulos

  
	
  THE ROYAL BANK

  	
  )

  
	
  OF SCOTLAND PLC

  	
  )

  



 



 109
 









 


	
  Witness to
  the above

  	
  )

  
	
  signatures:

  	
  )

  
	
   

  	
   

  
	
  Name: Alexia
  Matzmichalis

  	
  /s/ illeligible

  
	
   

  	
   

  
	
  Address: 2 Defteras Merachias

  	
   

  
	
  Piraeus 185 36 Greece

  	
   

  



 



 110