Document:

Exhibit
4.16

 

	
  Private & Confidential

  	
   

  	
  Execution version

  

 

Dated                         July 2008

 

	
   

  	
  DANAOS CORPORATION

  	
  (1)

  
	
   

  	
  as Borrower

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  FORTIS BANK (NEDERLAND) N.V.

  	
  (2)

  
	
   

  	
  as Lead Arranger

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  LLOYDS TSB BANK PLC and

  	
  (3)

  
	
   

  	
  NATIONAL BANK OF GREECE S.A.

  	
   

  
	
   

  	
  as Co-Arrangers

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Provided by

  	
   

  
	
   

  	
  THE BANKS AND FINANCIAL INSTITUTIONS

  	
  (4)

  
	
   

  	
  whose names are set out in
  Schedule 1 as Lenders

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  FORTIS BANK (NEDERLAND) N.V.

  	
  (5)

  
	
   

  	
  as Agent

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  FORTIS BANK (NEDERLAND) N.V.

  	
  (6)

  
	
   

  	
  as Security Trustee

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  FORTIS BANK (NEDERLAND) N.V., LLOYDS TSB

  	
  (7)

  
	
   

  	
  BANK PLC and NATIONAL BANK OF GREECE S.A.

  	
   

  
	
   

  	
  as Swap Banks

  	
   

  

 

 

LOAN
AGREEMENT

for
a $253,200,000 Loan relating to the

m.v. “YM Seattle”, m.v. “YM Vancouver”,

m.v. “YM Colombo” and m.v. “YM

Singapore”

 

 

 

 

 

Contents

 

	
  Clause

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  1

  	
  Purpose
  and definitions

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  
	
  2

  	
  The
  Commitments

  	
   

  	
  17

  
	
   

  	
   

  	
   

  	
   

  
	
  3

  	
  Interest
  and interest periods

  	
   

  	
  18

  
	
   

  	
   

  	
   

  	
   

  
	
  4

  	
  Repayment
  and prepayment

  	
   

  	
  21

  
	
   

  	
   

  	
   

  	
   

  
	
  5

  	
  Commitment
  commission, fees and expenses

  	
   

  	
  25

  
	
   

  	
   

  	
   

  	
   

  
	
  6

  	
  Payments
  and taxes; accounts and calculations

  	
   

  	
  26

  
	
   

  	
   

  	
   

  	
   

  
	
  7

  	
  Representations
  and warranties

  	
   

  	
  29

  
	
   

  	
   

  	
   

  	
   

  
	
  8

  	
  Undertakings

  	
   

  	
  32

  
	
   

  	
   

  	
   

  	
   

  
	
  9

  	
  Conditions

  	
   

  	
  43

  
	
   

  	
   

  	
   

  	
   

  
	
  10

  	
  Events
  of Default

  	
   

  	
  44

  
	
   

  	
   

  	
   

  	
   

  
	
  11

  	
  Indemnities

  	
   

  	
  49

  
	
   

  	
   

  	
   

  	
   

  
	
  12

  	
  Unlawfulness
  and increased costs

  	
   

  	
  51

  
	
   

  	
   

  	
   

  	
   

  
	
  13

  	
  Security
  and set off

  	
   

  	
  54

  
	
   

  	
   

  	
   

  	
   

  
	
  14

  	
  Assignment,
  transfer and lending office

  	
   

  	
  55

  
	
   

  	
   

  	
   

  	
   

  
	
  15

  	
  Agent
  and Security Trustee

  	
   

  	
  58

  
	
   

  	
   

  	
   

  	
   

  
	
  16

  	
  Notices
  and other matters

  	
   

  	
  58

  
	
   

  	
   

  	
   

  	
   

  
	
  17

  	
  Governing
  law and jurisdiction

  	
   

  	
  61

  
	
   

  	
   

  	
   

  	
   

  
	
  Schedule 1

  	
   

  	
  63

  
	
   

  	
   

  	
   

  
	
  Initial
  Commitments

  	
   

  	
  63

  
	
   

  	
   

  	
   

  
	
  Schedule 2
  Form of Compliance Certificate

  	
   

  	
  66

  
	
   

  	
   

  	
   

  
	
  Schedule 3
  Form of Drawdown Notice

  	
   

  	
  68

  
	
   

  	
   

  	
   

  
	
  Schedule 4
  Documents and evidence required as conditions precedent

  	
   

  	
  70

  
	
   

  	
   

  	
   

  
	
  Schedule 5
  Form of Substitution Certificate

  	
   

  	
  75

  
	
   

  	
   

  	
   

  
	
  Schedule 6
  Form of Notification of Change in Lending Office and/or Account for
  Payments

  	
   

  	
  81

  
	
   

  	
   

  	
   

  
	
  Schedule 7
  Mandatory Costs

  	
   

  	
  82

  

 

 

THIS AGREEMENT is dated
                        
July 2008 and made BETWEEN:

 

(1)        DANAOS CORPORATION as Borrower;

 

(2)        FORTIS BANK (NEDERLAND) N.V. as Lead Arranger;

 

(3)        LLOYDS TSB BANK PLC and NATIONAL BANK OF GREECE
S.A. as Co-Arrangers;

 

(4)        THE BANKS AND FINANCIAL
INSTITUTIONS whose names are set out in Schedule 1 as Lenders;

 

(5)        FORTIS BANK (NEDERLAND) N.V. as Agent;

 

(6)        FORTIS BANK (NEDERLAND) N.V. as Security Trustee; and

 

(7)        FORTIS BANK (NEDERLAND) N.V., LLOYDS TSB BANK PLC and NATIONAL
BANK OF GREECE S.A. as Swap Banks.

 

IT IS AGREED as follows:

 

   1       Purpose and definitions

 

1.1       Purpose

 

This Agreement
sets out the terms and conditions upon and subject to which the Lenders agree
to make available to the Borrower a loan of up to an aggregate amount of
$253,200,000 to be for the purpose of re-financing existing debt on the Ships.

 

1.2       Definitions

 

In this
Agreement, unless the context otherwise requires:

 

Accounts means the Borrower
Account and Owner Earnings Accounts;

 

Account Bank means Fortis
Bank (Nederland) N.V. acting through its offices at Coolsingel 93, P.O. Box
749, 3000 AS Rotterdam, The Netherlands and includes any other bank designated
in writing by the Agent (at the request of the Borrower and acting on the
instructions of the Majority Lenders) to be an Account Bank for the purposes of the Security Documents;

 

Account Pledge means the
account pledge executed, or as the context may require, to be executed by each
Owner in favour of the Security Trustee in respect of the Owner Earnings
Accounts in the agreed form;

 

Accounting Principles means US GAAP or International Accounting
Standards or such other recognised International Accounting Standards which the
Borrower may choose to apply and 

 

1

 

which are
agreed by the Lenders with their prior written consent (not to be unreasonably
withheld), consistently applied;

 

Advance means the
principal amount drawn down or requested to be drawn down by the Borrower under
the Agreement;

 

Affiliate means, in
relation to any person, a Subsidiary of that person or a Holding Company of
that person or any other Subsidiary of that Holding Company.

 

Agent means Fortis
Bank (Nederland) N.V. acting through its offices at Coolsingel 93, P.O. Box
749, 3000 AS Rotterdam, The Netherlands (or of such other address as may last
have been notified to the other parties to this Agreement pursuant to clause
16.1.3) and its successor in title or such other person as may be appointed
Agent for the Finance Parties pursuant to the Trust and Agency Agreement;

 

Approved Brokers
means Braemar Seascope, Howe Robinson, Simpson Spence &
Young, Clarkson Valuations Limited and Maersk Broker and Approved Broker means any one of them;

 

Audited
Financial Statements means the audited annual consolidated
financial statements of the Borrower’s Group prepared in accordance with the
provisions of clause 8.1.6 in the English language and in compliance with all
applicable SEC requirements and audited by the Auditors;

 

Auditors means such
internationally recognised and reputable firm of accountants appointed by the
Borrower;

 

Banking Day means a day
(other than Saturday or Sunday) on which dealings in deposits in Dollars are
carried on in the London Interbank Eurocurrency Market and on which banks are
open for business in Amsterdam, Athens, London and New York City;

 

Basel 2 Accord means the International Convergence of
Capital Measurement and Capital Standards, a Revised Framework” published by
the Basel Committee on Banking Supervision in June 2004 in the form
existing on the date of this Agreement or any other law or regulation which
implements Basel 2 (whether such implementation, application or compliance is
by a government, regulator, Finance Party or any of their Affiliates);

 

Borrower means Danaos
Corporation, a corporation listed on the New York Stock Exchange and
domesticated in and existing under the laws of the Marshall Islands, whose
registered address is Trust Company Complex, Ajeltake Island, Ajeltake Road,
Majuro, Marshall Islands MH96960;

 

Borrower Account means the
account in the name of the Borrower with account number 240  757  572 and IBAN NL53 FTSB 0240 7575 72 designated “Danaos
Corporation”, being an account with the Account Bank and includes any
sub-account thereof or time deposit account 

 

2

 

constituted by
moneys originally held on such Account and any other account designated by the
Agent to be a Borrower Account for the purposes of this Agreement;

 

Borrower’s Group means the Borrower and its Subsidiaries;

 

Casualty Amount means
$1,500,000 (or the equivalent in any other currency);

 

Charters means

 

(i)         in respect of the m.v. “YM Seattle”, the time charter dated 18 August 2005 and made between Seacarriers
Services Inc. and the Charterer;

 

(ii)        in respect of the m.v. “YM Vancouver”, the time charter dated 18 August 2005
and made between Seacarriers Lines Inc. and the Charterer;

 

(iii)       in respect of the m.v. “YM Colombo”, the time charter dated 30 March 2005
and made between Auckland Marine Inc. and the Charterer;

 

(iv)       in respect of the m.v. “YM Singapore”, the time charter dated 30 March 2005
and made between Wellington Marine Inc. and the Charterer,

 

Provided
that if one of the charters has been replaced in accordance with clause 4.2.5
of the Security Deed, this definition shall include such Replacement Charter
but shall not include such replaced charter,

 

Charterer means Yang
Ming (UK) Ltd, a company incorporated in England with number 3311986 and registered address at Second Floor, Valentines House, 51-69
Ilford Hill, Ilford IG1 2DG, United Kingdom;

 

Charter Notice
and Acknowledgement means a notice given by an Owner and the acknowledgement of
that notice of the assignment to be given by the relevant charterer in respect
of any Charter of a Ship in each case, substantially in the form scheduled to
the relevant Security Deed;

 

Classification
Society means Det Norske Veritas or such other classification
society which the Agent shall (acting on the instructions of all Lenders), at
the request of an Owner under the Guarantee, have agreed in writing shall be
treated as the Classification Society for the purposes of the Security
Documents, and that the Agent shall not unreasonably withhold its consent where
the proposed classification society is a member of the International
Association of Classification Societies;

 

Co-Arrangers means:

 

3

 

(1)        Lloyds TSB Bank
plc, a company incorporated in England with number 2065 and registered office at 25 Gresham Street, London EC2V 7HN,
United Kingdom; and

 

(2)        National Bank
of Greece S.A., a company incorporated in Greece, acting through its office at
2 Bouboulinas Street & Akti Miaouli, 185 38 Piraeus, Greece;

 

Commitment in relation to
a Lender at any relevant time means, subject to clause 2.1.2, the amount set
opposite its name in schedule 1 and/or, in the case of a New Lender, the amount
specified in the relevant Substitution Certificate, as reduced, in each case,
by any relevant term of this Agreement and so that, if at such time the Total
Commitments have been reduced to zero, references to a Lender’s Commitment
shall be construed as a reference to that Lender’s Commitment immediately prior
to such reduction to zero and Commitments
means any or all of them;

 

Compliance
Certificate means each certificate received by the Agent from the
Borrower pursuant to clause 8.3.2 substantially in the form set out in Schedule
2 and duly signed by an authorised signatory of the Borrower;

 

Compulsory
Acquisition means the requisition for title or other compulsory
acquisition, requisition, appropriation, expropriation, deprivation, forfeiture
or confiscation for any reason of a Ship by any Government Entity or other
competent authority, whether de jure or de facto, but shall exclude requisition
for use or hire not involving requisition of title;

 

Contribution in relation to
a Lender, means the principal amount of the Loan owing to such Lender at any
relevant time;

 

Default means any
Event of Default or any event or circumstance which with the giving of notice
by the Agent or lapse of time or the satisfaction of any other condition (or
any combination thereof) would constitute an Event of Default;

 

Disposal
Reduction Amount has the meaning given to that term
in clause 4.3.4(a);

 

DOC means a
document of compliance issued to an Operator in accordance with rule 13 of
the ISM Code;

 

Dollars and $ mean the lawful currency of the United States of America
and in respect of all payments to be made under any of the Security Documents
mean funds which are for same day settlement in the New York Clearing House
Interbank Payments System (or such other U.S. dollar funds as may at the
relevant time be customary for the same day settlement of international banking
transactions denominated in U.S. dollars);

 

Drawdown Date means the
Banking Day falling within the Drawdown Period on which the single Advance
permitted by this Agreement is, or is to be, drawn down;

 

4

 

Drawdown Notice means a notice
substantially in the form set out in Schedule 3;

 

Drawdown Period means the
period from the date of this Agreement to whichever is the earliest of (i) the
date on which the Advance is drawn down, (ii) the date on which the
Commitments of all Lenders are reduced to zero pursuant to any term of this
Agreement and (iii) 31 July 2008;

 

Earnings means all
moneys whatsoever from time to time due or payable to the Owners during the
Security Period arising out of the use or operation of the Ships including (but
without limiting the generality of the foregoing) all freight, hire and passage
moneys, income arising out of pooling arrangements, compensation payable to
that Borrower in the event of requisition of the Ships for hire, remuneration
for salvage or towage services, demurrage and detention moneys and damages for
breach (or payments for variation or termination) of any Charter;

 

Encumbrance means any
mortgage, charge (whether fixed or floating), pledge, lien, hypothecation,
assignment, trust arrangement or security interest or other encumbrance of any
kind securing any obligation of any person or any type of preferential
arrangement (including without limitation title transfer and/or retention arrangements
having a similar effect);

 

Environmental
Approval means any consent, authorisation, licence or approval of any
governmental or public body or authorities or courts applicable to any Relevant
Ship or its operation or the carriage of cargo and/or passengers thereon and/or
the provision of goods and/or services on or from such Relevant Ship required
under any Environmental Laws;

 

Environmental
Claim means any and all enforcement, clean-up, removal or other
governmental or regulatory actions or orders instituted or completed pursuant
to any Environmental Laws or any Environmental Approval together with claims
made by any third party relating to damage, contribution, loss or injury,
resulting from any actual or threatened emission, spill, release or discharge
of a Pollutant from any Relevant Ship;

 

Environmental
Laws means all national, international and state laws, rules,
regulations, treaties and conventions applicable to any Relevant Ship
pertaining to the pollution or protection of human health or the environment
including, without limitation, the carriage of Pollutants and actual or
threatened emissions, spills, releases or discharges of Pollutants;

 

Event of Default means any of
the events or circumstances described in clause 10.1;

 

Excluded Ship means a Ship in respect of which a Total Loss Reduction Date has occurred
and the Lenders’ Commitment has been reduced by the Disposal Reduction Amount
and the Loan has been repaid in an amount of the Disposal Reduction Amount;

 

Existing Lender has the meaning
ascribed to it in clause 14.3.1;

 

5

 

Final Repayment
Date means the earlier of (a) the tenth (10th) anniversary
of the Drawdown Date and (b) 31 July 2018;

 

Finance Parties means each of
the Lenders, the Agent, the Security Trustee, the Lead Arranger, each
Co-Arranger and, if a Qualifying Swap has been been entered into, each Swap
Bank;

 

Flag State means Liberia
or such other state or territory designated in writing by the Agent (acting on
instructions of all of the Lenders), at the request of an Owner as being the
Flag State of a Ship for the purposes of the Security Documents;

 

Government
Entity means and includes (whether having a distinct legal
personality or not) any national or local government authority, board,
commission, department, division, organ, instrumentality, court or agency and
any association, organisation or institution of which any of the foregoing is a
member or to whose jurisdiction any of the foregoing is subject or in whose
activities any of the foregoing is a participant;

 

Guarantee means the
guarantee executed or to be executed by each Owner in favour of the Security
Trustee in respect of the obligations of the Borrower under this Agreement and
the other Security Documents;

 

Holding Company means, in relation
to a company or corporation, any other company or corporation in respect of
which it is a Subsidiary.

 

Indebtedness means any
obligation for the payment or repayment of money, whether as principal or as
surety and whether present or future, actual or contingent;

 

Insurances means all
policies and contracts of insurance (which expression includes all entries of
the Ships in a protection and indemnity or war risks association) which are
from time to time during the Security Period in place or taken out or entered
into (or, as the context may permit, which are required to be in place or taken
out or entered into) by or for the benefit of the Borrower and/or the Owners
(whether in the sole name of the Borrower or an Owner or in the joint names of
the Borrower or the Owners and any other person) in respect of the Ships or
otherwise howsoever in connection with the Ships and all benefits thereof
(including claims of whatsoever nature and return of premiums);

 

Interest Payment
Date means (subject to clause 6.3) the last day of an Interest
Period and, where any Interest Period exceeds three (3) months, the date
or dates during that Interest Period falling at consecutive three (3) month
intervals after the first day of that Interest Period;

 

Interest Period means each
period for the calculation of interest determined in accordance with clause 3.2
(and subject to clause 6.4);

 

6

 

Interest Rate
Swap Rate means the fixed rate of interest
payable by the Borrower under the Qualifying Swaps;

 

ISM Code means the
International Management Code for the Safe Operation of Ships and for Pollution
Prevention constituted pursuant to Resolution A. 741 (18) of the International
Maritime Organisation and incorporated into the Safety of Life at Sea
Convention and includes any amendments or extensions thereto and any regulation
issued pursuant thereto;

 

ISPS Code means the
International Ship and Port Security Code of the International Maritime
Organisation and includes any amendments or extensions thereto and any
regulation issued pursuant thereto;

 

Lead Arranger means Fortis
Bank (Nederland) N.V. acting through its offices at Coolsingel 93, P.O. Box
749, 3000 AS Rotterdam, The Netherlands and includes its successors in title;

 

Lenders means
collectively the banks and financial institutions whose names and addresses are
listed in schedule 1 and includes their respective successors in title and New Lenders and Lender
means any one of them individually;

 

Lending Office has the
meaning referred to in clause 14.8;

 

LIBOR means, with
respect to any LIBOR borrowing for any Interest Period:

 

(a)        the rate for deposits
of Dollars for a period equivalent to such period at or around 11:00 a.m.
on the Quotation Date for such period as displayed on Reuters page LIBOR01
(British Bankers’ Association Interest Settlement Rates) (or such other page as
may replace such page LIBOR01 on such system or on any other system of the
information vendor for the time being designated by the British Bankers’
Association to calculate the BBA Interest Settlement Rates (as defined in the
British Bankers’ Association’s Recommended Terms and Conditions applicable at
the relevant time) for Dollars); or

 

(b)        if on such date
no such rate is displayed, LIBOR for such period shall be the rate (rounded
upward if necessary to one sixteenth (1/16th) of one per cent) quoted to the
Agent by the Reference Bank at the request of the Agent as the Reference Bank’s
offered rate for deposits in Dollars in an amount comparable with the amount in
relation to which LIBOR is to be determined and for a period equivalent to such
period to prime banks in the London Interbank Market at or about 11:00 a.m.
on the Quotation Date for such period;

 

Loan means the
aggregate principal amount owing by the Borrower to the Lenders under this
Agreement at any relevant time;

 

7

 

London Banking
Day means a day on which dealings in deposits in Dollars are
carried on in the London Interbank Market and which is a day (other than a
Saturday or a Sunday) on which banks are open for business in London for the
transfer of Dollar funds;

 

Loss Payable
Clause has the meaning given thereto in the Security Deed;

 

Major Casualty means any casualty the claim in respect of which exceeds the Casualty
Amount (or the equivalent in any other currency) inclusive of any deductible;

 

Majority Lenders means (i) the
Lenders, the aggregate of whose Contributions at any relevant time exceed sixty
six and two thirds per cent. (662/3%) of the
Contributions of all the Lenders or (ii) prior to the making of the
Advance under this Agreement, the aggregate of whose Commitments at any
relevant time exceed sixty six and two thirds per cent. (662/3%) of the Commitments of all of the Lenders;

 

Management
Agreements means:

 

(i)         in respect of the m.v. “YM Seattle”, the management
agreement dated 5 September 2007 made between Seacarriers Services Inc.
and the Manager;

 

(ii)        in respect of the m.v. “YM Vancouver”, the management agreement dated
27 November 2007 made between Seacarriers Lines Inc. and the Manager;

 

(iii)       in respect of the m.v. “YM Colombo”, the management agreement dated 12 March 2007
made between Auckland Marine Inc. and the Manager;

 

(iv)       in respect of the m.v. “YM Singapore”, the management agreement dated 5
September 2007 made between Wellington Marine Inc. and the Manager,

 

(each such
agreement incorporating the terms of an amended and restated management
agreement dated 18 September 2006 and made between the Borrower and the
Manager)

 

and any
replacement management agreement entered or (as the context may require) to be
entered into by the Owner with a Manager on terms previously approved in
writing by the Agent providing, inter alia, for the commercial and/or technical
management of the Ships by a Manager;

 

Manager means Danaos
Shipping Co. Ltd. of 14 Akti Kondyli, 185 45 Piraeus, Greece or such other ship
management company appointed as commercial and/or technical manager of the
Ships with the prior written consent of the Majority Lenders (such consent not
to be unreasonably withheld);

 

8

 

Manager’s
Undertaking means an agreement entered or, as the context may require,
to be entered into between the Manager under a Management Agreement and the
Security Trustee in such form as the Security Trustee may approve, acting
reasonably;

 

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

 

Margin for each
Interest Period shall be zero point seven five per cent (0.75%) per annum;

 

Market Value
Adjusted Net Worth has the meaning given to that term
in clause 8.3.3;

 

Market Value
Adjusted Total Assets has the meaning
given to that term in clause 8.3.3;

 

Master Agreement means each
agreement of that name in the form of either the 1992 or the 2002 Multicurrency
— Cross Border Master Agreement published by the International Swaps and Derivatives Association entered into or to be entered into
between the Borrower and a Swaps Bank;

 

Material Subsidiary at any time,
means a Subsidiary of the Borrower whose revenues or assets represent not less
than five per cent. (5%) of the consolidated revenues or assets (as the case
may be) of the Borrower and its Subsidiaries;

 

Mortgages means, in
relation to each Ship, the first priority or first preferred mortgage
appropriate for the applicable Flag State executed or (as the context may
require) to be executed by the relevant Owner in favour of the Security Trustee
in such form as may be required by the Security Trustee (acting on the
instructions of the Majority Lenders);

 

New Lender has the
meaning ascribed to it in clause 14.3;

 

Operator means any
person who is from time to time during the Security Period concerned in the
operation of a Ship and falls within the definition of “Company” set out in rule 1.1.2
of the ISM Code;

 

Original
Accounts means the audited consolidated financial statements of the
Borrower’s Group for the year ended 31 December 2007;

 

Owner means:

 

(v)        in respect of the m.v. “YM Seattle” (or, as contemplated in clause 4.3,
a Replacement Ship), Seacarriers Services Inc., a corporation incorporated and
existing under the laws of Liberia and with its registered office at 80 Broad
Street, Monrovia, Liberia, and any Liberian successor corporation by Merger;

 

9

 

(vi)      in respect of the m.v. “YM
Vancouver” (or, as contemplated in clause 4.3, a Replacement Ship), Seacarriers
Lines Inc., a corporation incorporated and existing under the laws of Liberia
and with its registered office at 80 Broad Street, Monrovia, Liberia, and any
Liberian successor corporation by Merger;

 

(vii)     in respect of the m.v. “YM
Colombo” (or, as contemplated in clause 4.3, a Replacement Ship), Auckland
Marine Inc., a corporation incorporated and existing under the laws of Liberia
and with its registered office at 80 Broad Street, Monrovia, Liberia, and any
Liberian successor corporation by Merger; and

 

(viii)    in respect of the m.v. “YM
Singapore” (or, as contemplated in clause 4.3, a Replacement Ship), Wellington
Marine Inc., a corporation incorporated and existing under the laws of Liberia
and with its registered office at 80 Broad Street, Monrovia, Liberia, and any
Liberian successor corporation by Merger,

 

and together the “Owners”

 

Owner Earnings
Accounts means the accounts at the Account Bank in the name of the
Owners, being:

 

(i)         in respect of Seacarriers Services Inc., account number 24.07.63.769 with IBAN NL59 FTSB 0240 7637 69 designated “Seacarriers Services Inc.”;

 

(ii)        in respect of Seacarriers Lines Inc., account number 24.07.63.777  with
IBAN NL37 FTSB 0240 7637 77 designated “Seacarriers Lines Inc.”;

 

(iii)       in respect of Auckland Marine Inc., account number 24.07.63.742 with IBAN NL12
FTSB 0240 7637 42 designated “Auckland Marine Inc.”;
and

 

(vi)      in respect of Wellington Marine Inc., account number 24.07.63.750  with
IBAN NL87 FTSB 0240 7637 50 designated “Wellington
Marine Inc.”,

 

each being a
Dollar account with the Account Bank to which all Earnings are to be paid and
includes any sub-account thereof or time deposit account constituted by moneys
originally held on such Owner Earnings Account and any other account designated
by the Agent to be an Owner Earnings Account for the purposes of this
Agreement;

 

Permitted
Encumbrances means (a) any Encumbrance created pursuant to the
Security Documents and (b) Permitted Liens;

 

Permitted Liens means any lien
on a Ship for master’s, officer’s or crew’s wages outstanding in the ordinary
course of trading and in any event not more than thirty (30) days overdue, any
lien for salvage and any ship repairer’s or outfitter’s possessory lien for a
sum not (except with the 

 

10

 

prior written
consent of the Agent, acting on the instructions of the Majority Lenders)
exceeding the Casualty Amount;

 

Pollutant means and
includes pollutants, contaminants, toxic substances, oil as defined in the
United States Oil Pollution Act of 1990 and all hazardous substances as defined
in the United States Comprehensive Environmental Response, Compensation and
Liability Act 1980;

 

Qualifying Swap  means
a swap transaction entered into pursuant to a Master Agreement between the
Borrower and a Swap Banks in relation to a portion of the Borrower’s liability
for interest under this Agreement;

 

Qualifying Swaps Period means the period from the date on which the swap
transaction contemplated by a Qualifying Swap takes effect until the date on
which that swap transaction is scheduled to expire;

 

Quotation Date means in relation to any period for which an interest rate is to be determined
under this Agreement, the first day of the relevant
period or, if such day is not a Banking Day, the immediately preceding Banking
Day;

 

Reference Banks means the principal London offices of The
Royal Bank of Scotland plc, Bank of Scotland plc and HSBC Bank plc or such
other banks as may be appointed by the Agent in consultation with the Borrower;

 

Registry means such
registrar, commissioner or representative of the relevant Flag State who is
duly authorised and empowered to register the Ships, the relevant Owner’s title
to each Ship and the Mortgages under the laws and the flag of such Flag State;

 

Relevant
Jurisdiction means any jurisdiction in which or where any Security Party
is incorporated, resident, domiciled, has a permanent establishment, carries
on, or has a place of business or is otherwise effectively connected or where a
Ship is registered;

 

Relevant Person means the
Borrower, the Security Parties and any company which is a subsidiary of the
Borrower or a Security Party but excluding any company which is dormant or the
value of whose gross assets is $50,000 or less;

 

Relevant Ship means the
Ships and any other vessel from time to time (whether before or after the date
of this Agreement) owned, managed or crewed by, or chartered to any Security
Party;

 

Repayment Dates means, subject
to clause 6.3, each of the sixteen (16) dates falling at six (6) monthly
intervals commencing the date falling twenty-four (24) months after the
Drawdown Date with the last such date falling on the Final Repayment Date;

 

Replacement Charter means a charter which replaces a Charter in
accordance with clause 4.2.5 of the Security Deed;

 

11

 

Replacement Conditions means:

 

(A)                   the value of
the Replacement Ship (calculated in accordance with clause 8.2.2 and with
reference to the intended date of acquisition) is equal to or greater than the
value of the ship which has suffered a Total Loss or has been sold (calculated
in accordance with clause 8.2.2 and with reference to the Banking Day before
the ship suffered or is deemed to suffer a Total Loss or such date prior to
sale as the Agent may reasonably determine); and

 

(B)                     receipt by the
Agent of the following:

 

(a)        a ship mortgage and deed of covenants executed by the Owner whose Ship
has been or is to be sold or become Total Loss in relation to the Replacement
Ship (the Replacement Ship Mortgage and Deed
of Covenants);

 

(b)        a legal opinion with respect to registration of the Replacement Ship and
the effectiveness of the Replacement Ship Mortgage and Deed of Covenants and
any other matters of the relevant Flag State;

 

(c)        a legal opinion with respect to matters of Liberian law in relation to
the execution of the documentation referred to in this definition by the
relevant Owner;

 

(d)        the equivalent documents and evidence as are set out in Schedule 4, part
1, paragraphs 2, 3 and 4 and Schedule 4, part 2, paragraphs 6, 9 and 10 with
respect to the Replacement Ship Mortgage and Deed of Covenants; and

 

(e)        all other documents and evidence from the Borrower, the relevant Owner
or otherwise which the Agent (acting on the instructions of the Lenders) or the
Security Trustee considers to be necessary to create effective security over
the Replacement Ship;

 

(C)                     the consent of
the Lenders to the replacement of the Ship which has
been or is to be sold or become Total Loss with the Replacement Ship, such
consent not to be unreasonably withheld.

 

Replacement Ship means a ship of
an equivalent type to the Ships as at the date hereof;

 

Replacement
Ship Mortgage and Deed of Covenants has the meaning
given to that term in the definition of Replacement Conditions;

 

Requisition Compensation means all sums
of money or other compensation from time to time payable during the Security
Period by reason of the Compulsory Acquisition of a Ship;

 

SEC means the
Securities and Exchange Commission of the U.S.A.;

 

12

 

Security Deed means the deed
executed or, as the context may require, to be executed by each Owner in favour
of the Security Trustee containing an assignment of, inter alia,
the Charters, the Earnings, the Insurances and Requisition Compensation of the
Ships;

 

Security Documents means this
Agreement, each Mortgage, the Security Deed, the Account Pledge, the Trust and
Agency Agreement, the Guarantee, each Charter Notice and Acknowledgement, any
Manager’s Undertaking, each Qualifying Swap, each Master Agreement, any
Replacement Ship Mortgage and Deed of Covenants and any other documents as may
have been or shall from time to time after the date of this Agreement be
executed to guarantee and/or secure all or any part of the Loan, interest
thereon and other moneys from time to time owing by the Borrower pursuant to
this Agreement (whether or not any such document also secures moneys from time
to time owing pursuant to any other document or agreement);

 

Security Party means each of
the Borrower, each Owner and any other person who may at any time be a party to
any of the Security Documents (other than the Finance Parties);

 

Security Period means the
period commencing on the date of this Agreement and terminating upon discharge
of the security created by the Security Documents following payment of all
moneys payable thereunder;

 

Security Requirement means the amount
in Dollars (as certified by the Agent whose certificate shall, in the absence
of manifest error, be conclusive and binding on the Borrower, the Owners and
the Finance Parties) which is (at all times) one hundred and twenty-five per
cent (125%) of the Loan;

 

Security Trustee means Fortis
Bank (Nederland) N.V. acting through its offices at Coolsingel 93, P.O. Box
749, 3000 AS Rotterdam, The Netherlands (or of such other address as may last
have been notified to the other parties in this Agreement pursuant to clause
16.1.3) and its successor in title or such other person as may be appointed
security trustee for the Finance Parties pursuant to the Trust and Agency
Agreement;

 

Security Value has the meaning given to that term in clause 8.2.2(e);

 

Ship means:

 

(i)                          the 4,253 TEU container ship built at Samsung Heavy
Industries Co., Ltd. known as the m.v. “YM Seattle” registered in the name of
Seacarriers Services Inc. under the laws and flag of Cyprus with official
number 9360910;

 

(ii)                       the 4,253 TEU container ship built at Samsung Heavy
Industries Co., Ltd. known as the m.v. “YM Vancouver” registered in the name of
Seacarriers Lines Inc. under the laws and flag of Cyprus with official number
9363364;

 

13

 

(iii)                    the 4,300 TEU container ship built at Hyundai Heavy
Industries Co., Ltd. known as the m.v. “YM Colombo” registered in the name of
Auckland Marine Inc. under the laws and flag of Liberia with official number 13289; and

 

(iv)                   the 4,300 TEU container ship built at Hyundai Heavy
Industries Co., Ltd. known as the m.v. “YM Singapore” registered in the name of
Wellington Marine Inc. under the laws and flag of Liberia with official number 13530,

 

Provided that if one of the above ships has been
replaced in accordance with clause 4.3, this definition shall not include that
ship and shall instead include the relevant Replacement Ship,

 

and together the “Ships”;

 

SMC in respect of
a Ship, means a safety management certificate issued in respect of that Ship in
accordance with rule 13 of the ISM Code;

 

Subsidiary of a person
means any company or entity directly or indirectly controlled by such person,
and for this purpose control means
either the ownership of more than fifty per cent. (50%) of the voting share
capital (or equivalent rights of ownership) of such company or entity or the
power to direct its policies and management, whether by contract or otherwise;

 

Substitution
Certificate means a certificate substantially in the terms of schedule 6
(or in such other form as the Lenders may approve or require);

 

Swap Bank means each of:

 

(a)        Fortis Bank
(Nederland) N.V., acting through its offices at Coolsingel 93, P.O. Box
749, 3000 AS Rotterdam, The Netherlands;

 

(b)       Lloyds TSB Bank
plc, acting through its offices at 10 Gresham Street, London, EC2V 7EA, United
Kingdom; and

 

(c)        National Bank
of Greece S.A., acting through its offices at acting through its office at 2
Bouboulinas Street & Akti Miaouli, 185 38 Piraeus, Greece,

 

and Swap Banks means all of them.

 

Taxes includes all
present and future taxes, levies, imposts, duties, fees or charges of whatever
nature together with interest thereon and penalties in respect thereof and Taxation and Tax shall be
construed accordingly;

 

Termination Date means the last
day of the Drawdown Period;

 

Total
Commitments at any relevant time means the total of the Commitments of
all the Lenders at such time;

 

14

 

Total Loss means:

 

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

 

(b)                      the Compulsory Acquisition of
a Ship; or

 

(c)                       the hijacking, theft,
condemnation, capture, seizure, arrest, detention or confiscation of a Ship
(other than where the same amounts to the Compulsory Acquisition of a Ship) by
any Government Entity, or by persons acting or purporting to act on behalf of
any Government Entity, unless that Ship be released and restored to the
relevant Owner from such hijacking, theft, condemnation, capture, seizure,
arrest, detention or confiscation within thirty (30) days after the occurrence
thereof;

 

Transaction
Documents means, collectively, the Security Documents, the Management
Agreements and the Charters;

 

Trust and Agency
Agreement means the trust and agency agreement executed or, as the
context may require, to be executed between the Finance Parties and the
Borrower;

 

Unaudited
Financial Statements means the 6-monthly consolidated financial
statements of the Borrower’s Group prepared in accordance with the provisions
of clause 8.1.6 in the English language by the Borrower in respect of the
preceding 6-month period; and

 

US GAAP means, for the
purposes of the preparation and/or audit of the Audited Financial Statements
and the Unaudited Financial Statements, generally accepted accounting
principles and practices in the United States of America.

 

1.3        Headings

 

Clause headings and the table of contents
are inserted for convenience of reference only and shall be ignored in the
interpretation of this Agreement.

 

1.4        Construction of certain terms

 

In this Agreement, unless the context
otherwise requires:

 

1.4.1        references to any person includes such person’s successors in title and
permitted assignees and transferees;

 

1.4.2        references to clauses and schedules are to be construed as references
to clauses of, and schedules to, this Agreement and references to this
Agreement include its schedules;

 

1.4.3        references to (or to any specified provision of) this Agreement or any
other document shall be construed as references to this Agreement, that
provision or that document as in force for the 

 

15

 

time being and as amended in accordance
with terms thereof, or, as the case may be, with the agreement of the relevant
parties;

 

1.4.4        references to a regulation
include any present or future regulation, rule, directive, requirement, request
or guideline (whether or not having the force of law) of any agency, authority,
central bank or government department or any self-regulatory or other national
or supra-national authority;

 

1.4.5        references to a month mean
a period beginning in one calendar month and ending in the next calendar month
on the day numerically corresponding to the day of the calendar month on which
it started, provided that (a) if the period started on the last Banking
Day in a calendar month or if there is no such numerically corresponding day,
it shall end on the last Banking Day in such next calendar month, (b) if
such numerically corresponding day is not a Banking Day, the period shall end
on the next following Banking Day in the same calendar month but if there is no
such Banking Day it shall end on the preceding Banking Day and months and monthly shall be construed accordingly and (c) references
to a calendar shall be construed as references to the Gregorian calendar;

 

1.4.6        words importing the plural shall include the singular and vice versa;

 

1.4.7        references to a time of day are to London time;

 

1.4.8        references to a person shall be construed as references to an
individual, firm, company, corporation, unincorporated body of persons or any
Government Entity;

 

1.4.9        references to a guarantee
include references to an indemnity or other assurance against financial loss
including, without limitation, an obligation to purchase assets or services as
a consequence of a default by any other person to pay any Indebtedness and guaranteed shall be construed accordingly;

 

1.4.10      references to assets
include all or part of any business, undertaking, real property, personal
property, uncalled capital and any rights (whether actual or contingent,
present or future) to receive, or require delivery of, any of the foregoing;

 

1.4.11      references to a document being in the
agreed form shall mean a document in a form agreed by (and for the
purposes of identification initialled by and on behalf of) the Borrower, each
relevant Security Party which is a party thereto and the Agent; and

 

1.4.12      references to any enactment shall be deemed to include references to
such enactment as re-enacted, amended or extended.

 

16

 

1.5        Obligations several

 

The obligations of each Lender under this
Agreement are several; the failure of any Lender to perform such obligations
shall not relieve any other Finance Party or the Borrower of any of its
obligations or liabilities under this Agreement nor shall the Agent, the Lead
Arranger or either of the Co-Arrangers be responsible for the obligations of
any Lender (except for its own respective obligations, if any, as a Lender) nor
shall any Lender be responsible for the obligations of any other Lender under
this Agreement.

 

1.6        Interests several

 

Notwithstanding any other term of this
Agreement (but without prejudice to the provisions of this Agreement relating
to or requiring action by the Majority Lenders) the interests of the Finance
Parties are several and the amount due to the Agent, the Lead Arranger or
either of the Co-Arrangers (for its own account) and to each Lender is a
separate and independent debt.  Save as
set forth in the Trust and Agency Agreement, the Agent, the Lead Arranger, each
Co-Arranger and each Lender shall have the right to protect and enforce its
rights arising out of this Agreement and it shall not be necessary for another
Finance Party to be joined as an additional party in any proceedings for this
purpose.

 

1.7        Third
Parties

 

No term of this
Agreement is enforceable under the Contracts (Rights of Third Parties) Act 1999
by a person who is not a party to it.

 

2        The Commitments

 

2.1        Amount

 

2.1.1       The Lenders, relying upon each
of the representations and warranties in clause 7 agree to lend to the Borrower
upon and subject to the terms of this Agreement the principal amount of their
respective Commitments.

 

2.1.2       On or about the date hereof,
each of the Ships shall be valued on a charter-free basis and on the basis of a
sale for prompt delivery for cash at arms length on normal commercial terms as
between a willing buyer and a willing seller in Dollars by two Approved Brokers
selected by, and at the cost of, the Borrower. 
The Fair Market Value shall
be the aggregate of the arithmetic average of the two valuations for each Ship.

 

(a)     If eighty per cent (80%) of
the Fair Market Value  is less than $253,200,000, the Total Commitments shall be
an amount equal to eighty per cent (80%) of the Fair Market Value and each
Lender’s Commitment shall be reduced pro rata. 
The Agent shall notify the Borrower of the reduced amount of each Lender’s
Commitment.

 

(b)     If eight per
cent (80%) of the Fair Market Value is equal to or greater than $253,200,000,
the Total Commitments shall be $253,200,000.

 

17

 

2.1.3        The obligation of each Lender
shall be to contribute that portion of the Advance which, as at the Drawdown
Date, its Commitment bears to the Commitments of all Lenders.

 

2.2        Single Advance

 

The loan facility referred to in clause 2.1
shall be available for drawing in a single Advance in an amount not exceeding
the Total Commitments, which may only be made on a Banking Day falling within
the Drawdown Period.

 

2.3        Drawdown

 

2.3.1        Subject to the terms and
conditions of this Agreement, the Advance shall be made available to the
Borrower following receipt by the Agent from the Borrower of a Drawdown Notice
not later than 10:00 a.m. on the third (3rd) Banking Day before the
proposed Drawdown Date.

 

2.3.2        A Drawdown Notice shall be
effective on actual receipt by the Agent and, once given, shall, subject as
provided in clause 3.5.1, be irrevocable.

 

2.4        Availability

 

Upon receipt of a Drawdown Notice complying
with the terms of this Agreement the Agent shall notify each Lender thereof and
of the date on which the Advance is to be made and subject to the terms of this
Agreement, each of the Lenders shall make available to the Agent its proportion
of the Advance for payment by the Agent in accordance with clause 6.2.

 

2.5        Application of proceeds

 

Without prejudice to the Borrower’s
obligations under clause 8.1.19, none of the Finance Parties shall have any
responsibility for the application of the proceeds of the Advance by the
Borrower.

 

3        Interest and interest periods

 

3.1        Interest rate

 

Interest on the Loan shall accrue from day to day
throughout the Security Period and be paid by the Borrower on in respect of
each Interest Period relating thereto on each Interest Payment Date for that
Interest Period at the rate per annum which is the aggregate of LIBOR,
Mandatory Costs and the Margin for that Interest Period in each case.

 

3.2        Determination of Interest Periods

 

The Borrower may (in relation to the first Interest
Period) in the Drawdown Notice or (in relation to each subsequent Interest
Period, save those periods to which clause 3.3 shall apply) by notice to be
received by the Agent not later than 10:00 am (London time) on the third (3rd)

 

18

 

Banking Date before the beginning of the applicable
Interest Period select a duration of one (1), three (3), six (6), nine (9) or
twelve (12) month(s) (or such shorter or longer period as may be approved
by the Agent) for such Interest Period. 
Unless otherwise selected each Interest Period shall have a duration of
three (3) months.  Each Interest
Period shall be subject as follows:

 

(a)     the first such Interest Period
shall commence on the Drawdown Date and shall (subject to clause 6.3) end on
expiry of the period selected by the Borrower pursuant to this clause 3.2 or on
the date falling three (3) months after the Drawdown Date in the absence
of selection;

 

(b)     each subsequent Interest
Period shall commence on the expiry of the immediately preceding Interest
Period; and

 

(c)     if any such Interest Period
would otherwise overrun any Repayment Date, in the case of the relevant Final
Repayment Date such Interest Period shall end on such Final Repayment Date and,
in the case of any other Repayment Date, the Loan shall be divided into two
parts, one part in an amount not less than the repayment instalment due on such
Repayment Date and having an Interest Period ending on such date and the other
part in an amount equal to the balance of the Loan having an Interest Period
ascertained in accordance with the other provisions of this clause 3.2.

 

3.3        Default interest

 

3.3.1        If the Borrower fails to pay
any sum (including, without limitation, any sum payable pursuant to this clause
3.3) on its due date for payment under any of the Security Documents, the
Borrower shall pay interest on such sum on demand from the due date up to the
date of actual payment (as well after as before judgment) at a rate determined
by the Agent pursuant to this clause 3.3. 
The period beginning on such due date and ending on such date of payment
shall be divided into successive periods of not more than three (3) months
as selected by the Agent (after consultation with the Lenders so far as
reasonably practicable in the circumstances) each of which (other than the
first, which shall commence on such due date) shall commence on the last day of
the preceding such period.

 

3.3.2        The rate of interest
applicable to each unpaid sum and for each such period shall be the aggregate
(as determined by the Agent under the preceding paragraph) of (a) two per
cent. (2%) per annum, (b) LIBOR for the relevant period, (c) the
Margin and (d) Mandatory Costs.

 

3.3.3        If the unpaid sum is an amount
of principal which shall have become due and payable, by reason of a
declaration by the Agent under clause 10.2.2 or a prepayment pursuant to
clauses 4.3, 8.2 or 12.1, prior to the next succeeding Interest Payment Date
relating thereto, the first period selected by the Agent shall end on such
Interest Payment Date and interest shall be payable on such

 

19

 

unpaid sum during such period at a rate of two per
cent. (2%) above the rate applicable thereto immediately before it shall have
become so due and payable.

 

3.3.4        Interest under this clause 3.3
shall be due and payable on the last day of each period determined by the Agent
pursuant to this clause 3.3 or, if earlier, on the date on which the sum in
respect of which such interest is accruing shall actually be paid.  If, for the reasons specified in this clause
3.5.1 the Agent is unable to determine a rate in accordance with the foregoing
provisions of this clause 3.3, each Lender shall promptly notify the Agent of
the cost of funds to such Lender and interest on any sum not paid on its due
date for payment shall be calculated for each Lender at a rate determined by
the Agent to be two per cent. (2%) per annum above the cost of funds to such
Lender.

 

3.4        Notification of Interest Periods and
interest rate

 

The Agent shall
notify the Borrower and the Lenders promptly of the duration of each Interest
Period or other period for the calculation of interest (or, as the case may be,
default interest) and of each rate of interest determined by it under this
clause 3.

 

3.5        Market disruption; non-availability

 

3.5.1        If and whenever, at any time
prior to the commencement of any Interest Period:

 

(a)     the Agent shall have
determined (which determination shall, in the absence of manifest error, be
conclusive), that adequate and fair means do not exist for ascertaining LIBOR
during such Interest Period; or

 

(b)     the Agent shall have received
notification from the Lenders with Contributions aggregating not less than
fifty per cent. (50%) of the Contributions of all the Lenders (or prior to the
first Drawdown Date, with Commitments aggregating not less than fifty per cent.
(50%) of the Commitments of all the Commercial Lenders) that deposits in
Dollars are not available to such Lenders in the ordinary course of business in
sufficient amounts to fund their Contributions for such Interest Period or that
LIBOR does not accurately reflect the cost to such Lenders of obtaining such
deposits,

 

the Agent shall forthwith give notice (a Determination Notice) thereof to the Borrower and to each of
the Lenders.  A Determination Notice
shall contain particulars of the relevant circumstances giving rise to its
issue.  After the giving of any
Determination Notice (and until the Agent notifies the Borrower that none of
the circumstances specified in this clause 3.5.1 continues to exist) the
undrawn amount of the Commitments of the Lenders shall only be borrowed (and
the Advance may only be requested) if a New Lender Basis has been agreed
pursuant to clause 3.5.2.

 

20

 

3.5.2        During the period of ten (10) days after any Determination Notice
has been given by the Agent under clause 3.5.1, each Lender that has notified
the Agent thereunder, shall certify to the Agent an alternative basis (Alternative Basis) for making available or, as the case may
be, maintaining its Contribution. The Alternative Basis may (without
limitation) include alternative interest periods, alternative currencies or
alternative rates of interest but shall include a margin above the cost of
funds to such Lender equivalent to the Margin for the relevant Interest Period.
The Agent shall calculate the arithmetic mean of the Alternative Bases provided
by the Lenders (rounded upwards, if not already such a multiple, to the nearest
whole multiple of one-sixteenth of one per cent.) (New Lender
Basis) and certify the same to the Borrower and each of the Lenders.
The New Lender Basis so certified shall be binding upon the Borrower and the
affected Lenders and shall take effect in accordance with its terms from the
date specified in the Determination Notice until such time as the Agent
notifies the Borrower that none of the circumstances specified in clause 3.5.1
continues to exist whereupon the normal interest rate fixing provisions for the
Loan shall apply.

 

4        Repayment and prepayment

 

4.1        Repayment

 

The Borrower shall repay the Loan as
follows:

 

4.1.1        by sixteen (16) equal instalments of eight million, six hundred and
twenty-seven thousand, three hundred and thirty-six Dollars ($8,627,336), one such instalment to be
repaid on each of the sixteen (16) consecutive Repayment Dates commencing the
date falling twenty-four months after the Drawdown Date; and

 

4.1.2        a final balloon payment of one hundred and fifteen million, one hundred
and sixty-two thousand, six hundred and twenty-four Dollars ($115,162,624) on
the Final Repayment Date.

 

4.2        Voluntary prepayment

 

The Borrower may prepay the Loan in whole
or part (being $500,000 or any larger sum which is an integral multiple of
$500,000) on the last day of any Interest Period, subject to the Borrower
giving the Agent at least fifteen (15) days’ prior notice in writing of its
intention to make any such prepayment. The amount of each prepayment shall be
regarded as being divided between the Lenders in the ratio that their
respective Contributions bear to the aggregate Contributions of all Lenders as
at the time of prepayment.  No prepayment
premium or penalty is due in respect of any prepayment under this clause 4.2.

 

21

 

4.3        Prepayment
on Total Loss or sale

 

4.3.1        Before the Advance is drawn

 

On a Ship being sold or becoming
a Total Loss before the Advance is drawn down, the obligations of the Lenders
to make available the Loan Facility set forth in clause 2.1 shall immediately cease and the
Lenders’ Commitments shall be reduced to zero on the Pre-Advance Disposal Reduction Date, unless
that Ship being sold or becoming a Total Loss is replaced with a Replacement
Ship and the Replacement Conditions have been met to the satisfaction of the
Agent by the Pre-Advance Disposal Reduction Date.

 

4.3.2        After
the Advance is drawn

 

If after the drawdown of the Advance, a Ship is sold
or becomes a Total Loss, the Borrower shall prepay to the Agent (for account of
the Lenders) the Disposal Reduction Amount on the Post-Advance Disposal Reduction Date, unless
that Ship being sold or becoming a Total Loss is replaced with a Replacement
Ship and the Replacement Conditions have been met to the satisfaction of the
Agent by the Post-Advance Disposal Reduction Date.

 

4.3.3        Notification

 

When the Agent
determines a Disposal Reduction Amount in accordance with this clause 4.3, it
shall promptly notify that amount to the Borrower.

 

4.3.4        Definitions

 

For the purposes of this clause 4.3:

 

(a)     Disposal Reduction Amount means the
Loan multiplied by the proportion which the Market Value of the Ship which has
been sold or become a Total Loss bears to the Market Value of all of the Ships
(excluding Excluded Ships) plus, if the Agent (acting on the instructions of
the Lenders) so elects, the Disposal Uplift Amount;

 

(b)    Disposal Uplift Amount
means, if the Post-Disposal Security Value  Ratio
is less than 1:1 or the Pre-Disposal Security Value  Ratio,
an amount which is necessary for the Post-Disposal Ratio to exceed the higher
of 1:1 and the Pre-Disposal Ratio;

 

(c)     Market Value means the value of a Ship or
Ships calculated in accordance with clause 8.2.2 and with reference to the date
on which the Total Loss or sale of a Ship has occurred;

 

(d)    Pre-Advance
Disposal Reduction Date means:

 

(i)         where a Ship has become a Total Loss, the earlier of:

 

(A)       the date a Total Loss
shall have been deemed to occur pursuant to 4.3.4(h);

 

22

 

(B)       the time of the
incident which the Agent considers may result in that Ship becoming a Total
Loss; and

 

(ii)        in the case of a sale,
the date on which a binding agreement has been entered into for the sale of
such Ship;

 

(e)     Post-Advance  Disposal
Reduction Date means:

 

(i)         where a Ship has become a
Total Loss, the earlier of:

 

(A)       the date falling one hundred
and twenty (120) days after that Ship becomes a Total Loss; and

 

(B)       the date on which insurance
proceeds or Requisition Compensation in respect of such Total Loss are received
by the relevant Owner (or the Security Trustee on behalf of the Lenders as
assignee of the assureds pursuant to the relevant Security Document); and

 

(ii)        where a Ship is sold, the date
upon which such sale is completed by the transfer of title to that Ship to the
purchaser in exchange for payment of the relevant purchase price;

 

(f)     Post-Disposal Security Value Ratio means the ratio which
the Security Value (calculated in accordance with clause 8.2.2(e) and on
the basis that the Ship is an
Excluded Ship) bears to the Security Requirement (calculated so as to include prepayment of the Disposal
Reduction Amount);

 

(g)    Pre-Disposal Security Value Ratio means
the ratio which the Security Value (calculated in accordance with clause 8.2.2(e) but
on the basis that the Ship is not
an Excluded Ship) bears to the Security Requirement (calculated so as to exclude prepayment of the Disposal
Reduction Amount); and

 

(h)    A Total Loss shall be deemed to have occurred:

 

(i)         in the case of an actual total
loss of a Ship on the actual date and at the time that Ship was lost or
destroyed or, if such date is not known, on the date on which that Ship was
last reported;

 

(ii)        in the case of a constructive
total loss of a Ship, upon the date and at the time notice of abandonment of
that Ship is given to the insurers of that Ship for the time being (provided a
claim for total loss is admitted by such insurers) or, if such insurers do not
forthwith admit such a claim, at the date and at the time at which either a
total loss is subsequently admitted by the insurers or a total loss is 

 

23

 

subsequently adjudged by a competent court of law or
arbitration tribunal to have occurred;

 

(iii)       in the case of a compromised
or arranged total loss, on the date upon which a binding agreement as to such
compromised or arranged total loss has been entered into by the insurers of a
Ship;

 

(iv)       in the case of Compulsory
Acquisition, on the date upon which the relevant requisition of title or other
compulsory acquisition occurs; and

 

(v)        in the case of hijacking,
theft, condemnation, capture, seizure, arrest, detention or confiscation of a
Ship (other than where the same amounts to Compulsory Acquisition of that Ship)
by any Government Entity, or by persons purporting to act on behalf of any
Government Entity, which deprives the applicable Borrower of the use of that
Ship for more than thirty days, upon the expiry of the period of thirty (30)
days after the date upon which the relevant hijacking, theft, condemnation,
capture, seizure, arrest, detention or confiscation occurred.

 

4.3.5        Insurance
proceeds

 

Any insurance moneys or Requisition Compensation or
proceeds of sale received by the Security Trustee or the Lenders in respect of such Total Loss
under the relevant Security Document or sale of a Ship shall (if and to the
extent necessary to ensure compliance with clause 4.3) be applied by the Agent
in or towards making any prepayment and paying any other moneys required under
clause 4.3 and provided no Default has occurred and is continuing the balance,
if any, shall be paid to the Borrower or as it may direct.

 

4.4        Amounts payable on prepayment

 

Any prepayment under this Agreement shall
be made together with: (a)  accrued interest on the amount to be prepaid
to the date of such prepayment, (b) any amount payable under clause 6.8 or
12.2 and (c) all other sums payable by the Borrower under this Agreement
or any of the other Security Documents including, without limitation, any
amounts payable under clause 11.

 

4.5        Notice of prepayment; reduction of
repayment instalments

 

Every notice of prepayment shall be
effective only on actual receipt by the Agent, shall be irrevocable, shall
specify the amount to be prepaid and shall oblige the Borrower to make such
prepayment on the date specified.  No
amount prepaid may be re-borrowed.  Any
amount prepaid pursuant to clause 4.2 shall be applied in reducing the
repayment instalments under clause 4.1 in the order of their due dates for
payment or as may be agreed from time to time between the Borrower and the
Lenders.  The Borrower may not cancel the
Commitments nor prepay the Loan or any part thereof save as expressly provided
in this Agreement.

 

24

 

5        Commitment commission, fees and expenses

 

5.1        Fees

 

The Borrower shall pay on the date hereof
to the Lead Arranger for itself and the Co-Arrangers $1,284,000 being an amount
equal to zero point five per cent (0.5%) of the Commitments at the date
hereof.  Such fees shall be payable by the
Borrower whether or not any of the Commitments of the Lenders are advanced.

 

5.2        Expenses

 

The Borrower shall pay to the Agent on a
full indemnity basis on demand:

 

5.2.1        all expenses (including legal, insurance, translation, printing and out
of pocket expenses and any taxes thereon) properly incurred by the Finance
Parties in connection with the negotiation, preparation, execution and, where
relevant, registration of the Security Documents (subject to any limit agreed
between the Agent and any counsel instructed by it and the Borrower) and of any
amendment or extension of, or the granting of any waiver or consent under, any
of the Security Documents; and

 

5.2.2        all expenses (including legal, translation, printing and out of pocket
expenses) properly incurred by the Finance Parties or any of them in connection
with, the enforcement or attempted enforcement of, or preservation or attempted
preservation of any rights under, any of the Security Documents, or otherwise
in respect of the moneys owing under any of the Security Documents,

 

together with interest at the rate referred
to in clause 3.3 from the date falling five (5) Banking Days following the
receipt by the Borrower of an invoice from the Agent with respect to those
expenses to the date of payment (as well after as before judgment).

 

5.3        Value Added Tax

 

All fees and expenses payable pursuant to
this clause 5 shall be paid together with value added tax or any similar tax
(if any) properly chargeable thereon. 
Any value added tax chargeable in respect of any services supplied by
the Finance Parties or any of them under this Agreement, the Trust and Agency
Agreement or any other Security Document shall, on delivery of the value added
tax invoice, be paid in addition to any sum agreed to be paid hereunder.

 

5.4        Stamp and other duties

 

The Borrower shall pay all stamp,
documentary, registration or other like duties or Taxes (including, but without
limitation, any duties or Taxes payable by, or assessed on, any of the Finance
Parties) imposed on or in connection with any of the Transaction Documents, the

 

25

 

Security Documents or the Loan and shall
indemnify each of the Finance Parties against any liability arising by reason
of any delay or omission by the Borrower to pay such duties or Taxes.

 

6        Payments and taxes; accounts and calculations

 

6.1        No set-off or counterclaim; distribution to
the Lenders

 

6.1.1        The Borrower acknowledges that
in performing their obligations under this Agreement the Lenders will be incurring
liabilities to third parties in relation to the funding of amounts to the
Borrower, such liabilities matching the liabilities of the Borrower to the
Lenders and that it is reasonable for the Lenders to be entitled to receive
payments from the Borrower gross on the due date in order that the Lenders are
put in a position to perform their matching obligations to the relevant third
parties.

 

6.1.2        Accordingly, all payments to
be made by the Borrower under any of the Security Documents shall be made in
full, without any set off or counterclaim whatsoever and, subject as provided
in clause 6.8, free and clear of any deductions or withholdings, in Dollars
(except for costs, charges or expenses which shall be paid in the currency in
which they are incurred) on the due date to the account of the Agent at such
bank in such place as the Agent may from time to time specify for this purpose,
save for payments in respect of a Qualifying Swap or a Master Agreement which
shall be made in accordance with the terms of those documents to the account of
the Swap Banks at such bank in such place as each Swap Bank may from time to
time specify in accordance with those documents.

 

6.1.3        Save where the Security
Documents provide for a payment to be made for the account of a particular
Finance Party, in which case the Agent shall distribute the relevant payment to
the Finance Party concerned, payments to be made by the Borrower under the
Security Documents in respect of amounts due under or in connection with the
Loan shall be for the account of all the Lenders and the Agent shall forthwith
distribute such payments in like funds as are received by the Agent to the
Lenders rateably in accordance with their Commitments or Contributions, as the
case may be).

 

6.2       Payment by the Lenders

 

All sums to be advanced by the Lenders to
the Borrower under this Agreement shall be remitted in Dollars on the Drawdown Date (or earlier) to the account of the Agent with ABN AMRO Bank N.V., New York Branch, SWIFT address ABNAUS33 for the account of Fortis Bank (Nederland) N.V., Rotterdam, SWIFT
address FTSBNL2R for further credit to account number 25.11.89.694 with reference “Danaos” or at such
other bank as the Agent may have notified to the Lenders and shall be paid by
the Agent on such date in like funds as are received by the Agent to the
account or accounts specified in the relevant Drawdown Notice.

 

26

 

6.3       Payment by the Borrower

 

All sums to be repaid by the Borrower to
the Lenders under this Agreement shall be remitted in Dollars on each of the Repayment Dates to the account of the Agent
(ABN AMRO Bank N.V., New York branch, SWIFT: ABNAUS33, Account Name: Fortis
Bank (Nederland) N.V., Rotterdam, SWIFT: FTSBNL2R, Reference: “For further
credit / Acc. 25.11.89.694 / Danaos Corporation”).

 

6.4       Non-Banking Days

 

When any payment under any of the Security
Documents would otherwise be due or an Interest Period would otherwise end on a
day which is not a Banking Day, the due date for payment or, as the case may
be, the applicable Interest Period shall be extended to the next following
Banking Day unless such Banking Day falls in the next calendar month in which
case payment shall be made or, as the case may be, the applicable Interest
Period shall end on the immediately preceding Banking Day.

 

6.5       Agent may assume receipt

 

Where any sum is to be paid under this
Agreement to the Agent for the account of another person, the Agent may assume
that the payment will be made when due and may (but shall not be obliged to)
make such sum available to the person so entitled.  If it proves to be the case that such payment
was not made to the Agent, then the person to whom such sum was so made
available shall on request refund such sum to the Agent together with interest
thereon sufficient to compensate the Agent for the cost of making available
such sum up to the date of such repayment and the person by whom such sum was
payable shall indemnify the Agent for any and all loss or expense which the
Agent may sustain or incur as a consequence of such sum not having been paid on
its due date.

 

6.6       Calculations

 

All interest and other payments of an
annual nature under any of the Security Documents shall accrue from day to day
and be calculated on the basis of actual days elapsed and a 360 day year.  In calculating the actual number of days
elapsed in a period which is one of a series of consecutive periods with no
interval between them or a period on the last day of which any payment falls to
be made in respect of such period, the first day of such period shall be
included but the last day excluded.

 

6.7       Certificates

 

Any certificate or determination of the
Agent or any Lender as to any rate of interest, rate of exchange or any other
amount pursuant to and for the purposes of any of the Security Documents shall,
as between Finance Parties and as between any Finance Party and the Borrower or
any other Security Party, be regarded as being conclusive evidence of such rate
or other amount.

 

27

 

6.8       Grossing-up for Taxes - Borrower

 

If at any time the Borrower is required by any
applicable law or regulation of any Government Entity binding on it to make any
deduction or withholding in respect of Taxes from any payment due under any of
the Security Documents for the account of any Finance Party (or if the Agent is
required to make any such deduction or withholding from a payment to a Finance
Party),

 

(a)     the Borrower shall notify the
Agent as soon as it becomes aware of the requirement;

 

(b)    the Borrower shall pay to the
relevant tax authorities promptly and in any event before any fine or penalty
arises each amount so deducted or withheld and deliver to the Agent the
original of any receipts, certificates or other proof evidencing the amounts
(if any) paid or payable in respect of any deduction or withholding as
aforesaid.

 

(c)     the sum due from the Borrower
in respect of such payment shall be increased to the extent necessary to ensure
that, after the making of such deduction or withholding, each Finance Party
receives on the due date for such payment (and retains, free from any liability
in respect of such deduction or withholding), a net sum equal to the sum which
it would have received had no such deduction or withholding been required to be
made and the Borrower shall indemnify each Finance Party against any losses or
costs incurred by it by reason of any failure of the Borrower to make any such
deduction or withholding or by reason of any increased payment not being made
on the due date for such payment.

 

6.9       Claw-back of tax benefit

 

If, following any such deduction or
withholding as is referred to in clause 6.8 from any payment by the Borrower
and the payment by the Borrower of the amount of such deduction or withholding
to the appropriate tax authorities, the Agent or any Lender, shall receive or
be granted a credit against or remission for any Taxes payable by it (by reason
of the payment of such deduction or withholding to the tax authorities), the
Agent or such Lender shall, subject to the Borrower having made any increased
payment in accordance with clause 6.8 and to the extent the Agent or such
Lender can do so without prejudicing the retention of the amount of such credit
or remission and without prejudice to the right of the Agent or such Lender to
obtain any other relief or allowance which may be available to it and to apply
any credit or remission in such order and against such amounts as it may
choose, reimburse the Borrower with such amount as the Agent or such Lender
shall certify to be the proportion of such credit or remission as will leave it
(after such reimbursement) in no worse position than it would have been in had
there been no such deduction or withholding from the payment by the Borrower as
aforesaid. Such reimbursement shall be made forthwith upon the Agent or, as the
case may be, the relevant Lender certifying that the amount of such credit or
remission has been received by it. Nothing contained in this clause shall
oblige the Agent or any Lender to rearrange its tax affairs 

 

28

 

or to disclose any information regarding
its tax affairs and computations. Without prejudice to the generality of the
foregoing, the Borrower shall not, by virtue of this clause 6.9, be entitled to
enquire about the Agent’s or any Lender’s tax affairs.

 

6.10      Bank account

 

Each Lender shall maintain, in accordance
with its usual practice, an account or accounts evidencing the amounts from
time to time lent by, owing to and paid to it under the Security
Documents.  The Agent shall maintain a
control account showing and other sums owing by the Borrower under the Security
Documents (excluding each Qualifying Swap and each Master Agreement).  The control account shall, in the absence of
manifest error, be conclusive as to the amount from time to time owing by the
Borrower under those Security Documents.

 

7      Representations and warranties

 

7.1      Continuing representations and warranties

 

The Borrower represents and warrants to
each of the Finance Parties that:

 

7.1.1      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.

 

7.1.2      Share capital and ownership: the Borrower has an authorised share
capital of 205,000,000 shares, par value $0.01 each, of which 200,000,000
shares are common stock and 5,000,000 shares are preferred stock.  The Borrower is the indirect and ultimate
owner of all the issued ordinary share capital of each Owner.

 

7.1.3      Corporate power: the Borrower (or in the case of paragraph (a), each
Owner) has the corporate capacity, and has taken all corporate action and
obtained all consents necessary for it:

 

(a)     to execute, enter into, and
perform its obligations under the Transaction Documents to which it is or is to
be a party and (in the case of each Owner) register the relevant Ship in its
name under a Flag State; and

 

(b)    to borrow under this Agreement
and to make all the payments contemplated by, and to comply with, those
Transaction Documents to which the Borrower is a party

 

7.1.4      Consents in force: All the consents referred to
in clause 8.1.8 remain in force and nothing has occurred which makes any of
them liable to revocation;

 

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

 

29

 

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

 

(b)    create legal, valid and
binding Encumbrances 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;

 

7.1.6      No third party Encumbrances: at the time of the execution and delivery
of each Security Document to which the Borrower is a party:

 

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

 

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

 

7.1.7      No conflicts: the execution by the Borrower of each Security
Document to which it is a party, and the borrowing by the Borrower of the Loan,
and its compliance with each Security 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.

 

7.1.8      Information.  All information which has been provided in
writing by or on behalf of the Borrower or any Security Party to the Lender in
connection with any Finance Document satisfied the requirements of clause
8.1.3.

 

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

 

7.1.10      No rebates etc.: there is no agreement or understanding to allow or
pay any rebate, premium, commission, discount or other benefit or payment
(howsoever described) to the Owners or any third party in connection with the
purchase by each Owner of the Ship owned by it, other than as disclosed to the
Agent in writing on or prior to the date of this Agreement.

 

30

 

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

 

7.1.12      Compliance with certain undertakings at
the date of this Agreement the Borrower is in compliance with clauses
8.1.1, 8.1.4, 8.1.8 and 8.11.

 

7.1.13      ISM Code and ISPS Code compliance: all requirements of the ISM Code and the
ISPS Code as they relate to the Borrower, each Owner, the Manager and the Ships
have been complied with.

 

7.1.14      No money laundering: in relation to the borrowing by the Borrower of the
Loan, the performance and discharge of its obligations and liabilities under
the Transaction Documents, and the transactions and other arrangements effected
or contemplated by the Transaction 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).

 

7.2      Initial representations and warranties

 

The Borrower further represents and
warrants to each of the Finance Parties that:

 

7.2.1      No withholding taxes: all payments which the Borrower is liable to make
under the Transaction 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 Relevant Jurisdiction.

 

7.2.2      No default: no Default or Event of Default has occurred and is
continuing.

 

7.2.3      Validity and completeness of Charters and the Management
Agreements:

 

(a)     The copies of the Charters and
the Management Agreements delivered to the Agent before the date of this
Agreement are true and complete copies;

 

(b)    The Charters and the
Management Agreements each constitute valid, binding and enforceable
obligations of the relevant parties thereto in accordance with its terms; and

 

(c)     Other than those amendments
and additions to the Charters and the Management Agreements disclosed to the
Agent before the date of this Agreement, no amendments or additions to either
document has been agreed nor has any party thereto waived any of their respective
rights thereunder.

 

7.2.4      Compliance with Environmental Laws and Approvals: except as may already have
been disclosed by the Borrower in writing to, and acknowledged in writing by,
the Finance Parties:

 

31

 

(a)     to the best of the Borrower’s
knowledge and belief, the Borrower and its Subsidiaries have complied with the
provisions of all Environmental Laws;

 

(b)    to the best of the Borrower’s
knowledge and belief, the Borrower and its Subsidiaries have obtained all
Environmental Approvals and are in compliance with all such Environmental
Approvals; and

 

(c)     neither the Borrower nor any
of its Subsidiaries has received notice that the Borrower or any such
Subsidiary is not in compliance with any Environmental Law or any Environmental
Approval.

 

7.2.5      No Environmental Claims: except as may already have been disclosed by the
Borrower in writing to, and acknowledged in writing by, the Finance Parties
there is no Environmental Claim pending or to the best of the Borrower’s
knowledge and belief, threatened against the Borrower or any of its
Subsidiaries or any Relevant Ship.

 

7.2.6      No potential Environmental Claims: except as may already have been disclosed
by the Borrower in writing to, and acknowledged in writing by, the Finance
Parties to the best of the Borrower’s knowledge and belief, there has been no
emission, spill, release or discharge of a Pollutant from any Relevant Ship
which could give rise to an Environmental Claim.

 

7.3      Repetition of representations and
warranties

 

The Borrower shall be deemed to repeat on
the Drawdown Date the representations and warranties in 7.1 and 7.2 as if made
with reference to the facts and circumstances existing on such day.

 

8      Undertakings

 

8.1      General

 

The Borrower undertakes with
each of the Finance Parties to comply with the following provision of this
clause 8 at all times during the Security Period except as the Agent may
otherwise permit:

 

8.1.1         Title; negative pledge and pari passu ranking: the Borrower will:

 

(a)     indirectly hold the entire
beneficial interest in, the ordinary shares of each Owner, free from all
Encumbrances and other interests and rights of every kind, except for Permitted
Encumbrances;

 

(b)    not create or permit to arise
any Encumbrance over any other asset, present or future other than in the
normal course of its business of acquiring, financing and operating vessels;
and

 

32

 

(c)              procure that its liabilities under the
Security 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;

 

8.1.2           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 circumstances the Borrower
shall be deemed to have complied with its obligations under this clause 8.1.2
by providing the Agent with prior written notice of its
decision to transfer, lease or otherwise dispose of its assets as aforesaid;

 

8.1.3           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 Transaction Document will be true and not misleading and will not omit
any material fact or consideration;

 

8.1.4           No other liabilities or obligations to be incurred. it will procure that none of
the Owners will incur any liability or obligation except liabilities and
obligations:

 

(a)              under the Transaction Documents to which
each Owner is a party; and

 

(b)             incurred in the normal course of its
business of operating vessels;

 

8.1.5           Provision of financial statements: the Borrower will:

 

(a)              as soon as possible, but in no event later
than 180 days after the end of each financial period to which they relate
(commencing with the financial period ended 31 December 2007), make available
the Audited Financial Statements for that financial period on the Borrower’s
website; and

 

(b)             as soon as possible, but in no event later
than 90 days after the end of each 6-monthly period to which they relate
(commencing with the 6-monthly period ended 30 June 2008), make available the
Unaudited Financial Statements for that financial period on the Borrower’s
website;

 

8.1.6           Form of financial statements: all accounts (audited and unaudited)
delivered under clause 8.1.5 will:

 

33

 

(a)              be prepared in accordance with all
applicable laws and Accounting Principles;

 

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

 

(c)              fully disclose or provide for all
significant liabilities of the Borrower’s Group;

 

8.1.7           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).

 

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

 

(a)              for the Borrower and each Owner to perform
its obligations under each Transaction Documents to which it is a party;

 

(b)             for the validity or enforceability of each
Transaction 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;

 

8.1.9           Maintenance of Encumbrances: the Borrower will:

 

(a)              at its own cost, do all that it reasonably
can to ensure that any Security Document validly creates the obligations and
the Encumbrances 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
Security Document with any court or authority in the Marshall Islands, Liberia,
Greece, Panama, Bahamas or Cyprus or such other jurisdiction which the Agent
may reasonably require (including, without limitation, any Flag State if at the
relevant time a Ship is registered under the laws of such Flag State), pay any
stamp, registration or similar tax in any such country in respect of any
Security Document, give any notice or take any other step which, in the opinion
of the Lender, is or has become necessary or desirable for any Security
Document to be valid, enforceable or admissible 

 

34

 

in evidence or to ensure or protect the priority of
any Permitted Encumbrance which it creates;

 

8.1.10                         Notification of litigation: the Borrower will provide
the Agent with details of any legal or administrative action involving the
Borrower, any Security Party, the Manager or the Ships, their Earnings or their
Insurances as soon as such action is instituted or it becomes apparent to that
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;

 

8.1.11                         Principal place of business: the Borrower will maintain
its place of business, and keep its corporate documents and records, at the
address set out in the definition of “Borrower” and the Borrower will not
establish, nor do anything as a result of which it would be deemed to have, a
place of business in any other country;

 

8.1.12                         Confirmation of no default: the Borrower will, within 3
Banking 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 Default or Event of Default
has occurred; or

 

(b)             states that no Default or 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 8.1.12 from time to
time; this clause 8.1.12 does not affect the Borrower’s obligations under
clause 8.1.13;

 

8.1.13                         Notification of default: the Borrower will notify the
Agent as soon as the Borrower becomes aware of:

 

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

 

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

 

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

 

8.1.14                         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 to:

 

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

 

(b)             any other matter relevant to, or to any
provision of, a Transaction Document, which in each case may be requested by
the Agent at any time;

 

35

 

8.1.15                         No amendment to the Transaction Documents: the Borrower shall not and
it will ensure that no Owner shall, agree to any amendment or supplement to, or
waive or fail to enforce, a Transaction Document to which it is a party to or
any of its provisions;

 

8.1.16                         Purchase of further tonnage: the Borrower shall procure
that each Owner shall not purchase a vessel other than the relevant Ship;

 

8.1.17                         “Know your customer” requirements: the Borrower shall provide
to the Finance Parties (or any of them) such documentation and evidence as may
be required by each of Finance Party from time to time comply with applicable
law and regulations and its own internal guidelines in relation to the opening
of bank accounts and the identification of its customers;

 

8.1.18                         Provision of copies and translation of documents: if the Agent so requires,
the Borrower will supply the Agent with a certified English translation in
respect of any of those documents referred to above, such translation to be
prepared by a translator approved by the Agent;

 

8.1.19                         Tax Lease Structure: the Borrower may place any
Ship within a tax lease structure with the prior written consent of the Lenders
such consent not to be unreasonably withheld;

 

8.1.20                         Use of proceeds: use the Advance exclusively for the
purposes specified in clause 1.1;

 

8.1.21                         Flag State: the Borrower shall ensure
that at all times the Ships are registered in the name of the relevant Owner
under the laws and flag of the relevant Flag State and are free from
Encumbrances other than the relevant Mortgage; and

 

8.1.22                         Classification: the Borrower shall ensure that at all
times the Ships maintains the relevant Classification Society free of all
overdue recommendations and conditions affecting class.

 

8.2                         Security
value maintenance

 

8.2.1                          Security shortfall: if at any time the Security Value shall
be less than the Security Requirement, the Agent may, and if so instructed by
the Majority Lenders, shall give notice to the Borrower requiring that such
deficiency be remedied and then the Borrower shall either:

 

(a)              prepay within a period of ten (10) Banking Days of the
date of receipt by them of the Agent’s said notice such sum in Dollars as will
result in the Security Requirement after such prepayment (taking into account
any other repayment of the Loan for the Ships made between the date of the
notice and the date of such prepayment) being equal to the Security Value; or

 

(b)             within ten (10) Banking Days of the date of receipt by
the Borrower of the Agent’s said notice, constitute to the satisfaction of the
Lenders such further security (in the form of an Encumbrance) for the Loan to
be held by the Security Trustee, and as shall be acceptable to the Lenders
having a value for security purposes (as determined by the 

 

36

 

Lenders
in their absolute discretion) at the date upon which such further security
shall be constituted which, when added to the Security Value, shall not be less
than the Security Requirement as at such date.

 

The provisions of clauses 4.5 and 4.6 shall apply to prepayments under
clause 8.2.1(a).

 

8.2.2                                Valuation
of the Ships:

 

(a)              Prior to the Drawdown Date and
thereafter at or about each anniversary of such Drawdown Date, each of Ships
shall be valued in Dollars by two Approved Brokers selected by the
Borrower.  The Borrower shall pay all
costs properly incurred in respect of such valuations.  Each valuation shall be made without physical
inspection unless required by the Majority Lenders (in which case the Borrower
shall use reasonable efforts to facilitate any required physical inspection as
soon as practicable after a request for the same).

 

(b)             Notwithstanding the foregoing, the Agent may, and if
so instructed by the Majority Lenders, shall obtain two valuations of one or
more of the Ships at any other time, but the Borrower shall only reimburse the
Agent for the cost of such valuations if (a) an Event of Default has occurred
which is continuing or (b) a Ship is being sold or there has been a Total Loss
for the purpose of determining the Disposal Reduction Amount in accordance with
clause 4.3, and in either case the Agent has served written demand on the
Borrower in relation thereto.

 

(c)              Each valuation made in
accordance with this clause 8.2.2 of a Ship shall be the aggregate
of the present values (as may be conclusively determined by the Agent but
subject to discount pursuant to clause 8.2.2(d)) of:

 

(i)                          where that Ship is subject
to a charter or other contract of employment having an unexpired term of at
least nine (9) months with a first class charterer acceptable to the Agent
(acting in accordance with the instructions from the Lenders) (which acceptance
shall not be unreasonably withheld), the bareboat-equivalent time charter
income of that 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 8.2.2(c), an option period); and

 

(ii)                       the
current charter-free market value  of
a vessel with identical characteristics to that Ship other that its age which
shall be considered to be the age of that Ship at the time of charter expiry
(so adjusted for a higher age), 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,

 

37

 

and in
the case of both (i) and (ii) on the basis of a sale for prompt delivery for
cash at arms length on normal commercial terms as between a willing buyer and a
willing seller.

 

(d)             The present values referred to
in clause 8.2.2(c) shall be discounted in respect of 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 year, as
follows:

 

(i)                          in relation to a period which is a Qualifying Swap Period, the Interest Rate Swap Rate;
and

 

(ii)                       in
relation to each period which is not a Qualifying Swap Period (including the
period from the expiry of the Qualifying Swap Period (and if there is more than
one Qualifying Swap Period, the most recent one) to the time of charter
expiry), the relevant ISDA Benchmark Rate collected daily by Reuters and ICA
plc in respect of Loan (and not a proportion thereto) for that period.

 

(e)              The sum total of: (1) the
aggregate of the arithmetic average of the most recent two valuations for each
Ship (excluding each Excluded Ship) determined in accordance with this clause
8.2.2 and (2) the market value of any additional security for the time being
actually provided to the Lenders pursuant to clause 8.2.1(b) as most recently
determined in accordance with clause 8.2.4 (in each case as certified by the
Agent to the Borrower which certificate shall, in the absence of manifest
error, be conclusive and binding on the Borrower, each of the Owners and the
Finance Parties) shall at any time be the Security
Value for the purposes of this Agreement.

 

(f)                The Agent shall provide the Borrower and each Lender
with a copy of any valuation requested by it.

 

8.2.3                                Information: the Borrower undertakes with
the Finance Parties to supply to the Agent and to any relevant Lenders such
information concerning the applicable Ship and its condition as such brokers
may reasonably require for the purpose of making any such valuation.

 

8.2.4                                Valuation
of additional security: for the purpose of this clause 8.2, the market value
of any additional security provided or to be provided to the Lenders shall be
determined by the Agent, acting on the instructions of the Majority Lenders in
their absolute discretion without any necessity for the Majority Lenders
assigning any reason thereto (provided that any additional security granted by
way of cash, should be valued on a Dollar by Dollar basis). Subject to the
provisions of the Trust and Agency Agreement, the Agent may appoint such
experts and appraisers as it may consider necessary in order to fulfil its
instructions from the Majority Lenders pursuant to this clause 8.2.4 and shall
not be required to act where no such instructions from the Majority Lenders are
received. Any costs incurred by the Agent shall be reimbursed by the Borrower
against copies of the applicable invoices.

 

38

 

8.2.5                                Documents
and evidence: in connection with any additional security provided in accordance
with this clause 8.2, the Agent shall be entitled to (and shall if so requested
by the Majority Lenders) require the Borrower to provide such evidence and
documents of the kind referred to in schedule 5 that it believes are
appropriate (or which it has been required to request) and such favourable
legal opinions as the Agent shall in its absolute discretion require.

 

8.2.6                                Release
of additional security

 

If at any time the Security Trustee holds additional
security provided under clause 8.2.1 and the Security Value of such additional
security, disregarding the value of that additional security, exceeds the
Security Requirement by at least ten per cent (10%) and the Security Value has
been determined by reference to valuations provided no more than 90 days
previously, or if an Charter is subsequently entered into, the Borrower may, by
notice to the Agent, require the release and discharge of that additional
security.  The Security Trustee shall
then promptly release and discharge that additional security if no Default is
then continuing or will result from such release and discharge and, upon such
release and discharge and, if so required by the Agent and or the Security
Trustee, the Borrower shall reimburse to the Agent and or the Security Trustee
any costs and expenses in relation to that release and discharge.

 

8.3                        Financial Undertakings

 

8.3.1                          The
Borrower shall ensure that at all times:

 

(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 0.75:1;

 

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

 

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

 

(d)              The Market Value Adjusted Net Worth of the Borrower shall not be less
than the higher of $250,000,000; and

 

(e)               From and including 31 March 2010 until the Final Repayment Date the
Borrower shall maintain in the Borrower Account a cash deposit of at least
$6,000,000;

 

8.3.2                               Compliance check.  Compliance with the undertakings contained in
this clause 8.3 shall be determined in each financial period:

 

(a)               for the first 6-month period of each annual financial period, by
reference to the Unaudited Financial Statements in respect of that 6-month
financial period

 

39

 

(b)              for the second 6-month period of each annual financial period, by
reference to the Audited Financial Statements relating to that annual financial
period;

 

(c)               an any other time as the Agent may reasonably request by reference to
such evidence as the Agent may require to determine and calculate the financial
covenants referred to in clauses 8.2 and 8.3.

 

At the same time as it
makes available each set of Audited Financial Statements and Unaudited
Financial Statements referred to in clause 8.1.5, the Borrower shall deliver to
the Agent a Compliance Certificate demonstrating its compliance (or not, as the
case may be) with the provisions of clauses 8.2 and 8.3.

 

8.3.3        Definitions:

 

The accounting terms used in this clause 8 shall be construed in
accordance with the Accounting Principles but so that:

 

Applicable Accounts means the most
recent Audited Financial Statements or
(as the case may be) Unaudited Financial Statements;

 

Borrower’s Income Statement has the
meaning given to that term in the Applicable Accounts;

 

Cash
Equivalents means:

 

(a)              deposits with first class international banks the
maturity of which does not exceed 12 months;

 

(b)             bonds, certificates of deposits and other money market
instruments or securities issued or guaranteed by the United States Government;
and

 

(c)              any other instruments approved by the Agent, with the
authorisation of the Majority Lenders;

 

Compliance Date means a date on which compliance
with the undertakings contained in this clause 8.3 is determined in accordance
with clause 8.3.2;

 

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
and as defined in the Applicable Accounts;

 

Exceptional Items means any
material items of an unusual or non-recurring nature which represent gains or
losses including those arising on the sale of vessels;

 

Financial Quarter means the
period commencing on the day after one Quarter Date and ending on the next
Quarter Date;

 

40

 

Financial Year means the
annual accounting period of the Borrower’s Group ending on (or about) 31 December
in each year;

 

Interest Coverage Ratio means ratio of
EBITDA to Net Interest in respect of any Relevant Period.

 

Market Value Adjusted Net Worth means Market Value Adjusted Total Assets  minus
Total Liabilities;

 

Market Value Adjusted Total Assets means, with reference to the Audited Financial Statements and the
Unaudited Financial Statements provided pursuant to clause 8.1.3, all assets of
the Borrower’s Group, with the value of the Ships calculated as per clause
8.2.2;

 

Net Interest means interest expense
minus interest income as stated in the Borrower’s Income Statement;

 

Quarter Date means each of 31
March, 30 June, 30 September and 31 December.

 

Relevant Period means each
period of twelve months or such shorter period commencing on the date hereof ending on or about the last day of the Financial Year and each
period of twelve months ending on or about the last day of each Financial
Quarter.

 

Total Liabilities
means, total liabilities of the
Borrower’s Group as stated in the most recent annual Audited Financial Accounts
of the Borrower’s Group.

 

8.4                         Corporate Undertakings

 

The Borrower also undertakes with the Agent to comply with
the following provisions of this clause 8.2 at all times during the Security
Period except as the Agent may otherwise permit.

 

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

 

8.4.2         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: (i) at any time when a Default or an Event of Default has
occurred and is continuing or (ii) will result from the payment of any dividend
or the making of any other form of distribution or (iii) for as long as any of
the financial covenants set out in clause 8.2.1 or 8.3.1 are not satisfied; or

 

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

 

41

 

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

 

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

 

8.4.3         Maintenance
of ownership of Owners. The Borrower shall remain
in ultimate legal and beneficial owner of the entire issued and allotted
issued and allotted ordinary share capital of each Owner free from any Security
Interest.

 

8.5                         Swaps Undertakings

 

The Borrower undertakes to the Swap Banks
only to enter into a Qualifying Swap with a Swap Bank if the proportion which
the notional amount of that Qualifying Swap bears to the notional amount of all
Qualifying Swaps in respect of the same Qualifying Swap Period is the same as
the proportion which the Commitment of that bank (in its capacity as Lender
rather than as Swap Bank) bears to the Total Commitments.

 

8.6                         Additional
Undertakings

 

The Borrower also undertakes with the Agent to ensure at all
times during the Security Period except as the Agent may otherwise permit that:

 

8.6.1         Seizure: in the event that all or a
material part of the undertaking, assets, rights or revenues of, or shares or
other ownership interests in, any Security Party are seized, nationalised,
expropriated or compulsorily acquired by or under the authority of any
government (other than when such seizure results in a Total Loss), such action
will not have a material effect on the Borrower’s or the relevant Security
Party’s ability to fulfil its obligations under the Security Documents; and

 

8.6.2         Unrest: in the event that the Flag
State of a Ship or any Relevant Jurisdiction becomes involved in hostilities or
civil war or there is a seizure of power in the Flag State of a Ship or any
Relevant Jurisdiction by unconstitutional means, such action will not have a
material adverse effect on the security created by any of the Security
Documents; or

 

8.6.3         Environment: in the event that any
Security Party fails to comply with any Environmental Law or any Environmental
Approval or a Ship or any other Relevant Ship is involved in any incident which
gives rise or may give rise to an Environmental Claim, the Borrower undertakes
that such non-compliance or incident or the consequences thereof shall not have
a material adverse effect on the business, assets, operations, property or
financial condition of that Security Party or any other Security Party or on
the security constituted by any of the Security Documents; or

 

42

 

8.6.4         P&I: each Security Party shall
comply with any requirements of the protection and indemnity association or
other insurer with which a Ship is entered for insurance or insured against
protection and indemnity risks (including oil pollution risks); or

 

8.6.5         Arrest: in the event that a Ship is
arrested, confiscated, seized, taken in execution, impounded, forfeited,
detained in exercise or purported exercise of any possessory lien or other
claim or otherwise taken from the possession of an Owner, the Borrower shall
procure its release within a period of ten (10) Banking Days thereafter.

 

8.6.6         Material
adverse change: with reference to Audited Financial Statements and Unaudited
Financial Statements, the Borrower undertakes that there will not be a material
adverse change in the financial condition of any Security Party.

 

9                      Conditions

 

9.1                         Documents and evidence

 

The obligation of each Lender to make its Commitment
available shall be subject to the condition that:

 

9.1.1         the Agent, or its duly authorised representative,
shall have received, no later than 10am (New York time) on the third (3rd)
Banking Day prior to the proposed Drawdown Date a Drawdown Notice specifying a
date for drawdown within the Drawdown Period;

 

9.1.2         the Agent, or its duly authorised representative,
shall have received, not later than the day on which such Drawdown Notice is
given, the documents and evidence specified in Part 1 of schedule 4 in form and
substance satisfactory to the Agent; and

 

9.1.3         the Agent, or its duly authorised representative,
shall have received, on or prior to the Drawdown, in respect of each Ship, the
documents and evidence specified in Part 2 of schedule 4 in form and substance
satisfactory to the Agent.

 

9.2                         General conditions precedent

 

The obligation of each Lender to contribute to the Advance
shall be subject to the further conditions that, at the time of the giving of
the Drawdown Notice and on the Drawdown Date:

 

9.2.1         the representations and warranties contained in
clauses 7.1 and 7.2 are true and correct on and as of each such time as if each
was made with respect to the facts and circumstances existing at such time; and

 

9.2.2         no Default shall have occurred and be continuing or
would result from the making of the Advance.

 

43

 

9.3         Waiver of conditions precedent

 

The conditions specified in this clause 9
are inserted solely for the benefit of the Lenders and may be waived on their
behalf in whole or in part and with or without conditions by the Agent acting
on the instructions of the Majority Lenders (or in the case of any waiver in
relation to the execution of any of the Security Documents, all the Lenders) in
respect of the first or any other Advance without prejudicing the right of the
Agent acting on such instructions to require fulfilment of such conditions in
whole or in part in respect of any other Advance.

 

9.4         Notification

 

The Agent shall notify the Lenders and the
Borrower promptly upon receipt by it of the documents and evidence referred to
in clause 9.1 in form and substance satisfactory to it.

 

10       Events of
Default

 

10.1        Events

 

An Event of Default occurs if:

 

10.1.1         Non-payment: the Borrower or any Security Party fails to pay when
due or (if so payable) on demand any sum payable under a Transaction Document
or under any document relating to a Transaction Document; such failure shall
not constitute an Event of Default if:

 

(a)        such
failure is due to a bank payment transmission error; and

 

(b)       the
Borrower or the relevant Security Party remedies such failure within 3 days or
the due date of payment of the relevant amount; or

 

10.1.2         Breach of Insurance and Certain
other Obligations: any breach occurs of clause 5.4 of the Guarantee (Insurance), or clause 8.2 (Security Value Maintenance) or clause 8.3
(Financial  Undertakings) of this Agreement;

 

10.1.3         Breach of other obligation
(1):
any breach by the Borrower or any Security Party occurs of any provision of a
Transaction Document (including, for the avoidance of doubt clause 8.6 (Additional Undertakings) of this Loan
Agreement) (other than a breach covered by paragraphs 10.1.1 or 10.1.2) and if,
in the opinion of the Lenders such default is capable of remedy, such default
is not remedied within 14 Banking Days after written notice from the Agent
requesting action to remedy the same; or

 

10.1.4         Breach of other
obligations (2): (subject to any applicable grace period specified in
the Security Document) any breach (which the Lenders consider, in their
discretion, to be material) by the Borrower or any Security Party occurs of any
provision of a Security Document (other than a breach covered by paragraphs
10.1.1, 10.1.2 or 10.1.3); or

 

44

 

10.1.5         Misrepresentation: any representation, warranty
or statement (which the Agent considers, in its discretion, to be material)
made by, or by an officer of, the Borrower or a Security Party in a Security
Document or in a Drawdown Notice or any other notice or document relating to a
Security Document is untrue or misleading when it is made provided that 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 Banking Days of its occurrence unless such innocent misrepresentation
is made on a Drawdown Date; or

 

10.1.6         Cross-default:  any of the following occurs in relation to any Indebtedness
of a Relevant Person (other than the Borrower) or any Indebtedness of the
Borrower of at least $500,000:

 

(a)        any Indebtedness of a Relevant Person is
not paid when due or, is so payable, on demand; or

 

(b)       any Indebtedness of a Relevant Person
becomes due and payable or capable or being declared due and payable prior to
its stated maturity date as a consequence of any event of default; or

 

(c)        a lease, hire purchase agreement or charter
creating any Indebtedness of 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

 

(d)       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 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

 

(e)        any Encumbrance securing any Indebtedness
of a Relevant Person becomes enforceable,

 

10.1.7         Insolvency
Proceedings: any of the following occurs in relation to a Relevant Party

 

(a)        a Relevant Person becomes unable to pay its
debts as they fall due; or

 

(b)       any assets of a Relevant Person are subject
of any form of execution, attachment, expropriation, sequestration or distress
in respect of a sum or sums aggregating $100,000 (or $10,000,000 in respect of
the Borrower) or more or the equivalent in another currency; or

 

(c)        any administrative or other receiver is
appointed over any asset of a Relevant Person; or

 

45

 

(d)       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 full 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 Agent
and effected not later than 3 months after the commencement of the winding up;
or

 

(e)        a petition is presented in any Relevant
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

 

(f)        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
arrangements 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

 

(g)       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

 

(h)       in a Relevant Jurisdiction other than
England, any event occurs or any procedure is commenced which, in the
reasonable opinion of the Agent is similar to any of the foregoing,

 

and for the purposes of this clause 10.1.7, Petition includes an application; or

 

10.1.8         Cessation of
business:
the Borrower ceases, or threatens to cease, 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

 

10.1.9         Unlawfulness: it becomes unlawful in any
Relevant Jurisdiction or impossible:

 

(a)        for the Borrower or any Security Party to
discharge any liability under a Security Document or to comply with any other
obligation which the Agent considers material under a Security Document; or

 

46

 

(b)       for the Agent to exercise or enforce any
right under, or to enforce any Encumbrance created by, a Security Document; or

 

10.1.10       Consents: 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 Agent considers material of a Transaction Document 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 Security Trustee or the ability of the Borrower or a
Security Party to timely discharge and/or perform its or their liabilities and
obligations (or any of them) under any Transaction Document; or

 

10.1.11       Ownership: if, without the prior
consent of the Agent, Dr John Coustas either owns directly and/or through
companies beneficially owned and controlled by him, or members of the Coustas
family and/or trusts or foundations in which members of the Coustas family are
beneficiaries own and control, less than 51 per cent of the issued voting share
capital of the Borrower; or

 

10.1.12       Listing: if, without the prior
consent of the Agent, the shares of the Borrower cease to be listed on the New
York Stock Exchange; or

 

10.1.13       Voting: it appears to the Agent
that, without its 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 ordinary shares in any Owner or in the ultimate control of the voting
rights attaching to any of those shares; or

 

10.1.14       Invalidity: any provisions which the
Agent considers material of a Transaction Document proves to have been or becomes
invalid or unenforceable, or an Encumbrance created by a Security Document
proves to have been or becomes invalid or unenforceable or such Encumbrance
proves to have ranked after, or loses its priority to another Encumbrance or
any other third party claim or interest; or

 

10.1.15       Security: the security constituted by
a Security Document is in any way imperilled or in jeopardy unless within 14
Banking Days of the security being so imperilled or jeopardised (i) the
Borrower or a Security Party provides to the Agent security in the form of a
new Security Document which, in the opinion of the Agent, is equivalent to that
constituted by the Security Document which has become imperilled or jeopardised
or (ii) the security ceases to be imperilled or in jeopardy; or

 

10.1.16       Master
Agreement: a 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 on the instructions of the Lenders);
or

 

47

 

10.1.17       Ship
Management: for any reason whatsoever, a Ship ceases to be managed by the Manager
on terms in all respects approved by the Agent (such approval not to be
unreasonably withheld); or

 

10.1.18       Other Events: any other event occurs or
any other circumstances arise or develop including, without limitation:

 

(a)        a change in the financial position, state
of affairs or prospects of the Borrower or an Owner; or

 

(b)       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 Agent considers that there is a material risk
that the Borrower is, or will later become, unable to discharge its liabilities
under the Transaction Documents as they fall due.

 

10.1.19       Flag State: the registration of a Ship
or a Mortgage under the laws and flag of the relevant Flag State is cancelled
or terminated without the prior written consent of the Security Trustee; or

 

10.2       Actions
following an Event of Default

 

On, or after any time after the occurrence of an Event of
Default which is continuing, the Agent may and if requested by the Majority
Lenders shall (without prejudice to any other rights of the Lenders):

 

10.2.1        serve on the Borrower a notice
stating that all obligations of the Lenders to the Borrower under this
Agreement are terminated whereupon on the Total Commitments shall be reduced to
zero forthwith; and/or

 

10.2.2        serve on the Borrower a notice
stating that the Loan, all accrued interest and all other amounts accrued or
owing under this Agreement and the other Security Documents are immediately due
and payable or are due and payable on demand; and/or

 

10.2.3        take any other action which,
as a result of the Event of Default or any notice served under clause 10.2.1 or
10.2.2 above, the Agent entitled to take under any Transaction Document or any
applicable law.

 

10.3       Termination
of Commitment

 

On the service of a notice under clause 10.2.1, the
Commitment and all other obligations of the Lender to the Borrower under this
Agreement shall terminate.

 

48

 

10.4        Acceleration
of Loan

 

On the service of a notice under clause 10.2.2, 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 Security Document
(including without limitation all interest and commitment commission) shall
become immediately due and payable or, as the case may be, payable on demand.

 

10.5        Multiple
notices; action without notice

 

The Agent may serve notices under clauses 10.2.1 and 10.2.2
simultaneously or on different dates and the Agent 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.

 

10.6        Exclusion
of Agent Liability

 

Neither the Agent, nor any receiver or manager appointed by
the Agent, shall have any liability to the Borrower or a Security Party

 

10.6.1         For any loss caused by an
exercise of rights under, or enforcement of an Encumbrance created by, a
Security Document or by any failure or delay to exercise such a right or to
enforce such an Encumbrance; or

 

10.6.2         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 an Encumbrance or for any
reduction (however caused) in the value of such an asset,

 

Except that this does not exempt the Agent or a receiver or manager
from liability for losses shown to have been caused by the gross negligence or
the wilful misconduct of the Agent’s own officers and employees or (as the case
may be) such receiver’s or manager’s own partners or employees.

 

11       Indemnities

 

11.1        Miscellaneous
indemnities

 

The Borrower shall within three (3) Banking Days of
demand, indemnify each Finance Party, without prejudice to any of their other
rights under any of the Security Documents, against any cost (including,
without limitation, broken funding costs) loss or liability incurred by that
Finance Party as a result of:

 

11.1.1         the occurrence of any Default;
or

 

11.1.2         a failure by any Security
Party to pay an amount due under a Security Document on its due date, including
without limitation, any cost, loss or liability arising as a result of clause 7
of the Trust and Agency Agreement; or

 

49

 

11.1.3         the Loan (or any part thereof)
not being prepaid in accordance with clauses 4.2, 4.3, 8.2, 12.1 or 12.4 and
any repayment or prepayment of the Loan (or part thereof) being made otherwise
than on the last day of an Interest Period; or

 

11.1.4         funding, or making
arrangements to fund, its participation in the Advance requested by the
Borrower in the Drawdown Notice but not made by reason of the operation of any
one or more of the provisions of this Agreement (other than by reason of
default or negligence by that Finance Party alone); or

 

11.1.5         prepayment of the Loan in whole or in part,

 

including, in any such case, but not limited to, any loss or
expense sustained or incurred by such Lender in maintaining or funding its
Contribution or any part thereof or in liquidating or re employing deposits
from third parties acquired to effect or maintain its Contribution or any part
thereof or any other amount owing to such Lender.

 

11.2        Indemnity
to the Agent and Security Trustee

 

The Borrower shall promptly indemnify the Agent and Security
Trustee against any reasonable cost, loss or liability incurred by the Agent and
the Security Trustee or either of them (acting reasonably) as a result of:

 

11.2.1         investigating any event which
it reasonably believes is a Default; or

 

11.2.2         acting or relying on any
notice, request or instruction which it reasonably believes to be genuine,
correct and appropriately authorised.

 

11.3        Currency
indemnity

 

If any sum due from any Security Party under any of the
Security Documents or any order or judgment given or made in relation thereto
has to be converted from the currency (the first
currency) in which the same is payable under the relevant Security
Document or under such order or judgment into another currency (the second currency) for the purpose of (a) 
making or filing a claim or proof against any Security Party, (b) 
obtaining an order or judgment in any court or other tribunal or (c) enforcing
any order or judgment given or made in relation to any of the Security
Documents, the Borrower shall indemnify and hold harmless each of the Finance
Parties from and against any loss suffered as a result of any difference
between (i)  the rate of exchange used for such purpose to convert the sum
in question from the first currency into the second currency and (ii) the
rate or rates of exchange at which any of the Finance Parties may in the ordinary
course of business purchase the first currency with the second currency upon
receipt of a sum paid to it in satisfaction, in whole or in part, of any such
order, judgment, claim or proof.  Any
amount due from the Borrower under this clause 11.3 shall be due as a separate
debt and shall not be affected by judgment being obtained for any other sums
due under or in 

 

50

 

respect of any of the Security Documents and the term rate of exchange includes any premium and
costs of exchange payable in connection with the purchase of the first currency
with the second currency.

 

11.4        Environmental
indemnity

 

The Borrower shall indemnify each of the Finance Parties on
demand and hold each of the Finance Parties harmless from and against all
costs, expenses, payments, charges, losses, demands, liabilities, actions,
proceedings (whether civil or criminal), penalties, fines, damages, judgments,
orders, sanctions or other outgoings of whatever nature which may be suffered, incurred
or paid by, or made or asserted against any Finance Party at any time, whether
before or after the repayment in full of principal and interest under this
Agreement, relating to, or arising directly or indirectly in any manner or for
any cause or reason whatsoever out of an Environmental Claim made or asserted
against the Finance Party if such Environmental Claim would not have been, or
been capable of being, made or asserted against the Finance Party if it had not
entered into any of the Security Documents and/or exercised any of its rights,
powers and discretions thereby conferred and/or performed any of its
obligations thereunder and/or been involved in any of the transactions
contemplated by the Security Documents.

 

12       Unlawfulness and increased costs

 

12.1        Unlawfulness

 

If it is or becomes contrary to any law or regulation for any
Lender to contribute to the Advance or to maintain its Commitment or fund its
Contribution, such Lender shall promptly, through the Agent, give notice to the
Borrower whereupon (a) such Lender’s Commitment shall be reduced to zero
and (b) the Borrower shall be obliged to prepay the Contribution of such
Lender either (i) forthwith or (ii) on a future specified date not
being earlier than the latest date permitted by the relevant law or regulation
together with interest and commitment commission accrued to the date of
prepayment and all other sums payable by the Borrower to such Lender under this
Agreement.

 

12.2        Increased
costs

 

This clause 12.2 applies if the Agent notifies the Borrower
that a Lender or Lenders considers (each a Notifying
Lender) that as a result of:

 

12.2.1         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 a Lender’s overall net
income); or

 

51

 

12.2.2         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 a Lender allocates
capital resources to its obligations under this Agreement including, without limitation,
the implementation of any regulations which may replace, amend and/or
supplement those set out in the Basel 2 Accord which is introduced, or altered,
or the interpretation or application of which is altered, after the date of
this Agreement,

 

a Notifying Lender (or a parent company of it) has incurred
or will incur an “increased cost”, that is to say:

 

(a)        an additional or increased cost incurred as a result of, or in
connection with, a Lender having entered into, or being a party to, this Agreement,
of funding or maintaining the Loan or performing its obligations under this
Agreement, or of having outstanding all or any part of the Loan or other unpaid
sums; or

 

(b)       a reduction in the amount of any payment to a Lender under this
Agreement or in the effective return which such a payment represents to a
Lender or on its capital;

 

(c)        an additional or increased cost of funding all or maintaining all or
any of the advances comprised in a class of advances formed by or including the
Loan or (as the case may require) the proportion of that cost attributable to
the Loan; or

 

(d)       a liability to make a payment, or a return foregone, which is
calculated by reference to any amounts received or receivable by a Lender under
this Agreement,

 

but not an item attributable to a change
in the rate of tax on the overall net income of a Lender (or a parent company
of it) or an item covered by the indemnity in clause 5.2.

 

For the purposes of this clause 12.2, a
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.

 

12.2.3         Payment
of increased costs.  The Borrower
shall pay to a Lender, on that Lender’s demand, the amounts which that Lender
from time to time notifies the Borrower that is necessary to compensate it for
the increased cost.

 

12.2.4         Notice of
prepayment.  If the Borrower is not willing
to continue to compensate a Lender for the increased cost under this clause
12.2, the Borrower may give that Lender not less than 15 days’ notice of its
intention to prepay the Loan at the end of an Interest Period.

 

12.2.5         Prepayment;
termination of Commitment.  A notice under
clause 12.2.4 shall be irrevocable; and on the date specified in the Borrower’s
notice of intended prepayment, the Borrower shall prepay (without premium or
penalty) the Loan together with accrued interest thereon at the applicable rate
plus the Margin.

 

52

 

	
  12.2.6

  	
  Application of prepayment. Clause 13.1 shall apply in relation to
  the prepayment.

  
	
   

  	
   

  
	
  12.3

  	
  Exception

  
	
   

  	
   

  
	
   

  	
  Nothing
  in clause 12.2 shall entitle any Lender to receive any amount in respect
  of compensation for any such liability to Taxes, increased or additional
  cost, reduction, payment, foregone return or loss (a) to the extent that
  the same is taken into account in calculating the additional cost or
  (b) to the extent that the same is the subject of an additional payment
  under clause 6.8.

  
	
   

  	
   

  
	
  12.4

  	
  Mitigation

  
	
   

  	
   

  
	
   

  	
  If
  circumstances arise which would, or would upon the giving of notice, result
  in:

  
	
   

  	
   

  
	
  12.4.1

  	
  the
  Borrower being required to make an increased payment to a Lender pursuant to
  clause 6.8; or

  
	
   

  	
   

  
	
  12.4.2

  	
  the
  reduction of the Commitment of a Lender to zero or the Borrower being
  required to prepay any Lender’s Contribution pursuant to clause 12.1; or

  
	
   

  	
   

  
	
  12.4.3

  	
  the
  Borrower being required to make a payment to a Lender to compensate such
  Lender or its holding company for a liability to Taxes, increased or
  additional cost, reduction, payment, foregone return or loss pursuant to
  clause 12.2,

  
	
   

  	
   

  
	
   

  	
  then, without in any way limiting,
  reducing or otherwise qualifying the obligations of the Borrower under
  clauses 6.8, 12.1 and 12.2, the Agent and the relevant Lender shall meet
  together and with the Borrower to discuss in good faith (but without
  obligation) what steps may be open to the relevant Lender (or, as the case
  may be, its holding company) to mitigate or remove such circumstances. If the
  relevant Lender and the Borrower are unable to agree such steps within thirty
  (30) days (or such longer period as they may agree) of the notice referred to
  in this clause 12.4 having been given, then the Borrower shall (save where
  they are already obliged to make a prepayment under clause 12.1) be entitled
  to notify such Lender of their intention to prepay such Lender’s
  Contribution. The Borrower shall make such prepayment within thirty (30) days
  of such notification and shall simultaneously pay to such Lender any expense
  which such Lender certifies as sustained or incurred by it as a consequence
  of such prepayment including any loss or expense sustained or incurred by
  such Lender in liquidating or re employing deposits from third parties
  acquired to effect or maintain its Contribution. Upon receipt of the
  Borrower’s notice of prepayment the Commitments of the relevant Lender shall
  be reduced to zero.

  

 

53

 

	
  13

  	
  Security and set off

  
	
   

  	
   

  
	
  13.1

  	
  Application of moneys

  
	
   

  	
   

  
	
   

  	
  If either:

  
	
   

  	
   

  
	
  13.1.1

  	
  on
  any date on which a payment is due to be made by the Borrower under this
  Agreement, the amount received by the Agent from the Borrower falls short of
  the total amount of the payment due to be made by the Borrower on such date;
  or

  
	
   

  	
   

  
	
  13.1.2

  	
  the
  Agent, the Security Trustee and/or the Lenders receive moneys under or
  pursuant to any of the Security Documents that are expressed to be applicable
  in accordance with the provisions of this clause 13.1,

  
	
   

  	
   

  
	
   

  	
  then,
  without prejudice to any rights or remedies available to the Agent, the
  Security Trustee and the Lenders under the Security Documents, such amount,
  if received by the Lenders shall be paid to the Agent, and shall be applied
  by the Agent in the following manner:

  
	
   

  	
   

  
	
  13.1.3

  	
  first,
  in or towards payment, on a pari passu basis, of all unpaid fees,
  commissions, costs and expenses which may be owing to any of the Finance
  Parties under any of the Security Documents;

  
	
   

  	
   

  
	
  13.1.4

  	
  secondly,
  in or towards payment, on a pari passu basis, of any arrears of interest
  which has become due but remains unpaid and any scheduled payments owing to
  any of the Swap Banks under the Qualifying Swaps which have become due
  but remain unpaid;

  
	
   

  	
   

  
	
  13.1.5

  	
  thirdly
  in or towards repayment of the Loan and in or towards payment to the Swap
  Banks of any other sums owing to the Swap Banks under the Master Agreements
  on a pari passu basis;

  
	
   

  	
   

  
	
  13.1.6

  	
  fourthly
  in or towards payment to any Lender for any loss suffered by reason of any
  payment in respect of principal relating to the Loan not being effected when
  due;

  
	
   

  	
   

  
	
  13.1.7

  	
  fifthly,
  in or towards payment to any Finance Party of any other sums (including
  indemnity amounts) which have become due but remain unpaid under any of the
  Security Documents; and

  
	
   

  	
   

  
	
  13.1.8

  	
  sixthly,
  the surplus (if any) shall be paid to the Borrower or to whomsoever else may
  be entitled to receive such surplus.

  
	
   

  	
   

  
	
  13.2

  	
  Set-off

  
	
   

  	
   

  
	
   

  	
  The Borrower
  authorises each Lender (without prejudice to any of the Lenders’ rights at
  law, in equity or otherwise), at any time and without notice to the Borrower,
  to apply any credit balance to which the Borrower is then entitled standing
  upon any account of the Borrower with any branch of such Lender in or towards
  satisfaction of any sum due and payable from the Borrower to such Lender
  under any of the Security Documents. For this purpose, each Lender is
  authorised to purchase with the moneys standing to the credit of such account
  such other currencies as may be necessary to effect such application. No
  Lender shall be obliged to exercise any right given to it by this clause
  13.2. Each Lender shall notify the Agent and the

  

 

54

 

	
   

  	
  Borrower
  forthwith upon the exercise or purported exercise of any right of set off
  giving full details in relation thereto and the Agent shall inform the other
  Lenders.

  
	
   

  	
   

  
	
  14

  	
  Assignment, transfer and lending office

  
	
   

  	
   

  
	
  14.1

  	
  Benefit and burden

  
	
   

  	
   

  
	
   

  	
  This
  Agreement shall be binding upon, and enure for the benefit of, the Finance
  Parties and the Borrower and their respective successors.

  
	
   

  	
   

  
	
  14.2

  	
  No assignment by Borrower

  
	
   

  	
   

  
	
   

  	
  The
  Borrower may not assign or transfer any of its rights or obligations under
  this Agreement without the prior consent of the Agent (given with the
  authorisation of all the Lenders).

  
	
   

  	
   

  
	
  14.3

  	
  Assignments and transfers by Lenders

  
	
   

  	
   

  
	
  14.3.1

  	
  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 5 with any modifications approved or required by the
  Agent (a Substitution Certificate)
  executed by the Transferor Lender and the Transferee Lender.

  
	
   

  	
   

  
	
  14.3.2

  	
  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.

  
	
   

  	
   

  
	
  14.3.3

  	
  A transfer pursuant to this
  clause 14.3 shall:

  
	
   

  	
   

  
	
   

  	
  (a)

  	
  require the prior written
  the consent of the Agent;

  
	
   

  	
   

  	
   

  
	
   

  	
  (b)

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

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (i)

  	
  following the occurrence of an Event of Default;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (ii)

  	
  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; and

  

 

55

 

	
   

  	
  (c)

  	
  require the consent of the Borrower (such consent not to
  be unreasonably withheld or delayed) in all other circumstances.

  
	
   

  	
   

  
	
  14.4

  	
  Reliance on Substitution Certificate

  
	
   

  	
   

  
	
  14.4.1

  	
  The
  Agent shall be entitled to rely on any Substitution Certificate believed by
  it to be genuine and correct and to have been presented or signed by the
  persons by whom it purports to have been presented or signed, and shall not
  be liable to any of the parties to this Agreement and the Security Documents
  for the consequences of such reliance.

  
	
   

  	
   

  
	
  14.4.2

  	
  The
  Agent shall at all times during the continuation of this Agreement maintain a
  register in which it shall record the name, Commitments, Contributions and
  administrative details (including the lending office) from time to time of
  the Lenders holding a Substitution Certificate and the date at which the
  transfer referred to in such Substitution Certificate held by each Lender was
  transferred to such Lender, and the Agent shall make the said register
  available for inspection by any Lender and the Borrower during normal banking
  hours upon receipt by the Agent of reasonable prior notice requesting the
  Agent to do so.

  
	
   

  	
   

  
	
  14.4.3

  	
  The
  entries on the said register shall, in the absence of manifest error, be
  conclusive in determining the identities of the Commitments, the
  Contributions and the Substitution Certificates held by the Lenders from time
  to time and the principal amounts of such Substitution Certificates and may
  be relied upon by the Agent and the other Security Parties for all purposes
  in connection with this Agreement and the other Security Documents.

  
	
   

  	
   

  
	
  14.5

  	
  Fees and expenses

  
	
   

  	
   

  
	
   

  	
  If
  any Lender assigns or transfers of all or any part of its rights, benefits
  and/or obligations under the Security Documents, the assignee/transferee
  shall pay to the Agent on demand a fee of one thousand five hundred Dollars
  ($1,500) (for the account of the Agent) together with all costs, fees and
  expenses (including, but not limited to, legal fees and expenses), and all
  value added tax thereon, verified by the Agent as having been incurred by it
  in connection with such assignment or transfer.

  
	
   

  	
   

  
	
  14.6

  	
  Documenting assignments and transfers

  
	
   

  	
   

  
	
   

  	
  If any Lender transfers all or any part
  of its rights, benefits and/or obligations as provided in clause 14.3 the
  Borrower undertakes, immediately on being requested to do so by the Agent and
  at the cost of the Existing Lender, to provide to each New Lender (or
  prospective New Lender) such “know your customer” documentation as the New
  Lender may request, to enter into, and procure that the other Security
  Parties shall enter into, such documents as may be necessary or desirable to
  transfer to the New Lender all or the relevant part of such Lender’s interest
  in the Security Documents and all relevant references in this Agreement to
  such Lender 

  

 

56

 

	
   

  	
  shall
  thereafter be construed as a reference to the Existing Lender and/or its New
  Lender (as the case may be) to the extent of their respective interests.

  
	
   

  	
   

  
	
  14.7

  	
  Sub-participation

  
	
   

  	
   

  
	
   

  	
  A
  Lender may sub-participate all or any part of its rights and/or obligations
  under the Security Documents without the consent of, or notice to, the
  Borrower but subject to the prior written consent of the Agent.

  
	
   

  	
   

  
	
  14.8

  	
  Lending offices

  
	
   

  	
   

  
	
   

  	
  Each
  Lender shall lend through its office at the address specified in schedule 1
  or, as the case may be, in any relevant Substitution Certificate or through
  any other office of such Lender selected from time to time by such Lender
  through which such Lender wishes to lend for the purposes of this Agreement (Lending Office). If the office through
  which a Lender is lending is changed pursuant to this clause 14.8, such
  Lender shall notify the Agent no later than five (5) Banking Days’ prior
  to such change in the form set forth in schedule 7 which notice shall include
  the details of any consequent change in its account for payments. Such notice
  shall be in the original and shall be signed by a duly authorised officer of
  the relevant Lender and the Agent shall notify the Borrower.

  
	
   

  	
   

  
	
  14.9

  	
  Disclosure of information

  
	
   

  	
   

  
	
   

  	
  Any
  Lender may disclose to a prospective transferee or to any other person who
  may propose entering into contractual relations with such Lender in relation
  to this Agreement such information about the Borrower as such Lender shall
  consider appropriate.

  
	
   

  	
   

  
	
  14.10

  	
  Increased costs

  
	
   

  	
   

  
	
   

  	
  If (i) a
  Existing Lender transfers part or all of its rights, benefits and obligations
  under this Agreement pursuant to clause 14.3 or a Lender changes its Lending
  Office pursuant to clause 14.8 and (ii) as a result of circumstances
  existing at the date such transfer or change occurs, the Borrower would be
  obliged to make payment under clause 6.7 or 12.2 to the New Lender or the
  Lender that has changed its Lending Office, that New Lender or Lender shall
  only be entitled to receive payment under clause 6.7 or 12.2 to the same
  extent as the Existing Lender or Lender acting through its previous Lending
  Office would have been if the novation or change had not occurred. The
  limitations on the New Lender or on a Lender that has changed is Lending
  Office in this clause 14.10 shall not apply where the transfer to the New
  Lender or change in Lending Office was made at the request of the Borrower or
  where the increased payment results from a change in law after the date of
  the transfer or change in question.

  

 

57

 

	
  15

  	
  Agent and Security Trustee

  
	
   

  	
   

  
	
  15.1

  	
  Appointment of the Agent

  
	
   

  	
   

  
	
   

  	
  The
  terms and basis on which the Agent has been appointed by the Lenders as Agent
  are set out in the Trust and Agency Agreement including, amongst other
  things, the manner in which any decision to exercise any right, powers,
  discretion or authority or to carry out any duty are to be made between the
  Lenders and the Agent.

  
	
   

  	
   

  
	
  15.2

  	
  Appointment of the Security Trustee

  
	
   

  	
   

  
	
   

  	
  The
  terms and basis on which the Security Trustee has been appointed by the
  Lenders as security trustee are set out in the Trust and Agency Agreement
  including, amongst other things the manner in which any decision to exercise
  any right, power, discretion or authority to carry out any duty are to be
  made between the Lenders and the Security Trustee.

  
	
   

  	
   

  
	
  16

  	
  Notices and other matters

  
	
   

  	
   

  
	
  16.1

  	
  Notices

  
	
   

  	
   

  
	
   

  	
  Every
  notice, request, demand or other communication under this Agreement or
  (unless otherwise provided therein) under any of the other Security Documents
  shall:

  
	
   

  	
   

  
	
  16.1.1

  	
  be in
  writing, delivered personally or by first class prepaid letter (airmail if
  available) or telefax and, in the case of notification of rates of interest
  by the Agent or in the case of the delivery of any document by the Agent, the
  Agent may refer the relevant party or parties (by fax or letter) to a web
  site and to the location of the relevant information on such web site in
  discharge of such notification or delivery obligation;

  
	
   

  	
   

  
	
  16.1.2

  	
  be
  deemed to have been received, subject as otherwise provided in the relevant
  Security Document:

  
	
   

  	
   

  
	
   

  	
  (a)

  	
  in
  the case of a letter, when delivered personally or seven (7) days after
  it has been put into the post;

  
	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  in
  the case of a telefax, when a complete and legible copy is received by the
  addressee (unless the date of despatch is not a Banking Day in the country of
  the addressee or, if the time of despatch is after the close of business in
  the country of the addressee, it shall be deemed to have been received at the
  opening of business on the next such Banking Day); and

  
	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  where
  reference in such notice, request, demand or other communication is made to a
  web site, when the delivery of the letter or telefax referring to the
  addressee to such

  

 

58

 

	
   

  	
   

  	
  web
  site is deemed to have been received pursuant to the other provisions of this
  clause 16.1,

  
	
   

  	
   

  
	
   

  	
  provided
  that any notice, request, demand or communication which is to be sent, made
  or delivered to the Agent will be effective only when actually received by
  the Agent and then only if it is expressly marked for the attention of the
  department or the individual specified in clause 16.1.3 or any other
  individual that the Agent shall specify pursuant to such clause 16.1.3; and

  
	
   

  	
   

  
	
  16.1.3

  	
  be
  sent:

  
	
   

  	
   

  
	
   

  	
  (a)

  	
  to
  the Borrower at:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  c/o
  Danaos Shipping Co. Ltd.

  
	
   

  	
   

  	
  14,
  Akti Kondyli,

  
	
   

  	
   

  	
  GR-185
  45 Piraeus, Greece

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Fax:

  	
  +30
  210 42 20 855

  
	
   

  	
   

  	
  Attention:

  	
  Legal
  Department

  
	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  to
  each Lender at its address or telefax number specified in Schedule 1 or in
  any relevant Substitution Certificate;

  
	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  to
  the Agent at:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Coolsingel
  93

  
	
   

  	
   

  	
  3012
  AE Rotterdam

  
	
   

  	
   

  	
  Netherlands

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Fax
  no:

  	
  +31-10-401-5937

  
	
   

  	
   

  	
  Attn:

  	
  Dingeman
  de Baan / Mark Meijer

  
	
   

  	
   

  	
   

  
	
   

  	
  (d)

  	
  to
  the Security Trustee at:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Coolsingel
  93

  
	
   

  	
   

  	
  3012
  AE Rotterdam

  
	
   

  	
   

  	
  Netherlands

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Fax
  no:

  	
  +31-10-401-5937

  
	
   

  	
   

  	
  Attn:

  	
  Dingeman
  de Baan / Mark Meijer

  
	
   

  	
   

  	
   

  
	
   

  	
  or to
  such other address and/or number as is notified by the relevant party to the
  other parties to this Agreement by not less than five (5) Banking Days’
  written notice.

  

 

59

 

	
  16.2

  	
  Notices through the Agent

  
	
   

  	
   

  
	
   

  	
  Every
  notice, request, demand or other communication under this Agreement to be
  given by any Security Party to any other party shall be given to the Agent
  specified in this Agreement for onward transmission as appropriate and to be
  given to any Security Party shall (except as otherwise provided in this
  Agreement) be given by the Agent. Promptly upon receipt of notification of an
  address or fax number or change of address or fax number pursuant to clause
  16.1.3 or changing its own address or fax number, the Agent shall notify the
  other relevant parties.

  
	
   

  	
   

  
	
  16.3

  	
  No implied waivers, remedies cumulative

  
	
   

  	
   

  
	
   

  	
  No
  failure or delay on the part of the Agent, the Security Trustee, the Lead
  Arranger, either of the Co-Arrangers, the Lenders or any of them to exercise
  any power, right or remedy under any of the Security Documents shall operate
  as a waiver thereof, nor shall any single or partial exercise by the Agent, the
  Security Trustee, the Lead Arranger, either Co-Arranger, the Lenders or any
  of them of any power, right or remedy preclude any other or further exercise
  thereof or the exercise of any other power, right or remedy. The remedies
  provided in the Security Documents are cumulative and are not exclusive of
  any remedies provided by law.

  
	
   

  	
   

  
	
  16.4

  	
  English language

  
	
   

  	
   

  
	
   

  	
  All
  certificates, instruments and other documents to be delivered under or
  supplied in connection with any of the Security Documents shall be in the
  English language or shall be accompanied by a certified English translation
  upon which the Agent, the Security Trustee, the Lead Arranger, both
  Co-Arrangers and the Lenders shall be entitled to rely.

  
	
   

  	
   

  
	
  16.5

  	
  Counterparts

  
	
   

  	
   

  
	
   

  	
  This
  Agreement may be executed in any number of original counterparts and by
  facsimile provided that original signed copies are provided within a
  reasonable period of time thereafter. All such counterparts shall, once
  executed, constitute a single document.

  
	
   

  	
   

  
	
  16.6

  	
  Further assurance

  
	
   

  	
   

  
	
   

  	
  The Borrower
  undertakes that the Security Documents shall both at the date of execution
  and delivery thereof and so long as any moneys are owing under any of the
  Security Documents be valid and binding obligations of the respective parties
  thereto and rights of each Lender enforceable in accordance with their
  respective terms and that they will, at their expense, execute, sign, perfect
  and do, and will procure the execution, signing, perfecting and doing by each
  of the other Security Parties of, any and every such further assurance,
  document, act or thing as in the reasonable opinion of the Majority Lender
  may be necessary or desirable for perfecting the security contemplated or
  constituted by the Security Documents.

  

 

60

 

	
  16.7

  	
  Conflicts

  
	
   

  	
   

  
	
   

  	
  In
  the event of any conflict between this Agreement and any of the other
  Security Documents, the provisions of this Agreement shall prevail.

  
	
   

  	
   

  
	
  17

  	
  Governing law and jurisdiction

  
	
   

  	
   

  
	
  17.1

  	
  Law

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
  17.2

  	
  Submission to jurisdiction

  
	
   

  	
   

  
	
   

  	
  The
  parties to this Agreement agree for the benefit of the Finance Parties that:

  
	
   

  	
   

  
	
  17.2.1

  	
  if
  any party has any claim against any other arising out of or in connection
  with this Agreement such claim shall (subject to clause 17.2.3) be referred
  to the High Court of Justice in England, to the jurisdiction of which each of
  the parties irrevocably submits;

  
	
   

  	
   

  
	
  17.2.2

  	
  the
  jurisdiction of the High Court of Justice in England over any such claim
  against any Finance Party shall be an exclusive jurisdiction and no courts
  outside England shall have jurisdiction to hear or determine any such claim;
  and

  
	
   

  	
   

  
	
  17.2.3

  	
  nothing
  in this clause 17.2 shall limit the right of a Finance Party to refer any
  such claim against the Borrower to any other court of competent jurisdiction
  outside England, to the jurisdiction of which the Borrower hereby irrevocably
  agrees to submit, nor shall the taking of proceedings by a Finance Party
  before the courts in one or more jurisdictions preclude the taking of
  proceedings in any other jurisdiction whether concurrently or not.

  
	
   

  	
   

  
	
   

  	
  The
  parties further agree that only the Courts of England and not those of any
  other State shall have jurisdiction to determine any claim which the Borrower
  may have against any of the Finance Parties arising out of or in connection
  with this Agreement.

  
	
   

  	
   

  
	
  17.3

  	
  Agent for service of process

  
	
   

  	
   

  
	
   

  	
  The
  Borrower irrevocably designates, appoints and empowers Danaos Management
  Consultants of 4 Staple Inn, Holborn, London WC1V 7QU, England to receive for
  it and on its behalf service of process issued out of the High Court of
  Justice in England in relation to any claim arising out of or in connection
  with this Agreement.

  
	
   

  	
   

  
	
  17.4

  	
  Waiver of immunity

  
	
   

  	
   

  
	
   

  	
  The Borrower
  irrevocably and unconditionally:

  

 

61

 

	
   

  	
  (a)

  	
  agrees
  not to claim immunity from proceedings brought by any Finance Party against
  it in relation to any of the Security Documents and to ensure that no such
  claim is made on its behalf;

  
	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  consents
  generally to the giving of any relief or the issue of any process in
  connection with any request for relief; and

  
	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  waives
  all rights of immunity in respect of itself or its assets.

  
	
   

  	
   

  	
   

  
	
  17.5

  	
  Contracts (Rights of Third Parties) Act 1999

  
	
   

  	
   

  	
   

  
	
   

  	
  No
  term of this Agreement is enforceable under the Contracts (Rights of Third
  Parties) Act 1999 by a person who is not a party to this Agreement.

  
	
   

  	
   

  	
   

  
	
  IN WITNESS whereof the parties to this Agreement
  have caused this Agreement to be duly executed on the date first above
  written.

  

 

62

 

Schedule 1

 

Initial
Commitments

 

	
  Name

  	
   

  	
  Address and fax number

  	
   

  	
  Commitment

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Fortis Bank
  (Nederland) N.V.

  	
   

  	
  Lending Office

  	
   

  	
  $126,600,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Coolsingel
  93

  	
   

  	
  (subject to clause 

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  2.1.2)

  	
   

  
	
   

  	
   

  	
  P.O. Box
  749

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3000
  AS Rotterdam

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The
  Netherlands

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address for Notices

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Coolsingel
  93

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  P.O. Box
  749

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3000
  AS Rotterdam

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The
  Netherlands

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Fax:

  	
  +31-10-401-5937

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attn:

  	
  Dingeman
  de Baan / Mark Meijer

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Account for Payments (but not payments under any Qualifying Swap or
  Master Agreement)

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Bank: ABN AMRO

  	
  Bank N.V., New York branch

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Swift address:

  	
  ABNAUS33

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Account name:

  	
  Fortis Bank (Nederland) N.V., Rotterdam

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Swift address:

  	
  FTSBNL2R

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Reference:

  	
  For further credit / Acc. 25.11.89.694 / Danaos

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Lloyds TSB Bank
  plc

  	
   

  	
  Lending Office

  	
   

  	
  $87,160,747.66

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  10
  Gresham Street

  	
   

  	
  (subject to clause 

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  2.1.2)

  	
   

  
	
   

  	
   

  	
  London
  EC2V 7EA

  	
   

  	
   

  	
   

  

 

63

 

	
  Name

  	
   

  	
  Address and fax number

  	
   

  	
  Commitment

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  United Kingdom

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address for Notices

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  10
  Gresham Street

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  London
  EC2V 7EA

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  United Kingdom

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Fax:

  	
  +44
  20 7158 3271

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attn:

  	
  Head
  of Loans Management

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Account for Payments (but not payments under any Qualifying Swap or
  Master Agreement)

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Account
  name:

  	
  Lloyds
  TSB Bank plc,

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Loans
  Administration

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Bank:

  	
  Bank
  of New York, New York

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Reference
  Account

  	
  890-0047-003

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Account
  reference:

  	
  Danaos
  — USD256.8m Facility

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SWIFT:

  	
  IRVTUS3N

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  National Bank
  of Greece S.A.

  	
  Lending Office

  	
   

  	
  $39,439,252.34

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2
  Bouboulinas Street & Akti Miaouli

  	
   

  	
  (subject to clause 

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  2.1.2)

  	
   

  
	
   

  	
   

  	
  185
  38 Piraeus

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Greece

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address for Notices

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2
  Bouboulinas Street & Akti Miaouli

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  185
  38 Piraeus

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Greece

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Fax:

  	
  +30
  210 41 44 120

  	
   

  	
   

  	
   

  

 

64

 

	
  Name

  	
   

  	
  Address and fax number

  	
   

  	
  Commitment

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attn:

  	
  Mr Katsikogiannis

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Account for Payments (but not payments under any Qualifying Swap or
  Master Agreement)

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Bank:

  	
  Bank of New York, New York

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Reference Account:

  	
  803-3139-005

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SWIFT:

  	
  IRVTUS3N

  	
   

  	
   

  	
   

  

 

65

 

Schedule 2

 

Form of
Compliance Certificate

 

	
  To:

  	
  Fortis
  Bank (Nederland) N.V.

  	
   

  
	
   

  	
  Coolsingel 93

  	
   

  
	
   

  	
  P.O. Box 749

  	
   

  
	
   

  	
  3000 AS Rotterdam

  	
   

  
	
   

  	
  The Netherlands

  	
   

  
	
   

  	
   

  	
   

  
	
  From:

  	
  Danaos
  Corporation (the Company)

  	
   

  

 

Dated:
[·]

 

$253,200,000
Loan Agreement dated [·] July 2008
relating to the

m.v.
“YM Seattle”, m.v. “YM Vancouver”, m.v. “YM Colombo” and m.v. “YM Singapore”

(the Loan Agreement)

 

Terms
defined in the Loan Agreement shall have the same meaning when used herein.

 

We, [·] and [·], each being a director of the Company,
refer to clauses 8.2 and 8.3 of the Loan Agreement and hereby certify that, as
at [insert date of accounts of the Borrower] and on the date hereof:

 

	
  1

  	
  Financial Covenants

  
	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  the Security Value is not less than the Security
  Requirement;

  
	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  the ratio of Total Liabilities (after deducting
  all Cash and Cash Equivalent) to Market Value Adjusted Total Assets (after
  deducting all Cash and Cash Equivalents) does not exceed 0.75:1;

  
	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  the aggregate of all Cash and Cash Equivalents is
  not less than $30,000,000;

  
	
   

  	
   

  	
   

  
	
   

  	
  (d)

  	
  the Interest Coverage Ratio is not less than
  2.5:1; [and]

  
	
   

  	
   

  	
   

  
	
   

  	
  (e)

  	
  the Market Value Adjusted Net Worth of the
  Borrower is not less than the higher of $250,000,000[.] [;and]

  
	
   

  	
   

  	
   

  
	
   

  	
  (f)

  	
  [in respect of Compliance Certificates issued after
  31 March 2010 only:]
  the Borrower is maintaining in the Borrower Account a cash deposit of at
  least $6,000,000.]

  

 

66

 

	
  2

  	
  Default

  
	
   

  	
   

  
	
   

  	
  [No Default has occurred which is
  continuing] or [The following Default has occurred which is continuing: [provide details of Default]. [The
  following steps are being taken to remedy it: [provide details of steps being taken to remedy Default]].

  

 

 

	
  Signed:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  [Authorised
  Signatory]

  	
   

  	
  [Authorised
  Signatory]

  

 

67

 

Schedule 3

 

Form of Drawdown
Notice

 

	
  To:

  	
  Fortis
  Bank (Nederland) N.V.

  	
   

  
	
   

  	
  Coolsingel
  93

  	
   

  
	
   

  	
  P.O. Box
  749

  	
   

  
	
   

  	
  3000
  AS Rotterdam

  	
   

  
	
   

  	
  The
  Netherlands

  	
   

  

 

[Date]

 

$253,200,000
Loan Agreement dated [·] July 2008
relating to the

m.v.
“YM Seattle”, m.v. “YM Vancouver”, m.v. “YM Colombo” and m.v. “YM Singapore”

(the Loan Agreement)

 

We
refer to the Loan Agreement and hereby give you notice that:

 

(1)                        On [insert proposed Drawdown
Date] we wish to draw down the single permitted Advance of $[·] to be paid to [insert name
of account] with [insert details of bank].

 

(2)                        The first Interest Period for
the Loan will be of [one][three][six][nine][twelve] month’s duration.

 

We
confirm that:

 

(a)                        no event or circumstance has occurred which is
continuing which constitutes a Default;

 

(b)                       the representations and warranties contained in
clauses 7.1 and 7.2 of the Loan Agreement are true and correct at the date
hereof as if made with respect to the facts and circumstances existing at such
date; and

 

(c)                        the borrowing to be effected by the drawdown of such Advance
will be within our corporate powers, has been validly authorised by appropriate
corporate action and will not cause any limit on our borrowings (whether
imposed by statute, regulation, agreement or otherwise) to be exceeded.

 

Words
and expressions defined in the Loan Agreement shall have the same meanings
where used herein.

 

68

 

	
   

  	
   

  
	
  For
  and on behalf of

  
	
  DANAOS CORPORATION

  

 

69

 

Schedule 4

 

Documents and
evidence required as conditions precedent

 

(referred to in
clause 9)

 

Part 1

 

Documents
and evidence required as conditions precedent to the issuance of any Drawdown
Notice

 

1.         Constitutional documents

 

copies,
certified by a duly authorised signatory of each Security Party as true,
complete and up to date copies of (i) all documents which contain or
establish or relate to the constitution of such Security Party and (ii) evidence
it is in good standing under the laws of its incorporation;

 

2.         Corporate authorisations -  Security Parties

 

in respect of
each Security Party, copies of resolutions of (i) the directors of it
approving each of the Transaction Documents to which it is to be a party, and
each authorising the signature, delivery and performance of its obligations
thereunder, certified by a duly authorised signatory of it as:

 

(i)                           being true and correct;

 

(ii)                        being duly passed at meeting
of its directors duly convened and held;

 

(iii)                     not having been amended, modified or
revoked; and

 

(iv)                    being in full force and effect,

 

together with
originals or certified copies of any powers of attorney issued by it pursuant
to such resolutions;

 

3.         Shareholder’s authorisations - Owners

 

in respect of each Owner, copies of resolutions of its shareholders,
approving the Transaction Documents to which it is to be a party and
authorising the signature, delivery and performance of its obligations
thereunder, certified by a duly authorised signatory of its shareholder as:

 

(i)                           being true and correct;

 

(ii)                        being duly passed at meeting
of its shareholders duly convened and held;

 

(iii)                     not having been amended, modified or
revoked; and

 

70

 

(iv)                    being in full force and effect,

 

together with
originals or certified copies of any powers of attorney issued by its
shareholder pursuant to such resolutions;

 

4.         Incumbency certificate

 

an original
certificate signed by a duly authorised signatory of each Security Party no
earlier than five (5) Banking Days prior to the date of this Agreement
certifying the names of the officers and directors of such Security Party and
attaching copies of the signatures of the persons who have been authorised on
behalf of it to sign such of the Transaction Documents to which it is, or is to
be, party and to give notices and communications, including (in respect of the
Borrower) notices of drawing under or in connection with the Security
Documents;

 

5.         Process agent appointments

 

a copy,
certified as a true copy by a duly authorised signatory of each Security Party
or other person acceptable to the Agent of a letter from such Security Party’s
agent for receipt of service of proceedings referred to in clause 18.3
accepting its appointment under each of the other Security Documents in which
it is or is to be appointed as such Security Party’s agent and confirming that
its appointment has become effective;

 

6.                            Security
Documents

 

(i)         a
signed original of this Agreement

 

(ii)       each
of the other Security Documents (other than those referred to in Part 2
paragraph 7 below), and any notices relating thereto;

 

7.         Charters and Management Agreements

 

a copy,
certified as a true and complete copy by a duly authorised signatory of each
Owner, of the Charters and the Management Agreements;

 

8.                            Legal
opinions:

 

(i)                           a legal opinion of Norton Rose
LLP with respect to matters of English law;

 

(ii)                        a legal opinion of Watson,
Farley & Williams LLP, New York with respect to matters of Marshall
Islands law;

 

(iii)                     a legal opinion of Watson, Farley &
Williams LLP with respect to matters of Liberian law;

 

(iv)                    a legal opinion of Montanios &
Montanios with respect to matters of Cyprus law;

 

71

 

9.         Fees

 

evidence that
the fees and expenses due to any Finance Party under the Security Documents
have been paid in full;

 

10.                     Audited
Financial Statements

 

a certified
copy of the Original Accounts;

 

11.                     Accounts

 

evidence that
the Accounts have been opened and that each Account has the sum of one Dollar
($1) credited to such account;

 

12.       Know Your
Customer

 

all know your
customer documentation reasonably required by each Finance Party in respect of
each Security Party; and

 

13.       Corporate Structure

 

evidence as to
the corporate structure of the Borrower and its Subsidiaries.

 

72

 

Part 2

 

Documents and evidence as
required as conditions precedent on or prior to the Drawdown Date

 

In respect of
each Ship:

 

1.                            Conditions
precedent

 

evidence
reasonably acceptable to the Agent that the conditions precedent set out in Part 1
of schedule 5 have been, or as the case may be, remain fully, satisfied;

 

2.                            DOC

 

a certified true copy of the DOC of the Operator;

 

3.                            Insurance
opinion

 

an opinion from
such insurance consultants to the Agent as the Agent may require on the
Insurances required to be effected in respect of each Ship under the Guarantee
and/or any other Security Documents relating to each Ship;

 

4.                            Insurance

 

evidence
reasonably acceptable to the Agent from each of the Owners that the Ships will
on the Drawdown Date, be insured in accordance with the provisions of the
Security Documents and all requirements of the Security Documents in respect of
such insurance have been complied with (including without limitation,
confirmation from the protection and indemnity association or other insurer
with which the Ships is, or is to be, entered for insurance or insured against
protection and indemnity risks (including oil pollution risks) that any
necessary declarations required by the association or insurer for the removal
of any oil pollution exclusion have been made and that any such exclusion does
not apply to the Ships);

 

5.                            Valuation

 

a valuation of
the Ships made in accordance with clause 8.2.2;

 

6.                            Registration

 

evidence that each Ship is registered in the name of
the Owner under the laws and flag of the relevant Flag State and is free of
Encumbrances other than the Mortgage;

 

73

 

7.                            Classification

 

evidence that each Ship maintains classification free of all overdue
recommendations and conditions affecting class;

 

8.                            Execution
and registration of documents

 

(a)                        signed originals of the Security Deed and all
notices of assignment required under such Security Deed (including, for the
avoidance of doubt, the Charter Notice and Assignment);

 

(b)                       a signed
original of the Mortgage from each Owner together in each case with evidence
that on the Drawdown Date it will be registered against the relevant Ship under
the laws and flag of the relevant Flag State; and

 

(c)                        a signed
original of each Manager’s Undertaking;

 

9.                            Legal
opinions:

 

a legal opinion
of Watson, Farley & Williams LLP, New York with respect to matters of
Marshall Islands law;

 

10.                     SMC

 

a certified
true copy of the SMC for each Ship;

 

11.                     ISPS Code

 

certified true
copies of all certificates required by the Owners and the Ships under the ISPS
Code;

 

12.                     Old Loan

 

evidence that the loan previously made to the Owners
(which was secured on the Ships) has been prepaid or repaid in full;

 

13.                     No
Total Loss or sale

 

none of the Ships has been sold or become a
Total Loss and no incident has occurred which the Agent considers may result in
a Ship becoming a Total Loss.

 

74

 

Schedule 5

 

Form of
Substitution Certificate

 

(referred
to in clause 15)

 

SUBSTITUTION
CERTIFICATE

 

Lenders are advised not to employ
Substitution Certificates or otherwise to assign or transfer interests in the
Loan Agreement without further ensuring that the transaction complies with all
applicable laws and regulations, including the Financial Services Act 1986 and
regulations made thereunder and similar statutes which may be in force in other
jurisdictions

 

To:                                                         Fortis Bank (Nederland) N.V.
as agent on its own behalf and on behalf of the Borrower and the Lenders
defined in the Loan Agreement referred to below.

 

Attention:      Loan Administration - [                                  ]

 

[Date]

 

This
certificate (Substitution Certificate) relates
to a loan agreement dated [·] July 2008 (the Loan Agreement) and made between (1) Danaos Corporation as
borrower (the Borrower), (2) Fortis Bank
(Nederland) N.V. as Lead Arranger, (3) Lloyds TSB Bank plc and National
Bank of Greece S.A. as Co-Arrangers, (4) the banks and financial
institutions as defined therein (together the Lenders),
(5) Fortis Bank (Nederland) N.V. as Agent, and (6) Fortis Bank (Nederland)
N.V. as Security Trustee; and (7) Fortis Bank (Nederland) N.V., Lloyds TSB
Bank plc and National Bank of Greece S.A. as Swap Banks for a loan of up to
$253,200,000.  Terms defined in the Loan Agreement
shall, unless otherwise defined herein, have the same meanings herein as
therein.

 

In this
Certificate:

 

the Existing Lender means [full name] of [lending office]; and

 

the New Lender means [full name] of [lending office].

 

1                                The Existing Lender with full
title guarantee assigns to the New Lender absolutely all rights and interests
(present, future or contingent) which the Existing Lender has as a Lender under
or by virtue of the Loan Agreement and the Trust and Agency Agreement and all
the Security Documents (save, for the avoidance of doubt, any Qualifying Swaps
and any Master Agreements) in relation to [  
] per cent. ([   ]%) of the
Contribution of the Existing Lender (or its predecessors in title) details of
which are set out below:

 

75

 

	
  Date of

  Advances

  	
   

  	
  Amount of Advances

  	
   

  	
  Existing

  Lender’s

  Contribution

  to Advances

  	
   

  	
  Maturity Date

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

2                                By virtue of this Substitution
Certificate and clause 14.3 of the Loan Agreement, the Existing Lender is
discharged [entirely from its Commitment which amounts to
$[          ]] [from [   ] per cent. ([   ]%) of its Commitment, which percentage
represents $[         ]].]

 

3                                The New Lender hereby requests
the Borrower, the Agent, the Security Trustee and the Lenders to accept the
executed copies of this Substitution Certificate as being delivered pursuant to
and for the purposes of clause 14.3 of the Loan Agreement so as to take
effect in accordance with the terms thereof on date of transfer.

 

4                                The New Lender:

 

(a)                        confirms that it has received
a copy of the Loan Agreement, the Trust and Agency Agreement and the other
Security Documents (save for any Qualifying Swaps and any Master Agreement)
together with such other documents and information as it has required in
connection with the transaction contemplated thereby;

 

(b)                       confirms that it has not
relied and will not hereafter rely on the Existing Lender or the Agent to check
or enquire on its behalf into the legality, validity, effectiveness, adequacy,
accuracy or completeness of the Loan Agreement, the Trust and Agency Agreement,
any of the Security Documents (save for any Qualifying Swap and any Master
Agreement) or any such documents or information;

 

(c)                        confirms that it has not
relied and will not rely on the Existing Lender, the Agent or the Lenders to
assess or keep under review on its behalf the financial condition,
creditworthiness, condition, affairs, status or nature of the Borrower or any
other Security Party (save as otherwise expressly provided therein);

 

76

 

(d)                       warrants that it has power and
authority to become a party to the Loan Agreement and the Trust and Agency
Agreement and has taken all necessary action to authorise execution of this
Substitution Certificate and to obtain all necessary approvals and consents to
the assumption of its obligations under the Loan Agreement, the Trust and
Agency Agreement and the other Security Documents (save, for the avoidance of
doubt, any Qualifying Swaps and any Master Agreements);

 

(e)                        acknowledges and accepts the
provisions of paragraph 4(d) above; and

 

(f)                         appoints the Agent to act as
its agent as provided in the Loan Agreement and the other Security Documents
(save, for the avoidance of doubt, any Qualifying Swaps and any Master
Agreements) and agrees to be bound by the terms of the Loan Agreement.

 

5                                The Existing Lender:

 

(a)                        warrants to the New Lender
that it has full power to enter into this Substitution Certificate and has
taken all corporate action necessary to authorise it to do so;

 

(b)                       warrants to the New Lender
that this Substitution Certificate is binding on the Existing Lender under the
laws of England, the country in which the Existing Lender is incorporated and
the country in which its lending office is located; and

 

(c)                        agrees that it will, at its
own expense, execute any documents which the New Lender reasonably requests for
perfecting in any relevant jurisdiction the New Lender’s title under this
Substitution Certificate or for a similar purpose.

 

6                                The New Lender hereby
undertakes with the Existing Lender and each of the other parties to the Loan
Agreement and the other Security Documents that it will perform in accordance
with its terms all those obligations which by the terms of the Loan Agreement,
the Trust and Agency Agreement and the other Security Documents will be assumed
by it after delivery of the executed copies of this Substitution Certificate to
the Agent and satisfaction of the conditions (if any) subject to which this
Substitution Certificate is expressed to take effect.

 

7                                By execution of this
Substitution Certificate on their behalf by the Agent and in reliance upon the
representations and warranties of the New Lender, the Borrower and the Finance
Parties accept the New Lender as a party to the Loan Agreement and the other
Security Documents with respect to all those rights and/or obligations which by
the terms of the Loan Agreement and the Security Documents will be assumed by
the New Lender (including those about pro-rata sharing and the exclusion of
liability on the part of, and the indemnification of, the Agent as provided by
the relevant Security Documents) after delivery of the executed copies of this
Substitution Certificate to the Agent and satisfaction of the conditions (if
any) subject to which this Substitution Certificate is expressed to take
effect.

 

77

 

8                                None of the Existing Lender or
the other Finance Parties:

 

(a)                        makes any representation or
warranty nor assumes any responsibility with respect to the legality, validity,
effectiveness, adequacy or enforceability of the Loan Agreement or any of the
Security Documents or any document relating thereto; or

 

(b)                       assumes any responsibility for
the financial condition of the Borrower or any other Security Party or any
party to any such other document or for the performance and observance by the
Borrower or any other Security Party or any party to any such other document
(save as otherwise expressly provided therein) and any and all such conditions
and warranties, whether express or implied by law or otherwise, are hereby
excluded (except as aforesaid).

 

9                                The Existing Lender and the
New Lender each undertake that they will on demand fully indemnify the Agent in
respect of any claim, proceeding, liability or expense which relates to or
results from this Substitution Certificate or any matter concerned with or
arising out of it unless caused by the Agent’s gross negligence or wilful
misconduct, as the case may be.

 

10                          The agreements and
undertakings of the New Lender in this Substitution Certificate are given to
and for the benefit of and made with each of the other parties to the Loan
Agreement and the other Security Documents.

 

11                          This Substitution Certificate
is governed by, and shall be construed in accordance with, English law.

 

	
  Existing
  Lender

  	
  New
  Lender

  
	
   

  	
   

  
	
  By:

  	
  By:

  
	
   

  	
   

  
	
  Dated:

  	
  Dated:

  

 

 

Agent

 

FORTIS
BANK (NEDERLAND) N.V.

 

Agreed for and on behalf of itself as
Agent, the Security Trustee, the Borrower, the Lead Arranger, the Co-Arrangers
and the Lenders

 

By:

 

Dated:

 

78

 

Note: The execution of this Substitution Certificate alone may
not transfer a proportionate share of the Existing Lender’s interest in the
security constituted by the Security Documents in the Existing Lender’s or New
Lender’s jurisdiction.  It is the
responsibility of the New Lender to ascertain whether any other documents are
required to perfect a transfer of such a share in the Existing Lender’s interest
in such security in any such jurisdiction and, if so, to seek appropriate
advice and arrange for execution of the same.

 

79

 

The
Schedule

 

Outstanding
Contribution: $[·]

Commitment:
$[·]

Portion
Transferred: [·]%

 

Administrative
Details of Transferee

 

Name of
New Lender: [·]

Lending
Office: [·]

 

Contact
Person (Loan Administration Department): [·]

Telephone:
[·]

Telefax
No: [·]

 

Contact
Person (Credit Administration Department): [·]

Telephone:
[·]

Telefax
No: [·]

 

Account
for payments: [·]

 

80

 

Schedule 6

 

Form of
Notification of Change in Lending Office and/or Account for Payments

 

	
  To:

  	
   

  	
  Fortis
  Bank (Nederland) N.V.

  
	
   

  	
   

  	
  Coolsingel
  93

  
	
   

  	
   

  	
  P.O. Box
  749

  
	
   

  	
   

  	
  3000
  AS Rotterdam

  
	
   

  	
   

  	
  The
  Netherlands

  

[Date]

 

$253,200,000
Loan Agreement dated [·] July 2008
relating to the

m.v.
“YM Seattle”, m.v. “YM Vancouver”, m.v. “YM Colombo” and m.v. “YM Singapore”

(the Loan Agreement)

 

Terms
defined in the Loan Agreement shall have the same meaning when used herein.

 

We
hereby notify you that our [Lending Office for the purposes of the Loan
Agreement is now [·] and that accordingly] our account for
payments is [·].

 

 

Signed

Duly
authorised signatory

For and
on behalf of

[Lender]

 

81

 

Schedule 7

 

Mandatory
Costs

 

1.                                 The Mandatory Cost is an
addition to the interest rate to compensate Lenders for the cost of compliance
with (a) the requirements of the Bank of England and/or the Financial
Services Authority (or, in either case, any other authority which replaces all
or any of its functions) or (b) the requirements of the European Central
Bank.

 

2.                                 On the first day of each
Interest Period (or as soon as possible thereafter) the Agent shall calculate,
as a percentage rate, a rate (the Additional
Cost Rate) for each Lender, in accordance with the
paragraphs set out below.  The
Mandatory Cost will be calculated by the Agent as a weighted average of the
Lenders’ Additional Cost Rates (weighted in proportion to the percentage
participation of each Lender in the relevant Loan) and will be expressed as a
percentage rate per annum.

 

3.                                 The Additional Cost Rate for
any Lender lending from a Lending Office in a Participating Member State will
be the percentage notified by that Lender to the Agent.  This percentage will be certified by that
Lender in its notice to the Agent to be its reasonable determination of the
cost (expressed as a percentage of that Lender’s participation in all Loans
made from that Facility Office) of complying with the minimum reserve
requirements of the European Central Bank in respect of loans made from that
Lending Office.

 

4.                                 The Additional Cost Rate for
any Lender lending from a Lending Office in the United Kingdom will be
calculated by the Agent as follows:

 

 per cent. per annum.

 

Where
E is the rate of charge payable by a Lender to the Financial Services Authority
under the Fees Rules in respect of the relevant financial year of the
Financial Services Authority (calculated for this purpose by the Agent as being
the average of the Fee Tariffs applicable to that Lender for that financial
year).

 

5.                                 For the purposes of this
Schedule:

 

(a)                                      Eligible
Liabilities and Special Deposits have
the meanings given to them from time to time under or pursuant to the Bank of
England Act 1998 or (as may be appropriate) by the Bank of England;

 

(b)                                     Fees Rules means the rules on
periodic fees contained in the FSA Supervision Manual or such other law or
regulation as may be in force from time to time in respect of the payment of
fees for the acceptance of deposits;

 

82

 

(c)                                      Fee Tariffs means the fee tariffs
specified in the Fees Rules under the activity group A.1 Deposit acceptors
(ignoring any minimum fee or zero rated fee required pursuant to the Fees Rules but
taking into account any applicable discount rate); and

 

(d)                                     Tariff Base has the meaning given to it
in, and will be calculated in accordance with, the Fees Rules.

 

6.                                 If requested by the Agent,
each Reference Bank shall, as soon as practicable after publication by the
Financial Services Authority, supply to the Agent, the rate of charge payable
by that Reference Bank to the Financial Services Authority pursuant to the Fees
Rules in respect of the relevant financial year of the Financial Services
Authority (calculated for this purpose by that Reference Bank as being the
average of the Fee Tariffs applicable to that Reference Bank for that financial
year).

 

7.                                 Each Lender shall supply any
information required by the Agent for the purpose of calculating its Additional
Cost Rate.  In particular, but without
limitation, each Lender shall supply the following information on or prior to
the date on which it becomes a Lender:

 

(a)                                      the jurisdiction of its
Facility Office; and

 

(b)                                     any other information that the
Agent may reasonably require for such purpose.

 

Each Lender shall promptly notify the Agent of any
change to the information provided by it pursuant to this paragraph.

 

8.                                 The rates of charge of each
Reference Bank for the purpose of E above shall be determined by the Agent
based upon the information supplied to it pursuant to paragraphs 6 and 7
above and on the assumption that, unless a Lender notifies the Agent to the
contrary, each Lender’s obligations in relation to cash ratio deposits and
Special Deposits are the same as those of a typical bank from its jurisdiction
of incorporation with a Facility Office in the same jurisdiction as its
Facility Office.

 

9.                                 The Agent shall have no
liability to any person if such determination results in an Additional Cost
Rate which over or under compensates any Lender and shall be entitled to assume
that the information provided by any Lender or Reference Bank pursuant to
paragraphs 3, 6 and 7 above is true and correct in all respects.

 

10.                           The Agent shall distribute the
additional amounts received as a result of the Mandatory Cost to the Lenders on
the basis of the Additional Cost Rate for each Lender based on the information
provided by each Lender and each Reference Bank pursuant to paragraphs 3,
6 and 7 above.

 

83

 

11.                           Any determination by the Agent
pursuant to this Schedule in relation to a formula, the Mandatory Cost, an
Additional Cost Rate or any amount payable to a Lender shall, in the absence of
manifest error, be conclusive and binding on all Parties.

 

12.                           The Agent may from time to
time, after consultation with the Borrower and the Lenders, determine and
notify to all of the parties to this Agreement and any amendments which are
required to be made to this Schedule in order to comply with any change in
law, regulation or any requirements from time to time imposed by the Bank of
England, the Financial Services Authority or the European Central Bank (or, in
any case, any other authority which replaces all or any of its functions) and
any such determination shall, in the absence of manifest error, be conclusive
and binding on all of the parties to this Agreement.

 

84

 

Execution Page

 

Borrower

 

	
  EXECUTED and DELIVERED

  	
  )

  	
   

  
	
  by
  its duly authorised attorney-in-fact

  	
  )

  	
   

  
	
  for
  and on behalf of

  	
  )

  	
   

  
	
  DANAOS CORPORATION

  	
  )

  	
  /s/
  Dimitri J. Andritsoyiannis

  
	
  in
  the presence of:

  	
   

  	
  Attorney-in-Fact

  

 

	
  /s/
  Zoe Lappa

  	
   

  
	
  Witness

  
	
   

  
	
  Name:

  
	
   

  
	
  Address:

  
	
   

  
	
  Occupation:

  

 

 

Lead Arranger

 

	
  SIGNED by

  	
  )

  	
   

  
	
  for
  and on behalf of

  	
  )

  	
   

  
	
  FORTIS BANK (NEDERLAND) N.V.

  	
  )

  	
  /s/ Fortis Bank (Nederland) N.V.

  
	
  as
  Lead Arranger

  	
  )

  	
   

  

 

 

Co-Arrangers

 

	
  SIGNED by

  	
  )

  	
   

  
	
  for
  and on behalf of

  	
  )

  	
   

  
	
  LLOYDS TSB BANK PLC

  	
  )

  	
  /s/
  Lloyds TSB Bank PLC

  
	
  as
  Co-Arranger

  	
  )

  	
   

  

 

85

 

	
  SIGNED by

  	
  )

  	
   

  
	
  for
  and on behalf of

  	
  )

  	
   

  
	
  NATIONAL BANK OF GREECE S.A.

  	
  )

  	
  /s/
  National Bank of Greece S.A.

  
	
  as Co-Arranger

  	
  )

  	
   

  

 

 

The Lenders

 

	
  SIGNED by

  	
  )

  	
   

  
	
  for
  and on behalf of

  	
  )

  	
   

  
	
  FORTIS BANK (NEDERLAND) N.V.

  	
  )

  	
  /s/ Fortis Bank (Nederland) N.V.

  
	
  as a
  Lender

  	
  )

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SIGNED by

  	
  )

  	
   

  
	
  for
  and on behalf of

  	
  )

  	
   

  
	
  LLOYDS TSB BANK PLC

  	
  )

  	
  /s/
  Lloyds TSB Bank PLC

  
	
  as
  Lender

  	
  )

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SIGNED by

  	
  )

  	
   

  
	
  for
  and on behalf of

  	
  )

  	
   

  
	
  NATIONAL BANK OF GREECE S.A.

  	
  )

  	
  /s/
  National Bank of Greece S.A.

  
	
  as Lender

  	
  )

  	
   

  

 

86

 

	
  Agent

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SIGNED by

  	
  )

  	
   

  
	
  for
  and on behalf of

  	
  )

  	
   

  
	
  FORTIS BANK (NEDERLAND) N.V.

  	
  )

  	
  /s/ Fortis Bank (Nederland) N.V.

  
	
  as
  Agent

  	
  )

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Security Trustee

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SIGNED by

  	
  )

  	
   

  
	
  for
  and on behalf of

  	
  )

  	
   

  
	
  FORTIS BANK (NEDERLAND) N.V.

  	
  )

  	
  /s/ Fortis Bank (Nederland) N.V.

  
	
  as Security Trustee

  	
  )

  	
   

  

 

87

 

Swap Banks

 

	
  SIGNED by

  	
  )

  	
   

  
	
  for
  and on behalf of

  	
  )

  	
   

  
	
  FORTIS BANK (NEDERLAND) N.V.

  	
  )

  	
  /s/ Fortis Bank (Nederland) N.V.

  
	
  as
  Swap Bank

  	
  )

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SIGNED by

  	
  )

  	
   

  
	
  for
  and on behalf of

  	
  )

  	
   

  
	
  LLOYDS TSB BANK PLC

  	
  )

  	
  /s/
  Lloyds TSB Bank PLC

  
	
  as
  Swap Bank

  	
  )

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SIGNED by

  	
  )

  	
   

  
	
  for
  and on behalf of

  	
  )

  	
   

  
	
  NATIONAL BANK OF GREECE S.A.

  	
  )

  	
  /s/
  National Bank of Greece S.A.

  
	
  as Swap Bank

  	
  )

  	
   

  

 

88Exhibit 4.17

 

Date 2 February 2009

 

 

DANAOS CORPORATION

as Borrower

 

 

- and -

 

 

THE BANKS AND FINANCIAL INSTITUTIONS

listed in Schedule 1, Part A

as Lenders

 

 

- and -

 

 

THE BANKS AND FINANCIAL INSTITUTIONS

listed in Schedule 1, Part B

as Swap Banks

 

 

- and -

 

 

DEUTSCHE SCHIFFSBANK AKTIENGESELLSCHAFT

as Agent and

Security Trustee

 

 

 

LOAN AGREEMENT

 

relating to a secured term loan facility
of up to US$299,000,000

to provide pre and post-delivery finance
for the acquisition

of five container carrier newbuildings having Builder’s Hull Nos.

HN 215, HN 220, HN 223 from Hanjin Heavy Industries &
Construction Co. Ltd.,

Hull No. 1698 from Samsung Heavy Industries Co. Ltd. and Hull No. Z00001
from

Shanghai Jiangnan Changxing Heavy Industry Co. Limited

 

 

WATSON FARLEY & WILLIAMS

Piraeus

 

 

INDEX

 

	
  Clause

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1

  	
   

  	
  INTERPRETATION

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2

  	
   

  	
  FACILITY

  	
   

  	
  20

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3

  	
   

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

  	
   

  	
  22

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4

  	
   

  	
  DRAWDOWN

  	
   

  	
  23

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5

  	
   

  	
  INTEREST

  	
   

  	
  24

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6

  	
   

  	
  INTEREST PERIODS

  	
   

  	
  26

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7

  	
   

  	
  DEFAULT INTEREST

  	
   

  	
  27

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8

  	
   

  	
  REPAYMENT AND PREPAYMENT

  	
   

  	
  28

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9

  	
   

  	
  CONDITIONS PRECEDENT

  	
   

  	
  30

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10

  	
   

  	
  REPRESENTATIONS AND WARRANTIES

  	
   

  	
  31

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11

  	
   

  	
  GENERAL UNDERTAKINGS

  	
   

  	
  33

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12

  	
   

  	
  CORPORATE UNDERTAKINGS

  	
   

  	
  37

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  13

  	
   

  	
  INSURANCE

  	
   

  	
  39

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  14

  	
   

  	
  SHIP COVENANTS

  	
   

  	
  44

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  15

  	
   

  	
  SECURITY COVER

  	
   

  	
  47

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  16

  	
   

  	
  PAYMENTS AND CALCULATIONS

  	
   

  	
  49

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  17

  	
   

  	
  APPLICATION OF RECEIPTS

  	
   

  	
  51

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  18

  	
   

  	
  APPLICATION OF EARNINGS

  	
   

  	
  52

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  19

  	
   

  	
  EVENTS OF DEFAULT

  	
   

  	
  52

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  20

  	
   

  	
  FEES AND EXPENSES

  	
   

  	
  57

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  21

  	
   

  	
  INDEMNITIES

  	
   

  	
  58

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  22

  	
   

  	
  NO SET-OFF OR TAX DEDUCTION

  	
   

  	
  60

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  23

  	
   

  	
  ILLEGALITY, ETC

  	
   

  	
  60

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  24

  	
   

  	
  INCREASED COSTS

  	
   

  	
  61

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  25

  	
   

  	
  SET-OFF

  	
   

  	
  62

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  26

  	
   

  	
  TRANSFERS AND CHANGES IN LENDING
  OFFICES

  	
   

  	
  63

  

 

 

	
  27

  	
   

  	
  VARIATIONS AND WAIVERS

  	
   

  	
  66

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  28

  	
   

  	
  NOTICES

  	
   

  	
  67

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  29

  	
   

  	
  SUPPLEMENTAL

  	
   

  	
  68

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  30

  	
   

  	
  LAW AND JURISDICTION

  	
   

  	
  68

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SCHEDULE 1

  	
   

  	
  70

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SCHEDULE 2 DRAWDOWN NOTICE

  	
   

  	
  71

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SCHEDULE 3 CONDITION PRECEDENT
  DOCUMENTS

  	
   

  	
  72

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SCHEDULE 4 AMOUNT OF ADVANCES

  	
   

  	
  76

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SCHEDULE 5 TRANSFER CERTIFICATE

  	
   

  	
  79

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SCHEDULE 6 FORM OF
  COMPLIANCE CERTIFICATE

  	
   

  	
  83

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SCHEDULE 7 MANDATORY COST FORMULA

  	
   

  	
  85

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SCHEDULE 8 DESIGNATION NOTICE

  	
   

  	
  87

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  EXECUTION PAGE

  	
   

  	
  88

  

 

 

THIS LOAN AGREEMENT is made on February 2009

 

BETWEEN:

 

(1)           DANAOS CORPORATION being a corporation domesticated and
existing under the laws of the Republic of the Marshall Islands whose
registered office is at Trust Company House, Trust Company Complex, Ajeltake
Road, Ajeltake Island, Majuro, the Marshall Islands as Borrower.

 

(2)           THE BANKS AND FINANCIAL
INSTITUTIONS listed in Schedule 1, Part A, as Lenders.

 

(3)           THE BANKS AND FINANCIAL
INSTITUTIONS listed in Schedule 1, Part B, as
Swap Banks.

 

(4)           DEUTSCHE SCHIFFSBANK
AKTIENGESELLSCHAFT,  Bremen
and Hamburg, acting through its
office at Domshof 17, D-28195 Bremen, Federal Republic of Germany as Agent and Security Trustee.

 

WHEREAS

 

(A)          The Lenders
have agreed to make available to the Borrower a secured term loan facility of
up to the lesser of (a) US$299,000,000 and (b) 70 per cent. of the aggregate
Delivered Costs of the Ships for the purpose of part-financing the Delivered
Costs of each Ship. The facility shall be divided into five Tranches - each of
Tranche A, B and E shall be made available in up to four Advances and each of
Tranche C and D shall be available in up to five Advances.

 

(B)           The
Borrower may, if it wishes, from time to time hedge its exposure under this
Agreement to interest rate fluctuations by entering into interest rate swap
transactions with the Swap Banks.

 

(C)           The Lenders
and the Swap Banks 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:

 

“Account Bank”  means Credit Suisse acting through its office
at St. Alban-Graben, 103 P.O. Box, CH-4002, Basel, Switzerland;

 

“Advance” 
means the principal amount of each borrowing by the Borrower under this
Agreement;

 

“Affected Lender”
has the meaning given in Clause 5.2 or, as the context may require, Clause 5.7;

 

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

 

“Agent”  means Deutsche Schiffsbank
Aktiengesellschaft, 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;

 

 

“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 semi-annual 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 11.6 and
which accounts are to be prepared in accordance with Clause 11.7);

 

“Approved Broker”  means each of Ingenieurbuero Weselmann of
Hamburg, Braemar Seascope Ltd., Howe Robinson & Co. Ltd., H. Clarkson &
Company Limited, R.S. Platou AS, Simpson Spence & Young, Maersk Broker
K/S and any other independent sale and purchase shipbroker as may be approved
by the Agent from time to time;

 

“Approved Flag”  means
the Maltese flag, the Cypriot flag, the Greek flag or such other flag as the
Lenders may, in their absolute discretion, approve as the flag on which a Ship
shall be registered;

 

“Approved Flag State” 
means Malta, Cyprus, Greece or any other country in which the Lenders
may, in their sole and absolute discretion, approve that a Ship be registered;

 

“Approved Manager”  means, in relation to a Ship, Danaos Shipping
Co. Ltd., a company incorporated in Cyprus having its registered office at
Libra House, 16 P. Caterari Street, Nicosia, Cyprus or any other company which
the Agent may approve from time to time as the commercial, technical and/or
operational manager of that Ship;

 

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

 

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

 

(a)        in the case of Tranche A, 31
March 2009 (or any later date as the scheduled delivery date in respect of
Ship A may be extended pursuant to Article VIII of Shipbuilding Contract
A); or

 

(b)        in the case of Tranche B, 15
January 2010 (or any later date as the scheduled delivery date in respect
of Ship B may be extended pursuant to Article VII of Shipbuilding Contract
B); or

 

(c)        in the case of Tranche C, 31
January 2010 (or any later date as the scheduled delivery date in respect
of Ship C may be extended pursuant to Article VII of Shipbuilding Contract
C); or

 

(d)        in the case of Tranche D, 30 June 2010
(or any later date as the scheduled delivery date in respect of Ship D may be
extended pursuant to Article VII of Shipbuilding Contract D); or

 

(e)        in the case of Tranche E, 31 May 2010
(or any later date as the scheduled delivery date in respect of Ship E may be
extended pursuant to Article VII of Shipbuilding Contract E); or

 

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

 

2

 

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

 

“Bank of China”  means Bank of China acting through its head
office in No. 1 Fuxingmennei Dajie, Beijing, 100818, Peoples Republic of
China;

 

“Bareboat
- equivalent Time Charter Income”  means,
in relation to each 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 15.5(a)) less the
aggregate Operating Expenses (other than in the case of a Ship subject to a
bareboat charter) and the Drydocking Expenses of that Ship as determined by the
Borrower and certified to the satisfaction of the Agent for the same period;

 

“Bareboat Charter Security Agreement”  means, in relation to any 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 14.12(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 Lenders) certain undertakings to be given by the Security Trustee to that
charterer, in such form as the Lenders may agree or require and, in the plural,
means all of them;

 

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

 

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

 

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

 

“Builders” 
means Samsung, Hanjin and Jiangnan, and in the singular means any of
them;

 

“Business Day”  means a day on which banks are open in Basel,
Frankfurt/Main, Bremen, Hamburg, Piraeus, Athens, London and (in relation to
any payment to be made to the Builder) Seoul and in respect of a day on which a
payment is required to be made under a Finance Document, also in New York City;

 

“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
Agent 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

 

3

 

(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;

 

“Cellcontainer No. 2”  means Cellcontainer (No. 2) Corp., a
corporation incorporated and existing under the laws of Liberia and having its
registered office at 80 Broad Street, Monrovia, Liberia;

 

“Cellcontainer No. 5”  means Cellcontainer (No. 5) Corp., a
corporation incorporated and existing under the laws of Liberia and having its
registered office at 80 Broad Street, Monrovia, Liberia;

 

“Charterers”  means, together, ZIM, CMA, Yang Ming and
Hanjin Shipping, and in the singular means any of them;

 

“Charterparty”  means:

 

(a)           any Initial Charterparty; and

 

(b)           any charterparty or contract of
affreightment in respect of a Ship of at least 12 consecutive months in
duration or any bareboat charterparty in respect of a Ship;

 

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

 

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

 

“Compliance Date”  means 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 11.6);

 

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

 

“Consolidated
Debt”  means the aggregate
amount of Debt due by the members of the Group (other than any such Debt owing
by any member of the Group to another member of the Group) as stated in the
then most recent Applicable Accounts;

 

“Contract Price”  has, in relation to each Ship, the meaning
given in the relevant Article of the Shipbuilding Contract in respect of
that Ship (as the same may be adjusted in accordance to that Shipbuilding
Contract);

 

“Contractual Currency” 
has the meaning given in Clause 21.5;

 

“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 Banks and each Lender whether as at the date of this Agreement or at any
later time;

 

“Danaos  Earnings Account”  means an account in the name of the Borrower
with the Account Bank designated “Danaos Corporation - Earnings Account” (or
any other office of the Account Bank which is designated by the Agent as the
Danaos Earnings Account for the purposes of this Agreement);

 

4

 

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

 

“Debt” 
means in relation to any member of the Group (the “debtor”):

 

(a)        Financial Indebtedness of the debtor;

 

(b)        liability for any credit to the debtor from
a supplier of goods or services or under any instalment purchase or payment
plan or other similar arrangement;

 

(c)        contingent liabilities of the debtor
(including without limitation any taxes or other payments under dispute) which
have been or, under GAAP, should be recorded in the notes to the Applicable
Accounts;

 

(d)        deferred tax of the debtor; and

 

(e)        liability under a guarantee, indemnity or
similar obligation entered into by the debtor in respect of a liability of
another person who is not a member of the Group which would fall within (a) to
(d) if the references to the debtor referred to the other person;

 

“Deed of
Covenant” means, in relation to a Ship, a deed of covenant
collateral to the Mortgage for that Ship, in such form as the Lenders may
approve or require, and in the plural means all of them;

 

“Delivered Cost”  means in respect of each Ship, the
aggregate of the Contract Price and the Extra Pre-delivery Costs for that Ship;

 

“Delivery Date”  means, in relation to a Ship, the date on
which title to and possession of that Ship is transferred from the Builder to
the relevant Owner;

 

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

 

(a)           it is entered into by the Borrower pursuant
to a Master Agreement with a 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 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; 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 8, as a Designated Transaction for the purposes of the Finance
Documents;

 

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

 

“Drawdown Date”  means,
in relation to an Advance, the date requested by the Borrower for the 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);

 

5

 

“Drydocking Expenses”  means, in relation to a Ship and a relevant
period, the provision agreed between the Borrower and the Agent for any
drydocking and special survey cost and expenses for that Ship during that
period;

 

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

 

(a)           all freight, hire and passage moneys,
compensation payable to the Owner owning the Ship or the Security Trustee in
the event of requisition of the 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 the Ship;

 

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

 

(c)           if and whenever the 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 the
Ship;

 

“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;

 

“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 Ship:

 

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

 

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

 

6

 

“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;

 

“Event of Default” 
means any of the events or circumstances described in Clause 19.1;

 

“Expresscarrier”  means Expresscarrier (No. 2)
Corp., a corporation incorporated and existing under the laws of Liberia and
having its registered office at 80 Broad Street, Monrovia, Liberia;

 

“Extra
Pre-delivery Costs”  means, in
respect of each Ship, the costs incurred or to be incurred by the Owners of
that Ship during the construction of the same (in addition to the Contract
Price for the Ship) as documented by the Borrower to the Agent (in the
statement referred to in paragraph 7 of Schedule 3, Part F) in such detail
as shall be required by the Agent on or before the Drawdown Date of the final
Advance of the Tranche used to finance that Ship;

 

“Finance Documents” 
means:

 

(a)           this Agreement;

 

(b)           the Master Agreements;

 

(c)           the Guarantees;

 

(d)           the Agency and Trust Agreement;

 

(e)           the Master Agreement Assignments;

 

(f)            the Predelivery Security Assignments;

 

(g)           the General Assignments;

 

(h)           the Mortgages;

 

(i)            any Deeds of Covenants;

 

(j)            the Danaos Earnings Account Pledge;

 

(k)           the Charterparty Assignments;

 

(l)            any Bareboat Charter Security Agreements;

 

(m)          the Approved Manager’s Undertakings; and

 

(n)           any other document (whether creating a
Security Interest or not) which is executed at any time by the Borrower, an
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;

 

7

 

“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; or

 

(e)           under any foreign exchange transaction
interest or currency swap or any other kind of derivative transaction
(including, without limitation, any freight 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 and
in the singular means any of them;

 

“General Assignment” 
means, in relation to a Ship, a general assignment of the Earnings, the
Insurances and any Requisition Compensation of that Ship, in such form as the
Lenders may approve or require, and in the plural means all of them;

 

“Guarantee”  means, in
relation to an Owner, an irrevocable and unconditional guarantee to be given by
that Owner in favour of the Security Trustee, guaranteeing the obligations of
the Borrower under this Agreement, the Master Agreements and the other Finance
Documents, in such form as the Lenders may approve or require, and in the
plural means all of them;

 

“Hanjin”  means Hanjin Industries &
Construction Co. Ltd., a company organised and existing under the laws of the
Republic of Korea, having its registered office at 29, 5-Ga, Bongnae-Dong,
Youngdo-Gu, Busan, 606-796, Korea;

 

“Hanjin Shipping”  means Hanjin Shipping Co. Ltd.
a company having its principal office in Seoul, Korea;

 

“Initial Charterparty”  means each of Initial Charterparty A,
Initial Charterparty B, Initial Charterparty C, Initial Charterparty D and
Initial Charterparty E, and in the plural means all of them;

 

“Initial  Charterparty A”  means the time charterparty dated 17 May 2006
made between Medsea and ZIM as charterer in respect of Ship A for a duration of
at least 12 years from 

 

8

 

the Delivery Date applicable to that Ship at a net daily charter hire rate
of at least $22,550 on terms acceptable in all respects to the Lenders;

 

“Initial  Charterparty Assignment”  means, in relation to a Ship, a deed of
assignment of the rights of the relevant Owner in respect of a Charterparty
relating thereto, in such form as the Lenders may approve or require and in the
plural means all of them;

 

“Initial  Charterparty B” means the time charterparty
dated 11 April 2007 made between Cellcontainer No. 2 and Hanjin
Shipping as charterer in respect of Ship B for a duration of at least 10 years
from the Delivery Date applicable to that Ship at a net daily charter hire rate
of at least $21,200 on terms acceptable in all respects to the Lenders;

 

“Initial  Charterparty
C”  means the bareboat
charterparty dated 23 May 2007 made between Expresscarrier and Yang Ming
as charterer in respect of Ship C for a duration of at least 18 years from the
Delivery Date applicable to that Ship at a net daily charter hire rate of at
least $26,500 on terms acceptable in all aspects to the Lenders;

 

“Initial  Charterparty
D”  means the time
charterparty date 17 September 2007 made between Teucarrier and CMA as
charterer in respect of Ship D for a duration of at least 12 years from the
Delivery Date applicable to that Ship at a net daily charter hire rate of at
least $43,000 on terms acceptable in all aspects to the Lenders;

 

“Initial  Charterparty
E”  means the time
charterparty date 11 April 2007 made between Cellcontainer No. 5 and
Hanjin Shipping as charterer in respect of Ship E for a duration of at least 10
years from the Delivery Date applicable to that Ship at a net daily charter
hire rate of at least $21,200 on terms acceptable in all aspects to the
Lenders;

 

“Insurances” means, in relation to a Ship:

 

(a)           all policies and contracts of insurance,
including entries of such Ship in any protection and indemnity or war risks
association, which are effected in respect of such 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 in relation to an Advance, a period
determined in accordance with Clause 6;

 

“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
Agent to be the Interest Rate Swap Rate for a period equal to, or as near as
possible equal to, the relevant applicable period;

 

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

 

9

 

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

 

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

 

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

 

“ISM Code Documentation”  includes:

 

(a)           the document of compliance (DOC) and safety
management certificate (SMC) issued pursuant to the ISM Code in relation to the
Ships or any of them 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 the Ships’ or the Owners’
compliance with the ISM Code which the Agent may require;

 

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

 

“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;

 

“ISSC” 
means a valid and current International Ship Security Certificate issued
under the ISPS Code;

 

“Jiangnan”  means, together, China Shipbuilding Trading
Company Limited, a company organised and existing under the laws of the
Republic of China, having its registered office at Fangyuan Mansion 56(Yi),
Zhongguancun Nan Da Jie, Beijing 100044, the People’s Republic of China and
Shanghai Jiangnan Changxing Heavy Industry Company Limited, a corporation
organised and existing under the laws of the Peoples Republic of China, having
its registered office at Marine Tower, No. 1 Pudong Da Dao, Shanghou
200120, the Peoples Republic of China;

 

“K-Exim ” 
means The Export-Import Bank of Korea acting through its office at 16-1,
Yeoido-Dong, Yeongdeungpo-Gu, Seoul, 150-996, Korea;

 

“KDB”  means Korea
Development Bank acting through its office at 16-3, Yeoido-Dong,
Yeongdeungpo-Gu, Seoul 150-973, Korea;

 

“Lender”  means, subject to Clause 26.6:

 

10

 

(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 26.14) 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);

 

“Lender’s
Cost of Funding”  means, for
an Interest Period in relation to a Lender, the rate per annum determined by
that Lender to be of the rate at which deposits in Dollars are offered to the
Lender by leading banks in the London Interbank Market at the 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, or, if that Lender uses other ways than through
the London Interbank Market to fund deposits in Dollars, such rate as
determined by that Lender to be the Lender’s cost of funding deposits in
Dollars for that Interest Period;

 

“LIBOR”
means, for an Interest Period:

 

(a)           the applicable Screen Rate; or

 

(b)           if no Screen Rate is available for that period, the rate per
annum determined by the Agent to be the rate per annum (rounded upwards, if
necessary, to the nearest one-sixteenth of one per cent.) notified to the Agent
by the
Reference Bank as the rate at which deposits in Dollars are offered to
the Reference
Bank by leading
banks in the London Interbank Market 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;

 

“LIBOR Correction Rate” 
means, at any relevant time in relation to an Affected Lender, the rate
per annum by which that Lender’s Cost of Funding exceeds LIBOR;

 

“Loan”  means the
aggregate principal amount of the Advances for the time being outstanding under
this Agreement;

 

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

 

“Majority Lenders”  means:

 

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

 

(b)           at any other time, Lenders whose Contributions
total 66.67 per cent. of the Loan;

 

“Mandatory
Cost Rate”  means, in relation
to the Loan, the cost calculated as a percentage rate per annum incurred by a
Lender as a result of compliance with any applicable regulatory or central bank
requirements, including any reserve costs imposed by the European Central Bank
or the European System of Central Banks (calculated pursuant to the formula
described in Schedule 7);

 

“Margin” 
means 1.20 per cent. per annum;

 

11

 

“Market Value” 
means, in respect of each Ship and each Fleet Vessel, the market value
thereof determined from time to time in accordance with Clause 15.4 (or as the
case may be Clause 15.5);

 

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

 

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

 

“Master Agreement”  means the master agreement (on the 2002 or
1992 ISDA (Multicurrency - Crossborder) form or on the “Rahmenverträge für
Finanztermingeschäfte (Master Agreement for Financial Derivatives Transactions)
form) made or to be made between the Borrower and each Swap Bank and includes
all Transactions from time to time entered into and Confirmations from time to
time exchanged thereunder and, in the plural means all of them;

 

“Master Agreement
Assignment”  means, in
relation to each Master Agreement, an assignment of the Borrower’s rights under
that Master Agreement executed or to be executed by the Borrower, in such form
as the Lenders may approve or require, and in the plural means all of them;

 

“Medsea”  means Medsea Marine Inc., a corporation
incorporated and existing under the laws of Liberia and having its registered
office at 80 Broad Street, Monrovia, Liberia;

 

“Mortgage”  means, in
relation to a Ship, the first priority or preferred (as the case may be) ship
mortgage on the Ship under an Approved Flag executed or to be executed by the
Owner of the Ship in favour of the Security Trustee, in such form as the
Lenders may approve or require and in the plural means all of them;

 

“Negotiation Period” 
has the meaning given in Clause 5.10;

 

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

 

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

 

“Operating
Expenses”  means, in relation
to a Ship and a relevant period, the expenses for crewing, victualling,
insuring, maintenance, spares, stores, management and operation of such Ship
which are reasonably incurred (in the opinion of the Agent) for a vessel of the
same size and type as that Ship as evidenced by the most recent audited
Applicable Accounts;

 

“Owners” 
means together Medsea, Cellcontainer No. 2, Expresscarrier,
Teucarrier and Cellcontainer No. 5, and in the singular means any of them;

 

“Payment Currency”  has
the meaning given in Clause 21.5;

 

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

 

(a)           England and Wales;

 

12

 

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

 

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

 

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

 

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

 

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

 

“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;

 

“Predelivery Security Assignment”  means, in relation to an Owner, an assignment
of the Shipbuilding Contract and of the Refund Guarantee relevant to that
Owner, to be given by that 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;

 

“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), the day on which quotations would ordinarily
be given by leading banks in the London Interbank Market for deposits in the
currency in relation to which such rate is to be determined for delivery on the
first day of that Interest Period or other period;

 

“Reference Bank”  means the Agent from time to time;

 

“Refund Guarantee A” 
means the irrevocable and unconditional refund guarantee dated 16 May 2006
with guarantee number MO902-605-LG-00096 issued by K-Exim in favour of Medsea
in relation to each stage payment made or to be made by Medsea to Samsung
pursuant to the Shipbuilding Contract A prior to the relevant Delivery Date;

 

“Refund Guarantee B”  means the irrevocable and unconditional
refund guarantee dated 10 April 2007 with guarantee number SLGQA020070041
issued by KDB in favour of Cellcontainer No. 2 in relation to each stage
payment made or to be made by Cellcontainer No. 2 to Hanjin pursuant to
the Shipbuilding Contract B prior to the relevant Delivery Date;

 

“Refund Guarantee C”  means the irrevocable and unconditional
refund guarantee dated 21 March 2007 with guarantee number
MO902-703-LG-00235 issued by K-Exim in favour of Expresscarrier in relation to
each stage payment made or to be made by Expresscarrier to Hanjin pursuant to
the Shipbuilding Contract C prior to the relevant Delivery Date;

 

“Refund Guarantees D”  means, together (a) the irrevocable and
unconditional refund guarantee dated 13 April 2007 with guarantee number
LGC1000700884 issued by Bank of China in favour of Teucarrier in relation to
the first and second instalments made or to be made by Teucarrier to Jiangnan
pursuant to the Shipbuilding Contract D (the “First
Refund Guarantee D”) and (b) each irrevocable and unconditional
guarantee to be issued by Bank 

 

13

 

of China (or any other bank or financial institution approved by the
Lenders) in relation to each of the third and fourth instalments to be paid by
Teucarrier to Jiangnan pursuant to Shipbuilding Contract D prior to the
Delivery Date for Ship D and in the singular means any of them;

 

“Refund Guarantee E”  means the irrevocable and unconditional
refund guarantee dated 10 April 2007 with guarantee number SLGQA020070044
issued by KDB in favour of Cellcontainer No. 5 in relation to each stage
payment made or to be made by Cellcontainer No. 5 to Hanjin pursuant to
the Shipbuilding Contract E prior to the relevant Delivery Date;

 

“Refund
Guarantees”  means, together, Refund Guarantee A, Refund
Guarantee B, Refund Guarantee C, Refund Guarantee D and Refund Guarantees E, and
in the singular means any of them;

 

“Refund Guarantors” 
means, together, Bank of China, K-Exim and KDB, and in the singular
means any of them;

 

“Relevant Person”  has
the meaning given in Clause 19.9;

 

“Repayment Date”  means
a date on which a repayment is required to be made under Clause 8;

 

“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”;

 

“Samsung”  means Samsung Heavy Industries Co. Ltd., a
company organised and existing under the laws of the Republic of Korea, with
its registered office at 647-9, Yeoksam-Dong, Kangnam-ku, Seoul, Korea;

 

“Screen Rate”  means 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 Interest Period which appears on Reuters BBA Page LIBOR
01 at or about 11.00 a.m. (London time) on the second Business Day prior
to the commencement of that Interest Period (and, for the purposes of this
Agreement, “Reuters BBA Page LIBOR 01” means the display designated as “Reuters
BBA Page LIBOR 01” on the Reuters Money News Service or such other page as
may replace Reuters BBA Page LIBOR 01 on that service for the purpose of
displaying rates comparable to that rate 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);

 

“Secured Liabilities” 
means all liabilities which the Borrower, the 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 (expressed as a percentage)
which is determined at any time by comparing (i) the aggregate of the
amounts referred to in paragraphs (a) and (b) of Clause 15.1 to (ii) the
aggregate of the Loan and the Swap Exposure;

 

“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;

 

14

 

(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;

 

“Security Party”  means
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 final 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 20, 21 or 22 below or any
other provision of this Agreement or another Finance Document; and

 

(d)           the Agent, the Security Trustee and the
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 Deutsche Schiffsbank
Aktiengesellschaft, in its capacity as security trustee for the Lenders and the
Swap Banks under the Finance Documents, or any successor of it in such capacity
appointed under clause 5 of the Agency and Trust Agreement;

 

“Ship  A”
means the 4,250 TEU container carrier newbuilding currently being constructed
by Samsung and having Hull No. 1698 to be purchased by Medsea pursuant to
Shipbuilding Contract A and registered in the ownership of Medsea under an
Approved Flag;

 

“Ship B”
means the 3,400 TEU container carrier newbuilding currently being constructed
by Hanjin and having Hull No. N-220 to be purchased by Cellcontainer No. 2
pursuant to Shipbuilding Contract B and registered in the ownership of
Cellcontainer No. 2 under an Approved Flag;

 

“Ship C” means the 6,500 TEU container
carrier newbuilding currently being constructed by Hanjin and having Hull No. N-215
to be purchased by Expresscarrier pursuant to Shipbuilding Contract C and
registered in the ownership of Expresscarrier under an Approved Flag;

 

“Ship D” means the 6,800 TEU container
carrier newbuilding currently being constructed by Jiangnan and having Hull No. Z00001
to be purchased by Teucarrier pursuant to Shipbuilding Contract D and
registered in the ownership of Teucarrier under an Approved Flag;

 

15

 

“Ship E” means the 3,400 TEU container
carrier newbuilding currently being constructed by Hanjin and having Hull No. N-223
to be purchased by Cellcontainer No. 5 pursuant to Shipbuilding Contract E
and registered in the ownership of Cellcontainer No. 5 under an Approved
Flag;

 

“Shipbuilding Contract A”  means the shipbuilding contract dated 12 May 2006
and made between Samsung and Medsea for the construction by Samsung of Ship A
and its purchase by Medsea, as supplemented from time to time;

 

“Shipbuilding Contract B” means the
shipbuilding contract dated 5 April 2007 and made between Hanjin and
Cellcontainer (No. 2), for the construction by Hanjin of Ship B and its
purchase by Cellcontainer (No. 2), as supplemented from time to time;

 

“Shipbuilding Contract C” means the
shipbuilding contract dated 16 March 2007 and made between Hanjin and
Expresscarrier, for the construction by Hanjin of Ship C and its purchase by
Expresscarrier, as supplemented from time to time;

 

“Shipbuilding Contract D” means the
shipbuilding contract dated 2 March 2007 and made between the Jiangnan and
Teucarrier, for the construction by Jiangnan of Ship D and its purchase by
Teucarrier, as supplemented from time to time;

 

“Shipbuilding Contract E” means the
shipbuilding contract dated 5 April 2007 and made between Hanjin and Cellcontainer
No. 5, for the construction by Hanjin of Ship E and its purchase by
Cellcontainer No. 5, as supplemented from time to time;

 

“Shipbuilding Contracts”  means, together, Shipbuilding Contract A,
Shipbuilding Contract B, Shipbuilding Contract C, Shipbuilding Contract D and
Shipbuilding Contract E and in the singular means any of them;

 

“Ships”  means, together, Ship A, Ship B, Ship C, Ship
D and Ship E, and in the singular means any of them;

 

“Swap
Banks” means the banks and financial institutions listed as Swap
Banks in Schedule 1, Part B, and in the singular means any of them;

 

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

 

“Teucarrier”  means Teucarrier (No. 1) Corp., a
corporation incorporated and existing under the laws of Liberia and having its
registered office at 80 Broad Street, Monrovia, Liberia;

 

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

 

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

 

“Total Loss”  means, in relation to a Ship:

 

16

 

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

 

(b)           any expropriation, confiscation,
requisition or acquisition of the 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 the Ship by any
tribunal or by any person or person claiming to be a tribunal;

 

(d)           any arrest, capture, seizure or detention
of the Ship (including any hijacking or theft) unless she is within 30 days
redelivered to the full control of the Owner owning the Ship;

 

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

 

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

 

(b)           in the case of a constructive, compromised,
agreed or arranged total loss of the 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 owning the Ship, with the Ship’s
insurers in which the insurers agree to treat the 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;

 

“Total Shareholders’
Equity”  means at any date, the total shareholders’
equity of the Group as determined in accordance with, and as shown in, the
Applicable Accounts;

 

“Tranche A”  means the
aggregate of the Advances to be made available by the Lenders to the Borrower
to assist Medsea in its acquisition of Ship A or, as the context may require,
the aggregate principal amount thereof outstanding at the relevant time under
this Agreement;

 

“Tranche B” means the aggregate of the Advances to be made
available by the Lenders to the Borrower to assist Cellcontainer No. 2 in
its acquisition of Ship B or, as the context may require, the aggregate
principal amount thereof outstanding at the relevant time under this Agreement;

 

“Tranche C” means the aggregate of the Advances to be made
available by the Lenders to the Borrower to assist Expresscarrier in its
acquisition of Ship C or, as the context may require, the aggregate principal
amount thereof outstanding at the relevant time under this Agreement;

 

“Tranche D” means the aggregate of the Advances to be made
available by the Lenders to the Borrower to assist Teucarrier in its
acquisition of Ship D or, as the context may require, the aggregate principal
amount thereof outstanding at the relevant time under this Agreement;

 

“Tranche E” means the aggregate of the Advances to be made
available by the Lenders to the Borrower to assist Cellcontainer No. 5 in
its acquisition of Ship E or, as the context may 

 

17

 

require,
the aggregate principal amount thereof outstanding at the relevant time under
this Agreement;

 

“Tranches”  means,
together, Tranche A, Tranche B, Tranche C, Tranche D and Tranche E, and in the
singular means any of them;

 

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

 

“Transfer Certificate”  has the meaning given in Clause 26.2;

 

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

 

“Yang Ming”  means Yang Ming Marine Transport Corp., a
company having its principal office in Keelung, Taiwan; and

 

“ZIM”  means Zim Israel Intergrated Shipping
Services Ltd., a company having its principal office at 7-9 Pal Yam Avenue, P.O. Box
1723, Haifa, 31016, Israel.

 

1.2          Construction
of certain terms.  In this
Agreement:

 

“approved”  means, for
the purpose of Clause 13, 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 a 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;

 

18

 

“obligatory insurances” 
means, in relation to a Ship, all insurances effected, or which the
Owner owning the Ship is obliged to effect, under Clause 13 below 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 in them of Clause 6 of the International Hull
Clauses (1/11/02 or 1/11/03), clause 8 of the Institute Time Clauses (Hulls)
(1/11/95) or clause 8 of the Institute Time Clauses (Hulls) (1/10/83) or the
Institute Amended Running Down Clause (1/10/71) or the Conditions and Plan of
the Swedish Club or any equivalent provision;

 

“regulation” includes any regulation, rule, official
directive, request or guideline (either having the force of law or compliance
with which is reasonable in the ordinary course of business of the party
concerned) of any governmental, intergovernmental or supranational body,
agency, department or regulatory, self-regulatory or other authority or
organisation;

 

“subsidiary”  has the
meaning given in Clause 1.4;

 

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

 

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

 

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

 

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

 

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

 

19

 

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

 

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

 

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

 

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

 

(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                                         FACILITY

 

2.1                               Amount of
facility.  Subject to the other provisions of this
Agreement, the Lenders shall make available to the Borrower a senior secured
term loan facility of up to $299,000,000 in up to five Tranches as follows:

 

(a)                                  Tranche A shall be in an
amount of up to the lesser of:

 

(i)                                     $49,000,000; and

 

(ii)                                  70 per cent. of the Delivered
Cost of Ship A;

 

(b)                                 Tranche B shall be in an
amount of up to the lesser of:

 

20

 

(i)                                     $44,700,000; and

 

(ii)                                  70 per cent. of the Delivered
Cost of Ship B;

 

(c)                                  Tranche C shall be in an
amount of up to the lesser of:

 

(i)                                     $73,600,000; and

 

(ii)                                  70 per cent. of the Delivered
Cost of Ship C;

 

(d)                                 Tranche D shall be in an
amount of up to the lesser of:

 

(i)                                     $87,000,000; and

 

(ii)                                  70 per cent. of the Delivered
Cost of Ship D;

 

(e)                                  Tranche E shall be in an
amount of up to the lesser of:

 

(i)                                     $44,700,000; and

 

(ii)                                  70 per cent. of the Delivered
Cost of Ship E;

 

(f)                                    each of Tranche A, B and E may
be drawn in up to four Advances and each of Tranche C, and D may be drawn in up
to five Advances.  Each Advance shall not
exceed the lesser of (i) 80 per cent. of the amount of the predelivery
instalment which is to be part-financed by that Advance and (ii) the maximum
amount thereof specified in Schedule 4 of this Agreement;

 

(g)                                 the final Advance of each
Tranche (which shall be used in part-financing the delivery instalment payable
pursuant to the Shipbuilding Contract for the Ship to be financed by that
Tranche and to refinance in part the Extra Pre-delivery Costs for that Ship)
shall be in an amount which, when aggregated with all other Advances in respect
of that Tranche, shall result in the Tranche not exceeding 70 per cent. of the
Delivered Cost of the Ship financed by that Tranche; and

 

(h)                                 the aggregate amount of the
Advances in respect of each Tranche which shall be used in financing or
refinancing the predelivery instalments in respect of a Ship payable or paid
pursuant to the Shipbuilding Contract applicable to that Ship, shall not exceed
80 per cent. of the aggregate amount of the pre-delivery instalments payable
for that Ship pursuant to that Shipbuilding Contract.

 

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.

 

2.3                               Transactions
under the Master Agreement.  At any time
during the Security Period the Borrower may request the Swap Banks to conclude
Designated Transactions for the purpose of hedging the Borrower’s exposure to
interest rate fluctuations in the context of its interest payment obligations
under this Agreement.  If the Borrower
requests to conclude a Designated Transaction prior to the delivery of at least
one of the Ships or, if at the time the Borrower requests to conclude a
Designated Transaction there is a shortfall in the minimum security cover
required to be maintained pursuant to Clause 15.1, the Swap Banks and the
Lenders may request that the Borrower provides or procures the provision of
such security as is acceptable to the Swap Banks and the Lenders.  The entry by the Swap Banks into the Master
Agreements does not commit the Swap Banks to conclude Designated Transactions,
or even to offer terms for doing so, but does provide a contractual framework
within which Designated Transactions may be concluded and secured, assuming
that the relevant Swap Bank is willing to conclude any

 

21

 

Designated Transaction at the
relevant time and that, if that is the case, mutually acceptable terms can be
agreed at the relevant time.

 

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

 

3.1                               Interests
of Lenders and Swap Banks several.  The
rights of the Lenders and the Swap Banks under this Agreement and the Master
Agreements are several; accordingly:

 

(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)                                 each 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 to which it is a party,

 

without joining the Agent, the Security Trustee, any other
Lender or any other 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 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 Agreements; 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 Agreements.

 

3.3                               Obligations
several.  The obligations of the Lenders under this
Agreement and of the Swap Banks under the Master Agreements are several; and a
failure of a Lender to perform its obligations under this Agreement or of a
Swap Bank to perform its obligations under the Master Agreement to which it is
a party 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 a Swap Bank have any responsibility for a
failure of another Lender or another Swap Bank to perform its obligations under
this Agreement or a Master Agreement.

 

3.4                               Parties
bound by certain actions of Majority Lenders. 
Every Lender, a 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:

 

22

 

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

 

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

 

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

 

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.
(Hamburg time) 3 Business Days prior to the intended Drawdown Date.

 

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

 

(a)                                  a Drawdown Date has to be a
Business Day during the Availability Period;

 

(b)                                 each Advance shall:

 

(i)                                     subject to Clause 4.2(c), be
in an amount that does not exceed the maximum amount of that Advance specified
in Schedule 4; and

 

(ii)                                  be used to finance or
refinance part of the relevant instalment payable to the Builder pursuant to
the relevant Shipbuilding Contract as are specified in Schedule 4 and, in the
case of the final Advance of each Tranche, part of the relevant Extra
Pre-delivery Costs;

 

(c)                                  the aggregate amount of the
Advances in respect of a Tranche shall not exceed the maximum amount of that
Tranche as set out in Clause 2.1; and

 

(d)                                 the Borrower shall demonstrate
to the satisfaction of the Agent the availability to it of funds in an amount
equal to the amount by which the instalment due to the Builder pursuant to the
relevant Shipbuilding Contract and the relevant Extra Pre-delivery Costs on the
relevant Drawdown Date exceeds the Advance to be made available to the Borrower
on that Drawdown Date.

 

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

 

23

 

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 Advance.  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 to the account of the
Builder which the Borrower specifies in the relevant Drawdown Notice.

 

4.8                               Disbursement
of Advance to third party.   The payment
by the Agent under Clause 4.7 to the Builder shall constitute the making of the
Advance and the Borrower shall thereupon become indebted, as principal and
direct obligor, to the Lenders in an amount equal to that Advance.

 

5                                         INTEREST

 

5.1                               Payment
of normal interest.  Subject to the
provisions of this Agreement, interest on each Advance, each Tranche or the
Loan in respect of each Interest Period shall be paid by the Borrower on the
last day of that Interest Period.

 

5.2                               Normal
rate of interest.  Subject to the
provisions of this Agreement, the rate of interest on each Advance or, as the
case may be, the Loan in respect of an Interest Period shall be the aggregate
of (a) the Margin, (b) the Mandatory Cost Rate (c) LIBOR and (d) if
a Lender (the “Affected Lender”)
notifies the Agent at least 1 Business Day before the start of the relevant
Interest Period that its Lender’s Cost of Funding exceeds LIBOR fixed by the
Agent during the Interest Period in the London Interbank Market at or about
11.00 a.m. (London time) on the Quotation Date for the Interest Period,
additionally in respect of the Affected Lender’s Contribution, the LIBOR Correction
Rate applicable to that Lender for the Interest Period.

 

5.3                               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.

 

5.4                               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.

 

5.5                               Obligation
of Reference Bank to quote.  Each Lender
which is the Reference Bank shall use all reasonable efforts to supply any
quotation required of it for the purposes of fixing a rate of interest under
this Agreement.

 

5.6                               Absence
of quotations by Reference Bank.  If
the Reference Bank fails to supply a quotation when required, the Agent shall
determine the relevant rate of interest in accordance with the following
provisions of this Clause 5.

 

5.7                               Market
disruption.  The following provisions of
this Clause 5 apply if:

 

24

 

(a)                                  no Screen Rate is available
for an Interest Period and the Reference Bank does 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, the Agent is notified by a Lender (the “Affected Lender”) that for any reason it is unable to obtain
Dollars in the London Interbank Market or in another way in order to fund its
Contribution (or any part of it) during the Interest Period.

 

5.8                               Notification
of market disruption.  The Agent
shall promptly notify the Borrower and each of the Lenders stating the
circumstances falling within Clause 5.7 which have caused its notice to be
given.

 

5.9                               Suspension
of drawdown.  If the Agent’s notice under
Clause 5.8 is served on the Borrower before an Advance is made:

 

(a)                                  in a case falling within
paragraph (a) of Clause 5.7, the Lenders’ obligation to make, and the
Borrower’s obligation to borrow, that Advance shall be suspended while the
circumstances referred to in the Agent’s notice continue and the provisions of
Clause 5.10 shall apply;

 

(b)                                 in a case falling within
paragraph (b) of Clause 5.7, the Affected Lender’s obligation to
participate in the Advance shall be suspended while the circumstances referred
to in the Agent’s notice continue.

 

5.10                        Negotiation
of alternative rate of interest.  If the Agent’s
notice under Clause 5.8 is served on the Borrower after an Advance is made:

 

(a)                                  in a case falling within
paragraph (a) or (c) of Clause 5.7, 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 5.8 (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.;

 

(b)                                 in a case falling within
paragraph (b) of Clause 5.7, the interest rate applicable to the Affected
Lender’s Contribution during the Interest Period concerned shall be the
aggregate of (i) the Margin, (ii) the Mandatory Cost Rate and (iii) its
Lender’s Cost of Funding for the applicable Interest Period.

 

5.11                        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.

 

5.12                        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 in any available currency of their or
its Contribution plus the Margin; and the procedure provided for by this Clause
5.12 shall be repeated if the relevant circumstances are continuing at the end
of the interest period so set by the Agent.

 

5.13                        Notice of
prepayment.  If the Borrower does not agree
with an interest rate set by the Agent under Clause 5.2 or Clause 5.12, the
Borrower may give the Agent not less than 15 Business Days’ notice of its intention
to prepay.

 

25

 

5.14                        Prepayment;
termination of Commitments.  A notice
under Clause 5.13 shall be irrevocable if served 3 Business Days before
payment; 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 Contribution,
together with accrued interest thereon at the applicable rate plus the Margin
and, if applicable, the LIBOR Correction Rate or, as the case may be, its
Lender’s Cost of Funding and, if the prepayment or repayment is not made on the
last Business Day of the interest period set by the Agent, any sums payable under
Clause 21.1(b).

 

5.15                        Application
of prepayment.  The provisions of Clause 8
shall apply in relation to the prepayment.

 

5.16                        Early
indication of LIBOR Correction Rate.  The Borrower may, at any time
falling at least 4 Business Days before the commencement of an Interest Period,
request that the Agent provide it with indicative quotations of the then
current interest rates applicable for periods selected by the Borrower equal in
duration to those referred to in Clause 6.2(a) as well as the funding costs
of the Lenders for an identical period. The Agent shall use reasonable
endeavours to obtain such quotations and the funding costs of the Lenders and
shall subsequently advise the Borrower if (and to what extent) the funding
costs of any Lender exceed the indicative interest rate quotations.

 

6                                         INTEREST
PERIODS

 

6.1                               Commencement
of Interest Periods.  The first
Interest Period applicable to an Advance, a Tranche or, as the case may be, the
Loan shall commence on the relevant Drawdown Date and each subsequent Interest
Period shall commence on the expiry of the preceding Interest Period.

 

6.2                               Duration
of normal Interest Periods.  Subject to
Clauses 6.3 and 6.4, each Interest Period in respect of each Advance shall be:

 

(a)                                  3, 6, 9 or 12 months as
notified by the Borrower to the Agent not later than 11.00 a.m. (Hamburg
time) 3 Business Days before the commencement of the Interest Period;

 

(b)                                 in the case of the first
Interest Period applicable to the second and any subsequent Advance of a
Tranche, a period ending on the last day of the then current Interest Period
applicable to such Tranche, whereupon all of the Advances in respect of such
Tranche shall be consolidated and treated as a single advance;

 

(c)                                  in the case of the first
Interest Period applicable to the second and any subsequent Tranche, a period
ending on the last day of the then current Interest Period applicable to the
first Tranche, whereupon all of the Tranches shall be consolidated and treated
as a single tranche;

 

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

 

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

 

26

 

6.3                               Duration
of Interest Periods for repayment instalments.  In
respect of an amount due to be repaid under Clause 8 on a particular Repayment
Date, an Interest Period in relation to the relevant Tranche shall end on that
Repayment Date.

 

6.4                               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 by 11.00 a.m. (Hamburg time) on the second Business Day
before the commencement of the Interest Period that it is not satisfied that
deposits in Dollars for a period equal to the Interest Period will be available
to it in the London Interbank Market when the Interest Period commences, the
Interest Period shall be of 6 months.

 

7                                         DEFAULT INTEREST

 

7.1                               Payment
of default interest on overdue amounts.  The
Borrower shall pay interest in accordance with the following provisions of this
Clause 7 on any amount payable by the Borrower under any Finance Document which
the Agent, the Security Trustee or any 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

 

(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 19.4, the date on which it became
immediately due and payable.

 

7.2                               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 2 per cent. above:

 

(a)                                  in the case of an overdue
amount of principal, the higher of the rates set out at paragraphs (a) and
(b) of Clause 7.3; or

 

(b)                                 in the case of any other
overdue amount, the rate set out at paragraph (b) of Clause 7.3.

 

7.3                               Calculation
of default rate of interest.  The rates
referred to in Clause 7.2 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);

 

(b)                                 the aggregate of the Mandatory
Cost (if any) and 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)                                     LIBOR plus (if applicable) the
Libor Correction Rate; or

 

(ii)                                  if the Agent (after
consultation with all the Lenders) determines that Dollar deposits for any such
period are not being made available to any Lender by leading banks in the
London 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 Agent
from such other sources as the Agent (after consultation with all the Lenders)
may from time to time determine.

 

7.4                               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 7.3 and of each period selected by the
Agent for the purposes of paragraph (b) of that Clause; 

 

27

 

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.

 

7.5                               Payment
of accrued default interest.  Subject to the
other provisions of this Agreement, any interest due under this Clause 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.

 

7.6                               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 thereupon be compounded.

 

7.7                               Application
to Master Agreements.  For the
avoidance of doubt, this Clause 7 does not apply to any amount payable under a
Master Agreement in respect of any continuing Designated Transaction as to
which section 2(e) (Default Interest; Other Amounts) of that Master
Agreement shall apply.

 

8                                         REPAYMENT
AND PREPAYMENT

 

8.1                               Amount of
repayment instalments.  The Borrower
shall repay the Loan by 20 equal consecutive semi-annual instalments of
$8,800,000 each and by a balloon instalment of $123,000,000 (the “Balloon Instalment”)  Provided  that if the
amount of the Loan drawndown hereunder is less than $299,000,000, each of the
repayment instalments and the Balloon Instalment shall be reduced pro rata by
an amount in aggregate equal to the undrawn balance.

 

8.2                               Repayment
Date and Consolidation of Tranches.

 

(a)                                  The first instalment shall be
repaid on 30 December 2011 (or if the Ships (or any of them) have been
delivered to the Owners prior to their scheduled delivery dates, on such
earlier date as the Agent (with the authorisation of the Lenders) may notify to
the Borrower in writing and the last instalment, together with the Balloon
Instalment, shall be paid on the earlier of (i) the date falling on the
tenth anniversary of the final Drawdown Date, (ii) 30 June 2021 and (iii) if
the Ships (or any of them), are delivered to the Owners prior to their
scheduled delivery dates, such date as the Agent (with the authorisation of the
Lenders) may notify to the Borrower in writing.

 

(b)                                 On the Drawdown Date in
respect of the Advance which is used to finance (inter alia) the delivery
instalment of the last of the Ships to be delivered to its Owner pursuant to
the relevant Shipbuilding Contract (following the drawing of that Advance by the
Borrower) all then outstanding Tranches shall be consolidated into a single
Tranche.

 

8.3                               Final
Repayment Date.  On the final
Repayment Date, the Borrower shall additionally pay to the Agent for the
account of the Creditor Parties all other sums then accrued or owing under any
Finance Document.

 

8.4                               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 in respect thereof.

 

8.5                               Conditions
for voluntary prepayment.  The conditions
referred to in Clause 8.4 are that:

 

(a)                                  a partial prepayment shall be
$1,000,000 or a multiple thereof;

 

(b)                                 the Agent has received from
the Borrower at least 15 days’ prior written notice specifying the amount to be
prepaid and the date on which the prepayment is to be made; and

 

28

 

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

 

8.6                               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.

 

8.7                               Mandatory
prepayment.  The Borrower shall be obliged
to prepay the Relevant Amount:

 

(a)                                  if a Ship is sold or becomes a
Total Loss:

 

(i)                                     in the case of a sale, on or
before the date on which the sale is completed by delivery of that Ship to the
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;

 

(b)                                 if any of the following
occurs, on demand by the Agent:

 

(i)                                     either a Shipbuilding Contract
or a Refund Guarantee is cancelled, terminated, rescinded or suspended or
otherwise ceases to remain in full force and effect for any reason; or

 

(ii)                                  a Shipbuilding Contract is
amended or varied without the prior written consent of the Agent (such consent
not to be unreasonably withheld) except for any such amendment or variation as
is permitted by this Agreement or any other relevant Finance Document; or

 

(iii)                               a Ship has not for any reason
been delivered to, and accepted by, the relevant Owner under the Shipbuilding
Contract to which it is a party by the last day of the Availability Period applicable
to the Tranche which shall be used to part-finance or refinance that Ship.

 

In this Clause 8.7, “Relevant
Amount” means in the case of any prepayment made pursuant to:

 

(A)                              Clause 8.7(a), an amount equal
to the higher of (1) the Relevant Percentage of the Loan and (2) an
amount which, after giving credit for the amount of the prepayment made
pursuant to this Clause 8.7, results in the Security Cover Ratio being equal to
the Security Cover Ratio referred to in Clause 15.1; and

 

(B)                                Clause 8.7(b), an amount equal
to the Tranche which has been made available to finance or refinance the
acquisition of the Ship which is subject to the Shipbuilding Contract or the
Refund Guarantee in relation to which any of the events referred to in Clause
8.7 (b) has occurred.

 

In this Clause 8.7 “Relevant
Percentage” means the Market Value of the Ship which has been sold
or become a Total Loss expressed as a percentage of the Market Value of all
Ships then subject to a Mortgage, with the Market Value of each such Ship to be
determined on the date on which the Ship being sold or which has become a Total
Loss is actually sold or becomes a Total Loss.

 

8.8                               Amounts
payable on prepayment.  A prepayment
shall be made together with accrued interest (and any other amount payable under
Clause 21 below or otherwise) in respect of

 

29

 

the amount prepaid and, if the prepayment
is not made on the last day of an Interest Period together with any sums
payable under Clause 21.1(b) but without premium or penalty.

 

8.9                               Application
of partial prepayment.  Each partial
prepayment shall if made pursuant to:

 

(a)                                  Clause 8.4 be applied in
inverse order of maturity first against the Balloon Instalment and thereafter
the repayment instalments specified in Clause 8.1 outstanding at that time;

 

(b)                                 Clause 8.7(a) pro rata
against the repayment instalments and the Balloon Instalment specified in
Clause 8.1 outstanding at that time; and

 

(c)                                  Clause 8.7(b), be applied in
fully repaying the Tranche applicable to the Ship which is the subject of the
Shipbuilding Contract or Refund Guarantee in relation to which any of the
events referred to in Clause 8.7(b) has occurred.

 

8.10                        No
reborrowing.  No amount prepaid may be
reborrowed.

 

8.11                        Unwinding of
Transactions.  On or prior to any repayment or
prepayment under this Clause 8 (other than in the case of prepayment made
pursuant to Clause 8.4) or any other provision of this Agreement, the Borrower
shall either:

 

(a)                                  unless otherwise agreed by the
Agent (acting with the authorisation of the Lenders), wholly or partially
reverse, offset, unwind or otherwise terminate one or more of the continuing
Designated Transactions so that the notional principal amount of the continuing
Designated Transactions thereafter remaining does not and will not in the
future exceed the amount of the Loan as reducing from time to time thereafter
pursuant to Clause 8.1; or

 

(b)                                 provide the Security Trustee
or any of the other Creditor Parties with additional security in all respects
acceptable to the Lenders, to secure the amount determined by the Agent to be
equal to the difference between the notional principal amount of the continuing
Designated Transactions and the amount of the Loan as reducing from time to
time thereafter pursuant to Clause 8.1.

 

9                                         CONDITIONS
PRECEDENT

 

9.1                               Documents,
fees and no default.  Each Lender’s
obligation to make an Advance is subject to the following conditions precedent:

 

(a)                                  that on or before the date of
this Agreement, the Agent receives:

 

(i)                                     the documents described in Part A
of Schedule 3 in a form and substance satisfactory to the Agent and its
lawyers; and

 

(ii)                                  the arrangement fee referred
to in Clause 20.1;

 

(b)                                 that, on or before the service
of the Drawdown Notice in respect of the first Advance of each Tranche (to
refinance or finance part of the first instalment payable pursuant to the
relevant Shipbuilding Contract), the Agent receives the documents described in Part B
of Schedule 3 in form and substance satisfactory to it and its lawyers;

 

(c)                                  that, on or before the service
of the Drawdown Notice in respect of the second Advance of each Tranche (to
refinance or finance part of the steel-cutting instalment payable pursuant to
the relevant Shipbuilding Contract), the Agent receives the documents described
in Part C of Schedule 3 in form and substance satisfactory to it and its
lawyers;

 

30

 

(d)                                 that, on or before the service
of the Drawdown Notice in respect of the third Advance of each Tranche (to
refinance or finance part of the keel-laying instalment payable pursuant to the
relevant Shipbuilding Contract), the Agent receives the documents described in Part D
of Schedule 3 in form and substance satisfactory to it and its lawyers;

 

(e)                                  that, on or before the service
of the Drawdown Notice in respect of the fourth Advance of Tranche C and D (to
refinance or finance part of the launching instalment payable pursuant to the
relevant Shipbuilding Contract), the Agent receives the documents described in Part E
of Schedule 3 in form and substance satisfactory to it and its lawyers;

 

(f)                                    that, on or before the
Drawdown Date in respect of the final Advance of each Tranche (to finance part
of the delivery instalment payable pursuant to the relevant Shipbuilding
Contract) the Agent receives the documents described in Part F of Schedule
3 in form and substance satisfactory to it and its lawyers (other than the
documents referred to in paragraphs (a), (b), (c), (e) and (f) in Part F
of Schedule 3 which the Agent shall receive on the Delivery Date of the Ship
financed by that Advance);

 

(g)                                 that, on or before the service
of each Drawdown Notice, the Agent receives any accrued (but unpaid) commitment
fee payable pursuant to Clause 20.1(b) and has received payment of the
expenses referred to in Clause 20.2;

 

(h)                                 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; and

 

(ii)                                  the representations and
warranties in Clause 10 and those of the Borrower or any Security Party which
are set out in the other Finance Documents would be true and not misleading if
repeated on each of those dates with reference to the circumstances then
existing; and

 

(iii)                               none of the circumstances
contemplated by Clause 5.7 has occurred and is continuing;

 

(iv)                              there has been no material
adverse change in the financial position, state of affairs or prospects of the
Borrower or any Security Party in the light of which the Agent considers that
there is a significant risk that the Borrower or any Security Party is, or will
later become, unable to discharge its liabilities under the Finance Documents
to which it is a party as they fall due; and

 

(i)                                     that, if the ratio set out in
Clause 15.1 were applied immediately following the making of an Advance which
will be used in financing (inter alia) the delivery instalment payable pursuant
the Shipbuilding Contract for a Ship, the Borrower would not be obliged to
provide additional security or prepay part of the Loan under that Clause; and

 

(j)                                     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, may request by notice to the
Borrower prior to the relevant Drawdown Date.

 

9.2                               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 9.1 are satisfied, the Borrower
shall ensure that those conditions are satisfied within 5 Business Days after
the relevant Drawdown Date (or such other period as the Agent, with the
authorisation of the Majority Lenders, specifies).

 

31

 

10                                  REPRESENTATIONS
AND WARRANTIES

 

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

 

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

 

10.3                        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 Owner.

 

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

 

(a)                                  to execute its Shipbuilding
Contract, to purchase and pay for its Ship under the relevant Shipbuilding
Contract and register its Ship in its name under an Approved Flag;

 

(b)                                 to enter into, and perform its
obligations under, the Charterparty 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 each Master Agreement
and to make all the payments contemplated by, and to comply with, those Finance
Documents to which the Borrower is a party.

 

10.5                        Consents
in force.  All the consents referred to in Clause 10.4
remain in force and nothing has occurred which makes any of them liable to
revocation.

 

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

 

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

 

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

 

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

 

10.7                        No third
party Security Interests.  Without
limiting the generality of Clause 10.6, at the time of the execution and
delivery of each Finance Document to which the Borrower is a party:

 

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

 

(b)                                 no third party will have any
Security Interest (except for Permitted Security Interests) 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.

 

10.8                        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

 

32

 

(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.

 

10.9                        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.

 

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

 

10.11                 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 11.5.

 

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

 

10.13                 Validity
and completeness of Shipbuilding Contracts.

 

(a)                                  The copies of the Shipbuilding
Contracts delivered to the Agent before the date of this Agreement are true and
complete copies;

 

(b)                                 each Shipbuilding Contract
constitutes valid, binding and enforceable obligations of the relevant Builder
and the relevant Owner respectively in accordance with its terms; and

 

(c)                                  other than those amendments
and additions to any of the Shipbuilding Contracts disclosed to the Agent
before the date of this Agreement, no amendments or additions to any of the
Shipbuilding Contracts have been agreed nor has any Owner or the relevant
Builder waived any of their respective rights under the Shipbuilding Contracts.

 

10.14                 No
rebates etc.  There is no agreement or
understanding to allow or pay any rebate, premium, commission, discount or
other benefit or payment (howsoever described) to the Owners, the Builders or
any third party in connection with the purchase by each Owner of the Ship to be
owned by it, other than as disclosed to the Agent in writing on or prior to the
date of this Agreement.

 

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

 

10.16                 Compliance
with certain undertakings.  At the date
of this Agreement, the Borrower is in compliance with Clauses 11.2, 11.4, 11.9
and 11.12.

 

10.17                 ISM Code
and ISPS Code compliance.  All
requirements of the ISM Code and the ISPS Code as they relate to the Borrower,
any Owner, the Approved Manager, Yang Ming and any Ship have been complied
with.

 

10.18                 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

 

33

 

defined in Article 1 of the Directive
(91/308/EEC) of the Council of the European Communities).

 

11                                  GENERAL
UNDERTAKINGS

 

11.1                        General.  The Borrower undertakes with each Creditor
Party to comply with the following provisions of this Clause 11 at all times during
the Security Period except as the Agent may, with the authorisation of the
Majority Lenders, otherwise permit.

 

11.2                        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 each Swap Bank under a Master
Agreement or all or any part of the Borrower’s interest in any amount payable
to the Borrower by a Swap Bank under a 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.

 

11.3                        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 (as determined on the
date of this Agreement) by at least 50 per cent. (in all other circumstances
the Borrower shall be deemed to have complied with its obligations under this
Clause 11.3 by providing the Agent with prior written notice of its decision to
transfer, lease or otherwise dispose of its assets as aforesaid).

 

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

 

(a)                                  under the Finance Documents
and the Shipbuilding Contract to which each is a party;

 

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

 

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

 

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

 

11.5                        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

 

34

 

Finance Document will be true and not
misleading and will not omit any material fact or consideration.

 

11.6                        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 ending 31 December 2008), the audited
consolidated accounts of the Borrower’s Group for that Financial Year and the
audited individual accounts of the Borrower for that Financial Year; and

 

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

 

The Agent will consider that the Borrower has
fulfilled its obligations under this Clause 11.6 if the Borrower has filed its
accounts with the Securities Exchange Commission (SEC) within the time periods
specified in this Clause 11.6.

 

11.7                        Form of
financial statements.  All accounts
(audited and unaudited) delivered under Clause 11.6 will:

 

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

 

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

 

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

 

11.8                        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).

 

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

 

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

 

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

 

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

 

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

 

11.10                 Maintenance
of Security Interests. The Borrower will:

 

35

 

(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 Malta,
Greece, or Cyprus or such other jurisdiction which the Lenders may reasonably
require (including, without limitation, any Approved Flag State if at the
relevant time a Ship is registered under the laws of such Approved Flag State),
pay any stamp, registration or similar tax in any such country in respect of
any Finance Document, give any notice or take any other step which, in the
opinion of the Majority Lenders, is or has become necessary or desirable for
any Finance Document to be valid, enforceable or admissible in evidence or to
ensure or protect the priority of any Security Interest which it creates.

 

11.11                 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 or the Ships, their Earnings
or their Insurances as soon as such action is instituted or it becomes apparent
to that 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.

 

11.12                 Principal
place of business.  The Borrower
will maintain its place of business, and keep its corporate documents and
records, at the address stated at Clause 28.2(a) and the Borrower will not
establish, nor do anything as a result of which it would be deemed to have, a
place of business in any other country.

 

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

 

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

 

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

 

The Agent may serve
requests under this Clause 11.13 from time to time;  this Clause 11.13 does not affect the
Borrower’s obligations under Clause 11.14.

 

11.14                 Notification
of default.  The Borrower will notify the
Agent as soon as the Borrower 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.

 

11.15                 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 Ships,
their Insurances, their Earnings or the Owners; or

 

(b)                                 any other matter relevant to,
or to any provision of, a Finance Document, which in each case may be requested
by the Agent or the Security Trustee (through the Agent) by any Lender at any
time.

 

36

 

11.16                 No
amendment to the Shipbuilding Contracts.  The
Borrower will ensure that no Owner shall agree to any material amendment or
supplement to, or waive or fail to enforce, a Shipbuilding Contract to which
such Owner is a party to or any of its provisions.

 

11.17                 Purchase of
further tonnage.  The Borrower
shall procure that no Owner shall purchase any vessel other than the Ships.

 

11.18                 “Know your
customer” requirements.  The Borrower
shall provide to the Agent such documentation and evidence as may be required
by any Lender from time to time to comply with applicable law and regulations
and its own internal guidelines in relation to the opening of bank accounts and
the identification of its customers.

 

11.19                 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.

 

11.20                 Tax Lease
Structure.  The Borrower may place any Ship
subject to a Mortgage within a tax lease structure, with the prior written
consent of the Lenders (such consent not to be unreasonably withheld) which
shall be subject to, without limitation:

 

(a)                                  the security position of the
Creditor Parties in the tax lease structure being no worse than that envisaged
by this Agreement;

 

(b)                                 the Creditor Parties being
able from a legal and regulatory perspective to participate in the tax lease
structure;

 

(c)                                  the profitability of the
Creditor Parties not decreasing or deteriorating as a result of the tax lease
structure; and

 

(d)                                 a requirement that the
Borrower pay an administration fee to the Agent (for the account of the
Creditor Parties) in a reasonable amount to be agreed between the Borrower and
the Agent (acting with the authorisation of the Lenders) to compensate the
Creditor Parties for all additional work which will be required to implement
the tax lease structure.

 

12                                  CORPORATE
UNDERTAKINGS

 

12.1                        General.  The Borrower also 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, may otherwise permit (such permission
not to be unreasonably withheld in the case of Clause 12.3(e)).

 

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

 

12.3                        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; or

 

37

 

(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.

 

12.4                        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 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 any Owner, whether
in respect of this 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.

 

12.5                        Financial
Covenants.  The Borrower shall ensure that
at all times:

 

(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 be not less than $30,000,000;

 

(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 $400,000,000;

 

(e)                                  the Book Net Worth of the
Borrower’s Group shall not be less than $250,000,000; and

 

(f)                                    the Market Value Adjusted Net
Worth of the Borrower’s Group shall not be less than 30 per cent. of the Market
Value Adjusted Total Assets.

 

12.6                        Compliance
check.  Compliance with the undertakings contained in
Clause 12.5 shall be determined in each Financial Year:

 

38

 

(a)                                  at the time the Agent receives
the Applicable Accounts of the Borrower’s Group for the first 6-month period of
the Borrower’s Group in each Financial Year (pursuant to Clause 11.6(b)), by
reference to the unaudited Applicable Accounts for the first two financial
quarters in the relevant Financial Year and, in the case of the second 6-month
period, by reference to the audited Applicable Accounts of the Borrower’s Group
in each Financial Year; and

 

(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 12.5.

 

At the same time as it delivers the
Applicable Accounts referred to in this Clause 12.6, 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 12.5
signed by the chief financial officer or, in his absence, any other officer of
the Borrower.

 

12.7                        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 free from any Security Interest.

 

12.8                        Amendments to financial
covenants.  If at any time the Borrower
agrees with any other banks or financial institutions financial covenants which
are more advantageous to those banks or financial institutions than those set
out in Clause 12.5, the Borrower shall promptly notify the Agent and shall
enter into such documents as shall be requested by the Agent to amend and
supplement this Agreement in order to ensure that the same financial covenants
apply to this Agreement.

 

13                                  INSURANCE

 

13.1                        General.  The Borrower undertakes with each Creditor
Party to procure that each Owner will comply with the following provisions of
this Clause 13 at all times during the Security Period (after the Ship which is
owned or to be owned by that Owner has been delivered to it under the relevant
Shipbuilding Contract) except as the Agent may, with the authorisation of the
Majority Lenders, otherwise permit.

 

13.2                        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
for hull and machinery including excess risks; and

 

(b)                                 war risks (including war
risks, P&I and terrorism); and

 

(c)                                  protection and indemnity
risks; and

 

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

 

13.3                        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 any other Ship then subject to a Mortgage 120 per cent. of the Loan;

 

39

 

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

 

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

 

(e)                                  on approved terms; and

 

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

 

13.4                        Further
protections for the Creditor Parties.  In
addition to the terms set out in Clause 13.3, the Borrower shall procure that
the obligatory insurances shall:

 

(a)                                  (except in relation to risks
referred to in Clause 13.2(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
sole 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 the Owners fail to do so.

 

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

 

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

 

(i)                                     notify the Security Trustee of
the brokers (or other 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)                                  obtain the Security Trustee’s
approval to the matters referred to in paragraph (i) above;

 

(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.

 

13.6                        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 effect or renew and of a

 

40

 

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 13.4;

 

(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 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.

 

13.7                        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 that Owner is entered
provides the Security Trustee with:

 

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

 

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

 

(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 its 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.

 

13.8                        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.

 

13.9                        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 affected by it and produce all relevant receipts
when so required by the Security Trustee.

 

13.10                 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.

 

41

 

13.11                 Compliance
with terms of insurances.  The Borrower
shall procure that no Owner does or omits to do (or permits 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:

 

(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 13.7(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)                                 each 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 in which the Ship owned by it is entered 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 shall 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.

 

13.12                 Alteration
to terms of insurances.  The Borrower
shall procure that no Owner shall either make or agree to any alteration to the
terms of any obligatory insurance or waive any right relating to any obligatory
insurance.

 

13.13                 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 herein 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.

 

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

 

(a)                                  the approved brokers; and

 

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

 

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

 

which relates 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.

 

42

 

13.15                 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 13.16 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.

 

13.16                 Mortgagees’
interest and additional perils insurances (pollution).  The Security Trustee shall effect, 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 mortgagees’ interest marine
insurance in relation to each Ship in an amount equal to 110 per cent. of the
Tranche applicable to that Ship, 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 an Owner, of any operator, charterer, manager or sub-manager of the
Ship owned by it or of any officer, employee or agent of an 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 an Owner,
any other person referred to in paragraph (i) above, or of any officer,
employee or agent of that Owner or of such a person, including the casting away
or damaging of the Ship owned by it and/or the Ship owned by it being
unseaworthy; and/or

 

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

 

(b)                                 a mortgagees’ interest
additional perils policy in relation to each Ship in an amount equal to 110 per
cent. of the Tranche applicable to that Ship, 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 a Ship, the imposition of any
Security Interest over a Ship and/or any other matter capable of being insured
against under a mortgagees’ 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.

 

13.17                 Review of
insurance requirements.  The Security
Trustee shall be entitled to review after prior consultation with the Borrower
the requirements of this Clause 13 from time to time in order to take account
of any changes in circumstances after the date of this 

 

43

 

Agreement which are, in the opinion of the
Security Trustee, significant and capable of affecting any Owner or any Ship
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).

 

13.18                 Modification
of insurance requirements.  The Security
Trustee shall promptly notify the Borrower and the Owners of any proposed
modification under Clause 13.17 to the requirements of this Clause 13 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 as an amendment to this Clause 13 and shall bind the
Borrower accordingly.

 

13.19                 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 a
Ship to remain at any safe port or to proceed to and remain at any safe port
designated by the Security Trustee until the relevant Owner implements any
amendments to the terms of the obligatory insurances and any operational
changes required as a result of a notice served under Clause 13.18 and the
Borrower shall procure that the Owners comply with such requirement within a
reasonable period or time in the context of the then prevailing circumstances.

 

14                                  SHIP
COVENANTS

 

14.1                        General.  The Borrower also undertakes with each
Creditor Party to procure that each Owner complies 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
(such permission not to be unreasonably withheld in the case of a proposed
change of port of registry under the same flag of a Ship and in the case of the
matters referred to in Clause 14.12(c)).

 

14.2                        Ship’s
name and registration.  Each Owner
shall keep the Ship owned by it registered in its name under an Approved Flag;
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 name or
port of registry of that Ship.

 

14.3                        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 affecting class; and

 

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

 

14.4                        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.

 

14.5                        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 

 

44

 

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 the relevant Owner and subject to the
security constituted by the relevant Mortgage and, as the case may be, the Deed
of Covenant 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.

 

14.6                        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.

 

14.7                        Inspection.  The Borrower shall:

 

(a)                                  ensure that each Owner shall
permit the Security Trustee (by surveyors or other persons appointed by it for
that purpose) to board the Ship (at the risk of the relevant Owner save where
any loss is shown to have been directly and mainly caused by the gross
negligence or wilful misconduct of such surveyor or other person) owned by it
at all reasonable times to inspect her condition or to satisfy themselves about
proposed or executed repairs or to prepare a survey report (at the reasonable
cost of the Borrower) in respect of such Ship and shall afford all proper
facilities for such inspections Provided that:

 

(i)                                   such boarding and inspection
does not materially disrupt the relevant Ship’s reasonable operation, repairs
or maintenance;

 

(ii)                                if no Event of Default has
occurred the Borrower shall not be required to pay for the cost of a survey
report in respect of each Ship more than once every 24 months; and

 

(b)                                 ensure that each Ship shall,
both at the time of the survey referred to in this Clause 14.7 and at all other
times throughout the Security Period, be in a good and safe condition and state
of repair.

 

14.8                        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, the Earnings or the
Insurances; and

 

(c)                                  all other outgoings whatsoever
in respect of the Ship owned by it, the Earnings or the 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
relevant 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.

 

14.9                        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, the ISPS Code 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;

 

45

 

(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 the Ship’s war risks insurers unless in the case of such
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.

 

14.10                 Provision
of information.  The Borrower
shall procure that each Owner shall promptly provide the Agent with any information
which it reasonably requests regarding:

 

(a)                                  the Ship owned by it, her
employment, position, engagements and her Insurances;

 

(b)                                 the Earnings and payments and
amounts due to the master and crew of the Ship owned by it;

 

(c)                                  any expenses incurred, or
likely to be incurred, in connection with the operation, maintenance or repair
of the Ship owned by it and any payments made in respect of that Ship;

 

(d)                                 any towages and salvages; and

 

(e)                                  that Owner’s compliance, the
Approved Manager’s compliance or the compliance of the Ship owned by it with
the ISM Code and the ISPS Code,

 

and, upon the Agent’s
request, provide copies of any current charter relating to the Ship owned by it
and of any current charter guarantee, and of the ISM Code Documentation and the
ISPS Code Documentation.

 

14.11                 Notification
of certain events.  The Borrower
shall procure that each Owner shall as soon as it becomes aware of any of the
events referred to in this Clause 14.11 notify the Agent by fax, confirmed
forthwith by letter of:

 

(a)                                  any casualty which is or is
likely to be or to become a Major Casualty;

 

(b)                                 any occurrence as a result of
which the Ship owned by it has become or is, by the passing of time or
otherwise, likely to become a Total Loss;

 

(c)                                  any requirement or recommendation
made by any insurer or classification society or by any competent authority
which is not complied with in accordance with its terms (including without
limitation, any time limit specified by any insurer or classification society
or any competent authority);

 

(d)                                 any arrest or detention of the
Ship owned by it (if the arrest or detention has not been released within 3
Business Days of its imposition or the Borrower or the relevant Owner considers
that the arrest or detention will not be released within 3 Business Day of its
imposition), any exercise or purported exercise of any lien on that Ship or her
Earnings or her Insurances or any requisition of that Ship for hire;

 

(e)                                  any intended dry docking of
the Ship owned by it which the Owner knows, or reasonably determines, will or
may exceed (or has exceeded) 15 days in total;

 

(f)                                    any Environmental Claim made
against that Owner or in connection with the Ship owned by it, or any
Environmental Incident;

 

46

 

(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 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.

 

14.12                 Restrictions
on chartering, appointment of managers etc.  The
Borrower shall procure that no Owner shall in relation to the Ship owned by it:

 

(a)                                  (other than pursuant to
Charterparty D), let the Ship owned by it on demise charter for any period,
without the Agent’s written consent, such consent not to be unreasonably
withheld;

 

(b)                                 (other than pursuant to the
Charterparty relative to its Ship), enter into any time or consecutive voyage
charter in respect of the Ship owned by it for a term which exceeds, or which
by virtue of any optional extensions may exceed, 12 months;

 

(c)                                  amend, vary or supplement the
Charterparty relative to that Ship;

 

(d)                                 charter the Ship owned by it
otherwise than on bona fide arm’s length terms at the time when the Ship is
fixed;

 

(e)                                  appoint (or permit the
appointment of) a manager of the Ship owned by it other than the Approved
Manager or agree to any alteration to the terms of the Approved Manager’s
appointment;

 

(f)                                    de-activate or lay up the Ship
owned by it; or

 

(g)                                 put the Ship owned by it into
the possession of any person for the purpose of work being done upon her in an
amount exceeding or likely to exceed $1,000,000 (or the equivalent in any other
currency) unless that person has first given to the Security Trustee and in
terms satisfactory to it a written undertaking not to exercise any lien on that
Ship or her Earnings or her Insurances for the cost of such work or otherwise
or other arrangements satisfactory to the Security Trustee are made to ensure
that no such lien will be exercised.

 

14.13                 Notice of
Mortgage.  The Borrower shall procure that each Owner
shall keep the Mortgage registered against the Ship owned by it as a valid
first priority mortgage or preferred (as the case may be), 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
Security Trustee or, as the case may be, the Lenders.

 

14.14                 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.

 

47

 

15                                  SECURITY
COVER

 

15.1                        Provision
of additional security cover; prepayment of Loan.  The Borrower undertakes with each Creditor
Party that, if at any time the Agent notifies the Borrower that:

 

(a)                                  the aggregate Market Value of
the Ships subject to a Mortgage; plus

 

(b)                                 the net realisable value of
any additional security previously provided under this Clause 15,

 

is below 125 per cent. of the aggregate of
the Loan and the Swap Exposure, 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 Agent which, in the
reasonable opinion of the Majority Lenders, has a net realisable value at least
equal to the shortfall and which consists of either (a) cash pledged to
the Security Trustee or the Lenders or (b) a Security Interest (including
but not limited to, a first or second priority or preferred (as the case may
be) mortgage over another Fleet Vessel) covering such asset or assets and
documented in such terms as the Lenders may approve or require or (c) an
assignment of the refund guarantee(s) of a Fleet Vessel which is a
newbuilding; or

 

(ii)                                prepay in accordance with
Clause 8 such part (at least) of the Loan as will eliminate the shortfall.

 

15.2                        Meaning
of additional security.  In Clause 14.1
“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.

 

15.3                        Requirement
for additional documents.  The Borrower
shall not be deemed to have complied with paragraph (i) of Clause 15.1
until the Agent has received in connection with the additional security
certified copies of documents of the kinds referred to in paragraphs 2, 3 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.

 

15.4                        Valuation
of a Fleet Vessel not subject to a long-term charter.  The Market Value of a Fleet Vessel which at
the relevant time is not subject to a charter or other contract of employment
having an unexpired term of at least 12 months with a first class charterer
acceptable to the Lenders (in their absolute discretion) is that shown by
taking the average of two valuations prepared:

 

(a)                                  as at a date not more than 4
weeks previously;

 

(b)                                 by 2 Approved Brokers, one
appointed by the Agent, the other appointed by the Borrower, with both
reporting to the Agent;

 

(c)                                  with or without physical
inspection of that Fleet Vessel (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.

 

48

 

Provided that if the difference between the
2 valuations obtained at any one time pursuant to this Clause 15.4 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 15.4 and the Market Value of
the Fleet Vessel in such circumstances shall be the average of the initial 2
valuations and the valuation provided by the third Approved Broker.

 

15.5                        Valuation of
a Fleet subject to long-term charter.  The Market Value of a Fleet
Vessel which at the relevant time is subject to a charter or other contract of
employment having an unexpired term of at least 12 months with a first class
charterer acceptable to the Lenders (in their absolute discretion) 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 Fleet Vessel 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 15.5, an “option period”); and

 

(b)                                 the current charter-free market
value (determined in accordance with Clause 15.4 but subject to the adjustments
referred to in this Clause 15.5) of a vessel with identical characteristics to
the Fleet Vessel other than its age which shall, for the purposes of this
Clause 15.5, be considered to be the age of the Fleet Vessel at the expiration
of the charter or other contract of employment to which the Fleet Vessel 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 Fleet Vessel which may affect its value.

 

For the purposes of this Clause 15.5, the
discount rate which will apply in calculating the present value of the amounts
referred to in paragraphs (a) and (b) will be of the applicable
Interest Rate Swap Rate for a period equal to the unexpired term of the Fleet
Vessel’s charter or other contract of employment (excluding any option periods
(rounded up to the nearest integral year)).

 

15.6                        Value of
additional security.  The net
realisable value of any additional security which is provided under Clause 15.1
and which consists of a Security Interest over a vessel shall be that shown by
a valuation complying with the requirements of Clause 15.4.  The net realisable value of any other form of
security shall be determined by the Agent (acting upon the instructions of all
the Lenders).

 

15.7                        Valuations
binding.  Any valuation under paragraph (i) of
Clause 15.1, Clauses 15.4, 15.5 or 15.6 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.

 

15.8                        Provision
of information.  The Borrower
shall promptly provide the Agent and any Approved Broker or expert acting under
Clause 15.4, 15.5 or 15.6 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.

 

15.9                        Payment
of valuation expenses.  Without prejudice
to the generality of the Borrower’s obligations under Clauses 20.2, 20.3 and
20.4, 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 the Agent in
connection with any matter arising out of this Clause.

 

49

 

15.10                 Frequency
of Valuations.  The Borrower acknowledges and
agrees that the Agent may commission valuations of the 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 in writing.

 

16                                  PAYMENTS
AND CALCULATIONS

 

16.1                        Currency
and method of payments.  All payments
to be made:

 

(a)                                  by the Lenders to the Agent;

 

(b)                                 by the Borrower to the Agent,
the Security Trustee or any Lender,

 

under a Finance Document shall be made to the Agent or
to the Security Trustee, in the case of an amount payable to it:

 

(i)                                   by not later than 11.00 a.m.
(New York City time) on the due date;

 

(ii)                                in same day Dollar funds
settled through the New York Clearing House Interbank Payments System (or in
such other Dollar 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); and

 

(iii)                             to such account of the Agent
with a bank in New York as the Agent may from time to time notify the Borrower
and each Lender.

 

16.2                        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.

 

16.3                        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.

 

16.4                        Distribution
of payments to Creditor Parties. 
Subject to Clauses 16.5, 16.6 and 16.7:

 

(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.

 

50

 

16.5                        Permitted
deductions by Agent. 
Notwithstanding any other provision of this Agreement or any other
Finance Document, the Agent may, before making an amount available to a Lender,
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.

 

16.6                        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.

 

16.7                        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.

 

16.8                        Agent may
assume receipt.  Clause 16.7
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).

 

16.9                        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.

 

16.10                 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.

 

16.11                 Accounts
prima facie evidence.  If any
accounts maintained under Clauses 16.9 and 16.10 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.

 

17                                  APPLICATION
OF RECEIPTS

 

17.1                        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 and
the Master Agreements (including, without limitation, the Master Agreements)
shall be applied:

 

(a)                                  FIRST: in or towards
satisfaction of any amounts then due and payable under the Finance Documents
(other than under the Master Agreements) 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 under the Master Agreements)
other than those amounts referred to at paragraphs (ii) and (iii) 

 

51

 

(including, but without limitation, all
amounts payable by the Borrower under Clauses 20, 21 and 22 of this Agreement
or by the Borrower or any Security Party under any corresponding or similar
provision in any other Finance Document (other than under the Master
Agreements));

 

(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 (other than under
the Master Agreements); and

 

(iii)                             thirdly, in or towards
satisfaction pro rata of the Loan;

 

(b)                                 SECONDLY: in or towards
satisfaction of any amounts then due and payable under the Master Agreements in
the following order and proportions:

 

(1)                                first, in or towards
satisfaction pro rata of all amounts then due and payable to each Swap Banks
under the Master Agreements other than those amounts referred to at paragraphs (ii) and
(iii);

 

(2)                                secondly, in or towards
satisfaction pro rata of any and all amounts of interest or default interest
payable to the Swap Banks under the Master Agreements (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 each Master Agreement but
shall have failed to pay or deliver to the relevant Swap Bank at the time of
application or distribution under this Clause 17.1); and

 

(3)                                thirdly, in or towards
satisfaction pro rata of the Swap Exposure (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); and

 

(c)                                  THIRDLY: any surplus shall be
paid to the Borrower or to any other person appearing to be entitled to it.

 

17.2                        Variation
of order of application.  The Agent may,
with the authorisation of all the Lenders and the Swap Banks, 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 17.1 either as
regards a specified sum or sums or as regards sums in a specified category or
categories.

 

17.3                        Notice of
variation of order of application.  The
Agent may give notices under Clause 17.2 from time to time in respect of sums
which may be received or recovered in the future.

 

17.4                        Appropriation
rights overridden.  This Clause 17
and any notice which the Agent gives under Clause 17.2 shall override any right
of appropriation possessed, and any appropriation made, by the Borrower or any
Security Party.

 

18                                  APPLICATION
OF EARNINGS

 

18.1                        Payment
of Earnings.  The Borrower undertakes with
each Creditor Party that, throughout the Security Period (subject only to the
provisions of the General Assignments), all the Earnings of a Ship are paid to
the Danaos Earnings Account.

 

18.2                        Application
of Earnings.  The Borrower undertakes with
each Creditor Party to procure that money from time to time credited to, or for
the time being standing to the credit of, the Danaos Earnings Account shall,
unless and until an Event of Default or Potential 

 

52

 

Event of Default shall have occurred
(whereupon the provisions of Clause 17.1 shall be and become applicable), be
available for application in the following manner:

 

(a)                                  in or towards meeting the
costs and expenses from time to time incurred by or on behalf of the relevant
Owner in connection with the operation of the Ship owned by it;

 

(b)                                 in or towards making payments
of all amounts due and payable by the Borrower under this Agreement other than
the payments of principal and interest pursuant to Clauses 8.1 and 5.1; and

 

(c)                                  as to any surplus from time to
time arising on the Danaos Earnings Account following application as aforesaid,
to be paid to the relevant Owner or, as the case may be, the Borrower or to
whomsoever the Borrower may direct.

 

18.3                        Location
of accounts.  The Borrower shall promptly:

 

(a)                                  comply with any requirement of
the Agent as to the location or re-location of the Danaos Earnings Account; and

 

(b)                                 execute any documents which
the Agent specifies to create or maintain in favour of the Security Trustee a
Security Interest over the Danaos Earnings Account.

 

19                                  EVENTS OF
DEFAULT

 

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

 

(a)                                  the Borrower or any Security
Party fails to pay when due or (if so payable) on demand any sum payable under
a Finance Document or under any document relating to a Finance Document; such
failure shall not constitute an Event of Default if:

 

(i)                                   such failure is due to a bank
payment transmission, technical or administrative error; and

 

(ii)                                the Borrower or the relevant
Security Party remedies such failure within 3 days or the due date of payment
of the relevant amount; or

 

(b)                                 any breach occurs of Clause 9,
11.3, 12.2, 12.3, 12.4, 12.5, 13.2 or 15.1; 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) above) if, in the opinion of
the Majority Lenders, such default is capable of remedy, and such default is
not 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) above); 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

 

53

 

(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 the definition of that term)
of at least $5,000,000 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

 

(v)                               any Security Interest securing
any Financial Indebtedness of a Relevant Person becomes enforceable; or

 

(g)                                 any of the following occurs in
relation to a Relevant Person:

 

(i)                                   a Relevant Person becomes
unable to pay its debts as they fall due; or

 

(ii)                                any assets of a Relevant
Person are subject of any form of execution, attachment, arrest, sequestration
or distress in respect of a sum of, or sums aggregating, $100,000 (or
$5,000,000 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 

 

54

 

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

 

(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
Charterparty or a Shipbuilding Contract is not granted, expires without being
renewed, is revoked or becomes liable to revocation or any condition of such a
consent is not fulfilled if this materially affects the security position of
the Creditor Parties or the ability of the Borrower or a Security Party to
timely discharge and/or perform its or their liabilities and obligations (or
any of them) under any Finance Document; or

 

(k)                                  if, without the prior consent
of the Majority Lenders, members of the Dr. John Coustas family (either
directly and/or through companies beneficially owned by members of the Dr. John
Coustas family and/or trusts or foundations of which members of the Dr. John
Coustas family are beneficiaries) own and control less than 51 per cent. of the
issued voting share capital of the Borrower; or

 

(l)                                     if, without the prior consent
of the Majority Lenders, the shares of the Borrower cease to be listed on the
New York Stock Exchange; or

 

(m)                               it appears to the Majority
Lenders that, without their prior consent, a change has occurred or probably
has occurred after the date of this Agreement in the ultimate beneficial
ownership of any of the shares in any Owner or in the ultimate control of the voting
rights attaching to any of those shares; or

 

(n)                                 any provision which the
Majority Lenders consider material of a Finance Document proves to have been or
becomes invalid or unenforceable, or a Security Interest created 

 

55

 

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 Majority Lenders 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)                                 any of the Initial
Charterparties is terminated or becomes invalid or unenforceable or otherwise
ceases to be in full force and effect for any reason prior to its stated
termination date and the relevant Initial Charterparty is not replaced within
30 days (or 60 days if the relevant Ship may not be chartered due to a defect
or is drydocked for repairs) by another charter having similar characteristics
to that Initial Charterparty and with a charterer, in a form and on terms
acceptable to the Lender; or

 

(q)                                 any of the Charterers ceases
to be a party to the Initial Charterparty entered into by it unless the
obligations of any replacement charterer are guaranteed by the original
Charterer (on terms satisfactory to the Lender);

 

(r)                                    any 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

 

(s)                                  for any reason whatsoever, any
Ship ceases to be managed by the Approved Manager on terms in all respects
approved by the Agent; or

 

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

 

(u)                                 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.

 

19.2                        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 Commitments, 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

 

56

 

(iii)                             take any other action which,
as a result of the Event of Default or any notice served under paragraph (i) or
(ii) above, the Agent and/or the Lenders are entitled to take under any
Finance Document or any applicable law;

 

(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.

 

19.3                        Termination
of Commitments.  On the service
of a notice under paragraph (a)(i) of Clause 19.2, the Commitments and all
other obligations of each Lender to the Borrower under this Agreement shall
terminate.

 

19.4                        Acceleration.  On the service of a notice under paragraph
(a)(ii) of Clause 19.2, 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.

 

19.5                        Multiple
notices; action without notice.  The Agent may
serve notices under paragraphs (a) (i) and (ii) of Clause 19.2
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.

 

19.6                        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 19.2; 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

 

19.7                        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.

 

19.8                        Exclusion
of Creditor Party liability.  No Creditor
Party nor any receiver or manager appointed by the Security Trustee, shall have
any liability to the Borrower or a Security Party:

 

(a)                                  for any loss caused by an
exercise of rights under, or enforcement of a Security Interest created by, a
Finance Document or by any failure or delay to exercise such a right or to
enforce such a Security Interest; or

 

(b)                                 as mortgagee in possession or
otherwise, for any income or principal amount which might have been produced by
or realised from any asset comprised in such a Security Interest or for any
reduction (however caused) in the value of such an asset,

 

                                                except that this does not
exempt a Creditor Party or a receiver or manager from liability for losses
shown to have been caused by the gross negligence or the wilful misconduct of
the Creditor Party’s own officers and employees or (as the case may be) such
receiver’s or manager’s own partners or employees.

 

19.9                        Relevant
Persons.  In this Clause 19 “a Relevant
Person” means the Borrower, a Security Party and any company which
is a subsidiary of the Borrower or a Security Party or of which a Security
Party is a subsidiary but excluding any company which is dormant and the value
of whose gross assets is $50,000 or less.

 

57

 

19.10                 Interpretation.  In Clause 19.1(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 19.1(g) “petition” includes an application.

 

20                                  FEES AND
EXPENSES

 

20.1                        Arrangement
and commitment fees.  The Borrower:

 

(a)                                  has paid to the Agent a
non-refundable arrangement fee of $1,495,000 (representing 0.5 per cent. of the
Total Commitments) one day after the date of the commitment letter dated 30 October 2008
in respect of the Loan and executed between the Borrower and the Agent; and

 

(b)                                 shall pay to the Agent a
commitment fee at the rate of 0.30 per cent. per annum on the undrawn balance
of the Total Commitments during the period from (and including) 30 October 2008
up to and including the earlier of (i) the final Drawdown Date and (ii) the
last day of the Availability Period for Tranche E, such commitment fee to be
payable every 3 months in arrears and on the last day of such period.

 

20.2                        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.

 

20.3                        Costs of
variations, amendments, enforcement etc.  The
Borrower shall pay to the Agent, on the Agent’s demand, the amount of all
expenses incurred by a Lender in connection with:

 

(a)                                  any amendment or supplement to
a Finance Document, or any proposal for such an amendment to be made;

 

(b)                                 any consent or waiver by the
Agent, 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 15 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.

 

20.4                        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.

 

20.5                        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 20 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.

 

58

 

21                                  INDEMNITIES

 

21.1                        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
7);

 

(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 19;

 

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.

 

21.2                        Breakage
costs.  Without limiting its generality, Clause 21.1
covers any liability, expense or loss, including a loss of a prospective
profit, incurred by a Lender:

 

(a)                                  in liquidating or employing
deposits from third parties acquired or arranged to fund or maintain all or any
part of its Contribution and/or any overdue amount (or an aggregate amount
which includes its Contribution or any overdue amount); and

 

(b)                                 in terminating, or otherwise
in connection with, any interest and/or currency swap or any other transaction
entered into (whether with another legal entity or with another office or
department of the Lender concerned) to hedge any exposure arising under this
Agreement or that part which the Lender concerned determines is fairly
attributable to this Agreement of the amount of the liabilities, expenses or
losses (including losses of prospective profits) incurred by it in terminating,
or otherwise in connection with, a number of transactions of which this
Agreement is one.

 

21.3                        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;

 

59

 

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.

 

21.4                        Extension
of indemnities; environmental indemnity. 
Without prejudice to its generality, Clause 21.3 covers:

 

(a)                                  any matter which would be
covered by Clause 20.3 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, the ISM Code or the
ISPS Code.

 

21.5                        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.

 

In this Clause 21.5 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 21.5 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 judgment or order
relating to those other liabilities.

 

21.6                        Application
to Master Agreement.  For the
avoidance of doubt, Clause 21.5 does not apply in respect of sums due from the
Borrower to the Swap Banks under or in connection with a Master Agreement as to
which sums the provisions of section 8 (Contractual Currency) of the Master
Agreements shall apply.

 

21.7                        Certification
of amounts.  A notice which is signed by 2
officers 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.

 

21.8                        Sums
deemed due to a Lender.  For the
purposes of this Clause 21, 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.

 

60

 

22                                  NO SET-OFF
OR TAX DEDUCTION

 

22.1                        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.

 

22.2                        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; and

 

(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.

 

22.3                        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.

 

22.4                        Exclusion
of tax on overall net income.  In this Clause
22 “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.

 

22.5                        Application
to the Master Agreements.  For the
avoidance of doubt, Clause 22 does not apply in respect of sums due from the
Borrower to a Swap Bank under or in connection with each Master Agreement as to
which sums the provisions of section 2(d) (Deduction or Withholding for
Tax) of each Master Agreement shall apply.

 

23                                  ILLEGALITY,
ETC

 

23.1                        Illegality.  This Clause 23 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.

 

23.2                        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 23.1 which the Agent receives from the Notifying
Lender.

 

23.3                        Prepayment;
termination of Commitment.  On the Agent
notifying the Borrower under Clause 23.2, the Notifying Lender’s Commitment
shall terminate; and thereupon or, if later, on the date specified in the
Notifying Lender’s notice under Clause 23.1 as the date 

 

61

 

on which the notified event would become
effective the Borrower shall prepay the Notifying Lender’s Contribution in
accordance with Clause 8 (other than Clause 8.6).

 

24                                  INCREASED
COSTS

 

24.1                        Increased
costs.  This Clause 24 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) which is
introduced, or altered, or the interpretation or application of which is
altered, after the date of this Agreement; or

 

(c)                                  the
implementation or application of or compliance with the “International
Convergence of Capital Measurement and Capital Standards, a Revised Framework”
published by the Basel Committee on Banking Supervision in June 2004 in
the form existing on the date of this Agreement (the “Basel II Accord”) or any other law or
regulation implementing the Basel II Accord or any of the approaches provided
for and allowed to be used by banks under or in connection with the Basel II
Accord in each case as from time to time implemented by any Lender,

 

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;

 

(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 21.1 or by
Clause 22.

 

For the purposes of this Clause 24.1 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.

 

62

 

24.2                        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 24.1.

 

24.3                        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.

 

24.4                        Notice of
prepayment.  If the Borrower is not willing
to continue to compensate the Notifying Lender for the increased cost under
Clause 24.3, the Borrower may give the Agent not less than 3 Business Days’
notice of its intention to prepay the Notifying Lender’s Contribution.

 

24.5                        Prepayment;
termination of Commitment.  A notice under
Clause 24.4 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 21.1).

 

24.6                        Application
of prepayment.  Clause 8 shall apply in
relation to the prepayment.

 

25                                  SET-OFF

 

25.1                        Application
of credit balances.  Each Creditor
Party may without prior notice but following the occurrence of an Event of
Default which is continuing:

 

(a)                                  apply any balance (whether or
not then due) which at any time stands to the credit of any account in the name
of the Borrower at any office in any country of that Creditor Party in or towards
satisfaction of any sum then due from the Borrower to that Creditor Party under
any of the Finance Documents; and

 

(b)                                 for that purpose:

 

(i)                                  break, or alter the maturity
of, all or any part of a deposit of the Borrower;

 

(ii)                               convert or translate all or
any part of a deposit or other credit balance into Dollars; and/or

 

(iii)                            enter into any other
transaction or make any entry with regard to the credit balance which the
Creditor Party concerned considers appropriate.

 

25.2                        Existing
rights unaffected.  No Creditor
Party shall be obliged to exercise any of its rights under Clause 25.1; 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).

 

25.3                        Sums
deemed due to a Lender.  For the
purposes of this Clause 25, 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.

 

63

 

26                                  TRANSFERS
AND CHANGES IN LENDING OFFICES

 

26.1                        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.

 

26.2                        Transfer
by a Lender.  Subject to Clause 26.4, 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 5 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 26.2 shall:

 

(i)                                   require the
prior written the consent of the Agent;

 

(ii)                                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; and

 

(iii)                             require the
consent of the Borrower (such consent not to be unreasonably withheld or
delayed) in all other circumstances.

 

26.3                        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 Borrower, the Security Parties, the Security
Trustee,  each of the other Lenders and
the other Swap Banks;

 

(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).

 

26.4                        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 26.3 on or before that
date.

 

64

 

26.5                        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.

 

26.6                        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.

 

26.7                        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;

 

(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
5.7 and Clause 20, 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.

 

26.8                        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 26.4) 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.

 

65

 

26.9                        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.

 

26.10                 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.

 

26.11                 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.

 

26.12                 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.

 

26.13                 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.

 

26.14                 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.

 

26.15                 Notification.  On receiving a notice pursuant to Clause
26.14, 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.

 

27                                  VARIATIONS AND WAIVERS

 

27.1                        Variations, waivers etc. by Majority Lenders.  Subject to Clause 27.2, 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.

 

27.2                        Variations, waivers etc. requiring agreement of all Lenders.  However, as regards the
following, Clause 27.1 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”:

 

66

 

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

 

(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, 5.1, 8.2, 11, 12.4, 15.1,
17, 18, 19 or 30;

 

(g)                                 a change to this Clause 27;

 

(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.

 

27.3                        Exclusion of other or implied variations.  Except for a document which
satisfies the requirements of Clauses 27.1 and 27.2, no document, and no act,
course of conduct, failure or neglect to act, delay or acquiescence on the part
of the Creditor Parties or any of them (or any person acting on behalf of any
of them) shall result in the Creditor Parties or any of them (or any person
acting on behalf of any of them) being taken to have varied, waived, suspended
or limited, or being precluded (permanently or temporarily) from enforcing,
relying on or exercising:

 

(a)                                  a provision of this Agreement or another Finance Document; or

 

(b)                                 an Event of Default; or

 

(c)                                  a breach by the Borrower or a Security Party of an obligation under
a Finance Document or the general law; or

 

(d)                                 any right or remedy conferred by any Finance Document or by the
general law;

 

(e)                                  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.

 

28                                  NOTICES

 

28.1                        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.

 

28.2        Addresses for communications.  A notice shall be sent:

 

	
  (a)           to the Borrower:

  	
  c/o Approved Manager

  
	
   

  	
  Akti Kondyli 14

  
	
   

  	
  185 45 Piraeus

  
	
   

  	
  Greece

  
	
   

  	
  Fax No: +30 210 422 0853

  

 

67

 

	
  (b)           to a Lender:

  	
  At the address below its name in Schedule 1,
  Part A or (as the case may require) in the relevant Transfer Certificate

  
	
   

  	
   

  
	
  (c)           to the Agent and Security Trustee:

  	
  Domshof 17

  
	
   

  	
  D-28195 Bremen

  
	
   

  	
  Germany

  
	
   

  	
   

  
	
   

  	
  Fax No: +49 421 360 9329

  
	
   

  	
   

  
	
   

  	
  Attention: Achim Boehme

  
	
   

  	
   

  
	
  (d)           to a Swap Bank:

  	
  At the address below its name in Schedule 1,
  Part B

  

 

or to such other address as the relevant party may notify the other.

 

28.3                        Effective date of notices.  Subject to Clauses 28.4 and 28.5:

 

(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; and

 

(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.

 

28.4                        Service outside business hours.  However, if under Clause 28.3 a notice would
be deemed to be served:

 

(a)                                  on a day which is not a business day in the place of receipt; or

 

(b)                                 on such a business day, but after 5 p.m. local time,

 

the notice shall (subject to Clause 28.5) be deemed to be served, and
shall take effect, at 9 a.m. on the next day which is such a business day.

 

28.5                        Illegible notices.  Clauses 28.3 and 28.4 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.

 

28.6                        Valid notices.  A notice under or in connection with a
Finance Document shall not be invalid by reason that its contents or 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.

 

28.7                        English language.  Any notice under or in connection with a
Finance Document shall be in English.

 

28.8                        Meaning of “notice”.  In this Clause “notice” includes any demand,
consent, authorisation, approval, instruction, waiver or other communication.

 

29                                  SUPPLEMENTAL

 

29.1                        Rights cumulative, non-exclusive.  The rights and remedies which the Finance
Documents give to each Creditor Party are:

 

68

 

(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.

 

29.2                        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.

 

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

 

29.4                        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.

 

29.5                        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.

 

30                                  LAW AND JURISDICTION

 

30.1                        English law.  This Agreement and any non contractual
obligations arising out of or in connection with it shall be governed by, and
construed in accordance with, English law.

 

30.2                        Exclusive English jurisdiction.  Subject to Clause 30.3, the courts of England
shall have exclusive jurisdiction to settle any Dispute.

 

30.3                        Choice of forum for the exclusive benefit of the Creditor Parties.  Clause 30.2 is for the
exclusive benefit of the Creditor Parties, each of which reserves the right:

 

(a)                                  to commence proceedings in relation to any Dispute 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 Dispute.

 

30.4                        Process agent.  The Borrower irrevocably appoints Danaos
Management Consultants at their office for the time being, presently at 4
Staple Inn, Holborrn, London WC1V 7QU, England to act as its process 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 a Dispute.

 

30.5                        Creditor Party rights unaffected.  Nothing in this Clause 30 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.

 

30.6                        Meaning of “proceedings”.  In this Clause 30, “proceedings”
means proceedings of any kind, including an application for a provisional or
protective measure and a “Dispute”  means any dispute arising out of or in
connection with this Agreement (including a

 

69

 

dispute relating to the existence, validity or
termination of this Agreement) or any non-contractual obligation arising out of
or in connection with this Agreement.

 

 

THIS AGREEMENT has been entered into on the date stated at the
beginning of this Agreement.

 

70

 

SCHEDULE 1

 

PART A

 

LENDERS AND COMMITMENTS

 

	
  Lender and Lending Office

  	
   

  	
  Commitment

  	
   

  
	
   

  	
   

  	
  (US Dollars)

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Deutsche Schiffsbank Aktiengesellschaft

  Domshof 17, D-28195 Bremen

  Federal Republic of Germany

  	
   

  	
  125,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Credit Suisse

  St. Alban-Graben

  103 P.O. Box

  CH-4002, Basel Switzerland

  	
   

  	
  125,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Emporiki Bank of Greece S.A.

  114 Kolokotroni Street

  185 35 Piraeus

  Greece

  	
   

  	
  49,000,000

  	
   

  

 

PART B

 

SWAP BANKS

 

Deutsche Schiffsbank Aktiengesellschaft

Domshof 17, D-28195 Bremen

Federal Republic of Germany

 

Credit Suisse

St. Alban-Graben

103 P.O. Box

CH-4002, Basel Switzerland

 

Emporiki Bank of Greece S.A.

114 Kolokotroni Street

185 35 Piraeus

Greece

 

71

 

SCHEDULE 2

DRAWDOWN NOTICE

 

To:                              Deutsche Schiffsbank Aktiengesellschaft

Domshof 17, D-28195 Bremen

Federal Republic of Germany

 

2009

 

DRAWDOWN NOTICE

 

1              We refer to the loan agreement (the “Loan
Agreement”) dated          2009
and made between us, the Borrower, the Lenders and the Swap Banks referred to
therein, yourselves as Agent and Security Trustee, in connection with a term
loan facility of up to US$299,000,000. Terms defined in the Loan Agreement have
their defined meanings when used in this Drawdown Notice.

 

2                                         We request to borrow the [     
] Advance of Tranche [          ]
as follows:

 

(a)                                  Amount: US$[         ];

 

(b)                                 Drawdown Date:  [             ];

 

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

 

(d)                                 Payment instructions : account of [                             ] and numbered
[                                         
] with [                 ] of
[                       ].

 

3                                         We represent and warrant that:

 

(a)                                  the representations and warranties in Clause 10 of the Loan
Agreement would remain true and not misleading if repeated on the date of this
notice with reference to the circumstances now existing; and

 

(b)                                 no Event of Default or Potential Event of Default has occurred or
will result from the borrowing of the Loan.

 

4                                         This notice cannot be revoked without your prior consent.

 

5                                         We authorise you to deduct any fees including the arrangement fee
and any accrued commitment fee referred to in Clause 20 from the amount of the
Advance.

 

 

Attorney-in-Fact

for
and on behalf of

DANAOS CORPORATION

 

72

 

SCHEDULE 3

CONDITION PRECEDENT DOCUMENTS

 

In this Schedule 3 “Relevant Ship” means, in relation to an
Advance of a Tranche to be made available on a Drawdown Date, the Ship which is
to be part-financed by that Tranche.

 

PART A

 

The following are the documents referred to in
Clause 9.1(a).

 

1                                         A duly executed original of each Guarantee, the Master Agreements,
the Agency and Trust Agreement, the Master Agreement Assignments and the Danaos
Earnings Account Pledge.

 

2                                         Certified copies of the certificate of incorporation and
constitutional documents of the Borrower and each Owner.

 

3                                         Copies of resolutions of the shareholders and directors of each
Owner authorising the execution of each of the Finance Documents to which that
Owner is a party and, in the case of each Owner ratifying the execution of the
Shipbuilding Contracts to which it is a party.

 

4                                         Evidence that the Danaos
Earnings Account has been duly opened with the Account Bank by the Borrower.

 

5                                         The original of any power of
attorney under which any Finance Document is executed on behalf of the Borrower
or each Owner.

 

6                                         Copies of all consents which
the Borrower or any Security Party requires to enter into, or make any payment
under, any Finance Document or any Shipbuilding Contract.

 

7                                         Originals of the Refund
Guarantees and certified true copies of the Shipbuilding Contracts duly
executed by the parties thereto.

 

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

 

9                                         Favourable legal opinions
from lawyers appointed by the Agent on such matters concerning the laws of the
Marshall Islands, Liberia, Korea and China and such other relevant
jurisdictions as the Majority Lenders may require.

 

10                                  Copies of each Initial
Charterparty duly executed by the parties thereto.

 

11                                  If the Lenders so requires,
in respect of any of the documents referred to above, a certified English
translation prepared by a translator approved by the Agent.

 

PART B

 

The following are the
documents referred to in Clause 9.1(b).

 

1                                         A duly executed original of the Predelivery Security Assignment and
the Charterparty Assignment in respect of the Initial Charterparty for the
Relevant Ship (and of each document required to be delivered pursuant thereto)
and, if the Relevant Ship is Ship C, the Bareboat Charter Security Agreement in
respect of the Initial Charterparty for Ship C (and of each document to be
delivered thereunder).

 

73

 

2                                         Evidence that the first instalment payable pursuant to the relevant
Shipbuilding Contract has been duly paid by the relevant Owner to the relevant
Builder.

 

3                                         Such documentary evidence as the Agent and its legal advisers may
require in relation to the due authorisation and execution of the Refund
Guarantee applicable to the Shipbuilding Contract for the Relevant Ship and, in
the case of the First Refund Guarantee D, evidence that it has been duly
registered with the State Administration for Foreign Exchange (SAFE) in China.

 

PART C

 

The following are the documents referred to in Clause 9.1(c).

 

1                                         A duly issued invoice from the relevant Builder notifying the
relevant Owner that the steel-cutting of the Relevant Ship has been carried out
and showing all sums due and payable to that Builder pursuant to the relevant Article of
the Shipbuilding Contracts for the Relevant Ship upon steel-cutting of that
Ship together with evidence that all amounts payable thereunder have been duly
paid.

 

2                                         Evidence satisfactory to the Agent that the funds referred to in Clause
4.2(d) applicable to the steel-cutting instalment of the Relevant Ship
have been paid by the relevant Owner to the relevant Builder or will be paid at
the same time as the remittance of the relevant Advance to that Builder.

 

PART D

 

The following are the documents referred to in Clause 9.1(d).

 

1                                         A duly issued invoice from the relevant Builder notifying the
relevant Owner that the keel-laying of the Relevant Ship has been carried out
and showing all sums due and payable to that Builder pursuant to the relevant Article of
the Shipbuilding Contract for the Relevant Ship upon keel-laying of that Ship.

 

2                                         Evidence satisfactory to the Agent that the funds referred to in Clause
4.2(d) applicable to the keel-laying instalment of the Relevant Ship have
been paid by the relevant Owner to the relevant Builder or will be paid at the
same time as the remittance of the relevant Advance to that Builder.

 

3                                         Written confirmation from the Owner of the Relevant Ship and the
Approved Manager that they have irrevocably accepted and approved the building
works which have been completed on the Relevant Ship up to the date of her
keel-laying.

 

4                                         If the Relevant Ship is Ship D, the original Refund Guarantee (or a
copy of the SWIFT message pursuant to which that Refund Guarantee has been
issued) for the third instalment payable pursuant to Shipbuilding Contract D
together with such documentary evidence as the Agent and its legal advisers may
require in relation to the due authorisation and execution of the Refund
Guarantee and evidence that it has been duly registered with the State
Administration for Foreign Exchange (SAFE) in China.

 

PART E

 

The following are the
documents referred to in Clause 9.1(e).

 

1                                         A duly issued invoice from the relevant Builder notifying the
relevant Owner that the launching of the Relevant Ship has been carried out and
showing all sums due and

 

74

 

payable to
that Builder pursuant to the relevant Article of the Shipbuilding Contract
for the Relevant Ship upon launching of that Ship.

 

2                                         Evidence satisfactory to the Agent that the funds referred to in Clause
4.2(d) applicable to the launching instalment of the Relevant Ship have
been paid by the relevant Owner to the relevant Builder or will be paid at the
same time as the remittance of the relevant Advance to that Builder.

 

3                                         Written confirmation from the relevant Owner and the Approved
Manager that they have irrevocably accepted and approved the building works
which have been completed on the Relevant Ship up to the date of launching.

 

4                                         If the Relevant Ship is Ship D, the original Refund Guarantee for
the fourth instalment (or a copy of the SWIFT message pursuant to which that
Refund Guarantee has been issued) payable pursuant to Shipbuilding Contract D
together with such documentary evidence as the Agent and its legal advisers may
require in relation to the due authorisation and execution of the Refund
Guarantee and evidence that it has been registered with the State
Administration for Foreign Exchange (SAFE) in China.

 

PART F

 

The following are the
documents referred to in Clause 9.1(f).

 

1                                         Evidence, satisfactory to the Agent, that arrangements have been
made with the Builder (and the Builder’s bank) to protect the Agent’s right to
repayment of the relevant Advance between the Drawdown Date for that Advance
and the Delivery Date of the Relevant Ship under the relevant Shipbuilding
Contract with the Advance only being released to the Builder by an
attorney-in-fact appoint by the Agent.

 

2                                         A duly executed original of the Mortgage, the Deed of Covenant (if
applicable), the General Assignment (and of each document to be delivered under
each of them) in respect of the Relevant Ship.

 

3                                         Documentary evidence that:

 

(a)                                  the Relevant Ship has been unconditionally delivered by the relevant
Builder to, and accepted by, the relevant Owner under the relevant Shipbuilding
Contract, and the full purchase price payable under that Shipbuilding Contract
(in addition to the part being financed by the relevant Tranche) has been duly
paid;

 

(b)                                 the Relevant Ship is definitively and permanently registered in the
name 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 International Association of
Classification Societies and which his acceptable to the Agent free of all
overdue recommendations affecting the class;

 

(e)                                  the Mortgage and (if applicable) the Deed of Covenant in respect of
the Relevant Ship have been duly registered against the Relevant Ship as a
valid first preferred or priority ship mortgage and (if applicable) collateral
deed of covenant in accordance with the laws of the applicable Approved Flag
State;

 

(f)                                    the Relevant Ship has been unconditionally delivered by its Owner
to, and accepted by, its Charterer for operation under the Initial Charterparty
relative to that Ship after the 

 

75

 

Mortgage and
(if applicable) the Deed of Covenant have been duly registered against that
Ship in accordance with the laws of the applicable Approved Flag State; and

 

(g)                                 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.

 

4                                         Documents establishing that the Relevant Ship will, as from its
Delivery Date, be managed by the Approved Manager on terms acceptable to the
Agent, together with:

 

(a)                                  the Approved Manager’s Undertaking in respect of the Relevant Ship;
and

 

(b)                                 copies of the document of compliance (DOC), and the safety
management certificate (SMC) pursuant to the ISM Code and International Ship
Security Certificate issued pursuant to the ISPS Code in relation to the Ship,
the relevant Owner, the Approved Manager and/or if the Relevant Ship is Ship D,
Yang Ming.

 

5                                         A valuation of the Relevant Ship addressed to the Agent and dated no
earlier than 30 days prior to the relevant Delivery Date, stated to be for the
purposes of this Agreement and prepared in accordance with Clause 15 which
shows the value of the Relevant Ship in an amount acceptable to the Agent

 

6                                         A favourable opinion (at the cost of the Borrower) from an
independent insurance consultant acceptable to the Agent on such matters
relating to the insurances for the Relevant Ship as the Agent may require.

 

7                                         A written statement, satisfactory to the Agent, evidencing the
calculation of the Delivered Cost of the Relevant Ship (with a detailed
breakdown of the Extra Pre-Delivery Costs for that Ship) signed by the chief
financial officer or, in his absence, any other officer of the Borrower.

 

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

 

Every copy document delivered
under this Schedule shall be certified as a true and up to date copy by a director
or the secretary (or equivalent officer) of the relevant Owner.

 

76

 

SCHEDULE 4

AMOUNT OF ADVANCES

 

Ship A

 

	
  Stage of
  Construction

  	
   

  	
  Amount due
  to

  Yard under 

  Shipbuilding

  Contract

  	
   

  	
  Maximum

  amount of

  Advance

  	
   

  
	
   

  	
   

  	
  ($)

  	
   

  	
  ($)

  	
   

  
	
  First Instalment

  	
   

  	
  12,760,000

  	
   

  	
  10,208,000

  	
   

  
	
  Steel-cutting

  	
   

  	
  6,380,000

  	
   

  	
  5,104,000

  	
   

  
	
  Keel-laying

  	
   

  	
  6,380,000

  	
   

  	
  5,104,000

  	
   

  
	
  Delivery

  	
   

  	
  38,280,000

  	
   

  	
  28,584,000

  	
  *

  
	
  Total

  	
   

  	
  63,800,000

  	
   

  	
  49,000,000

  	
   

  

 

Ship B

 

	
  Stage of
  Construction

  	
   

  	
  Amount due
  to

  Yard under

  Shipbuilding

  Contract

  	
   

  	
  Maximum

  amount of

  Advance

  	
   

  
	
   

  	
   

  	
  ($)

  	
   

  	
  ($)

  	
   

  
	
  First Instalment

  	
   

  	
  16,764,000

  	
   

  	
  13,411,200

  	
   

  
	
  Steel-cutting

  	
   

  	
  5,588,000

  	
   

  	
  4,470,400

  	
   

  
	
  Keel-laying

  	
   

  	
  5,588,000

  	
   

  	
  4,470,400

  	
   

  
	
  Delivery

  	
   

  	
  27,940,000

  	
   

  	
  22,348,000

  	
  *

  
	
  Total

  	
   

  	
  55,880,000

  	
   

  	
  44,700,000

  	
   

  

 

77

 

Ship C

 

	
  Stage of
  Construction

  	
   

  	
  Amount due
  to

  Yard under

  Shipbuilding

  Contract

  	
   

  	
  Maximum 

  amount of

  Advance

  	
   

  
	
   

  	
   

  	
  ($)

  	
   

  	
  ($)

  	
   

  
	
  First Instalment

  	
   

  	
  19,800,000

  	
   

  	
  15,840,000

  	
   

  
	
  Steel-cutting

  	
   

  	
  9,900,000

  	
   

  	
  7,920,000

  	
   

  
	
  Keel-laying

  	
   

  	
  9,900,000

  	
   

  	
  7,920,000

  	
   

  
	
  Launching

  	
   

  	
  9,900,000

  	
   

  	
  7,920,000

  	
   

  
	
  Delivery

  	
   

  	
  49,500,000

  	
   

  	
  34,000,000

  	
  *

  
	
  Total

  	
   

  	
  99,000,000

  	
   

  	
  73,600,000

  	
   

  

 

Ship D

 

	
  Stage of
  Construction

  	
   

  	
  Amount due
  to

  Yard under

  Shipbuilding

  Contract

  	
   

  	
  Maximum

  amount of

  Advance

  	
   

  
	
   

  	
   

  	
  ($)

  	
   

  	
  ($)

  	
   

  
	
  First Instalment

  	
   

  	
  22,600,000

  	
   

  	
  18,080,000

  	
   

  
	
  Steel-cutting

  	
   

  	
  16,950,000

  	
   

  	
  13,560,000

  	
   

  
	
  Keel-laying

  	
   

  	
  16,950,000

  	
   

  	
  13,560,000

  	
   

  
	
  Launching

  	
   

  	
  22,600,000

  	
   

  	
  18,080,000

  	
   

  
	
  Delivery

  	
   

  	
  33,900,000

  	
   

  	
  23,720,000

  	
  *

  
	
  Total

  	
   

  	
  113,000,000

  	
   

  	
  87,000,000

  	
   

  

 

78

 

Ship E

 

	
  Stage
  of Construction

  	
   

  	
  Amount due to

  Yard under

  Shipbuilding

  Contract

  	
   

  	
  Maximum

  amount of

  Advance

  	
   

  
	
   

  	
   

  	
  ($)

  	
   

  	
  ($)

  	
   

  
	
  First
  Instalment

  	
   

  	
  16,764,000

  	
   

  	
  13,411,200

  	
   

  
	
  Steel-cutting

  	
   

  	
  5,588,000

  	
   

  	
  4,470,400

  	
   

  
	
  Keel-laying

  	
   

  	
  5,588,000

  	
   

  	
  4,470,400

  	
   

  
	
  Delivery

  	
   

  	
  27,940,000

  	
   

  	
  22,348,000

  	
  *

  
	
  Total

  	
   

  	
  55,880,000

  	
   

  	
  44,700,000

  	
   

  

 

* All the Advances to be made available to finance
part of the delivery instalments shall also be used to part-finance the Extra
Pre-Delivery Costs of each Ship and the maximum amount of each such Advance
takes into account the Extra Pre-Delivery Costs of the relevant Ship which are
to be part-financed.

 

79

 

SCHEDULE 5

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:                              DEUTSCHE
SCHIFFSBANK AKTIENGESELLSCHAFT for itself and for and on behalf of the Borrower, each
Security Party, the Security Trustee, and each Lender and each Swap Bank as
each such term is defined in the Loan Agreement referred to below.

 

[                ],
20[  ]

 

1                                         This Certificate relates to a
Loan Agreement dated                     February 2009 (the “Agreement”)
and made between (1) Danaos Corporation (the “Borrower”), (2) the banks and financial institutions
listed in Schedule 1, Part A as Lenders, (3) the banks and financial
institutions listed in Schedule 1, Part B as Swap Banks and (4) Deutsche
Schiffsbank Aktiengesellschäft as Agent and Security Trustee for a term loan
facility of up to $299,000,000 in aggregate.

 

2                                         In this Certificate, terms
defined in the Agreement shall, unless the contrary intention appears, have the
same meanings when used in this Certificate and in addition:

 

“Relevant Parties”
means the Agent, the Borrower, each Security Party, the Security Trustee, each
Lender and each Swap Bank;

 

“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 26 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 26 of the Agreement provides will become binding on it upon this
Certificate taking effect.

 

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 26 of the Agreement.

 

80

 

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:

 

(1)                                 any Finance Document proves to
be invalid or ineffective;

 

(2)                                 the Borrower or any Security
Party fails to observe or perform its obligations, or to discharge its
liabilities, under any Finance Document; or

 

(3)                                 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:

 

(1)                                 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

 

(2)                                 that this Certificate is valid
and binding as regards the Transferee; and

 

(e)                                  confirms the accuracy of the
administrative details set out below regarding the Transferee.

 

10                                  The Transferor and the
Transferee each undertake with the Agent and the Security Trustee severally, on
demand, fully to indemnify the Agent and/or the Security Trustee in 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

 

81

 

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:

  	
   

  

 

82

 

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.

  

 

83

 

SCHEDULE 6

FORM OF COMPLIANCE CERTIFICATE

 

	
   

  	
   

  	
   

  
	
  To:

  	
   

  	
  Deutsche
  Schiffsbank Aktiengesellschaft

  
	
   

  	
   

  	
  Domshof
  17

  
	
   

  	
   

  	
  D-28195
  Bremen

  
	
   

  	
   

  	
  Federal Republic of Germany

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  [·] 200[·]

  

 

Dear Sirs,

 

We refer to a loan agreement [·] 2009 (the “Loan Agreement”) made between (amongst others) yourselves and
ourselves in relation to a secured term loan facility of up to $299,000,000 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] [3-month period] [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 12.5 of the Loan Agreement for the
[3] [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
[·]:[·];

 

(d)                                 the Market Value Adjusted Net
Worth of the Borrower’s Group is $[·];

 

(e)                                  the Book Net Worth of the
Borrower’s Group is [·]; and

 

(f)                                    the Market Value Adjusted Net
Worth of the Borrower’s Group is [·] per cent. of the Market
Value Adjusted Total Assets.

 

84

 

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

 

 

	
  [l]

  	
   

  
	
  Chief Financial Officer of

  	
   

  
	
  Danaos Corporation

  	
   

  

 

85

 

SCHEDULE 7

MANDATORY COST FORMULA

 

1                                         The Mandatory Cost is an
addition to the interest rate to compensate Lenders for the cost of compliance
with (a) the requirements of the Financial Services Authority (or any
other authority which replaces all or any of its functions) or (b) the
requirements of the European Central Bank.

 

2                                         On the first day of each
Interest Period (or as soon as possible thereafter) the Agent shall calculate,
as a percentage rate, a rate (the “Additional Cost Rate”)
for each Lender, in accordance with the paragraphs set out below.  The Mandatory Cost will be calculated by the
Agent as a weighted average of the Lenders’ Additional Cost Rates (weighted in
proportion to the percentage participation of each Lender in the Loan) and will
be expressed as a percentage rate per annum.

 

3                                         The Additional Cost Rate for
any Lender lending from a lending office in a Participating Member State will
be the percentage notified by that Lender to the Agent.  This percentage will be certified by that
Lender in its notice to the Agent to be its reasonable determination of the
cost (expressed as a percentage of that Lender’s participation in the Loan) of
complying with the minimum reserve requirements of the European Central Bank in
respect of loans made from that lending office.

 

4                                         The Additional Cost Rate for
any Lender lending from a lending office in the United Kingdom will be
calculated by the Agent as follows:

 

	
  

  	
   

  	
   

  
	
   

  	
  per
  cent. per annum

  
	
   

  	
   

  

Where:

 

E                                         is designed to
compensate Lenders for amounts payable under the Fees Rules and is
calculated by the Agent as being the average of the most recent rates of charge
supplied by the Lenders to the Agent pursuant to paragraph 6 below and
expressed in pounds per £1,000,000.

 

5                                         For the purposes of this
Schedule:

 

(a)                                  “Special Deposits” has the meaning given to it from time to
time under or pursuant to the Bank of England Act 1998 or (as may be
appropriate) by the Bank of England;

 

(b)                                 “Fees Rules” means the rules on periodic fees contained in
the FSA Supervision Manual or such other law or regulation as may be in force
from time to time in respect of the payment of fees for the acceptance of
deposits;

 

(g)                                 “Fee Tariffs” means the fee tariffs specified in the Fees Rules under
the activity group A.1 Deposit acceptors (ignoring any minimum fee or zero
rated fee required pursuant to the Fees Rules but taking into account any
applicable discount rate);

 

(h)                                 “Participating Member State” means any member state of the
European Union that adopts or has adopted the euro as its lawful currency in
accordance with legislation of the European Union relating to European Monetary
Union; and

 

86

 

(i)                                     “Tariff Base” has the meaning given to it in, and will be
calculated in accordance with, the Fees Rules.

 

6                                         If requested by the Agent,
each Lender lending from a lending office in the United Kingdom shall, as soon
as practicable after publication by the Financial Services Authority, supply to
the Agent, the rate of charge payable by that Lender to the Financial Services
Authority pursuant to the Fees Rules in respect of the relevant financial
year of the Financial Services Authority (calculated for this purpose by that
Lender as being the average of the Fee Tariffs applicable to that Lender for
that financial year) and expressed in pounds per £1,000,000 of the Tariff Base
of that Lender.

 

7                                         Each Lender shall supply any
information required by the Agent for the purpose of calculating its Additional
Cost Rate.  In particular, but without
limitation, each Lender shall supply the following information in writing on or
prior to the date on which it becomes a Lender:

 

(a)                                  the jurisdiction of its
lending office; and

 

(c)                                  any other information that the
Agent may reasonably require for such purpose.

 

Each Lender shall promptly notify the Agent
in writing of any change to the information provided by it pursuant to this
paragraph.

 

8                                         The rates of charge of each
Lender lending from a lending office in the United Kingdom for the purpose of
calculating E shall be determined by the Agent based upon the information
supplied to it pursuant to paragraph 6 above and on the assumption that, unless
a Lender notifies the Agent to the contrary, each Lender’s obligations in
relation to cash ratio deposits and Special Deposits are the same as those of a
typical bank from its jurisdiction of incorporation with a lending office in
the same jurisdiction as its lending office.

 

9                                         The Agent shall have no
liability to any person if such determination results in an Additional Cost
Rate which over or under compensates any Lender and shall be entitled to assume
that the information provided by any Lender pursuant to paragraphs 3, 6 and 7
above is true and correct in all respects.

 

10                                  The Agent shall distribute the
additional amounts received as a result of the Mandatory Cost to the Lenders on
the basis of the Additional Cost Rate for each Lender based on the information
provided by each Lender pursuant to paragraphs 3, 6 and 7 above.

 

11                                  Any determination by the Agent
pursuant to this Schedule in relation to a formula, the Mandatory Cost, an
Additional Cost Rate or any amount payable to a Lender shall, in the absence of
manifest error, be conclusive and binding on all parties.

 

The Agent may from time to time, after consultation
with the Borrower and the Lenders, determine and notify to all parties any
amendments which are required to be made to this Schedule in order to comply
with any change in law, regulation or any requirements from time to time
imposed by the Financial Services Authority or the European Central Bank (or,
in any case, any other authority which replaces all or any of its functions) and
any such determination shall, in the absence of manifest error, be conclusive
and binding on all parties

 

87

 

SCHEDULE 8

DESIGNATION NOTICE

 

	
  To:

  	
  Deutsche
  Schiffsbank Aktiengesellschaft

  
	
   

  	
  Domshof
  17, D-28195 Bremen

  
	
   

  	
  Federal Republic of Germany

  

 

[date]

 

Dear Sirs

 

Loan Agreement dated
                    
2009 made between (i) ourselves as Borrower (ii) the Banks and
Financial Institutions listed as Lenders and Swap Banks therein and (iii) yourselves
as Agent and Security Trustee

 

We refer to:

 

1                                         the Loan Agreement;

 

2                                         the Master Agreement made
between the Borrower and [·] as Swap Bank; and

 

3                                         a Confirmation delivered
pursuant to the said Master Agreement dated [·].

 

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

  	
   

  

 

88

 

EXECUTION PAGE

 

	
  BORROWER

  	
   

  
	
   

  	
   

  
	
  SIGNED by Mr. Iraklis Prokopakis

  	
  )

  	
   

  
	
  for and on
  behalf of

  	
  )

  	
  /s/ Iraklis
  Prokopakis

  
	
  DANAOS
  CORPORATION

  	
  )

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  LENDERS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SIGNED by Vassiliki Georgopoulos

  	
  )

  	
   

  
	
  for and on
  behalf of

  	
  )

  	
  /s/
  Vassiliki Georgopoulos

  
	
  DEUTSCHE SCHIFFSBANK

  	
  )

  	
   

  
	
  AKTIENGESELLSCHÄFT

  	
  )

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SIGNED by Vassiliki Georgopoulos

  	
  )

  	
   

  
	
  for and on
  behalf of

  	
  )

  	
  /s/
  Vassiliki Georgopoulos

  
	
  CREDIT SUISSE

  	
  )

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SIGNED by Christina Margelou &
  Chryssa Vallgan

  	
  )

  	
   

  
	
  for and on
  behalf of

  	
  )

  	
  /s/ Christina
  Margelou

  
	
  EMPORIKI BANK OF GREECE S.A.

  	
  )

  	
  /s/ Chryssa
  Vallgan

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SWAP
  BANKS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SIGNED by Vassiliki Georgopoulos

  	
  )

  	
   

  
	
  for and on
  behalf of

  	
  )

  	
   

  
	
  DEUTSCHE SCHIFFSBANK

  	
  )

  	
  /s/
  Vassiliki Georgopoulos

  
	
  AKTIENGESELLSCHÄFT

  	
  )

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SIGNED by Vassiliki Georgopoulos

  	
  )

  	
   

  
	
  for and on
  behalf of

  	
  )

  	
  /s/
  Vassiliki Georgopoulos

  
	
  CREDIT SUISSE

  	
  )

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SIGNED by Christina Margelou &
  Chryssa Vallgan

  	
  )

  	
   

  
	
  for and on
  behalf of

  	
  )

  	
  /s/
  Christina Margelou

  
	
  EMPORIKI BANK OF GREECE S.A.

  	
  )

  	
  /s/ Chryssa
  Vallgan

  

 

89

 

	
  AGENT

  	
   

  
	
   

  	
   

  
	
  SIGNED by Vassiliki Georgopoulos

  	
  )

  	
   

  
	
  for and on
  behalf of

  	
  )

  	
  /s/
  Vassiliki Georgopoulos

  
	
  DEUTSCHE SCHIFFSBANK

  	
  )

  	
   

  
	
  AKTIENGESELLSCHÄFT

  	
  )

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SECURITY
  TRUSTEE

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SIGNED by Vassiliki Georgopoulos

  	
  )

  	
   

  
	
  for and on
  behalf of

  	
  )

  	
   

  
	
  DEUTSCHE SCHIFFSBANK

  	
  )

  	
  /s/
  Vassiliki Georgopoulos

  
	
  AKTIENGESELLSCHÄFT

  	
  )

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Witness to
  all the

  	
  )

  	
   

  
	
  above
  signatures

  	
  )

  	
  /s/ Evangelia
  Hatziefstratiou

  
	
   

  	
   

  	
   

  
	
  Name: Evangelia
  Hatziefstratiou

  	
   

  	
   

  
	
  Address:
  Watson, Farely & Williams

                 2,
  Defteras Merarchia 

                 Piraeus
  185 – 36 — Greece

  	
   

  	
   

  

 

90

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00160-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00160-of-00352.parquet"}]]