Document:

Exhibit 10.1

 

 

SL GREEN REALTY CORP.

AMENDED AND RESTATED 2005 STOCK OPTION AND
INCENTIVE  PLAN

 

TABLE OF CONTENTS

	
  

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
   

  	
  DEFINITIONS

  	
   

  	
  1

  
	
  2.

  	
   

  	
  EFFECTIVE DATE AND
  TERMINATION OF PLAN

  	
   

  	
  4

  
	
  3.

  	
   

  	
  ADMINISTRATION OF PLAN

  	
   

  	
  5

  
	
  4.

  	
   

  	
  SHARES AND UNITS
  SUBJECT TO THE PLAN

  	
   

  	
  6

  
	
  5.

  	
   

  	
  PROVISIONS APPLICABLE
  TO STOCK OPTIONS

  	
   

  	
  7

  
	
  6.

  	
   

  	
  PROVISIONS APPLICABLE
  TO RESTRICTED STOCK

  	
   

  	
  10

  
	
  7.

  	
   

  	
  PROVISIONS APPLICABLE
  TO PHANTOM SHARES

  	
   

  	
  12

  
	
  8.

  	
   

  	
  PROVISIONS APPLICABLE
  TO DIVIDEND EQUIVALENT RIGHTS

  	
   

  	
  14

  
	
  9.

  	
   

  	
  OTHER EQUITY-BASED
  AWARDS

  	
   

  	
  16

  
	
  10.

  	
   

  	
  PERFORMANCE GOALS

  	
   

  	
  16

  
	
  11.

  	
   

  	
  TAX WITHHOLDING

  	
   

  	
  16

  
	
  12.

  	
   

  	
  REGULATIONS AND
  APPROVALS

  	
   

  	
  17

  
	
  13.

  	
   

  	
  INTERPRETATION AND
  AMENDMENTS; OTHER RULES

  	
   

  	
  18

  
	
  14.

  	
   

  	
  CHANGES IN CAPITAL
  STRUCTURE

  	
   

  	
  18

  
	
  15.

  	
   

  	
  MISCELLANEOUS

  	
   

  	
  20

  
	
  EXHIBIT A PERFORMANCE
  GOALS

  	
   

  	
  22

  
	
  EXHIBIT B PERFORMANCE
  GOALS

  	
   

  	
  23

  

 

                 i

SL GREEN REALTY CORP.

AMENDED AND RESTATED

2005 STOCK OPTION AND INCENTIVE PLAN

SL Green Realty Corp., a
Maryland corporation, wishes to attract and retain qualified key employees,
Directors, officers, advisors, consultants and other personnel and encourage
them to increase their efforts to make the Company’s business more successful
whether directly or through its Subsidiaries or other affiliates.  In furtherance thereof, the SL Green Realty
Corp. Amended and Restated 2005 Stock Option and Incentive Plan is designed to
provide equity-based incentives to certain Eligible Persons.  Awards under the Plan may be made to Eligible
Persons in the form of Options, Restricted Stock, Phantom Shares, Dividend
Equivalent Rights or other forms of equity-based compensation.

1. DEFINITIONS.

Whenever used herein, the following terms shall have
the meanings set forth below:

“Annual Rate” means the
number of Shares subject to Awards granted in a single year divided by the
number of Shares of the Company’s outstanding Common Stock at the end of such
year.

“Award,” except where
referring to a particular category of grant under the Plan, shall include
Incentive Stock Options, Non-Qualified Stock Options, Restricted Stock, Phantom
Shares, Dividend Equivalent Rights and other equity-based Awards as
contemplated herein.

“Award Agreement” means a
written agreement in a form approved by the Committee to be entered into
between the Company and the Participant as provided in Section 3.  An Award Agreement may be, without limitation,
an employment or other similar agreement containing provisions governing grants
hereunder, if approved by the Committee for use under the Plan.

“Board” means the Board of Directors of the Company.

“Cause” means, unless
otherwise provided in the Participant’s Award Agreement, (i) engaging in
(A) willful or gross misconduct or (B) willful or gross neglect; (ii)
repeatedly failing to adhere to the directions of superiors or the Board or the
written policies and practices of the Company or its Subsidiaries or its
affiliates; (iii) the commission of a felony or a crime of moral turpitude,
dishonesty, breach of trust or unethical business conduct, or any crime
involving the Company or its Subsidiaries, or any affiliate thereof; (iv)
fraud, misappropriation or embezzlement; (v) any illegal act detrimental to the
Company its Subsidiaries or any affiliate thereof; (vi) repeated failure to
devote substantially all of the Participant’s business time and efforts to the
Company or its Subsidiaries, or any affiliate thereof, if required by the
Participant’s employment agreement; or (vii) the Participant’s failure  adequately and competently to perform his
duties after receiving notice from the Company or its Subsidiaries, or any
affiliate thereof specifically identifying the manner in which the Participant
has failed to perform; provided, however, that, if at any particular time the
Participant is subject to an effective employment agreement or consulting
agreement with the Company, then, in lieu of the foregoing definition, “Cause”
shall at that time have such meaning as may be specified in such employment
agreement.

“Change in Control”
means:

 

(i)             any “person,” including a “group”
(as such terms are used in Sections 13(d) and 14(d) of the Exchange Act,
together with all “affiliates” and “associates” (as such terms are defined in
Rule 12b-2 under the Exchange Act) of such person, shall become the “beneficial
owner” (as such term is defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company representing 25% or more of either
(A) the combined voting power of the Company’s then outstanding securities
having the right to vote in an election of the Board (“Voting Securities”) or
(B) the then outstanding shares of all classes of stock of the Company (in
either such case other than as a result of the acquisition of securities
directly from the Company); or

(ii)           the members of the Board at the
beginning of any consecutive 24-calendar-month period commencing on or after
the initial effective date of the Plan (the “Incumbent Directors”) cease for
any reason including without limitation, as a result of a tender offer, proxy
contest, merger or similar transaction, to constitute at least a majority of
the Board; provided that any person becoming a director of the Company whose
election or nomination was approved by a vote of at least a majority of the
members of the Board then still in office who were members of the Board at the
beginning of such 24-calendar-month period, shall, for purposes hereof, be
considered an Incumbent Director; or

(iii)          the shareholders of the Company shall
approve (A) any consolidation or merger of the Company or any subsidiary where
the shareholders of the Company, immediately prior to the consolidation or
merger, would not, immediately after the consolidation or merger, beneficially
own (as such term is defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, shares representing in the aggregate at least 50% of the voting
shares of the corporation issuing cash or securities in the consolidation or
merger (or of its ultimate parent corporation, if any), (B) any sale, lease,
exchange or other transfer (in one transaction or a series of transactions
contemplated or arranged by any party as a single plan) of all or substantially
all of the assets of the Company or (C) any plan or proposal for the
liquidation or dissolution of the Company.

Notwithstanding the
foregoing clause (i), an event described in clause (i) shall not be a Change in
Control if such event occurs solely as the result of an acquisition of
securities by the Company which, by reducing the number of shares of stock or
other Voting Securities outstanding, increases (x) the proportionate number of
shares of stock of the Company beneficially owned by any “person” (as defined
above) to 25% or more of the shares of stock then outstanding or (y) the
proportionate voting power represented by the Voting Securities beneficially
owned by any “person” (as defined above) to 25% or more of the combined voting
power of all then outstanding Voting Securities; provided, however, that if any
“person” referred to in clause (x) or (y) of this sentence shall thereafter
become the beneficial owner of any additional stock of the Company or other
Voting Securities (other than pursuant to a share split, stock dividend, or
similar transaction), then a Change in Control shall be deemed to have occurred
for purposes of the foregoing clause (i).

Notwithstanding the foregoing,
no event or condition shall constitute a Change in Control to the extent that,
if it were, a 20% tax would be imposed under Section 409A of the Code; provided
that, in such a case, the event or condition shall continue to constitute a
Change in Control to the maximum extent possible (e.g., if applicable, in
regard of vesting without an acceleration of distribution) without causing the
imposition of such 20% tax.

“Code” means the Internal Revenue Code of 1986, as
amended.

 2
 

 

“Committee” means the Compensation Committee of the
Board.

“Common Stock” means the
shares of common stock of the Company as constituted on the effective date of
the Plan, and any other shares into which such common stock shall thereafter be
changed by reason of a recapitalization, merger, consolidation, split-up,
combination, exchange of shares or the like.

“Company” means SL Green Realty Corp., a Maryland
corporation.

“Director” means a non-employee director of the
Company or its Subsidiaries.

“Disability” means,
unless otherwise provided by the Committee in the Participant’s Award Agreement,
a disability which renders the Participant incapable of performing all of his
or her material duties for a period of at least 150 consecutive or
non-consecutive days during any consecutive twelve-month period.  Notwithstanding the foregoing, no circumstances
or condition shall constitute a Disability to the extent that, if it were, a
20% tax would be imposed under Section 409A of the Code; provided that, in such
a case, the event or condition shall continue to constitute a Disability to the
maximum extent possible (e.g., if applicable, in regard of vesting without an
acceleration of distribution) without causing the imposition of such 20% tax.

“Dividend Equivalent
Right” means a right awarded under Section 8 of the Plan to receive (or have
credited) the equivalent value of dividends paid on Common Stock.

“Eligible Person” means a
key employee, Director, officer, advisor, consultant or other personnel of the
Company and its Subsidiaries or other person expected to provide significant
services (of a type expressly approved by the Committee as covered services for
these purposes) to the Company or its Subsidiaries.

“Exchange Act” means the Securities Exchange Act of
1934, as amended.

“Fair Market Value” per
Share as of a particular date means (i) if Shares are then listed on a national
stock exchange, the closing sales price per Share on the exchange for the last
preceding date on which there was a sale of Shares on such exchange, as
determined by the Committee, (ii) if Shares are not then listed on a national
stock exchange but are then traded on an over-the-counter market, the average
of the closing bid and asked prices for the Shares in such over-the-counter
market for the last preceding date on which there was a sale of such Shares in
such market, as determined by the Committee, or (iii) if Shares are not then
listed on a national stock exchange or traded on an over-the-counter market,
such value as the Committee in its discretion may in good faith determine;
provided that, where the Shares are so listed or traded, the Committee may make
such discretionary determinations where the Shares have not been traded for 10
trading days.

“Full-Value Award” means
an Award other than an Option, Stock Appreciation Right or other Award that
does not deliver the full value at grant thereof of the underlying shares.

“Fungible Pool Unit” shall be the measuring unit used for purposes of
the Plan, as specified in Section 4, to determine the number of Shares which
may be subject to Awards hereunder, which shall consist of Shares in the
proportions (ranging from 0.7 to 3.0) as set forth in Section 4(a).

“Grantee” means an
Eligible Person granted Restricted Stock, Phantom Shares, Dividend Equivalent
Rights or such other equity-based Awards as may be granted pursuant to Section
9.

 3
 

 

“Incentive Stock Option”
means an “incentive stock option” within the meaning of Section 422(b) of the
Code.

“Non-Qualified Stock Option” means an Option which is
not an Incentive Stock Option.

“Option” means the right
to purchase, at a price and for the term fixed by the Committee in accordance
with the Plan, and subject to such other limitations and restrictions in the
Plan and the applicable Award Agreement, a number of Shares determined by the
Committee.

“Optionee” means an
Eligible Person to whom an Option is granted, or the Successors of the
Optionee, as the context so requires.

“Option Price” means the price per Share, determined
by the Board or the Committee, at which an Option may be exercised.

“Participant” means a Grantee or Optionee.

 “Phantom Share” means a right, pursuant to the
Plan, of the Grantee to payment of the Phantom Share Value.

“Phantom Share Value,”
per Phantom Share, means the Fair Market Value of a Share of Class A Common
Stock, or, if so provided by the Committee, such Fair Market Value to the
extent in excess of a base value established by the Committee at the time of
grant.

“Plan” means the Company’s
Amended and Restated 2005 Stock Option and Incentive Plan, as set forth herein
and as the same may from time to time be amended.

“Restricted Stock” means an award of Shares that are
subject to restrictions hereunder.

“Retirement” means,
unless otherwise provided by the Committee in the Participant’s Award
Agreement, the Termination of Service (other than for Cause) of a Participant
on or after the Participant’s attainment of age 65 or on or after the
Participant’s attainment of age 55 with five consecutive years of service with
the Company and or its Subsidiaries or its affiliates.

“Securities Act” means
the Securities Act of 1933, as amended.

“Settlement Date” means the date determined under
Section 7.4(c).

“Shares” means shares of Common Stock of the Company.

“Stock Appreciation Right” means the right to settle
an Option as provided for in Section 5.7.

“Subsidiary” means any
corporation (other than the Company) that is a “subsidiary corporation” with
respect to the Company under Section 424(f) of the Code.  In the event the Company becomes a subsidiary
of another company, the provisions hereof applicable to subsidiaries shall,
unless otherwise determined by the Committee, also be applicable to any company
that is a “parent corporation” with respect to the Company under Section 424(e)
of the Code.

“Successor of the
Optionee” means the legal representative of the estate of a deceased Optionee
or the person or persons who shall acquire the right to exercise an Option by
bequest or inheritance or by reason of the death of the Optionee.

 4
 

 

“Termination of Service”
means a Participant’s termination of employment or other service, as applicable,
with the Company and its Subsidiaries.

“Three-Year Average
Annual Rate” means the average of the Annual Rates (i) during the first three
calendar years following April 1, 2005 and (ii) for the first three calendar
years following April 1, 2007.

2. EFFECTIVE DATE AND TERMINATION OF PLAN.

The effective date of the
Plan is April 1, 2007.  The Plan shall
not become effective unless and until it is approved by the requisite
percentage of the holders of the Common Stock of the Company.  The Plan shall terminate on, and no Award
shall be granted hereunder on or after, the 10-year anniversary of the earlier
of the approval of the Plan by (i) the Board or (ii) the shareholders of the
Company; provided, however, that the Board may at any time prior to that date terminate
the Plan; and provided, further, that all Awards made under the Plan prior to a
Plan termination shall remain in effect until such Awards have been satisfied
or terminated in accordance with the terms and provisions of the Plan and the
applicable Award Agreement.

3. ADMINISTRATION OF PLAN.

(a)   The Plan shall be administered by the
Committee appointed by the Board. Unless otherwise determined by the Board, the
Committee, upon and after such time as it is covered in Section 16 of the
Exchange Act, shall consist of at least two individuals each of whom shall be a
“nonemployee director” as defined in Rule 16b-3 as promulgated by the
Securities and Exchange Commission (“Rule 16b-3”) under the Exchange Act and
shall, at such times as the Company is subject to Section 162(m) of the Code
(to the extent relief from the limitation of Section 162(m) of the Code is
sought with respect to Awards), qualify as “outside directors” for purposes of
Section 162(m) of the Code; provided that no action taken by the Committee
(including without limitation grants) shall be invalidated because any or all
of the members of the Committee fails to satisfy the foregoing requirements of
this sentence.  If and to the extent
applicable, no member of the Committee may act as to matters under the Plan
specifically relating to such member.  Notwithstanding the other foregoing provisions of
this Section 3(a), any Award under the Plan to a person who is a member of the
Committee shall be made and administered by the Board.  If no Committee is designated by the Board to
act for these purposes, the Board shall have the rights and responsibilities of
the Committee hereunder and under the Award Agreements.

(b)   Subject to the provisions of the Plan, the
Committee shall in its discretion (i) authorize the granting of Awards to
Eligible Persons; and (ii) determine the eligibility of Eligible Persons to
receive an Award, as well as determine the number of Shares to be covered under
any Award Agreement, considering the position and responsibilities of the
Eligible Persons, the nature and value to the Company of the Eligible Person’s
present and potential contribution to the success of the Company whether
directly or through its Subsidiaries and such other factors as the Committee
may deem relevant.

(c)   The Award Agreement shall contain such other
terms, provisions and conditions not inconsistent herewith as shall be
determined by the Committee.  In the
event that any Award Agreement or other agreement hereunder provides (without
regard to this sentence) for the obligation of the Company or any affiliate
thereof to purchase or repurchase Shares from a Participant or any other
person, then, notwithstanding the provisions of the Award Agreement or such
other agreement, such obligation shall not apply to the extent that the
purchase or repurchase would not be permitted under governing state law.  The Participant shall take whatever
additional actions and execute whatever additional documents the Committee may
in its reasonable judgment deem necessary or advisable in order to carry out or
effect

 5
 

one or more of the
obligations or restrictions imposed on the Participant pursuant to the express
provisions of the Plan and the Award Agreement.

(d)   The Committee may provide, in its discretion,
that (i) all stock issued hereunder be initially maintained in separate
brokerage account for the Participant at a brokerage firm selected by, and
pursuant to an arrangement with, the Company; and (ii) in the case of vested
Shares, the Participant may move such Shares to another brokerage account of
the Participant’s choosing or request that a stock certificate be issued and
delivered to him or her.

(e)   The Committee, in its discretion, may
delegate to the Chief Executive Officer of the Company all or part of the
Committee’s authority and duties with respect to awards, including, without
limitation, the granting of awards to individuals who are not subject to the
reporting and other provisions of Section 16 of the Act and who are not
and are not expected to be “covered employees” within the meaning of
Section 162(m) of the Code.  Any
such delegation by the Committee may, in the sole discretion of the Committee,
include a limitation as to the amount of awards that may be awarded during the
period of the delegation and may contain guidelines as to the determination of
the option exercise price, or price of other awards and the vesting
criteria.  The Committee may revoke or
amend the terms of a delegation at any time but such action shall not invalidate
any prior actions of the Committee’s delegate that were consistent with the
terms of the Plan.

4. SHARES AND
UNITS SUBJECT TO THE PLAN.

(a)   Subject to
adjustments as provided in Section 14, the total number of Shares subject to
Awards granted under the Plan, in the aggregate, may not exceed 7,000,000 (the “Fungible
Pool Limit”).  Each Share issued or to be
issued in connection with Full-Value Awards that vest or are granted based on
the achievement of the performance goals set forth in Exhibit A shall be
counted against the Fungible Pool Limit as 2.0 Fungible Pool Units.  Each Share issued or to be issued in
connection with any other Full-Value Awards shall be counted against the
Fungible Pool Limit as 3.0 Fungible Pool Units. 
Options, Stock Appreciation Rights and other Awards that do not deliver
the full value at grant thereof of the underlying Shares and that expire 10
years from the date of grant shall be counted against the Fungible Pool Limit
as 1 Fungible Pool Unit.  Options, Stock
Appreciation Rights and other Awards that do not deliver the full value at
grant thereof of the underlying Shares and that expire five years from the date
of grant shall be counted against the Fungible Pool Limit as 0.7 of a Fungible
Pool Unit.  (For these purposes, the
number of Shares taken into account with respect to a Stock Appreciation Right
shall be the number of Shares underlying the Stock Appreciation Rights at grant
(i.e., not the final number of Shares delivered upon exercise of the Stock
Appreciation Rights).)  Shares that have
been granted as Restricted Stock or that have been reserved for distribution in
payment for Options, Phantom Shares or other equity-based Awards but are later
forfeited or for any other reason are not payable under the Plan may again be
made the subject of Awards under the Plan.

(b)   At the end of (i) the third calendar year
following April 1, 2005 and (ii) the third calendar year following April 1,
2007, the Three-Year Average Annual Rate, respectively, shall not exceed the
greater of (1) 2%, with respect to the third calendar year following April 1,
2005, or 2.23%, with respect to the third calendar year following April 1, 2007
or (2) the mean of the Company’s GICS peer group (collectively, the “Target
Rate”).  For purposes of calculating the
number of Shares granted in a year in connection with the limitation set forth
in the foregoing sentence, Shares underlying Full-Value Awards will be taken
into account as (i) 1.5 Shares if the Company’s annual Common Stock price
volatility is 53% or higher, (ii) two Shares if the Company’s annual Common
Stock price volatility is between 25% and 52%, and (iii) four Shares if the
Company’s annual Common Stock price volatility is less than 25%.  (For the avoidance of doubt, the Annual Rate
in any one year during such three-year 

 6
 

periods may exceed the
applicable Target Rate, provided that the Three-Year Average Annual Rate does
not exceed the applicable Target Rate.)

(c)   Shares subject to Dividend Equivalent Rights,
other than Dividend Equivalent Rights based directly on the dividends payable
with respect to Shares subject to Options or the dividends payable on a number
of Shares corresponding to the number of Phantom Shares awarded, shall be
subject to the limitation of Section 4.1(a). 
If any Phantom Shares, Dividend Equivalent Rights or other equity-based
Awards under Section 9 are paid out in cash, then, notwithstanding the first
sentence of Section 4.1(a) above (but subject to the second sentence thereof)
the underlying Shares may again be made the subject of Awards under the Plan.

(d)   The certificates for Shares issued hereunder
may include any legend which the Committee deems appropriate to reflect any
rights of first refusal or other restrictions on transfer hereunder or under
the Award Agreement, or as the Committee may otherwise deem appropriate.

(e)   No award may be granted under the Plan to any
person who, assuming exercise of all options and payment of all awards held by
such person, would own or be deemed to own more than 9.8% of the outstanding
shares of Common Stock.  Subject to
adjustments as provided in Section 14, no Eligible Person shall be granted
Awards (with Shares subject to Awards being counted, depending on the type of
Award, in the proportions ranging from 0.7 to 3.0, as described in Section
4(a)) in any one year covering more than 700,000 Shares, it being expressly
contemplated that Awards in exclusively one category (e.g., Options) can (but
need not) be used in the discretion of the Committee to reach the limitation
set forth in this sentence.

5. PROVISIONS APPLICABLE TO STOCK OPTIONS.

5.1   Grant of
Option.

Subject to the
other terms of the Plan, the Committee (or, as expressly permitted by Section
3, the Chief Executive Officer) shall, in its discretion as reflected by the
terms of the applicable Award Agreement: (i) determine and designate from time
to time those Eligible Persons to whom Options are to be granted and the number
of Shares to be optioned to each Eligible Person; (ii) determine whether to
grant Incentive Stock Options or to grant Non-Qualified Stock Options, or both
(to the extent that any Option does not qualify as an Incentive Stock Option,
it shall constitute a separate Non-Qualified Stock Option); provided that
Incentive Stock Options may only be granted to employees; (iii) determine the
time or times when and the manner and condition in which each Option shall be
exercisable and the duration of the exercise period; (iv) designate each Option
as one intended to be an Incentive Stock Option or as a Non-Qualified Stock
Option; and (v) determine or impose other conditions to the grant or exercise
of Options under the Plan as it may deem appropriate.

5.2   Option
Price.

The Option Price shall be
determined by the Committee on the date the Option is granted and reflected in
the Award Agreement, as the same may be amended from time to time.  The Option Price shall not be less than 100%
of the Fair Market Value of a Share on the day the Option is granted.  Any particular Award Agreement may provide
for different exercise prices for specified amounts of Shares subject to the
Option.

5.3   Period
of Option and Vesting.

 7
 

 

(a)   Unless earlier expired, forfeited or
otherwise terminated, each Option shall expire in its entirety upon the 10th
anniversary of the date of grant or shall have such other term (which may be
shorter, but not longer) as is set forth in the applicable Award Agreement
(except that, in the case of an individual described in Section 422(b)(6) of
the Code (relating to certain 10% owners) who is granted an Incentive Stock
Option, the term of such Option shall be no more than five years from the date
of grant).  The Option shall also expire,
be forfeited and terminate at such times and in such circumstances as otherwise
provided hereunder or under the Award Agreement.

(b)   Each Option, to the extent that the Optionee
has not had a Termination of Service and the Option has not otherwise lapsed,
expired, terminated or been forfeited, shall first become exercisable according
to the terms and conditions set forth in the Award Agreement, as determined by
the Committee at the time of grant. 
Unless otherwise provided in the Award Agreement, no Option (or portion
thereof) shall ever be exercisable if the Optionee has a Termination of Service
before the time at which such Option (or portion thereof) would otherwise have
become exercisable, and any Option that would otherwise become exercisable
after such Termination of Service shall not become exercisable and shall be
forfeited upon such termination. 
Notwithstanding the foregoing provisions of this Section 5.3(b), Options
exercisable pursuant to the schedule set forth by the Committee at the time of
grant may be fully or more rapidly exercisable or otherwise vested at any time
in the discretion of the Committee.  Upon
and after the death of an Optionee, such Optionee’s Options, if and to the
extent otherwise exercisable hereunder or under the applicable Award Agreement
after the Optionee’s death, may be exercised by the Successors of the Optionee.

5.4   Exercisability
Upon and After Termination of Optionee.

(a)   Subject to
provisions of the Award Agreement, in the event the Optionee has a Termination
of Service other than by the Company or its Subsidiaries for Cause, or other
than by reason of death, Retirement or Disability, no exercise of an Option may
occur after the expiration of the three-month period to follow the termination,
or if earlier, the expiration of the term of the Option as provided under
Section 5.3(a); provided that, if the Optionee should die after the
Termination of Service, such termination being for a reason other than Cause,
Disability or Retirement, but while the Option is still in effect, the Option
(if and to the extent otherwise exercisable by the Optionee at the time of
death) may be exercised until the earlier of (i) one year from the date of the
Termination of Service of the Optionee, or (ii) the date on which the term of
the Option expires in accordance with Section 5.3(a).

(b)   Subject to provisions of the Award Agreement,
in the event the Optionee has a Termination of Service on account of death or
Disability or Retirement, the Option (whether or not otherwise exercisable) may
be exercised until the earlier of (i) one year from the date of the Termination
of Service of the Optionee, or (ii) the date on which the term of the Option
expires in accordance with Section 5.3.

(c)   Notwithstanding any other provision hereof,
unless otherwise provided in the Award Agreement, if the Optionee has a
Termination of Service by the Company for Cause, the Optionee’s Options, to the
extent then unexercised, shall thereupon cease to be exercisable and shall be
forfeited forthwith.

5.5   Exercise
of Options.

(a)   Subject to vesting, restrictions on
exercisability and other restrictions provided for hereunder or otherwise
imposed in accordance herewith, an Option may be exercised, and payment in full
of the aggregate Option Price made, by an Optionee only by written notice (in
the form prescribed by the Committee) to the Company specifying the number of
Shares to be purchased.

 

 8

 

(b)   Without limiting the scope of the Committee’s
discretion hereunder, the Committee may impose such other restrictions on the
exercise of Incentive Stock Options (whether or not in the nature of the
foregoing restrictions) as it may deem necessary or appropriate.

5.6 Payment.

(a)   The aggregate Option Price shall be paid in
full upon the exercise of the Option. 
Payment must be made by one of the following methods:

(i)            a certified or bank cashier’s check
or wire transfer;

(ii)           subject to Section 12(e), the
proceeds of a Company loan program or third-party sale program or a notice
acceptable to the Committee given as consideration under such a program, in
each case if permitted by the Committee in its discretion, if such a program
has been established and the Optionee is eligible to participate therein;

(iii)          if approved by the Committee in its
discretion, Shares of previously owned Common Stock, which have been previously
owned for more than six months, having an aggregate Fair Market Value on the
date of exercise equal to the aggregate Option Price; or

(iv)          by any combination of such methods of
payment or any other method acceptable to the Committee in its discretion.

(b)   Except in the case of Options exercised by
certified or bank cashier’s check, the Committee may impose limitations and
prohibitions on the exercise of Options as it deems appropriate, including,
without limitation, any limitation or prohibition designed to avoid accounting
consequences which may result from the use of Common Stock as payment upon
exercise of an Option.

(c)   The Committee may provide that no Option may
be exercised with respect to any fractional Share.  Any fractional Shares resulting from an
Optionee’s exercise that is accepted by the Company shall in the discretion of
the Committee be paid in cash.

5.7  Stock Appreciation Rights.

The Committee, in
its discretion, may also permit (taking into account, without limitation, the
application of Section 409A of the Code, as
the Committee may deem appropriate) the Optionee to elect to exercise an
Option by receiving a combination of Shares and cash, or, in the discretion of
the Committee, either Shares or solely in cash, with an aggregate Fair Market
Value (or, to the extent of payment in cash, in an amount) equal to the excess
of the Fair Market Value of the Shares with respect to which the Option is
being exercised over the aggregate Option Price, as determined as of the day
the Option is exercised.

5.8  Exercise by Successors.

An Option may be
exercised, and payment in full of the aggregate Option Price made, by the
Successors of the Optionee only by written notice (in the form prescribed by
the Committee) to the Company specifying the number of Shares to be
purchased.  Such notice shall state that
the aggregate Option Price will be paid in full, or that the Option will be
exercised as otherwise provided hereunder, in the discretion of the Company or
the Committee, if and as applicable.

 9
 

 

5.9   Nontransferability of Option.

Each Option granted under
the Plan shall be nontransferable by the Optionee except by will or the laws of
descent and distribution of the state wherein the Optionee is domiciled at the
time of his death; provided, however, that the Committee may (but need not)
permit other transfers, where the Committee concludes that such transferability
(i) does not result in accelerated U.S. federal income taxation, (ii) does not
cause any Option intended to be an Incentive Stock Option to fail to be
described in Section 422(b) of the Code, and (iii) is otherwise appropriate and
desirable; and provided, further, that in no event may an Option be transferred
by the Optionee for consideration without shareholder approval.

5.10 Deferral.

Except as provided
in the Award Agreement, the Committee (taking into account, without limitation,
the possible application of Section 409A of the Code, as the Committee may deem appropriate) may establish a program
under which Participants will have Phantom Shares subject to Section 7 credited
upon their exercise of Options, rather than receiving Shares at that time.

5.11 Certain Incentive Stock Option Provisions.

(a)  The aggregate Fair Market
Value, determined as of the date an Option is granted, of the Common Stock for
which any Optionee may be awarded Incentive Stock Options which are first
exercisable by the Optionee during any calendar year under the Plan (or any
other stock option plan required to be taken into account under Section 422(d)
of the Code) shall not exceed $100,000.

(b)  If Shares acquired upon exercise of an
Incentive Stock Option are disposed of in a disqualifying disposition within
the meaning of Section 422 of the Code by an Optionee prior to the expiration
of either two years from the date of grant of such Option or one year from the
transfer of Shares to the Optionee pursuant to the exercise of such Option, or
in any other disqualifying disposition within the meaning of Section 422 of the
Code, such Optionee shall notify the Company in writing as soon as practicable
thereafter of the date and terms of such disposition and, if the Company (or
any affiliate thereof) thereupon has a tax-withholding obligation, shall pay to
the Company (or such affiliate) an amount equal to any withholding tax the
Company (or affiliate) is required to pay as a result of the disqualifying
disposition.

(c) The Option
Price with respect to each Incentive Stock Option shall not be less than 100%,
or 110% in the case of an individual described in Section 422(b)(6) of the Code
(relating to certain 10% owners), of the Fair Market Value of a Share on the
day the Option is granted.  In the case
of an individual described in Section 422(b)(6) of the Code who is granted an
Incentive Stock Option, the term of such Option shall be no more than five
years from the date of grant.

6. PROVISIONS
APPLICABLE TO RESTRICTED STOCK.

6.1   Grant of Restricted Stock.

(a)   In connection with the grant of Restricted
Stock, whether or not performance goals (as provided for under Section 10)
apply thereto, the Committee shall establish one or more vesting periods with
respect to the shares of Restricted Stock granted, the length of which shall be
determined in the discretion of the Committee. 
Subject to the provisions of this Section 6, the applicable Award
Agreement and the other provisions of the Plan, restrictions on Restricted
Stock shall lapse if the Grantee satisfies all applicable employment or other
service requirements through the end of the applicable vesting period.  Nothing in this Section 6 shall limit the
Committee’s authority, and the Committee is 

 10
 

 

expressly authorized, to grant
Shares which are fully vested upon grant (and for which there is no period of
forfeiture), and which are subject to the rules of this Section 6.

(b)   Subject to the other terms of the Plan, the
Committee may, in its discretion as reflected by the terms of the applicable
Award Agreement:  (i) authorize the
granting of Restricted Stock to Eligible Persons; (ii) provide a specified purchase price for the Restricted
Stock (whether or not the payment of a purchase price is required by any state
law applicable to the Company); (iii) determine the restrictions
applicable to Restricted Stock and (iv) determine or impose other conditions,
including any applicable performance goals, to the grant of Restricted Stock
under the Plan as it may deem appropriate.

6.2   Certificates.

(a)   Unless otherwise provided by the Committee,
each Grantee of Restricted Stock shall be issued a stock certificate in respect
of Shares of Restricted Stock awarded under the Plan.  Each such certificate shall be registered in
the name of the Grantee. Without limiting the generality of Section 4.1(c), the
certificates for Shares of Restricted Stock issued hereunder may include any
legend which the Committee deems appropriate to reflect any restrictions on
transfer hereunder or under the Award Agreement, or as the Committee may
otherwise deem appropriate, and, without limiting the generality of the
foregoing, shall bear a legend referring to the terms, conditions, and
restrictions applicable to such Award, substantially in the following form:

The transferability of
this certificate and the shares of stock represented hereby are subject to the
terms and conditions (including forfeiture) of the SL Green Realty Corp. 2005
Stock Option and Incentive Plan and an Award Agreement entered into between the
registered owner and SL Green Realty Corp. Copies of such Plan and Award
Agreement are on file in the offices of SL Green Realty Corp., at 420 Lexington
Avenue, New York, New York 10170.

(b)   The Committee may require that any stock
certificates evidencing such Shares be held in custody by the Company until the
restrictions hereunder shall have lapsed, and that, as a condition of any Award
of Restricted Stock, the Grantee shall have delivered to the Company a stock
power, endorsed in blank, relating to the stock covered by such Award.  If and when such restrictions so lapse, the
stock certificates shall be delivered by the Company to the Grantee or his or
her designee as provided in Section 6.3 (and
the stock power shall be so delivered or shall be discarded).

6.3   Restrictions and Conditions.

Unless otherwise
provided by the Committee, the Shares of Restricted Stock awarded pursuant to
the Plan shall be subject to the following restrictions and conditions:

(i)                              Subject to the
provisions of the Plan and the Award Agreements, during a period commencing
with the date of such Award and ending on the date the period of forfeiture
with respect to such Shares lapses, the Grantee shall not be permitted
voluntarily or involuntarily to sell, transfer, pledge, anticipate, alienate,
encumber or assign Shares of Restricted Stock awarded under the Plan (or have
such Shares attached or garnished). 
Subject to the provisions of the Award Agreements and clause (iii)
below, the period of forfeiture with respect to Shares granted hereunder shall
lapse as provided in the applicable Award Agreement.  Notwithstanding the foregoing, unless
otherwise expressly provided by the Committee, the period of forfeiture with
respect to such Shares shall only lapse as to whole Shares.

 11
 

 

(ii)                             Except as provided
in the foregoing clause (i), below in this clause (ii) or in Section 14, or as
otherwise provided in the applicable Award Agreement, the Grantee shall have,
in respect of the Shares of Restricted Stock, all of the rights of a
shareholder of the Company, including the right to vote the Shares and the
right to receive any cash dividends currently; provided, however that, if
provided in an Award Agreement, cash dividends on such Shares shall (A) be held
by the Company (unsegregated as a part of its general assets) until the period
of forfeiture lapses (and forfeited if the underlying Shares are forfeited),
and paid over to the Grantee (without interest) as soon as practicable after
such period lapses (if not forfeited), or (B) treated as may otherwise be
provided in an Award Agreement. 
Certificates for Shares (not subject to restrictions) shall be delivered
to the Grantee or his or her designee, at the request thereof, promptly after,
and only after, the period of forfeiture shall lapse without forfeiture in
respect of such Shares of Restricted Stock.

(iii)                            Except as otherwise
provided in the applicable Award Agreement, if the Grantee has a Termination of
Service by the Company and its Subsidiaries for Cause, or by the Grantee for
any reason, during the applicable period of forfeiture, then (A) all Shares
still subject to restriction shall thereupon, and with no further action, be
forfeited by the Grantee, and (B) in the
event the Grantee has paid a cash purchase price for the forfeited Shares, the
Company shall pay to the Grantee as soon as practicable (and in no event more
than 30 days) after such termination an amount equal to the lesser of (x) the
amount paid by the Grantee (if any) for such forfeited Restricted Stock as
contemplated by Section 6.1, and (y) the Fair Market Value on the date of
termination of the forfeited Restricted Stock.

7. PROVISIONS
APPLICABLE TO PHANTOM SHARES.

7.1   Grant of Phantom Shares.

Subject to the
other terms of the Plan, the Committee shall, in its discretion as reflected by
the terms of the applicable Award Agreement: 
(i) authorize the granting of Phantom Shares to Eligible Persons and
(ii) determine or impose other conditions to the grant of Phantom Shares under
the Plan as it may deem appropriate.

7.2   Term.

The Committee may
provide in an Award Agreement that any particular Phantom Share shall expire at
the end of a specified term.

7.3   Vesting.

Phantom Shares shall vest
as provided in the applicable Award Agreement.

7.4   Settlement of Phantom Shares.

(a)   Each vested and outstanding Phantom Share
shall be settled by the transfer to the Grantee of one Share; provided that the
Committee at the time of grant may provide that a Phantom Share may be settled
(i) in cash at the applicable Phantom Share Value or (ii) in cash or by
transfer of Shares as elected by the Grantee in accordance with procedures
established by the Committee (taking into
account, without limitation, Section 409A of the Code, as the Committee may
deem appropriate).

 12
 

 

(b)   Phantom Shares shall be settled with a
single-sum payment by the Company; provided that, with respect to Phantom
Shares of a Grantee which have a common Settlement Date, the Committee may
permit the Grantee to elect in accordance with procedures established by the
Committee (taking into account, without
limitation, Section 409A of the Code, as the Committee may deem appropriate) to
receive installment payments over a period not to exceed 10 years.

(c)      (i)      Unless
otherwise provided in the applicable Award Agreement, the “Settlement Date”
with respect to a Phantom Share is as soon as practicable after (but not later
than the first day of the month to follow) the date on which the Phantom Share
vests; provided that a Grantee may elect, in accordance with procedures to be
established by the Committee, that such Settlement Date will be deferred as
elected by the Grantee to as soon as practicable after (but not later than the
first day of the month to follow) the Grantee’s Termination of Service, or such
other time as may be permitted by the Committee.  Unless
otherwise determined by the Committee, elections under this Section 7.4(c)(i)
must, except as may otherwise be permitted under the rules applicable under
Section 409A of the Code, (A) be effective at least one year after they are made,
or, in the case of payments to commence at a specific time, be made at least
one year before the first scheduled payment and (B) defer the commencement of
distributions for at least five years.

(ii)       Notwithstanding Section 7.4(c)(i), the
Committee may provide that distributions of Phantom Shares can be elected at
any time in those cases in which the Phantom Share Value is determined by
reference to Fair Market Value to the extent in excess of a base value, rather
than by reference to unreduced Fair Market Value.

(iii)      Notwithstanding the foregoing, the
Settlement Date, if not earlier pursuant to this Section 7.4(c), is the date of
the Grantee’s death.

(d)   Notwithstanding the other provisions of this
Section 7, in the event of a Change in Control, the Settlement Date shall be
the date of such Change in Control and all amounts due with respect to Phantom
Shares to a Grantee hereunder shall be paid as soon as practicable (but in no
event more than 30 days) after such Change in Control, unless such Grantee elects
otherwise in accordance with procedures established by the Committee.

(e)   Notwithstanding any other provision of the
Plan, a Grantee may receive any amounts to be paid in installments as provided
in Section 7.4(b) or deferred by the Grantee as provided in Section 7.4(c) in
the event of an “Unforeseeable Emergency.” 
For these purposes, an “Unforeseeable Emergency,” as determined by the
Committee in its sole discretion, is a severe financial hardship to the Grantee
resulting from a sudden and unexpected illness or accident of the Grantee or “dependent,”
as defined in Section 152(a) of the Code, of the Grantee, loss of the Grantee’s
property due to casualty, or other similar extraordinary and unforeseeable
circumstances arising as a result of events beyond the control of the
Grantee.  The circumstances that will
constitute an Unforeseeable Emergency will depend upon the facts of each case,
but, in any case, payment may not be made to the extent that such hardship is or
may be relieved:

(i)            through reimbursement or
compensation by insurance or otherwise,

(ii)           by liquidation of the Grantee’s
assets, to the extent the liquidation of such assets would not itself cause
severe financial hardship, or

(iii)          by future cessation of the making of
additional deferrals under Section 7.4 (b) and (c).

 13
 

 

Without
limitation, the need to send a Grantee’s child to college or the desire to
purchase a home shall not constitute an Unforeseeable Emergency.  Distributions of amounts because of an
Unforeseeable Emergency shall be permitted to the extent reasonably needed to
satisfy the emergency need.

7.5   Other Phantom Share Provisions.

(a)   Rights to payments with respect to Phantom
Shares granted under the Plan shall not be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance,
attachment, garnishment, levy, execution, or other legal or equitable process,
either voluntary or involuntary; and any attempt to anticipate, alienate, sell,
transfer, assign, pledge, encumber, attach or garnish, or levy or execute on
any right to payments or other benefits payable hereunder, shall be void.

(b)   A Grantee may designate in writing, on forms
to be prescribed by the Committee, a beneficiary or beneficiaries to receive
any payments payable after his or her death and may amend or revoke such
designation at any time.  If no
beneficiary designation is in effect at the time of a Grantee’s death, payments
hereunder shall be made to the Grantee’s estate.  If a Grantee with a vested Phantom Share
dies, such Phantom Share shall be settled and the Phantom Share Value in
respect of such Phantom Shares paid, and any payments deferred pursuant to an
election under Section 7.4(c) shall be accelerated and paid, as soon as
practicable (but no later than 60 days) after the date of death to such Grantee’s
beneficiary or estate, as applicable.

(c)   The Committee may establish a program under
which distributions with respect to Phantom Shares may be deferred for periods
in addition to those otherwise contemplated by foregoing provisions of this
Section 7.  Such program may include,
without limitation, provisions for the crediting of earnings and losses on
unpaid amounts, and, if permitted by the Committee, provisions under which
Participants may select from among hypothetical investment alternatives for
such deferred amounts in accordance with procedures established by the
Committee.

(d)   Notwithstanding any other provision of this
Section 7, any fractional Phantom Share will be paid out in cash at the Phantom
Share Value as of the Settlement Date.

(e)   No Phantom Share shall be construed to give
any Grantee any rights with respect to Shares or any ownership interest in the
Company.  Except as may be provided in
accordance with Section 8, no provision of the Plan shall be interpreted to
confer upon any Grantee any voting, dividend or derivative or other similar
rights with respect to any Phantom Share.

7.6   Claims Procedures.

(a)   To the extent that the Plan is determined by
the Committee to be subject to the Employee Retirement Income Security Act of
1974, as amended, the Grantee, or his beneficiary hereunder or authorized
representative, may file a claim for payments with respect to Phantom Shares
under the Plan by written communication to the Committee or its designee.  A claim is not considered filed until such
communication is actually received. 
Within 90 days (or, if special circumstances require an extension of
time for processing, 180 days, in which case notice of such special circumstances
should be provided within the initial 90-day period) after the filing of the
claim, the Committee will either:

(i)            approve the claim and take
appropriate steps for satisfaction of the claim; or

(ii)           if the claim is wholly or partially
denied, advise the claimant of such denial by furnishing to him a written
notice of such denial setting forth (A) the 

 14
 

 

specific reason or
reasons for the denial; (B) specific reference to pertinent provisions of the
Plan on which the denial is based and, if the denial is based in whole or in
part on any rule of construction or interpretation adopted by the Committee, a
reference to such rule, a copy of which shall be provided to the claimant; (C)
a description of any additional material or information necessary for the
claimant to perfect the claim and an explanation of the reasons why such
material or information is necessary; and (D) a reference to this Section 7.6
as the provision setting forth the claims procedure under the Plan.

(b)   The claimant may request a review of any
denial of his claim by written application to the Committee within 60 days
after receipt of the notice of denial of such claim.  Within 60 days (or, if special circumstances
require an extension of time for processing, 120 days, in which case notice of
such special circumstances should be provided within the initial 60-day period)
after receipt of written application for review, the Committee will provide the
claimant with its decision in writing, including, if the claimant’s claim is
not approved, specific reasons for the decision and specific references to the
Plan provisions on which the decision is based.

8. PROVISIONS
APPLICABLE TO DIVIDEND EQUIVALENT RIGHTS.

8.1   Grant of Dividend Equivalent Rights.

Subject to the
other terms of the Plan, the Committee shall, in its discretion as reflected by
the terms of the Award Agreements, authorize the granting of Dividend
Equivalent Rights to Eligible Persons based on the regular cash dividends
declared on Common Stock, to be credited as of the dividend payment dates,
during the period between the date an Award is granted, and the date such Award
is exercised, vests or expires, as determined by the Committee; provided,
however, that in no event may a Dividend Equivalent Right be granted in
connection with an Option or a Stock Appreciation Right.  Such Dividend Equivalent Rights shall be
converted to cash or additional Shares by such formula and at such time and
subject to such limitation as may be determined by the Committee.  If a Dividend Equivalent Right is granted in
respect of an Award hereunder (other than an Option or Stock Appreciation
Right), then, unless otherwise stated in the Award Agreement, in no event shall
the Dividend Equivalent Right be in effect for a period beyond the time during
which the applicable portion of the underlying Award is in effect.

8.2   Certain Terms.

(a)   The term of a Dividend Equivalent Right shall
be set by the Committee in its discretion.

(b)   Unless otherwise determined by the Committee,
except as contemplated by Section 8.4, a Dividend Equivalent Right is
exercisable or payable only while the Participant is an Eligible Person.

(c)   Payment of the amount determined in
accordance with Section 8.1 shall be in cash, in Common Stock or a combination
of the both, as determined by the Committee.

(d)   The Committee may impose such
employment-related conditions on the grant of a Dividend Equivalent Right as it
deems appropriate in its discretion.

 15
 

 

8.3   Other Types of Dividend Equivalent Rights.

The Committee may
establish a program under which Dividend Equivalent Rights of a type whether or
not described in the foregoing provisions of this Section 8 may be granted to
Participants.  For example, and without
limitation, the Committee may grant a dividend equivalent right with respect to
a Phantom Share, which right would consist of the right (subject to Section
8.4) to receive a cash payment in an amount equal to the dividend distributions
paid on a Share from time to time.

8.4   Deferral.

The Committee may
establish a program (taking into account, without limitation, the possible application
of Section 409A of the Code, as the
Committee may deem appropriate) under which Participants (i) will have
Phantom Shares credited, subject to the terms of Sections 7.4 and 7.5 as though
directly applicable with respect thereto, upon the granting of Dividend
Equivalent Rights, or (ii) will have payments with respect to Dividend
Equivalent Rights deferred.  In the case
of the foregoing clause (ii), such program may include, without limitation,
provisions for the crediting of earnings and losses on unpaid amounts, and, if
permitted by the Committee, provisions under which Participants may select from
among hypothetical investment alternatives for such deferred amounts in
accordance with procedures established by the Committee.

9. OTHER EQUITY-BASED
AWARDS.

The
Committee shall have the right (i) to grant other Awards based upon the Common
Stock having such terms and conditions as the Committee may determine,
including, without limitation, the grant of shares based upon certain
conditions, the grant of convertible preferred shares, convertible debentures
and other exchangeable or redeemable securities or equity interests, and the
grant of stock appreciation rights, (ii) to grant limited-partnership or any
other membership or ownership interests (which may be expressed as units or
otherwise) in a Subsidiary or operating or other partnership (or other
affiliate of the Company), with any Shares being issued in connection with the
conversion of (or other distribution on account of) an interest granted under the
authority of this clause (ii) to be subject, for the avoidance of doubt, to
Section 4 and the other provisions of the Plan, and (iii) to grant Awards
valued by reference to book value, fair value or performance parameters
relative to the Company or any Subsidiary or group of Subsidiaries.

10. PERFORMANCE GOALS.

The
Committee, in its discretion, (i) may establish one or more performance goals
as a precondition to the issuance or vesting of Awards, and (ii) may provide,
in connection with the establishment of the performance goals, for
predetermined Awards to those Participants (who continue to meet all applicable
eligibility requirements) with respect to whom the applicable performance goals
are satisfied.  In the case of any
grant intended to qualify as performance based compensation under Section
162(m) of the Code (including, for these purposes, grants constituting
performance based compensation, as determined without regard to certain
shareholder approval and disclosure requirements by virtue of an applicable
transition rule), the Committee (i) may use
one or a combination of the performance goals set forth in Exhibit B; and (ii)
may establish other goals (with shareholder approval of other types of goals)
intended to be performance goals as contemplated by Section 162(m) of the Code
and the regulations thereunder.

 16

11. TAX WITHHOLDING.

11.1         In General.

The Company shall
be entitled to withhold from any payments or deemed payments any amount of tax
withholding determined by the Committee to be required by law.  Without limiting the generality of the
foregoing, the Committee may, in its discretion, require the Participant to pay
to the Company at such time as the Committee determines the amount that the
Committee deems necessary to satisfy the Company’s obligation to withhold
federal, state or local income or other taxes incurred by reason of (i) the
exercise of any Option, (ii) the lapsing of any restrictions applicable to any
Restricted Stock, (iii) the receipt of a distribution in respect of Phantom
Shares or Dividend Equivalent Rights or (iv) any other applicable income-recognition
event (for example, an election under Section 83(b) of the Code).

11.2         Share Withholding.

(a)   Upon exercise of an Option, the Optionee may,
if approved by the Committee in its discretion, make a written election to have
Shares then issued withheld by the Company from the Shares otherwise to be
received, or to deliver previously owned Shares, in order to satisfy the
liability for such withholding taxes.  In
the event that the Optionee makes, and the Committee permits, such an election,
the number of Shares so withheld or delivered shall have an aggregate Fair
Market Value on the date of exercise sufficient to satisfy the applicable
withholding taxes.  Where the exercise of
an Option does not give rise to an obligation by the Company to withhold
federal, state or local income or other taxes on the date of exercise, but may
give rise to such an obligation in the future, the Committee may, in its
discretion, make such arrangements and impose such requirements as it deems
necessary or appropriate.

(b)   Upon lapsing of restrictions on Restricted
Stock (or other income-recognition event), the Grantee may, if approved by the
Committee in its discretion, make a written election to have Shares withheld by
the Company from the Shares otherwise to be released from restriction, or to
deliver previously owned Shares (not subject to restrictions hereunder), in
order to satisfy the liability for such withholding taxes.  In the event that the Grantee makes, and the
Committee permits, such an election, the number of Shares so withheld or
delivered shall have an aggregate Fair Market Value on the date of exercise
sufficient to satisfy the applicable withholding taxes.

(c)   Upon the making of a distribution in respect
of Phantom Shares or Dividend Equivalent Rights, the Grantee may, if approved
by the Committee in its discretion, make a written election to have amounts
(which may include Shares) withheld by the Company from the distribution
otherwise to be made, or to deliver previously owned Shares (not subject to restrictions
hereunder), in order to satisfy the liability for such withholding taxes.  In the event that the Grantee makes, and the
Committee permits, such an election, any Shares so withheld or delivered shall
have an aggregate Fair Market Value on the date of exercise sufficient to
satisfy the applicable withholding taxes.

11.3         Withholding Required.

Notwithstanding anything contained in the Plan or the Award Agreement
to the contrary, the Participant’s satisfaction of any tax-withholding
requirements imposed by the Committee shall be a condition precedent to the
Company’s obligation as may otherwise be provided hereunder to provide Shares
to the Participant and to the release of any restrictions as may otherwise be
provided hereunder, as applicable; and the applicable Option, Restricted Stock,
Phantom Shares or Dividend Equivalent Rights shall be forfeited upon the
failure of the Participant to satisfy such requirements with respect to, as
applicable, (i) the exercise of the Option, (ii) the lapsing of restrictions on
the Restricted Stock (or other income-recognition event) or (iii) distributions
in respect of any Phantom Share or Dividend Equivalent Right.

 17
 

 

12. REGULATIONS AND
APPROVALS.

(a)   The obligation of the Company to sell Shares
with respect to an Award granted under the Plan shall be subject to all
applicable laws, rules and regulations, including all applicable federal and
state securities laws, and the obtaining of all such approvals by governmental
agencies as may be deemed necessary or appropriate by the Committee.

(b)   The Committee may make such changes to the
Plan as may be necessary or appropriate to comply with the rules and
regulations of any government authority or to obtain tax benefits applicable to
an Award.

(c)   Each grant of Options, Restricted Stock,
Phantom Shares (or issuance of Shares in respect thereof) or Dividend
Equivalent Rights (or issuance of Shares in respect thereof), or other Award
under Section 9 (or issuance of Shares in respect thereof), is subject to the
requirement that, if at any time the Committee determines, in its discretion,
that the listing, registration or qualification of Shares issuable pursuant to
the Plan is required by any securities exchange or under any state or federal
law, or the consent or approval of any governmental regulatory body is
necessary or desirable as a condition of, or in connection with, the issuance
of Options, Shares of Restricted Stock, Phantom Shares, Dividend Equivalent
Rights, other Awards or other Shares, no payment shall be made, or Phantom
Shares or Shares issued or grant of Restricted Stock or other Award made, in
whole or in part, unless listing, registration, qualification, consent or
approval has been effected or obtained free of any conditions in a manner
acceptable to the Committee.

(d)   In the event that the disposition of stock
acquired pursuant to the Plan is not covered by a then current registration
statement under the Securities Act, and is not otherwise exempt from such
registration, such Shares shall be restricted against transfer to the extent
required under the Securities Act, and the Committee may require any individual
receiving Shares pursuant to the Plan, as a condition precedent to receipt of
such Shares, to represent to the Company in writing that such Shares are acquired
for investment only and not with a view to distribution and that such Shares
will be disposed of only if registered for sale under the Securities Act or if
there is an available exemption for such disposition.

(e)   Notwithstanding any other provision of the
Plan, the Company shall not be required to take or permit any action under the
Plan or any Award Agreement which, in the good-faith determination of the
Company, would result in a material risk of a violation by the Company of
Section 13(k) of the Exchange Act.

13. INTERPRETATION AND
AMENDMENTS; OTHER RULES.

The Committee may make
such rules and regulations and establish such procedures for the administration
of the Plan as it deems appropriate. 
Without limiting the generality of the foregoing, the Committee may (i)
determine the extent, if any, to which Options, Phantom Shares or Shares
(whether or not Shares of Restricted Stock) or Dividend Equivalent Rights shall
be forfeited (whether or not such forfeiture is expressly contemplated
hereunder); (ii) interpret the Plan and the Award Agreements hereunder, with
such interpretations to be
conclusive and binding on all persons and otherwise accorded the maximum
deference permitted by law, provided that the Committee’s interpretation shall
not be entitled to deference on and after a Change in Control except to the
extent that such interpretations are made exclusively by members of the
Committee who are individuals who served as Committee members before the Change
in Control; and (iii) take any other actions and make any other determinations
or decisions that it deems necessary or appropriate in connection with the Plan
or the administration or interpretation thereof.  In the event of any dispute or disagreement
as to the interpretation of the Plan or of any rule, regulation or procedure,
or as to any question, right or obligation arising from or related to the Plan,
the decision of the Committee, except as provided in clause (ii) of the
foregoing sentence, shall be final and binding upon all persons.  The Committee
may, in its discretion, delegate the
authority and 

 18
 

 

responsibility
to act pursuant to the Plan with respect to ministerial administrative matters,
which actions shall at all times be subject to the supervision of the
Committee, and the actions of such a delegee in accordance with the foregoing
shall be considered the actions of the Committee hereunder.  Unless otherwise expressly provided
hereunder, the Committee, with respect to any grant, may exercise its
discretion hereunder at the time of the Award or thereafter.  The Board may amend the Plan as it shall deem
advisable, except that no amendment may adversely affect a Participant with
respect to an Award previously granted unless such amendments are required in
order to comply with applicable laws; provided, however, that the Plan may not
be amended without shareholder approval in any case in which amendment in the
absence of shareholder approval would cause the Plan to fail to comply with any
applicable legal requirement or applicable exchange or similar rule.

14. CHANGES IN CAPITAL
STRUCTURE.

(a)   If (i) the Company or its Subsidiaries shall
at any time be involved in a merger, consolidation, dissolution, liquidation,
reorganization, exchange of shares, sale of all or substantially all of the assets
or stock of the Company or its Subsidiaries or a transaction similar thereto,
(ii) any stock dividend, stock split, reverse stock split, stock combination,
reclassification, recapitalization or other similar change in the capital
structure of the Company or its Subsidiaries, or any distribution to holders of
Common Stock other than cash dividends, shall occur or (iii) any other event
shall occur which in the judgment of the Committee necessitates action by way
of adjusting the terms of the outstanding Awards, then:

(x)  the maximum aggregate number of Shares which
may be made subject to Options and Dividend Equivalent Rights under the Plan,
the maximum aggregate number and kind of Shares of Restricted Stock that may be
granted under the Plan, the maximum aggregate number of Phantom Shares and
other Awards which may be granted under the Plan may be appropriately adjusted
by the Committee in its discretion; and

(y) the Committee shall take any such
action as in its discretion shall be necessary to maintain each Participants’
rights hereunder (including under their Award Agreements) with respect to
Options, Phantom Shares and Dividend Equivalent Rights (and, as appropriate,
other Awards under Section 9), so that they are substantially proportionate to
the rights existing in such Options, Phantom Shares and Dividend Equivalent
Rights (and other Awards under Section 9) prior to such event, including,
without limitation, adjustments in (A) the number of Options, Phantom Shares
and Dividend Equivalent Rights (and other Awards under Section 9) granted, (B)
the number and kind of shares or other property to be distributed in respect of
Options, Phantom Shares and Dividend Equivalent Rights (and other Awards under
Section 9 as applicable), (C) the Option Price and Phantom Share Value, and (D)
performance-based criteria established in connection with Awards; provided
that, in the discretion of the Committee, the foregoing clause (D) may also be
applied in the case of any event relating to a Subsidiary if the event would
have been covered under this Section 14(a) had the event related to the
Company.

To
the extent that such action shall include an increase or decrease in the number
of Shares (or units of other property then available) subject to all
outstanding Awards, the number of Shares (or units) available under Section 4
shall be increased or decreased, as the case may be, proportionately, as may be
determined by the Committee in its discretion.

(b)   Any Shares or other securities distributed to
a Grantee with respect to Restricted Stock or otherwise issued in substitution
of Restricted Stock shall be subject to the restrictions and 

 19
 

 

requirements imposed by
Section 6, including depositing the certificates therefor with the Company
together with a stock power and bearing a legend as provided in Section 6.2(a).

(c)   If the Company shall be consolidated or
merged with another corporation or other entity, each Grantee who has received
Restricted Stock that is then subject to restrictions imposed by Section 6.3(a)
may be required to deposit with the successor corporation the certificates, if
any, for the stock or securities or the other property that the Grantee is
entitled to receive by reason of ownership of Restricted Stock in a manner
consistent with Section 6.2(b), and such stock, securities or other property
shall become subject to the restrictions and requirements imposed by Section
6.3(a), and the certificates therefor or other evidence thereof shall bear a
legend similar in form and substance to the legend set forth in Section 6.2(a).

(d)   If a Change in Control shall occur, then the
Committee, as constituted immediately before the Change in Control, may make
such adjustments as it, in its discretion, determines are necessary or
appropriate in light of the Change in Control, provided that the Committee
determines that such adjustments do not have an adverse economic impact on the
Participant as determined at the time of the adjustments.

(e)   The judgment of the Committee with respect to
any matter referred to in this Section 13 shall be conclusive and binding upon
each Participant without the need for any amendment to the Plan.

15. MISCELLANEOUS.

15.1         No Rights to Employment or Other
Service.

Nothing in the
Plan or in any grant made pursuant to the Plan shall confer on any individual
any right to continue in the employ or other service of the Company or its
Subsidiaries or interfere in any way with the right of the Company or its
Subsidiaries and its shareholders to terminate the individual’s employment or
other service at any time.

15.2         Right of First Refusal; Right of
Repurchase.

At the time of
grant, the Committee may provide in connection with any grant made under the
Plan that Shares received hereunder shall be subject to a right of first
refusal pursuant to which the Company shall be entitled to purchase such Shares
in the event of a prospective sale of the Shares, subject to such terms and
conditions as the Committee may specify at the time of grant or (if permitted
by the Award Agreement) thereafter, and to a right of repurchase, pursuant to
which the Company shall be entitled to purchase such Shares at a price
determined by, or under a formula set by, the Committee at the time of grant or
(if permitted by the Award Agreement) thereafter.

15.3         No Fiduciary Relationship.

Nothing contained
in the Plan (including without limitation Sections 7.5(c) and 8.4), and no
action taken pursuant to the provisions of the Plan, shall create or shall be
construed to create a trust of any kind, or a fiduciary relationship between
the Company or its Subsidiaries, or their officers or the Committee, on the one
hand, and the Participant, the Company, its Subsidiaries or any other person or
entity, on the other.

 20
 

 

15.4         No Fund Created.

Any and all
payments hereunder to any Participant under the Plan shall be made from the
general funds of the Company (or, if applicable, a Participating Company), no
special or separate fund shall be established or other segregation of assets
made to assure such payments, and the Phantom Shares (including for purposes of
this Section 15.4 any accounts established to facilitate the implementation of
Section 7.4(c)) and any other similar devices issued hereunder to account for
Plan obligations do not constitute Common Stock and shall not be treated as (or
as giving rise to) property or as a trust fund of any kind; provided, however,
that the Company may establish a mere bookkeeping reserve to meet its
obligations hereunder or a trust or other funding vehicle that would not cause
the Plan to be deemed to be funded for tax purposes or for purposes of Title I
of the Employee Retirement Income Security Act of 1974, as amended.  The obligations of the Company under the Plan
are unsecured and constitute a mere promise by the Company to make benefit
payments in the future and, to the extent that any person acquires a right to
receive payments under the Plan from the Company, such right shall be no
greater than the right of a general unsecured creditor of the Company.  (If any affiliate of the Company is or is
made responsible with respect to any Awards, the foregoing sentence shall apply
with respect to such affiliate.)  Without
limiting the foregoing, Phantom Shares and any other similar devices issued
hereunder to account for Plan obligations are solely a device for the measurement
and determination of the amounts to be paid to a Grantee under the Plan, and
each Grantee’s right in the Phantom Shares and any such other devices is
limited to the right to receive payment, if any, as may herein be provided.

15.5         Notices.

All notices under the Plan shall be in writing, and if to the Company,
shall be delivered to the Board or mailed to its principal office, addressed to
the attention of the Board; and if to the Participant, shall be delivered
personally, sent by facsimile transmission or mailed to the Participant at the
address appearing in the records of the Company.  Such addresses may be changed at any time by
written notice to the other party given in accordance with this Section 15.5.

15.6         Exculpation and Indemnification.

The Company shall
indemnify and hold harmless the members of the Board and the members of the
Committee from and against any and all liabilities, costs and expenses incurred
by such persons as a result of any act or omission to act in connection with
the performance of such person’s duties, responsibilities and obligations under
the Plan, to the maximum extent permitted by law.

15.7         Captions.

The use of
captions in this Plan is for convenience. 
The captions are not intended to provide substantive rights.

15.8         Governing Law.

THE PLAN SHALL BE GOVERNED BY THE LAWS OF MARYLAND WITHOUT REFERENCE TO
PRINCIPLES OF CONFLICT OF LAWS.

 21
 

EXHIBIT A

PERFORMANCE GOALS

(i) 7% FFO growth.

(ii) 10% total return to shareholders.

(iii) Total return to shareholders in the top one-third
of the “peer group”.

For purposes of this
Exhibit A, “peer group” shall be Alexandria Real Estate Equities, Inc.,
American Financial Realty Trust, Boston Properties, Inc., Brandywine Realty
Trust, Corporate Office Properties Trust, Crescent Real Estate Equities
Company, Douglas Emmett, Duke Realty Corporation, Highwoods Properties, Inc.,
HRPT Properties, Kilroy Realty Corporation, Liberty Property Trust, Mack-Cali
Realty Corporation, Maguire Properties, Parkway Properties, SL Green Realty
Corp., and Washington REIT.  Such “peer
group” may not change with respect to any particular Award.

 22
 

EXHIBIT B

PERFORMANCE GOALS

Performance-Based
Awards intended to qualify as “performance based” compensation under Section
162(m) of the Code, may be payable upon the attainment of objective performance
goals that are established by the Committee and relate to one or more
Performance Criteria, in each case on specified date or over any period, up to
10 years, as determined by the Committee. 
Performance Criteria may (but need not) be based on the achievement of
the specified levels of performance under one or more of the measures set out
below relative to the performance of one or more other corporations or indices.

“Performance Criteria” means the following business criteria
(or any combination thereof) with respect to one or more of the Company, any
Subsidiary or any division or operating unit thereof:

	
  

  	
  (i)

  	
  pre-tax income,

  
	
   

  	
   

  	
   

  
	
   

  	
  (ii)

  	
  after-tax income,

  
	
   

  	
   

  	
   

  
	
   

  	
  (iii)

  	
  net income (meaning net income as reflected in the
  Company’s financial reports for the applicable period, on an aggregate,
  diluted and/or per share basis),

  
	
   

  	
   

  	
   

  
	
   

  	
  (iv)

  	
  operating income,

  
	
   

  	
   

  	
   

  
	
   

  	
  (v)

  	
  cash flow,

  
	
   

  	
   

  	
   

  
	
   

  	
  (vi)

  	
  earnings per share,

  
	
   

  	
   

  	
   

  
	
   

  	
  (vii)

  	
  return on equity,

  
	
   

  	
   

  	
   

  
	
   

  	
  (viii)

  	
  return on invested capital or assets,

  
	
   

  	
   

  	
   

  
	
   

  	
  (ix)

  	
  cash and/or funds available for distribution,

  
	
   

  	
   

  	
   

  
	
   

  	
  (x)

  	
  appreciation in the fair market value of the Common
  Stock,

  
	
   

  	
   

  	
   

  
	
   

  	
  (xi)

  	
  return on investment,

  
	
   

  	
   

  	
   

  
	
   

  	
  (xii)

  	
  total return to shareholders,

  
	
   

  	
   

  	
   

  
	
   

  	
  (xiii)

  	
  net earnings growth,

  
	
   

  	
   

  	
   

  
	
   

  	
  (xiv)

  	
  stock
  appreciation (meaning an increase in the price or value of the Common Stock
  after the date of grant of an award and during the applicable period),

  
	
   

  	
   

  	
   

  
	
   

  	
  (xv)

  	
  related return ratios,

  
	
   

  	
   

  	
   

  
	
   

  	
  (xvi)

  	
  increase in revenues,

  
	
   

  	
   

  	
   

  
	
   

  	
  (xvii)

  	
  net earnings,

  

 

 

 23
 

 

	
  

  	
  (xviii)

  	
  changes (or the absence of changes) in the per share
  or aggregate market price of the Company’s Common Stock,

  
	
   

  	
   

  	
   

  
	
   

  	
  (xix)

  	
  number of securities sold,

  
	
   

  	
   

  	
   

  
	
   

  	
  (xx)

  	
  earnings before any one or more of the following
  items: interest, taxes, depreciation or amortization for the applicable
  period, as reflected in the Company’s financial reports for the applicable
  period,

  
	
   

  	
   

  	
   

  
	
   

  	
  (xxi)

  	
  total revenue
  growth (meaning the increase in total revenues after the date of grant of an
  award and during the applicable period, as reflected in the Company’s
  financial reports for the applicable period),

  
	
   

  	
   

  	
   

  
	
   

  	
  (xxii)

  	
  the Company’s
  published ranking against its peer group of real estate investment trusts
  based on total shareholder return, and

  
	
   

  	
   

  	
   

  
	
   

  	
  (xxiii)

  	
  FFO.

  

 

Performance Goals may be
absolute amounts or percentages of amounts or may be relative to the
performance of other companies or of indexes.

Except as otherwise
expressly provided, all financial terms are used as defined under Generally
Accepted Accounting Principles (“GAAP”) and all determinations shall be made in
accordance with GAAP, as applied by the Company in the preparation of its
periodic reports to shareholders.

To the extent permitted
by Section 162(m) of the Code, unless the Committee provides otherwise at the
time of establishing the Performance Goals, for each fiscal year of the
Company, the Committee may provide for objectively determinable adjustments, as
determined in accordance with GAAP, to any of the Performance Criteria
described above for one or more of the items of gain, loss, profit or expense:
(A) determined to be extraordinary or unusual in nature or infrequent in
occurrence, (B) related to the disposal of a segment of a business, (C)
related to a change in accounting principle under GAAP, (D) related to
discontinued operations that do not qualify as a segment of a business under
GAAP, and (E) attributable to the business operations of any entity
acquired by the Company during the fiscal year.

 24Exhibit
4.17

Dated 14 November 2006

DANAOS
CORPORATION

as Borrower

- and -

THE BANKS
AND FINANCIAL INSTITUTIONS

listed in
Schedule 1

as Lenders

- and -

HSH
NORDBANK AG

as Swap Bank

- and -

AEGEAN BALTIC BANK S.A.
and

HSH NORDBANK AG

as Arrangers

- and -

AEGEAN BALTIC BANK S.A.

as Agent

and Security
Trustee

LOAN
AGREEMENT

relating to revolving
credit and term loan facilities

of up to US$700,000,000
to refinance certain existing

indebtedness, to finance
part of the purchase

price of certain approved
ships and to provide additional liquidity

for general
working capital and other corporate purposes of the Borrower

WATSON, FARLEY & WILLIAMS

Piraeus

INDEX

	
  Clause

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1

  	
   

  	
  INTERPRETATION

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2

  	
   

  	
  FACILITIES

  	
   

  	
  23

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3

  	
   

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

  	
   

  	
  23

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4

  	
   

  	
  DRAWDOWN

  	
   

  	
  25

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5

  	
   

  	
  CURRENCY OPTION

  	
   

  	
  27

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6

  	
   

  	
  INTEREST

  	
   

  	
  32

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7

  	
   

  	
  INTEREST PERIODS

  	
   

  	
  34

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8

  	
   

  	
  DEFAULT INTEREST

  	
   

  	
  34

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9

  	
   

  	
  CONVERSION TO TERM LOAN; REPAYMENT AND PREPAYMENT

  	
   

  	
  35

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10

  	
   

  	
  CONDITIONS PRECEDENT

  	
   

  	
  39

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11

  	
   

  	
  REPRESENTATIONS AND WARRANTIES

  	
   

  	
  40

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12

  	
   

  	
  GENERAL UNDERTAKINGS

  	
   

  	
  42

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  13

  	
   

  	
  CORPORATE UNDERTAKINGS

  	
   

  	
  46

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  14

  	
   

  	
  INSURANCE

  	
   

  	
  47

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  15

  	
   

  	
  SHIP COVENANTS

  	
   

  	
  52

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  16

  	
   

  	
  SECURITY COVER

  	
   

  	
  56

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  17

  	
   

  	
  PAYMENTS AND CALCULATIONS

  	
   

  	
  58

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  18

  	
   

  	
  APPLICATION OF RECEIPTS

  	
   

  	
  60

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  19

  	
   

  	
  APPLICATION OF EARNINGS

  	
   

  	
  61

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  20

  	
   

  	
  EVENTS OF DEFAULT

  	
   

  	
  61

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  21

  	
   

  	
  FEES AND EXPENSES

  	
   

  	
  66

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  22

  	
   

  	
  INDEMNITIES

  	
   

  	
  67

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  23

  	
   

  	
  NO SET-OFF OR TAX DEDUCTION

  	
   

  	
  69

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  24

  	
   

  	
  ILLEGALITY, ETC

  	
   

  	
  70

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  25

  	
   

  	
  INCREASED COSTS

  	
   

  	
  70

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  26

  	
   

  	
  SET-OFF

  	
   

  	
  71

  

 

 

	
  27

  	
  TRANSFERS AND CHANGES IN LENDING OFFICES

  	
   

  	
  72

  
	
   

  	
   

  	
   

  	
   

  
	
  28

  	
  VARIATIONS AND WAIVERS

  	
   

  	
  75

  
	
   

  	
   

  	
   

  	
   

  
	
  29

  	
  NOTICES

  	
   

  	
  76

  
	
   

  	
   

  	
   

  	
   

  
	
  30

  	
  SUPPLEMENTAL

  	
   

  	
  77

  
	
   

  	
   

  	
   

  	
   

  
	
  31

  	
  LAW AND JURISDICTION

  	
   

  	
  77

  
	
   

  	
   

  	
   

  	
   

  
	
  SCHEDULE 1 LENDERS AND COMMITMENTS

  	
   

  	
  79

  
	
   

  	
   

  	
   

  
	
  SCHEDULE 2 DRAWDOWN NOTICE

  	
   

  	
  80

  
	
   

  	
   

  	
   

  
	
  SCHEDULE 3 CONDITION PRECEDENT DOCUMENTS

  	
   

  	
  81

  
	
   

  	
   

  	
   

  
	
  SCHEDULE 4 TRANSFER CERTIFICATE

  	
   

  	
  88

  
	
   

  	
   

  	
   

  
	
  SCHEDULE 5 DESIGNATION NOTICE

  	
   

  	
  92

  
	
   

  	
   

  	
   

  
	
  SCHEDULE 6 FORM OF COMPLIANCE CERTIFICATE

  	
   

  	
  93

  
	
   

  	
   

  	
   

  
	
  EXECUTION PAGE

  	
   

  	
  94

  

 

THIS LOAN AGREEMENT
is made on 14 November 2006

BETWEEN:

(1)                                  DANAOS CORPORATION, 
as Borrower;

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

(3)                                  HSH NORDBANK AG,  acting through its office at Martensdamm 6, D-24103 Kiel,
Germany as Swap Bank;

(4)                                  AEGEAN BALTIC BANK S.A., acting through its office at 28
Diligianni Street, 145 62 Kifissia, Greece and HSH NORDBANK
AG, acting through its office at Gerhart-Hauptmann-Platz 50,
D-20095, Hamburg, Germany, as Arrangers; and

(5)                                  AEGEAN BALTIC BANK S.A., acting through its office at 28 Diligianni Street, 145 62
Kifissia, Greece, as Agent and Security Trustee.

WHEREAS:

(A)                              The
Lenders agreed to make available to the Borrower revolving credit and term loan
facilities of up to US$700,000,000 in aggregate as follows:

(a)                                  in
the period commencing on the date of this Agreement and ending on the date
falling on the fifth anniversary thereof a secured revolving credit of up to
US$700,000,000 divided into:

(i)                                     a
5-year revolving credit facility of initially up to US$200,000,000 (which may
be increased by the aggregate drawings made by the Borrower pursuant to the
facility referred to in sub-paragraph (ii) below):

(aa)                            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), in financing part of the acquisition cost of certain
Approved Ships (as hereafter defined); and

(bb)                          to
provide the Borrower with additional liquidity for its general working capital
and corporate purposes;

(ii)                                  a
secured 364-day revolving credit facility of up to US$500,000,000:

(aa)                            to
be on-lent by the Borrower to certain wholly-owned subsidiaries of the Borrower
to assist such subsidiaries in financing part of the acquisition cost of
certain Approved Ships; and

(bb)                          to
provide the Borrower with additional liquidity for its general working capital
and corporate purposes;

(b)                                 on
the date falling on the fifth anniversary of this Agreement all amounts then
outstanding under the revolving credit facility referred to in sub-paragraph
(a) above shall be converted into a term loan facility which shall be repaid
over a period of up to 5 years in accordance with the terms of this Agreement.

(B)                                To
the extent initially borrowed for the purposes listed in sub-paragraph (a) of
Recital (A) and prepaid, the Borrower shall be entitled to reborrow the prepaid
amounts for the purposes referred to in sub-paragraph (a)(ii).

(C)                                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.

(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;

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

“Age”  means, in relation to any Mortgaged Ship, the
number of integral years from the year in which the construction of that Ship
was completed until the Amortising Period Commencement 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 Agent
and the Security Trustee in such form as the Lenders may approve or require;

“Agent” 
means Aegean Baltic Bank S.A., in its capacity as agent for the Lenders
under the Finance Documents, or any successor of it in such capacity appointed
under clause 5 of the Agency and Trust Agreement;

“Amortising Period  Commencement Date”  means the date falling on the fifth
anniversary of this Agreement;

“APL”  means APL (Bermuda) Ltd., a company
incorporated under the laws of Bermuda whose registered office is at Cedar
House, 41 Cedar Avenue, Hamilton, Bermuda;

“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 interim 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);

“Approved Broker”  means each of Braemar Seascope Shipbrokers
Limited, Howe Robinson & Co. Ltd., H. Clarkson & Company Limited,
Simpson Spence & Young, Maersk Shipbrokers 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 

 2
 

which the Lenders may, in their absolute discretion, approve that a
Ship may be registered;

“Approved Guarantor”  means a company 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 MOA”  means, in relation to an Approved Ship, the
memorandum of agreement (including 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 of such Approved Ship and, in the plural, means all of them;

“Approved Ship”  means:

(a)                                  any
container vessel whose nominal container carrying capacity is not less than
approximately 700 TEUs and which on the date of the Mortgage relative thereto
is not more than 15 years old; or

(b)                                 any
bulk carrier of not less than approximately 20,000 metric tons deadweight and
which on the date of the Mortgage relative thereto is not more than 10 years
old; or

(c)                                  any
other ship owned by the Borrower or an Approved Guarantor which is listed in
Appendix I of the commitment letter dated 29 June 2006 issued by Aegean Baltic
Bank S.A. (on behalf of the Arrangers) to the Borrower; or

(d)                                 any
other type of vessel,

nominated by the Borrower and to be approved by the Lenders (in the
case of a Ship falling within paragraphs (a), (b) and (c) above such approval
shall not be unreasonably withheld and in the case of a Ship falling within
paragraph (d) above such approval shall be in the sole and absolute discretion
of the Lenders) as an “Approved Ship”
for the purposes of this Agreement and, in the plural, means all of them;

“Arrangers”
means, together, HSH Nordbank AG and Aegean Baltic Bank S.A.;

“Availability Period” means the period
commencing on the date of this Agreement and ending on:

(a)                                  in
the case of an Advance under the Long-Term Revolving Facility, and subject to
Clause 4.2(a), the date falling 30 days before the end of the Revolving Period Provided that if  the Drawdown Date of the first Advance under the Long-Term
Revolving Facility (which shall be applied in refinancing the Existing
Indebtedness) has not occurred by 31 December 2006 the Total Commitments shall
be cancelled and terminated on that day;

 3
 

(b)                                 in
the case of an Advance under the Short-Term Revolving Facility, and subject to
Clauses 4.2(b) and 4.8, the date falling 364 days after the date of this
Agreement,

(or in any such case, such later date as the Agent may, with the
authorisation of all the Lenders, agree with the Borrower); and

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

“Balloon Instalment”  and “Balloon Instalments”
have the meaning given in Clause 9.2(a);

“Bareboat Charter Security Agreement”  means, in relation to any Mortgaged Ship
which is subject to a bareboat charter (such 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 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;

“Book Net Worth”  means, as of any Compliance Date, the
aggregate of:

(a)                                  the
amount paid up or credited as paid up on the issued share capital of the
Borrower (other than any redeemable share capital) and any capital surplus in
respect of the issued share capital of the Borrower;

(b)                                 the
amount standing to the credit of the consolidated capital and revenue reserves
of the Borrower’s Group; and

(c)                                  the
amount standing to the credit of the Borrower’s Group consolidated profit and
loss account

as each such amounts is
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, Athens, Hamburg and Kiel 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;

 4
 

(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;

“Charterparty Assignment”  means, in relation to:

(a)                                  an
Existing Ship (at all times during the term of the Existing Charter relative
thereto), an assignment of the rights of the Owner of that Existing Ship under
the Existing 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
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 bareboat 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;

“CMA CGM”  means CMA CGM S.A., a company incorporated
acting in France acting through its office in Marseille, France;

“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);

 5
 

“Compliance Date” means 30
June 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;

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

“Danaos Earnings Account”  means an account of the name of the Borrower
with the Agent in Athens 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 Danaos Earnings Account for the
purposes of this Agreement;

“Danaos Earnings  Account Pledge”
means a pledge of the Danaos Earnings Account executed or to be executed by the
Borrower in favour of the Lenders and the Agent in such form as the Lenders may
approve or require;

“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;

“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;

(b)                                 its
purpose is the hedging of the Borrower’s exposure (i) under this Agreement to
fluctuations in LIBOR arising from the funding of the Loan (or any part
thereof) for a period expiring no later than the final Repayment 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
Advance”  means each Advance
requested by, and made available to, the Borrower and/or continued in Dollars
and in the plural means all of them;

“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;

 6
 

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

“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

(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, with Danaos Earnings Account
and the Owner’s Earnings Account and in the singular means any 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,

 7
 

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;

“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:

(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
which appears on the appropriate page of the Reuters Monitor Money Rates
Service at or about 11.00 a.m. (Brussels time) on the Quotation Date for that
Interest 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 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 for a period
equal to that Interest 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 Charter”  means, in relation to:

(a)                                  “APL
BELGIUM”, a time charter dated 30 November 1999 (as supplemented and amended by
addenda numbered 1 to 4 (inclusive) thereto and as the same may be further
supplemented and amended from time to time), made between Lato and APL as
charterer;

(b)                                 “CMA
CGM ELBE”, a time charter dated 7 March 2003 (as supplemented and amended by
addenda numbered 1 to 6 (inclusive) thereto and as the same may be further
supplemented and amended from time to time), made between Lacey and CMA CGM as charterer;

(c)                                  “CMA
CGM KALAMATA”, a time charter dated 7 March 2003 (as supplemented and amended
by addenda numbered 1 to 5 (inclusive) thereto and as the same may be further
supplemented and amended from time to time), made between Geoffrey and CMA CGM
as charterer;

 8
 

(d)                                 “CMA
CGM KOMODO”, a time charter dated 7 March 2003 (as supplemented and amended by
addenda numbered 1 to 5 (inclusive) thereto and as the same may be further
supplemented and amended from time to time), made between Appleton and CMA CGM as
charterer;

(e)                                  “HENRY”,
a time charter dated 19 November 2003 (as supplemented and amended by addenda
numbered 1 to 2 thereto and as the same may be further supplemented and amended
from time to time), made between Tyron and Wan Hai Lines Ltd. of Taipei,
Taiwan;

(f)                                    “HYUNDAI
COMMODORE”, a time charter dated 14 April 2003 (as supplemented and amended by
an addendum number 1 thereto and as the same may be further supplemented and
amended from time to time) made between Commodore and HMM;

(g)                                 “HYUNDAI
DUKE”, a time charter dated 14 April 2003 (as supplemented and amended by an
addendum number 1 thereto and as the same may be further supplemented and
amended from time to time) made between Duke and HMM; and

(h)                                 “INDEPENDENCE”,
a time charter dated 19 November 2003 (as supplemented and amended by addenda
numbered 1 to 2 thereto and as the same may be further supplemented and amended
from time to time), made between Independence and Wan Hai Lines Ltd. of Taipei,
Taiwan,

and in the plural means all of them;

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

“Existing Loan
Agreement”  means the loan
agreement dated 18 March 2005 made between (i) Lato, Commodore and certain
other companies as joint and several borrowers, (ii) the banks and financial
institutions referred to therein as lenders and (iii) Aegean Baltic Bank S.A.
as agent and security agent in respect of a loan facility of (originally)
$200,000,000 (of which an amount of $179,125,000 is outstanding by way of
principal on the date of this Agreement) and, in the singular, means any of
them;

“Existing Owners”  means each of:

(a)                                  Lato
Shipping (Private) Ltd. (“Lato”),
a company incorporated under the laws of the Republic of Singapore whose
registered office is at 20 Raffles Place, #09-01, Ocean Towers, Singapore;

(b)                                 Appleton
Navigation S.A. (“Appleton”);

(c)                                  Commodore
Marine Inc. (“Commodore”);

(d)                                 Duke
Marine Inc. (“Duke”);

(e)                                  Geoffrey
Shipholding Limited (“Geoffrey”);

(f)                                    Independence
Navigation Inc. (“Independence”);

(g)                                 Lacey
Navigation Inc. (“Lacey”);

(h)                                 Tyron
Enterprises S.A. (“Tyron”),

 9
 

each a corporation incorporated under the laws of the Republic of
Liberia whose registered office is at 80 Broad Street, Monrovia, Liberia,

and, in the singular means any one of them;

“Existing Ships”  means each of:

(a)                                  “APL
BELGIUM”, a 2002-built container vessel of approximately 5,500 TEUs container
carrying capacity which is registered in the ownership of Lato under Singapore
flag (“APL BELGIUM”);

(b)                                 “CMA
CGM ELBE”, a 1991-built container vessel of approximately 2,930 TEUs container
carrying capacity which is registered in the ownership of Lacey under Greek
flag (“CMA CGM ELBE”);

(c)                                  “CMA
CGM KALAMATA”, a 1991-built container vessel of approximately 2,930 TEUs
container carrying capacity which is registered in the ownership of Geoffrey
under Greek flag (“CMA CGM KALAMATA”);

(d)                                 “CMA
CGM KOMODO”, a 1991-built container vessel of approximately 2,930 TEUs
container carrying capacity which is registered in the ownership of Appleton
under Greek flag (“CMA CGM KOMODO”);

(e)                                  “HENRY”,
a 1986-built container vessel of approximately 3,065 TEUs container carrying
capacity which is registered in the ownership of Tyron under Greek flag (“HENRY”);

(f)                                    “HYUNDAI
COMMODORE”, a 1992-built container vessel of approximately 4,650 TEUs container
carrying capacity which is registered in the ownership of Commodore under Greek
flag (“HYUNDAI COMMODORE”);

(g)                                 “HYUNDAI
DUKE”, a 1992-built container vessel of approximately 4,650 TEUs container
carrying capacity which is registered in the ownership of Duke under Greek flag
(“HYUNDAI DUKE”); and

(h)                                 “INDEPENDENCE”,
a 1986-built container vessel of approximately 3,045 TEUs container carrying
capacity which is registered in the ownership of Independence under Cypriot
flag (“INDEPENDENCE”),

and, in the singular, means any one 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
Guarantees;

(d)                                 the
Agency and Trust Agreement;

(e)                                  the
Master Agreement Assignment;

(f)                                    the
Mortgages;

(g)                                 the
Deeds of Covenant;

 10
 

(h)                                 the
General Assignments;

(i)                                     the
Danaos Earnings Account Pledge;

(j)                                     the
Owner’s Earnings Account Pledges;

(k)                                  any
Charterparty Assignment;

(l)                                     any
Bareboat Charter Security Agreements;

(m)                               Manager’s
Undertakings; and

(n)                                 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
documents referred to in this definition;

“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;

 11
 

“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;

“HMM”  means Hyundai Merchant Marine Inc., a
corporation incorporated under the laws of the Republic of Liberia whose
registered office is at 80 Broad Street, Monrovia, Liberia;

“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;

“IPO”  means a successful initial public offering of
the shares of the Borrower on the New York Stock Exchange;

“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,

 12
 

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

(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;

“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:

(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 which appears on the
appropriate page of the Reuters Monitor Money Rates Service at or about 11.00
a.m. (London time) on the Quotation Date for that Interest 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 Monitor Money Rates Service, the rate per annum determined by the Agent to be the arithmetic mean 

 13
 

(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 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
for a period equal to that Interest 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;

“Long-Term Revolving Facility”  means the aggregate principal amount of
initially up to $200,000,000 (as such amount may be increased pursuant to
Clause 4.2(b)(iv));

“Long-Term Revolving Facility Limit”  means, at any time during the Availability
Period for the Long-Term Revolving Facility, an amount initially not exceeding
$200,000,000 in aggregate which may be increased from time to time by the
aggregate amount of all Advances initially drawn under the Short-Term Revolving
Facility and which have been consolidated into the Long-Term Revolving Facility
pursuant to Clause 4.2(b)(iii) and which may be reduced by any optional
cancellations made pursuant to this Agreement;

“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 $1,500,000 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 total 66.67 per cent. of the Loan;

“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;

“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 

 14
 

Vessel as specified in the Applicable Accounts with the Market Value of
that Fleet Vessel as at the relevant Compliance Date);

“Margin” means, 0.70 per cent. per
annum;

“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;

“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 Group in
the Applicable Accounts;

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

 15
 

“Optional Currency Advance” means each
Advance requested by, and made available to, the Borrower and/or continued in
an Optional Currency and in the plural means all of them;

“Original Dollar Amount”
means the amount in Dollars which would have been outstanding if the relevant
Advance had first been drawn in and had remained denominated in Dollars,
reduced as may be appropriate from time to time by repayments and/or
prepayments and in accordance with Clause 5;

“Owner” means, in relation to:

(a)                                  “APL
BELGIUM”, Lato;

(b)                                 “CMA
CGM ELBE”, Lacey;

(c)                                  “CMA
CGM KALAMATA”, Geoffrey;

(d)                                 “CMA
CGM KOMODO”, Appleton;

(e)                                  “HENRY”,
Tyron;

(f)                                    “HYUNDAI
COMMORE”, Commodore;

(g)                                 “HYUNDAI
DUKE”, Duke;

(h)                                 “INDEPENDENCE”,
Independence; and

(i)                                     each
other Mortgaged Ship, the Approved Guarantor which (i) is the owner of such
Mortgaged Ship or (ii) acquired such Mortgaged Ship pursuant to the Approved
MOA relative thereto,

and, in the plural, means all of them;

“Owner’s Earnings Account” 
means, in relation to each Mortgaged Ship, an account in the name of the
Owner of such Ship with the Agent in Athens 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;

“Owner’s Earnings  Account Pledge”
means, in relation to each Owner’s Earnings Account, a pledge of that Owner’s
Earnings Account executed or to be executed by the relevant Owner in favour of
the Lenders and the Agent in such form as the Lenders may approve or require
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;

“Permissible Limit” means,
for the purpose of Clause 5, the lesser of (a) the Total Commitments and (b)
the Relevant Percentage (as defined in Clause 4.2) of the aggregate Market
Value of the Mortgaged Ships.

“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;

 16
 

(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;

“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;

“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;

“Reference Loan” means, for the purpose of
Clause 5, the amount in Dollars which would have been outstanding at the
relevant time if the Term Loan had been (a) denominated in Dollars on the
Amortising Period Commencement Date and thereafter remained denominated in
Dollars and (b) reduced from time to time by the repayments and/or prepayments
(made in Dollars) referred to in Clause 9;

“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;

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

“Repayment Date”  means a date on which a repayment is required
to be made under Clause 9;

“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”;

 17

“Revolving Credit”  means, at any time, the aggregate principal
amount of the Long-Term Revolving Facility Limit and the Short-Term Revolving
Facility Limit or, as the context may require, the aggregate principal amount
of the Advances under the Long-Term Revolving Facility and Short-Term Revolving
Facility outstanding under this Agreement at that time;

“Revolving Period”  means the period commencing on the date of
this Agreement and ending on the date falling on the fifth anniversary of the
date of this Agreement;

“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 Cover Ratio”  means the ratio which is determined, at any
time, by comparing the aggregate of the amounts referred to in paragraphs (a)
and (b) of Clause 16.1 against the Loan;

“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; and

 18
 

(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;

“Security Trustee”  means Aegean Baltic Bank S.A., in its
capacity as security trustee for the Lenders under the Finance Documents, or
any successor of it in such capacity appointed under clause 5 of the Agency and
Trust Agreement;

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

“Short-Term Revolving Facility”  means the aggregate principal amount of
initially up to $500,000,000 which may be drawn by the Borrower in accordance
with Clause 4.2;

“Short-Term Revolving Facility Limit”  means, at any time during the Availability
Period for the Short-Term Revolving Facility, an amount initially not exceeding
$500,000,000 in aggregate which shall be reduced from time to time by (a) the
aggregate amount of all Advances drawn under the Short-Term Revolving Facility
and consolidated into the Long-Term Revolving Facility pursuant to Clause
4.2(b)(iv) and (b) any undrawn amounts of the Short-Term Revolving Facility
cancelled by the Lenders pursuant to Clause 4.8 or by the Borrower pursuant to
Clause 9.5;

“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;

“Sub-Loan”  shall have the meaning given to that term in
Clause 9.2(c);

“Swap Bank”  means HSH Nordbank AG acting through
its office at Martensdamm 6, D-24103 Kiel, Germany;

“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;

“Term Loan”  means, on the Amortising Period Commencement
Date, the aggregate principal amount of all the Advances (following the
conversion of the Revolving Credit to the Term Loan pursuant to Clause 9.1)
and, at all times thereafter, the Loan for the time being outstanding under
this Agreement;

 19
 

“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 Indebtedness”  means the consolidated Financial Indebtedness
of the Borrower’s Group as shown in the consolidated balance sheets for the
Borrower’s Group in the Applicable Accounts;

“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;

(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;

“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;

 20
 

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

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

“Weighted Age”  means, in relation to any Mortgaged Ship
which is a container vessel, the product of that Ship’s Age multiplied by that
Ship’s Weight Factor;

“Weighted Average Age of the Ships”  means, the aggregate of the single Weighted
Age of all the Mortgaged Ships which are container vessels at the Amortising
Period Commencement Date; and

“Weight Factor”  means, in relation to any Mortgaged Ship
which is a container vessel, the nominal TEU capacity of such Ship expressed as
a percentage of the aggregate TEU capacity of all Mortgaged Ships on the
Amortising Period Commencement Date which are container vessels.

1.2                               Construction
of certain terms.  In this Agreement:

“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, fax or telex;

“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;

“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;

 21
 

“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;

“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 therein of Clause 1 of the Institute Time Clauses
(Hulls)(1/10/83) or Clause 8 of the Institute Time Clauses (Hulls)(1/11/1995)
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 all risks referred to in the
Institute War and Strike Clauses (Hulls) (1/10/83) and (1/11/95) including, but
not limited to, the risk of mines, blocking and trapping, missing vessel,
political risks, deprivation, confiscation and all risks excluded by Clause 23
of the Institute Time Clauses (Hulls) (1/10/83) or Clause 24 of the Institute
Time Clauses (Hulls) (1/11/1995) 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;

 22
 

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

(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 revolving credit and term loan
credit facilities 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 and Swap Bank several. 
The rights of the Lenders and the Swap Bank under this Agreement and the
Master Agreement are several; accordingly:

 23
 

(a)                                  each
Lender 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 or the Swap Bank as additional parties in the
proceedings.

3.2                               Proceedings
by individual Lender or Swap Bank. 
However, without the prior consent of the Majority Lenders, no Lender
and the Swap 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 under this Agreement and of the Swap Bank under the Master Agreement
are several; and a failure of a Lender 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 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 or the Swap
Bank have any responsibility for a failure of another Lender or the Swap 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 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;

(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.

 24
 

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.

4                                         DRAWDOWN

4.1                               Request
for Advance.  Subject to the
following conditions, the Borrower may request an Advance to be made 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)                                  in
the case of an Advance under the Long-Term Revolving Facility;

(i)                                     the
Drawdown Date of such Advance shall be a Business Day during the Availability
Period for the Long-Term Revolving Facility;

(ii)                                  the
Drawdown Date in respect of the first such Advance shall not be later than 31
December 2006 (and such Advance shall (inter alia) be applied in fully
refinancing the Existing Indebtedness secured on the Existing Ships) and a
failure by the Borrower to satisfy this condition shall result in the
Commitments and all other obligations of each Lender to the Borrower under this
Agreement being automatically terminated on 31 December 2006; and

(iii)                               when
such Advance is aggregated with all other then outstanding Advances under the
Long-Term Revolving Facility (including, without limitation, any Advances
initially made under the Short-Term Revolving Facility), the aggregate amount
of such Advances does not exceed the lesser of (A) the Long-Term Revolving
Facility Limit and (B) the Relevant Percentage of the aggregate Market Values
of the Mortgaged Ships;

(b)                                 in
the case of an Advance under the Short-Term Revolving Facility:

(i)                                     on
the Drawdown Date of any Advance under the Short-Term Revolving Facility, the
Long-Term Revolving Facility Limit will have been fully drawn;

(ii)                                  the
Drawdown Date of such Advance shall be a Business Day during the Availability
Period relative to the Short-Term Revolving Facility;

(iii)                               when
such Advance is aggregated with all other then outstanding Advances under the
Long-Term Revolving Facility (including, without limitation, any Advances
initially made under the Short-Term Revolving Facility), the Advances do not
exceed the lesser of (A) the Total Commitments and (B) the Relevant Percentage
of the aggregate Market Value of the Mortgaged Ships;

(iv)                              on
the Drawdown Date of such Advance (and immediately following the drawdown
thereof), the Advance will be consolidated into the Long-Term Revolving
Facility and the Short-Term Revolving Facility Limit shall be permanently
reduced by the amount of the Advance (and the Long-Term Revolving Facility
Limit will be increased by the same amount);

(c)                                  each
Advance shall be drawn down in an amount of at least $5,000,000 or a higher
integral multiple of $1,000,000; and

(d)                                 if
any part of the Total Commitments relating to the Short-Term Revolving Facility
or the Long-Term Revolving Facility have not been borrowed before the end of
the Availability 

 25
 

Period
applicable thereto, the Total Commitments shall on that date be permanently
cancelled by an amount equal to such undrawn amount,

In Clauses 4.2(a)(iii) and 4.2(b)(iii) “Relevant Percentage” 
means (1) at any time when the Loan does not exceed $200,000,000, 80 per
cent. and (2) at all other times, 75 per cent.

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
it has received a Drawdown Notice and the Agent shall inform each Lender 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.

4.6                               Lenders
to make available Contributions.  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.

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; and that payment to the Borrower shall be made:

(a)                                  in
the case of the first Advance under the Long-Term Revolving Facility 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, to the account nominated by the Borrower in the
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                               Review of Availability Period for Short-Term Revolving Facility.  If at the end of the Availability Period for
the Short-Term Revolving Facility the Short-Term Revolving Facility has not
been fully drawn, the Borrower may, by giving the Agent not less than 30 days
notice in writing, request the extension of the original Availability Period
for the Short Term Revolving Facility for a further period of up to 364 days
(an “Extension Period”).  If all the Lenders, acting in their sole and
absolute discretion, agree to extend the applicable Availability Period in
accordance with this Clause 4.8 the Agent shall send to the Borrower a notice
in writing advising it of the period by which the Availability Period will be
extended and the available amount of the Short-Term Revolving Facility during
the Extension Period Provided that:

 26
 

(a)                                  the
Lenders shall, in their sole and absolute discretion, determine how much of the
Short-Term Revolving Facility Limit may be made available to the Borrower
during any Extension Period and the length of the Extension Period and if the
Lenders agree to make available less than the whole of the Short-Term Revolving
Facility 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; and

(b)                                 if
the Lenders agree to extend the Availability Period, the Borrower shall on or
prior to the expiry of each Extension Period be entitled, by giving the Agent
not less than 30 days notice in writing, to request a further extension (of up
to 364 days) in the Availability Period applicable to the Short-Term Revolving
Facility subject to making such a request prior to the date falling on the
fourth anniversary of this Agreement;

(c)                                  on
the earlier of (i) the end of the Availability Period in respect of the
Short-Term Revolving Facility (as extended by one or more Extension Periods)
and (ii) the Amortising Period Commencement Date, any undrawn amounts of the
Short-Term Revolving Facility shall be permanently cancelled.

4.9                               Approval of Ships. 
Each Ship nominated by the Borrower to be an Approved Ship for the
purposes of this Agreement shall need to be approved first by all the Lenders
as such (which approval shall not be unreasonably withheld in the case of a
Ship which falls within paragraphs (a), (b) or (c) of the definition of “Approved
Ship” and such approval shall be in the sole and absolute discretion of the
Lenders in the case of a Ship which falls within paragraph (d) of the
definition of “Approved Ship”)  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.

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 third 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 (i) the equivalent in the relevant Optional Currency
of $10,000,000 (determined by converting that Optional Currency into Dollars at
the applicable Dollar Spot Rate of Exchange) and (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-paragraph (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) $140,000,000 and (ii) 70 per cent. of the Loan;

 27
 

(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:

(a)                                  if
the determination is made during the Revolving Period, 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”) and if on the date on which the Agent makes its
determination:

(i)                                     the
Dollar Equivalent Amount of the Loan exceeds the Permissible Limit, the Borrower
shall forthwith prepay in full an amount equal to such excess (and the
provisions of sub-paragraph (ii) 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 the Loan exceeds the Long-Term Revolving Facility
Limit (but not the Permissible Limit), the Borrower shall either:

(A)                              notionally
drawdown an Advance under the Short-Term Revolving Facility which shall be equal
to such excess (and the Borrower shall pay all fees applicable to the drawdown
of such Advance pursuant to Clause 21.1); or

 28
 

(B)                                prepay
such amount so that, following the application of such prepayment against the
Loan, the Dollar Equivalent Amount of the Loan does not exceed the Long-Term
Revolving Facility Limit; and

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

(iv)                              the
Continuing Balance (as determined in accordance with the foregoing provisions
of this Clause 5.6(a)) is less than the Dollar Equivalent Amount of the Loan in
the preceding Interest Period, the amount of such difference may not be
reborrowed and the Lenders shall not be obliged to advance to the Borrower any
further monies (other than in accordance with Clause 9.14(b)); and

(b)                                 if
the determination is made on or after the Amortising Period Commencement Date,
the determination shall be made immediately after the Borrower has made any repayment
and/or prepayment of all or any part of the Advance which it is required to
make at that time pursuant to Clause 9 and:

(i)                                     if
the Dollar Equivalent Amount of the Loan exceeds the Reference Loan, the
Borrower shall forthwith prepay an amount equal to such excess; and

(ii)                                  if
the Dollar Equivalent Amount of the Loan does not exceed the Reference Loan,
the Continuing Balance shall be equal to the Term Loan in the preceding
Interest Period (as reduced in accordance with the
provisions of Clause 9) and the Lenders shall not be obliged to advance to the
Borrower any further monies.

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
Optimal Currency) at the end of the preceding Interest Period.

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; and

(ii)                                  secondly:

 29
 

(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;

(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 (b)(i) 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;

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(a)(ii), 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.

 30
 

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:

(a)                                  if
the determination is made during the Revolving Period and the Agent determines:

(i)                                     that
the Dollar Equivalent Amount of the Loan is greater than 105 per cent. of the
Permissible Limit (for the purposes of this sub-paragraph (i), the “excess”), the Borrower shall, within 10 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 sub-paragraph (ii) 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 Repayment
Date in or towards satisfaction of the Borrower’s actual obligation to make a
payment in accordance with Clause 5.6; and

(ii)                                  that
the Dollar Equivalent Loan exceeds the Long-Term Revolving Facility Limit (but
not the Permissible Limit), the Borrower shall, on the first date on which interest
is payable in respect of any Advance pursuant to Clause 6, either:

(A)                              notionally
drawdown an Advance under the Short-Term Revolving Facility which shall be
equal to such excess (and the Borrower shall pay all fees applicable to the
drawdown of such Advance pursuant to Clause 21.1); or

(B)                                prepay
such amount so that, following the application of such prepayment against the
Loan, the Dollar Equivalent Amount of the Loan does not exceed the Long-Term
Revolving Facility Limit;

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

(b)                                 if
the determination is made on or after the Amortising Period Commencement Date
and the Agent determines:

(i)                                     that
the Dollar Equivalent Amount of the Loan is greater than 105 per cent. of the
Reference Loan (for the purposes of this sub-paragraph (i), the “excess”), the Borrower shall, within 10 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 any currency equal (or if applicable, equivalent, on the
basis of the Spot Rate of exchange applicable at that time) 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). 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 Repayment
Date in or towards satisfaction of the Borrower’s actual obligation to make a
payment in accordance with Clause 5.6; and

(ii)                                  that
the circumstances in sub-paragraph (i) do not apply, the Continuing Balance
shall be equal to the Term Loan at that time.

 31
 

5.10                        Reduction in Reference Loan. 
If any reduction is made to an Advance pursuant to this Clause 5 and
this results in the Term Loan being less than the Reference Loan, such difference shall be applied against
the Term Loan in inverse order of maturity.

5.11                        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 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 and
the Reference Rate for that Interest Period.

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 definition of
LIBOR 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 Monitor Money Rates
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 LIBOR; or

(b)                                 at
least 1 Business Day before the start of an Interest Period, Lenders having
Contributions 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 LIBOR 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 

 32
 

Period in the
London 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 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

(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 Margin; 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.

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;
and

(b)                                 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 

 33
 

Contribution,
together with accrued interest thereon at the applicable rate plus the Margin
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.

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)                                  1,
3, 6, 9 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)                                 3
months, if the Borrower fails to notify the Agent by the time specified in
paragraph (a) above; or

(c)                                  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 Repayment Date, an Interest Period shall end on
that Repayment 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

 34
 

(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
Margin 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                                         CONVERSION
TO TERM LOAN;  REPAYMENT AND PREPAYMENT

9.1                               Conversion
to Term Loan.  On the Amortising Period Commencement Date,
the Revolving Credit shall be converted into the Term Loan.

 35
 

9.2                               Repayments.  The following provisions of this Clause 9.2
shall apply to the repayment of the Term Loan:

(a)                                  the
Term Loan shall be repaid by up to 20 equal consecutive three-monthly repayment
instalments (each a “Repayment Instalment”
and together the “Repayment Instalments”)
and, if applicable, a final balloon instalment (the “Balloon
Instalment”);

(b)                                 if
on the Amortising Period Commencement Date all the Mortgaged Ships are
container vessels, each Repayment Instalment shall be “RI”
and the Balloon Instalment shall be “B” and the
number of the Repayment Instalments shall be “N”
where:

	
  (i)

  	
  RI

  	
   

  	
  =

  	
   

  	
  TL

  
	
   

  	
   

  	
   

  	
   

  	
  (20-WAA) x4

  

where

“TL” is
the Term Loan as at the Amortising Period Commencement Date; and

“WAA”  is the Weighted Average Age of the Mortgaged
Ships on the Amortising Period Commencement Date

(ii)                                  the
number of Repayment Instalments shall be determined by dividing TL by RI
Provided that the number of repayment Instalments may not exceed 20 in
aggregate; and

(iii)                               B                                      =                                         TL
- (RI x N);

(c)                                  if
on the Amortising Period Commencement Date the Mortgaged Ships include vessels
other than container vessels:

(i)                                     the
Term Loan shall be divided into notional sub-loans (each a “Sub-Loan”) with the number of Sub-Loans being equal to the
number of different types of Mortgaged Ships;

(ii)                                  the
amount of each Sub-Loan shall be determined by multiplying the Term Loan by a
fraction whose numerator is the aggregate Market Values of the Mortgaged Ships
of the same type and whose denominator is the aggregate Market Value of all the
Mortgaged Ships at that time;

(iii)                               each
Sub-Loan shall be repaid in the following manner:

(A)                              the
Sub-Loan relating to the Mortgaged Ships which are container vessels shall be
repaid in accordance with Clause 9.2(b) but by construing all references in
that Clause to the Term Loan as references to the relevant Sub-Loan;

(B)                                the
repayment instalments and the balloon instalment in relation to each Sub-Loan
for Mortgaged Ships which are not container vessels shall be determined in
accordance with principles similar to those referred to in Clause 9.2(b) and by
also taking into account the age and income generating capacity at that time of
the relevant Ships.  The actual amount of
the said instalments shall be included within a notice to be sent by the Agent
(with the authorisation of all the Lenders) to the Borrower on or before the
Amortising Period Commencement Date;

(d)                                 if
the provisions of this Clause 9.2(c) shall apply at any time, all references in
this Agreement to the Repayment Instalments and the Balloon Instalment shall be
read and construed as references to the aggregate amount of the individual repayment
instalments 

 36
 

of each
Sub-Loan and the aggregate amount of the individual balloon instalments of each
Sub-Loan; and

(e)                                  if
the Weighted Average Age of the Mortgaged Ships at the Amortising Period
Commencement Date is:

(i)                                     at
least 20, the Term Loan (or, if applicable, the relevant Sub-Loan or Sub-Loans)
shall become repayable on the Amortising Period Commencement Date in full
through a single instalment; or

(ii)                                  at
least 15, B shall be zero.

9.3                               Repayment
Dates for Term Loan/Sub-Loans. 
Subject to Clause 9.2(e), the first Repayment Instalment in respect of
the Term Loan or, if applicable each Sub-Loan, shall be repaid on the date
falling 3 months after the Amortising Period Commencement Date, each subsequent
Repayment Instalment shall be repaid at 3-monthly intervals thereafter and the
Balloon Instalment, together with the final Repayment Instalment, shall be
repaid on the date falling on the earlier of (a) the tenth anniversary of the
date of this Agreement and (b) 31 December 2016.

9.4                               Final
Repayment Date.  On the final
Repayment Date for the Term Loan or, if applicable, each Sub-Loan, 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 any Finance Document.

9.5                               Optional
facility cancellation.  The Borrower
shall be entitled, upon giving to the Agent not less than 5 Business Days 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 $5,000,000 or a higher
multiple of $1,000,000, the undrawn balance of the Revolving Credit.  Upon such cancellation taking effect on
expiry of such notice the several obligations of the Lenders to make their
respective Commitments available in relation to the portion of the Total
Commitments to which such notice relates shall terminate and the commitment fee
referred to in Clause 21.1(b)) on such portion shall cease to accrue.

9.6                               Voluntary
prepayment.  Subject to the following
conditions, the Borrower may prepay the whole or any part of the Loan on the
last day of an Interest Period.

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

(a)                                  a
partial prepayment shall be $5,000,000 or a higher multiple of $1,000,000;

(b)                                 the
Agent has received from the Borrower at least 5 (at any time during the
Revolving 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.

9.8                               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 Revolving Period,
withdraw or amend a prepayment notice up to 3 days prior to the date of
prepayment specified in the relevant prepayment notice.

 37

9.9                               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 9.7(c).

9.10                        Mandatory
prepayment/reductions.  If a
Mortgaged Ship is sold or becomes a Total Loss or the Mortgage on that Ship is
discharged pursuant to Clause 9.10(b)(iii) and immediately following such sale,
Total Loss or discharge of Mortgage (each a “Disposal
Event”) the Security Cover Ratio (determined by reference to all the
remaining Mortgaged Ships) is less than the higher of (i) 133 per cent. and
(ii) the Security Cover Ratio maintained immediately prior to the date of the
Disposal Event applicable to that Ship (the “Minimum
Disposal Security Cover Ratio”):

(a)                                  and
such Disposal Event occurs before the Amortising Period Commencement Date, the
Long-Term Revolving Facility Limit shall be permanently reduced by an amount,
which after giving credit thereto, results in the Security Cover Ratio (on the
first day after the Disposal Event applicable to the Ship) being equal to the
Minimum Disposal Security Cover Ratio, unless the Borrower procures the
execution by an Approved Guarantor and (where applicable) registration of Finance
Documents in respect of a further Approved Ship equivalent or essentially
equivalent to the Finance Documents applicable to the Ship subject to the
relevant Disposal Event which results in the Security Cover Ratio being at
least equal to the Minimum Disposal Security Cover Ratio in which case no
permanent reduction of the Long-Term Revolving Facility Limit shall be made;

(b)                                 and
such Disposal Event occurs after the Amortising Period Commencement Date, the
Borrower shall be obliged to prepay such amount of the Loan so that, after
giving credit to the prepayment, the Security Cover Ratio is equal to the
Minimum Disposal Security Cover Ratio.

The prepayments or, as the case may be, permanent reductions and/or
cancellations of the Long-Term Revolving Facility Limit referred to in this
Clause 9.10 shall be made:

(i)                                     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

(ii)                                  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

(iii)                               in
the case the Mortgage on the relevant Ship is discharged (other than in the
circumstances referred to in paragraph (i) 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.

9.11                        Application
of partial prepayment.  Each partial
prepayment made after the Amortising Period Commencement Date shall be applied
to reduce pro rata each Repayment Instalment and the Balloon Instalment of the
Term Loan or the applicable Sub-Loan.

9.12                        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
Repayment Date or, as the case may be, the date of 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.

 38
 

9.13                        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 any sums payable under
Clause 22.1(b) but without premium or penalty.

9.14                        Reborrowing.

(a)                                  No
amount of the Term Loan prepaid may be reborrowed.

(b)                                 Subject
to the terms of this Agreement, any amount of the Revolving Credit repaid or
prepaid may be reborrowed.

9.15                        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
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 9.2.

9.16                        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 9.11 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 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, 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 each Advance which will be secured
on an Approved Ship (in order to ensure compliance with Clause 10.1(f)), 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 commitment fee) 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;

(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 

 39
 

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, the Borrower would not be obliged to provide additional
security or prepay part of the Loan under that Clause;

(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 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 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, specifies).

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 Singapore
flag, the Greek flag or the Cypriot flag, as the case may be;

(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

 40
 

(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

(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, 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 timely any or
all of its obligations under any of the Finance Documents.

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.

 41
 

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 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 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:

 42
 

(a)                                  under
the Finance Documents 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

(d)                                 incurred,
in the case of the Borrower, in the normal course of its business of acquiring
and financing vessels.

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;

(b)                                 as
soon as possible, but in no event later than 90 days after the end of each
6-month period in each Financial Year of the Borrower ending on respectively 30
June and 31 December, the unaudited consolidated accounts of the Borrower’s
Group for that 6-month period; and

(c)                                  at
any time after an IPO of the Borrower, 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’s Group at the
date of those accounts and of its profit for the period to which those accounts
relate; and

(c)                                  fully
disclose or provide for all significant liabilities of 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, and will
promptly send certified copies to the Agent of, all consents required:

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

 43
 

(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:

(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, Singapore or Greece 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 MOAs. 
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 MOA 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

 44
 

(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 Contributions
exceeding 10 per cent. of the aggregate of the Loan or (if no Advance is outstanding
at the relevant time) Commitments exceeding 10 per cent. of the 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 MOA, 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.  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                 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
(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).

 45
 

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 when compliance with the undertakings in this Clause 13.4 is
determined pursuant to Clause 13.5:

(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 the higher of
(i) $30,000,000 and (ii) the Relevant Percentage of the Total Indebtedness of
the Borrower’s Group (where “Relevant Percentage”
means (i) at all times during the Revolving Period, 3 per cent. and (ii) at all
times thereafter, 4 per cent.);

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

(d)                                 the
Market Value Adjusted Net Worth of the Borrower’s Group shall not be less than:

(i)                                     at
all times prior to an IPO, $250,000,000; and

 46
 

(ii)                                  at
all times thereafter, $400,000,000

Provided that at
all times the Book Net Worth shall be not less than $250,000,000.

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 Clauses 12.6(b)), by reference to the unaudited Applicable
Accounts in the case of the first 6-month period in each Financial Year of the
Borrower and, in the case of the second 6-month period, the audited Applicable
Accounts of the Borrower;

(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 a
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:

(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 

 47
 

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 the Loan;

(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 the international marine insurance market (currently
$1,000,000,000);

(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

(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);

 48
 

(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;

(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.

 49
 

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) above) 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.

14.14                 Provision of
copies of communications. The Borrower shall procure that each Owner shall
provide the Security Trustee, at the time of each such communication, 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;

 50
 

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 Loan 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) 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 110
per cent. of the Loan 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 

 51
 

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, may otherwise permit (such permission not to be unreasonably withheld
in the case of Clause 15.2).

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.

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 

 52
 

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 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.

 53
 

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 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;

(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

Provided that any
inspection of a Ship will be conducted without interfering with the reasonable
operation, repairs and maintenance of that Ship and all inspections shall be
carried out at the risk of the Security Trustee if there has been wilful
misconduct or gross negligence on the part of the surveyors or other person
appointed by the Security Trustee to conduct the inspection.

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

(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:

 54
 

(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 become 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 limits 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 is not included within the
schedule of dry docking to be submitted by the Borrower pursuant to Clause
15.16 or any dry docking the length, cost or extent of which is materially
different to that contemplated by the aforementioned schedule;

(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

(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.

 55
 

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)                                  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
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 $1,500,000 (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.

15.16                 Notification of scheduled dry dockings. 
The Borrower will by no later than 31 January in each
calendar year send to the Agent a schedule (in a form satisfactory to the
Agent) identifying which Ships are intended to be dry docked during that year
and the extent of the works to be carried out during each dry docking and the estimated
duration and cost of the same.  The
schedule will be updated by no later than 30 June in each calendar year to take
account of any Ships which are to be dry docked within that year which were not
subject to a Mortgage when the original schedule for the relevant year was sent
to the Agent.

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,

 56
 

is below 125 per cent. of the Loan, 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 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 9 months at any date 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 9 months shall be the aggregate
of the present values (as may be conclusively determined by the Agent) of:

(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

 57

(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 6-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

(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:

 58
 

(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 JPMorgan
Chase Bank, New York, (Swift Code CHASUS33 (Account No 400807963 (Reference “Danaos
Corporation - US$700,000,000 facility”)), 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 or the Security Trustee shall be made available by the
Agent to that Lender 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 or the Security Trustee may have notified to the Agent not less than 5 Business
Days previously; and

(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

 59
 

available to a
Lender, deduct and withhold from that amount any sum which is then due and
payable to the Agent from that Lender under any Finance Document or any sum
which the Agent is then entitled under any Finance Document to require that
Lender 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 or any Lender any sum which the Agent is expecting to receive for
remittance or distribution to the Borrower 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 or a Lender,
without first having received that sum, the Borrower 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 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:

(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);

 60
 

(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 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.

19.2                        Location
of accounts.  The Borrower shall, and
shall ensure each Owner shall, promptly:

(a)                                  comply
with any requirement of the Agent as to the location or re-location of
the Earnings Accounts (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.

20                                  EVENTS
OF DEFAULT

20.1                        Events of
Default.  An Event of Default occurs
if:

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(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

(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

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(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,
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

(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

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(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 MOA 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 the ability of the Borrower or a
Security Party to timely perform its or their obligations 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 50 per cent. or less of the issued
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

(q)                                 an
Event of Default (as defined in Section 14 of the Master Agreement) occurs; or

(r)                                    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.

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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 to the Borrower under this Agreement are terminated; and/or

(ii)                                  serve
on the Borrower a notice stating that the Loan, 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 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 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 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, 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 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 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

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(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 an “excluded Security Party”)
and any company which is a subsidiary of the Borrower or a Security Party
(other than an excluded Security Party) or of which a Security Party (other
than an excluded 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,
commitment and agency fees.  The
Borrower shall pay to the Agent:

(a)                                  an
arrangement/underwriting fee of an amount previously agreed in writing between
the Arrangers and the Borrower for distribution among the Lenders and the
Arrangers in the proportions agreed;

(b)                                 quarterly
in arrears (and on the last day of the Revolving Period) during the period from
the date of this Agreement to the last day of the Revolving Period, for the
account of the Lenders, a commitment fee at the rate previously agreed in
writing between the parties on the undrawn amount of the Long-Term Revolving
Facility, for distribution among the Lenders in the proportions agreed;

(c)                                  a
drawdown fee of an amount previously agreed in writing between the Arrangers
and the Borrower, for distribution among the Lenders in the proportions agreed;
and

(d)                                 on
the date falling 3 months after the date of this Agreement and every 3 months
thereafter during the Security Period, an agency fee of an amount previously
agreed in writing between the Agent and the Borrower, such agency fee to be
payable to the Agent in arrears for its own account.

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.

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;

 66
 

(b)                                 any
consent or waiver by the Lenders, 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 and each Lender on the
Agent’s demand and the Security Trustee on its demand in respect of all
expenses, liabilities and losses 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 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;

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:

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(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

(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.

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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.  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 shall be treated as a sum due to
that Lender save in the case of manifest error.

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.

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

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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 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 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, the Notifying Lender’s
Commitment shall terminate; and 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 9.6).

25                                  INCREASED
COSTS

25.1                        Increased
costs.  This Clause 25 applies if a
Lender (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 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”)) 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 performing its obligations under this Agreement, or of having
outstanding all or any part of its Contribution or other unpaid sums;

 70
 

(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 or (as the case may require) the proportion of that cost
attributable to the Contribution; 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.

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.

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; and

(b)                                 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 Margin
(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

 71
 

(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.

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:

(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 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.

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.

A transfer pursuant to this Clause 27.2 shall:

(i)                                     be
effected without the consent of, but with notice to, the Borrower:

(A)                              following
the occurrence of an Event of Default;

(B)                                if
such transfer is to a subsidiary or any other company or financial institution
which is in the same ownership or control as the Transferor Lender; or

 72
 

(C)                                if
such transfer is part of the Transferor Lender’s programme of securitising its
portfolio of loans; and

(ii)                                  require
the consent of the Borrower in all other circumstances and, if the Borrower
objects to such transfer it shall notify the Agent within 5 days of receiving
notice of the proposed transfer (the “transfer notice”)
and either the Borrower shall, within 15 days of the transfer notice, prepay
the Contribution of the Transferor Lender which it was proposing to transfer
(such prepayment to be made in accordance with Clause 9) and/or the Commitment
of the Transferor Lender which it was proposing to transfer shall be
permanently cancelled on the date of the Borrower’s notice to the Agent.

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;

(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;

 73
 

(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 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 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 Agent or the Security Trustee; and
the Lenders may assign, in any manner and terms agreed by the Majority Lenders,
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 assignee or sub-participant
or any person who may otherwise enter into contractual relations with that
Lender in connection with this Agreement, 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.

 74
 

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 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”:

(a)                                  a
change in the definition of the Margin 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;

(e)                                  a
change to the definition of “Majority Lenders” or “Finance Documents”;

(f)                                    a
change to the preamble or to Clause 2, 3, 4, 6.1, 9.2, 12, 13.4, 18, 19, 20 or
31;

(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:

 75
 

(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

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  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

  	
   

  	
  Aegean Baltic Bank S.A.

  
	
   

  	
  and the Security

  	
   

  	
  28 Diligianni Street

  
	
   

  	
  Trustee:

  	
   

  	
  145 62 Kifissia

  
	
   

  	
   

  	
   

  	
  Greece

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Fax No: + 30 210 623 4192/3

  

 

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;

 76
 

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                                  SUPPLEMENTAL

30.1                        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.

30.2                        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.

30.3                        Counterparts.  A Finance Document may be executed in any
number of counterparts.

30.4                        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.

30.5                        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.

31                                  LAW
AND JURISDICTION

31.1                        English
law.  This Agreement shall be
governed by, and construed in accordance with, English law.

31.2                        Exclusive
English jurisdiction.  Subject to
Clause 31.3, the courts of England shall have exclusive jurisdiction to settle
any disputes which may arise out of or in connection with this Agreement.

 77

31.3                        Choice of
forum for the exclusive benefit of the Creditor Parties.  Clause 31.2 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.

31.4                        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.

31.5                        Creditor
Party rights unaffected.  Nothing in
this Clause 31 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.

31.6                        Meaning of
“proceedings”.  In this Clause 31, “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.

 78
 

SCHEDULE 1

LENDERS AND COMMITMENTS

	
  Lender and Lending Office

  	
   

  	
  Commitment

  (US Dollars)

  
	
   

  	
   

  	
   

  
	
  HSH Nordbank AG

  Gerhart-Hauptmann-Platz 50

  20095 Hamburg

  Germany

  	
   

  	
  693,000,000

  
	
   

  	
   

  	
   

  
	
  Fax No:+(49) 40
  3333 34118

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Aegean Baltic
  Bank S.A.

  28 Diligianni Street

  145 62 Kifissia

  Greece

  	
   

  	
  7,000,000

  
	
   

  	
   

  	
   

  
	
  Fax No: +(30
  210) 623 4192/3

  	
   

  	
   

  

 

 79
 

SCHEDULE
2

DRAWDOWN
NOTICE

To:                              Aegean
Baltic Bank S.A.

28 Diligianni Street

145 62 Kifissia

Greece

[                  ]
200[·]

Attention:                                       Loans
Administration 

DRAWDOWN NOTICE

1                                         We
refer to the loan agreement dated [·] 2006 (the “Loan Agreement”) and made between
ourselves, as Borrower, the Lenders referred to therein and yourselves as Agent
and Security Trustee in connection with revolving credit and term loan
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 the [Long-Term][Short-Term] Revolving
Facility as follows:

(a)                                  Amount:
US$[·];

(b)                                 The
Advance shall be drawn in [$] or [Optional Currency];                          

(c)                                  Drawdown
Date:  [             ] 200[·];

(d)                                 Duration
of the first Interest Period shall be [       
] months; and

(e)                                  Payment
instructions : account in the name of [                  ] and numbered [          ] with [                 ] of [                       ].

3                                         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.

4                                         This
notice cannot be revoked without the prior consent of the Majority Lenders.

5                                         We
authorise you to deduct from the Advance the amount of all fees payable
pursuant to Clause 21.1.

	
   

  	
  [Name of Signatory]

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Director

  	
   

  
	
   

  	
  for and on
  behalf of

  	
   

  
	
   

  	
  DANAOS
  CORPORATION

  	
   

  

 80
 

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
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; and 

(g)                                 the
Owner’s Earnings Account Pledges relative to the Existing Ships or, if the
Borrower decides that the Earnings of the Existing Ships are instead to be paid
to the Danaos Earnings Account, the Danaos Earnings Account Pledge. 

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 each Owner’s Earnings Account relative to an Existing
Ship or, as the case may be, the Danaos Earnings 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 Greek flag or, in the case of “APL BELGIUM”, Singapore flag and, in
the case of “INDEPENDENCE”, Cypriot flag; 

 81
 

(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 mortgage in accordance with the laws
of Greece or, in the case of “APL BELGIUM”, as a valid first priority statutory
mortgage in accordance with the laws of Singapore and, in the case of “INDEPENDENCE”,
as a valid first priority statutory mortgage in accordance with the laws of
Cyprus; 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                                  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.

13                                  Documentary
evidence that the agent for service of process named in Clause 30 has accepted
its appointment.

14                                  Favourable
legal opinions from lawyers appointed by the Agent on such matters concerning
the laws of the Marshall Islands, Liberia, Singapore, Greece, Cyprus and such
other relevant jurisdictions as the Agent may require.

15                                  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.

16                                  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.

 82
 

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. 

In Part B of Schedule 3, the following definitions shall have the
following meanings:

“Relevant Advance” means, in relation to
each Approved Ship, the Advance which shall be used to part-finance the
acquisition of such Approved Ship; 

“Relevant Owner” means the Approved
Guarantor which is the buyer of the Relevant Ship; and

“Relevant Ship” means, in relation to
each Relevant  Advance, the Approved Ship which is to be financed by such
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
such 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 MOA 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 MOA.

4                                         Copies
of the Approved MOA 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.

5                                         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 4.9.

6                                         A
duly executed original of the Guarantee of the Relevant Owner and of the
Mortgage, the General Assignment, the Owner’s Earnings Account Pledge (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                                         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). 

10                                  Documentary evidence that:

 83
 

(a)                                  the
Relevant Ship has been unconditionally delivered by the Approved Seller thereof
to, and accepted by, the Relevant Owner under the Approved MOA, and the full
purchase price payable under the MOA (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.

11                                  A
copy of the Management Agreement and duly executed original of the Manager’s
Undertaking in relation to the Relevant Ship.

12                                  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.

13                                  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 MOA and of all documents to be executed by such Approved Seller
under the Approved MOA.

14                                  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). 

15                                  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.

16                                  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.

 84
 

17                                  Favourable
legal opinions from lawyers appointed by the Lender on such matters concerning
the laws of the Approved Flag State and such other relevant jurisdictions as
the Agent may require. 

18                                  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 Advance which shall be secured on an Approved
Ship. 

In Part C of Schedule 3, the following definitions shall have the
following meanings:

“Relevant Advance” means the Advance
which shall be drawn down on the relevant Drawdown Date; 

“Relevant Owner” means the owner of the
Relevant Ship; and

“Relevant Ship” means, in relation to
each Relevant  Advance, each Approved Ship which is to act as security for
such Advance.

1                                         Copies
of resolutions of the shareholders and directors of each Relevant Owner and the
Borrower authorising the execution of each of the Finance Documents to which
such 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.

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 each Relevant Owner or the Borrower requires to enter
into, or make any payment under, any Finance Document.

4                                         The written confirmation of the Agent that each
Relevant Ship has been approved by the Lenders as an Approved Ship for the purposes
of this Agreement pursuant to Clause 4.9.

5                                         A
duly executed original of the Guarantee of each Relevant Owner and of the
Mortgage, the General Assignment, the Owner’s Earnings Account Pledge (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 each Relevant Ship and of each document to be delivered
pursuant to each such Finance Document.

6                                         If
applicable, a duly executed original of the Charterparty Assignment and the
Bareboat Charter Security Agreement in respect of each Relevant Ship and of
each document to be delivered pursuant to each such Finance Document.

7                                         Evidence
satisfactory to the Agent that each Relevant Owner is a direct or indirect
wholly-owned subsidiary of the Borrower.

8                                         The
originals of any documents required in connection with the opening of the
Danaos Earnings Account in respect of each Relevant Ship (only if the Earnings
of the Relevant Ship are not to be paid to the Danaos Earnings Account). 

 85
 

9                                         Documentary evidence that:

(a)                                  each
Relevant Ship is registered in the ownership of the Relevant Owner under an
Approved Flag;

(b)                                 each
Relevant Ship is in the absolute and unencumbered ownership of the Relevant Owner
save as contemplated by the Finance Documents;

(c)                                  each
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;

(d)                                 the
Mortgage relating to each 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

(e)                                  each
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 each 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 each 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 each Relevant Ship and each Relevant
Owner certified as true and in effect by each Relevant Owner.

12                                  Two
valuations (at the cost of the Borrowers) of each 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). 

13                                  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 each
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.

14                                  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 each Relevant Ship as the Agent may require.

15                                  Favourable
legal opinions from lawyers appointed by the Lender on such matters concerning
the laws of the Approved Flag State and such other relevant jurisdictions as
the Agent may require. 

16                                  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.

 86
 

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.

 87
 

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:                              AEGEAN BALTIC BANK S.A. 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.

[                  
], 20[  ]

1                                         This
Certificate relates to a Loan Agreement dated [·]
2006 (the “Agreement”) and made between (1)
Danaos Corporation (the “Borrower”),
(2) the banks and financial institutions listed in Schedule 1 as Lenders, (3)
HSH Nordbank AG as Swap Bank, (4) HSH Nordbank AG and Aegean Baltic Bank S.A.
as Arrangers, (5) Aegean Baltic Bank S.A. as Agent and Security Trustee for
revolving credit and term loan 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
Arrangers, the Borrower, each Security Party, the Security Trustee and each
Lender;

“Transferor” means [full name] of
[lending office];

“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.

 88
 

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 of the Arrangers or any Lender
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, the Arrangers or any Lender 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.

 89
 

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 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

 

[Name of Agent]

By:

Date:

 90
 

Administrative Details of Transferee

Name of Transferee:

Lending Office:

Contact Person

(Loan Administration
Department):

Telephone:

Telex:

Fax:

Contact Person

(Credit Administration
Department):

Telephone:

Telex:

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.

  

 91
 

SCHEDULE
5

DESIGNATION
NOTICE

To:                              Aegean
Baltic Bank S.A.

28 Diligianni Street

145 62 Kifissia

Greece

[·]

Dear Sirs

Loan Agreement dated [·] 2006
made between (inter alia) (i) ourselves as Borrower, (ii) the Lenders, (iii)
yourselves as Agent and Security Trustee and (iv) HSH Nordbank AG as Swap Bank
in respect of revolving credit and term loan facilities of up to US$700,000,000
in aggregate (the “Loan Agreement”)

We refer to:

1                                         the
Loan Agreement;

2                                         the
Master Agreement dated [·] made between
ourselves and HSH Nordbank AG; and

3                                         a
Confirmation delivered pursuant to the said Master Agreement dated [·]
and addressed by HSH Nordbank AG 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

  

 92
 

SCHEDULE
6

FORM
OF COMPLIANCE CERTIFICATE 

To:                              Aegean
Baltic Bank S.A.

28 Diligianni Street

145 62 Kifissia

Greece

 [·]
200[·]

Dear Sirs,

We refer to a loan agreement
[·] 2006 (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 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 $[·] and the Book Net
Worth is $[·]. 

This certificate shall be
governed by, and construed in accordance with, English law.

	
   

  	
   

  
	
  [·]

  
	
  Chief Financial Officer of

  
	
  Danaos Corporation

  

 93
 

EXECUTION
PAGE

	
  THE BORROWER

  	
   

  
	
   

  	
   

  
	
  SIGNED by John Coustas

  	
  ) /s/ John Coustas

  
	
  for and on behalf of

  	
  )

  
	
  DANAOS CORPORATION

  	
  )

  
	
   

  	
   

  
	
   

  	
   

  
	
  THE LENDERS

  	
   

  
	
   

  	
   

  
	
  SIGNED by D. Daispynes
  Althinides

  	
  ) /s/ D. Daispynes Althinides

  
	
  for and on behalf of

  	
  )

  
	
  AEGEAN BALTIC BANK S.A.

  	
  )

  
	
   

  	
   

  
	
   

  	
   

  
	
  SIGNED by G. Paleokrasas

  	
  ) /s/ G. Paleokrasas

  
	
  for and on behalf of

  	
  )

  
	
  HSH NORDBANK AG

  	
  )

  
	
   

  	
   

  
	
   

  	
   

  
	
  SWAP BANK

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  SIGNED by G. Paleokrasas

  	
  ) /s/ G. Paleokrasas

  
	
  for and on behalf of

  	
  )

  
	
  HSH NORDBANK AG

  	
  )

  
	
   

  	
   

  
	
   

  	
   

  
	
  THE ARRANGERS

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  SIGNED by D. Daispynes
  Althinides

  	
  ) /s/ D. Daispynes Althinides

  
	
  for and on behalf of

  	
  )

  
	
  AEGEAN BALTIC BANK S.A.

  	
  )

  

 

 94
 

 

	
  SIGNED by G. Paleokrasas

  	
  ) /s/ G. Paleokrasas

  
	
  for and on behalf of

  	
  )

  
	
  HSH NORDBANK AG

  	
  )

  
	
   

  	
   

  
	
   

  	
   

  
	
  THE AGENT AND THE SECURITY TRUSTEE

  
	
   

  	
   

  
	
   

  	
   

  
	
  SIGNED by D. Daispynes
  Althinides

  	
  ) /s/ D. Daispynes Althinides

  
	
  for and on behalf of

  	
  )

  
	
  AEGEAN BALTIC BANK S.A.

  	
  )

  
	
   

  	
   

  
	
   

  	
   

  
	
  Witness to the above

  	
  )

  
	
  signatures:

  	
  )

  
	
   

  	
   

  
	
  Name: Hatzmichalis

  	
   /s/ illegible

  
	
   

  	
   

  
	
  Address: 2 Defteras Merarchias

  	
   

  
	
                 Piraeus
  18536 Greece

  	
   

  

 

 95

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