Document:

Exhibit
10.6

 

Dated 17th
December 2002

 

 

CONTAINERS
SERVICES INC.

-and-

CONTAINERS
LINES INC.

as
Borrowers

 

-and-

 

THE
BANKS AND FINANCIAL INSTITUTIONS

listed
in Schedule 1

as Banks

 

-and-

 

AEGEAN
BALTIC BANK S.A.

as Agent

 

-and-

 

HSH
NORDBANK AG

as Paying
Agent and Security Trustee

 

 

 

FINANCIAL
AGREEMENT

 

 

relating to
short and long-term loan facilities

of up to US$
60,000,000 in aggregate

to assist in
partly financing the construction and acquisition of two 4,300 TEU container
vessels under

construction
at Samsung Heavy Industries Ltd.

having Builder’s
Hull Numbers 1455 and 1456

 

 

CONTENTS

 

	
  CLAUSE

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  1

  	
  PURPOSE AND DEFINITIONS

  	
  4

  
	
  2

  	
  THE FACILITIES

  	
  26

  
	
  3

  	
  AVAILABILITY – COMMITMENTS BY THE BANKS – POSITION OF THE
  CREDITORS AND THE INSTRUCTING GROUP

  	
  28

  
	
  4

  	
  NOTICE OF DRAWDOWN

  	
  30

  
	
  5

  	
  INTEREST

  	
  32

  
	
  6

  	
  INTEREST PERIODS

  	
  32

  
	
  7

  	
  HEDGING TRANSACTIONS

  	
  33

  
	
  8

  	
  ALTERNATIVE AND FORWARD CURRENCY OPTIONS

  	
  35

  
	
  9

  	
  SUBSTITUTE BASIS

  	
  39

  
	
  10

  	
  PREPAYMENT

  	
  40

  
	
  11

  	
  EARNINGS ACCOUNTS

  	
  42

  
	
  12

  	
  REPAYMENT

  	
  43

  
	
  13

  	
  EVIDENCE OF DEBT

  	
  45

  
	
  14

  	
  PAYMENTS

  	
  45

  
	
  15

  	
  CHANGE OF CIRCUMSTANCES

  	
  47

  
	
  16

  	
  REPRESENTATIONS AND WARRANTIES

  	
  50

  
	
  17

  	
  SECURITIES

  	
  53

  
	
  18

  	
  CONDITIONS PRECEDENT

  	
  54

  
	
  19

  	
  MAINTENANCE OF SECURITY

  	
  58

  
	
  20

  	
  FINANCIAL AND OTHER INFORMATION

  	
  59

  
	
  21

  	
  UNDERTAKINGS

  	
  60

  
	
  22

  	
  INSURANCE UNDERTAKINGS

  	
  66

  
	
  23

  	
  EVENTS OF DEFAULT

  	
  70

  
	
  24

  	
  PROCEEDS AND APPLICATION

  	
  73

  
	
  25

  	
  FEES

  	
  74

  
	
  26

  	
  EXPENSES

  	
  75

  
	
  27

  	
  INDEMNITY

  	
  75

  
	
  28

  	
  STAMP DUTIES

  	
  76

  
	
  29

  	
  NO WAIVER

  	
  76

  
	
  30

  	
  PARTIAL INVALIDITY

  	
  76

  
	
  31

  	
  THE AGENT, THE PAYING AGENT, THE SECURITY TRUSTEE, AND THE BANKS

  	
  76

  
	
  32

  	
  RETIREMENT OF THE AGENT, PAYING AGENT AND THE SECURITY TRUSTEE

  	
  83

  
	
  33

  	
  ASSIGNMENTS AND TRANSFERS

  	
  84

  
	
  34

  	
  LANGUAGE

  	
  86

  
	
  35

  	
  NON-IMMUNITY

  	
  86

  
	
  36

  	
  NOTICES

  	
  87

  
	
  37

  	
  APPLICABLE LAW AND JURISDICTION

  	
  88

  
				

 

2

 

	
  38

  	
  AGENT FOR SERVICE OF PROCESS

  	
  88

  
	
  39

  	
  THIS AGREEMENT AND THE OTHER FINANCE DOCUMENTS

  	
  88

  
	
  40

  	
  COUNTERPARTS

  	
  88

  
	
   

  	
   

  	
   

  
	
  SCHEDULE 1

  	
  91

  
	
  THE BANKS AND THEIR COMMITMENTS

  	
  91

  
	
  SCHEDULE 2

  	
  92

  
	
  NOTICE OF DRAWDOWN

  	
  92

  
	
  SCHEDULE 3

  	
  93

  
	
  FORM OF TRANSFER CERTIFICATE

  	
  93

  

 

3

 

THIS AGREEMENT
is made on the 17th day of December 2002

 

BETWEEN

 

1                                         (a)     CONTAINERS
SERVICES INC., a corporation organised and existing
under the laws of the Republic of Liberia having its registered office at 80,
Broad Street, Monrovia, Republic of Liberia (“Containers
Services”); and

 

(b)     CONTAINERS LINES INC., a corporation organised and existing under the
laws of the Republic of Liberia having its registered office at 80, Broad
Street, Monrovia, Republic of Liberia (“Containers Lines”
and together with Containers Services “the Borrowers”),

 

as joint and several
borrowers;

 

2                                        THE BANKS listed in Schedule 1 as lenders (together “the Banks”) as lenders;

 

3                                        AEGEAN BALTIC BANK S.A. of 28, Diligianni Street, Kifissia 145 62, Athens, Republic of
Greece (“the Agent”) as agent;

 

4                                        HSH NORDBANK AG (the successor by way of merger of LANDESBANK SCHLESWIG-HOLSTEIN GIROZENTRALE and HAMBURGISCHE LANDESBANK) of Gerhart – Hauptmann – Platz – 50, D-20095, Hamburg the
Federal Republic of Germany (“the Paying Agent”
and “the Security Trustee”) in its capacity
as paying agent and security trustee; and

 

5                                        HSH NORDBANK AG (the successor by way of merger of LANDESBANK SCHLESWIG-HOLSTEIN GIROZENTRALE and HAMBURGISCHE LANDESBANK) of Gerhart – Hauptmann – Platz – 50, D-20095, Hamburg the
Federal Republic of Germany (“the Swap Agent”)
as party to the Master Agreement (as hereinafter defined).

 

1                                        PURPOSE AND DEFINITIONS

 

1.1          This
Agreement sets out the terms and conditions on which the Banks have agreed to
make available to the Borrowers as joint and several borrowers certain loan
facilities not exceeding in aggregate US$ 60,000,000 which will be made
available to the Borrowers to assist in part financing the construction and
acquisition of the Vessels.

 

1.2          In
this Agreement the following terms shall have the following meanings unless the
context otherwise requires -

 

4

 

“Additional Construction
Costs” means in respect of a Vessel, any increase in the Contract
Price under Article II paragraph 2 of the relevant Shipbuilding Contract;

 

“Additional Construction
Expenses” means together (i) the Additional Construction Costs and
(ii) any expenses incurred by the relevant Borrower during the construction
period of the relevant Vessel related to its construction, supervision and
delivery and being additional to the Contract Price and the Additional
Construction Costs in respect thereof and (iii) interest due and payable under
this Agreement in respect of the relevant Pre-delivery Advance and accrued
until the Drawdown Date of the relevant Post-Delivery Junior Facility Advance,
as stated in the relevant Statement of Additional Construction Expenses;

 

“Advance” or “Advances” means, save as
otherwise provided herein, an advance or advances of a Facility made or to be
made by the Banks hereunder;

 

“Advance A”
means the Pre-Delivery Facility Advance related to Newbuilding A and referred
to in Clause 4.3(a);

 

“Advance B” means the Pre-Delivery Facility Advance related to
Newbuilding B referred to in Clause 4.3(b);

 

“Advance C” means the Post-Delivery Senior Facility Advance related to
Newbuilding A referred to in Clause 4.4(a);

 

“Advance C Balloon Payment”
has the meaning given in Clause 12.2.1;

 

“Advance C Maturity Date”
means the date falling 10 years after Drawdown Date of Advance C;

 

“Advance C Repayment
Instalments” has the meaning given in Clause 12.2.1;

 

“Advance D” means the Post-Delivery Senior Facility Advance related to
Newbuilding B referred to in Clause 4.4(b);

 

“Advance D Balloon Payment”
has the meaning given in Clause 12.2.2;

 

“Advance D Maturity Date”
means the date falling 10 years after Drawdown Date of Advance D;

 

“Advance D Repayment
Instalments” has the meaning given in Clause 12.2.2;

 

“Advance E” means the Post-Delivery Junior Facility Advance related to
Newbuilding A and referred to in Clause 4.5(a);

 

5

 

“Advance E Balloon Payment”
has the meaning given in Clause 12.3.1;

 

“Advance E Maturity Date”
means the date falling 10 years after Drawdown Date of Advance E;

 

“Advance E Repayment
Instalments” has the meaning given in Clause 12.3.1;

 

“Advance F” means the Post-Delivery Junior Facility Advance related to
Newbuilding B and referred to in Clause 4.5(b);

 

“Advance F Balloon Payment”
has the meaning given in Clause 12.3.2;

 

“Advance F Maturity Date”
means the date falling 10 years after Drawdown Date of Advance F;

 

“Advance F Repayment
Instalments” has the meaning given in Clause 12.3.2;

 

“AML Time Charter” means, in respect of a Vessel, the time charter entered or to be
entered into between the Bareboat Charterer and the relevant Borrower;

 

“Applicable Accounting
Principles” means those accounting principles, standards and
practices on which preparation of the Financial Statements are based, which are
International Accounting Standards and Principles and practices or such other
generally accepted international accounting principles, standards and practices
adopted by Danaos and Danaos Shipping Co. Ltd after the date hereof and
notified to the Agent and accepted by the Agent;

 

“Applicable Margin”
means:

 

(a)           in respect of the Pre-Delivery Facility One point Twenty Five per
cent (1.25%) per annum;

 

(b)           in respect of the Post-Delivery Senior Facility Zero point Seven hundred
Seventy Five per cent (0.775%) per annum; and

 

(c)           in respect of the Post-Delivery Junior Facility Zero point Seven
hundred Seventy Five per cent (0.775%) per annum;

 

“Approved Brokers”
means the insurance brokers appointed by the Bareboat Charterer with the
Security Trustee’s prior approval;

 

6

 

“Approved Currency”
means any currency other than Dollars which is freely transferable and
convertible into Dollars and in which deposits are freely available to the
Banks in the London and/or Luxembourg Interbank Eurocurrency Market;

 

“Approved Management
Agreement” means the management agreement for each Vessel made or to
be made between the Bareboat Charterer and the Manager on terms acceptable to
the Agent;

 

“Auditors” means
a first class firm of international accountants to be approved by the Agent;

 

“Availability Period”
means for each Facility the period commencing from the date of this Agreement
and ending on the Final Availability Date in respect thereof;

 

“Balloon Payments”
means collectively the Advance C Balloon Payment, the Advance D Balloon
Payment, the Advance E Balloon Payment and the Advance F Balloon Payment and in
the singular means any of them;

 

“Bank” means:

 

(a)           a bank or a financial institution listed in Schedule 1 and acting
through its branch indicated in Schedule 1 (or through another branch notified
to the Agent in accordance with Clause 34.14); or

 

(b)           a direct or indirect assignee of such bank or financial institution
or of a successor of it; or

 

(c)           a direct or indirect successor of an assignee such as is mentioned
in (b) unless any of the foregoing has assigned all of its rights and novated
all its obligations and liabilities under the Finance Documents;

 

“Bareboat Charterer” means Allocean Maritime Container (No.3) Limited, a company
incorporated under the laws of England and Wales (registered number 4806608)
whose registered office is at Ground Floor, 40 Queen Street, London EC4R 1DD;

 

“Bareboat Charter” means, in respect of a Vessel, the bareboat charter entered or to be
entered into between the relevant Owner and the Bareboat Charterer;

 

“Broken Funding Costs”
means any amount that the Paying Agent may certify as necessary to compensate
the Banks for any loss (other than Taxes) incurred or to be incurred by them as
a consequence of repayment in respect of funds borrowed (or committed to be
borrowed) or deposits taken (or committed to be taken) from third parties in
connection with the

 

7

 

commitment of the Banks in the Facilities,
or in liquidating or re-employing such funds or deposits for the remaining part
of the then current Interest Period;

 

“Business Day” means
a day on which banks and financial markets are open for business in all of New
York, London, Athens and Hamburg and any other financial centre which the
Paying Agent may deem appropriate for the operation of the provisions of this
Agreement;

 

“Charter” means,
in respect of a Vessel, the time charterparty dated 22nd July 2003 made between
the relevant Borrower and the Charterer;

 

“Charter Assignment
Agreements” means collectively the time charter assignment
agreements in respect of the Charter and the Earnings between each of the
Borrowers and the Security Trustee in form and substance satisfactory to the
Creditors in their sole discretion;

 

“Charterer”
means P & O Nedlloyd B.V.;

 

“Classification Society”
means Det Norske Veritas or such other classification society as the Agent and
the Security Trustee may approve in writing, such approval not to be unreasonably
withheld;

 

“Commitment” means in relation to a Bank the amount set out opposite its
name in Schedule 1 (in respect of each Facility) as reduced or cancelled by any
relevant term of this Agreement;

 

“Containers Lines Deposit Account” means the account held with the Royal Bank of Scotland, designated “Containers
Lines Deposit Account” with account number 98091625 in the name of Containers
Lines.

 

“Containers Lines Earnings
Account” means the interest-bearing deposit
account number 110 154 021 in the name of Containers Lines to
be maintained throughout the Security Period with the Paying Agent in Hamburg,
the Federal Republic of Germany, such account to include any substitute account
or revised account or revised designation or number whatsoever;

 

“Containers Lines Earnings
Account Charge” means
the charge granted by Containers Lines, in favour of the Security Trustee in
respect of the Container Lines Earnings Account in form and substance
satisfactory to the Security Trustee in its absolute discretion.

 

“Containers Lines Second Priority
Deposit Account Charge” means
the second priority charge granted by Containers Lines, in favour of the
Security Trustee in respect of the Container Lines Deposit Account in form and
substance satisfactory to the Security Trustee in its absolute discretion.

 

8

 

“Containers Services Deposit
Account” means the account held with the
Royal Bank of Scotland, designated “Containers Services Deposit Account” with
account number 98091672 in the name of the Containers Services.

 

“Containers Services Earnings
Account” means the interest-bearing deposit
account number 110 154 043 in the name of Containers Services to be maintained throughout the Security Period with the
Paying Agent in Hamburg, the Federal Republic of Germany, such account to
include any substitute account or revised account or revised designation or
number whatsoever;

 

“Containers Services Earnings
Account Charge” means
the charge granted by Containers Services, in favour of the Security Trustee in
respect of the Container Services Earnings Account in form and substance
satisfactory to the Security Trustee in its absolute discretion.

 

“Containers Services Second
Priority Deposit Account Charge” means the second priority charge granted by Containers
Services, in favour of the Security Trustee in respect of the Container
Services Deposit Account in form and substance satisfactory to the Security
Trustee in its absolute discretion.

 

“Contract Price”
means the contract price of the relevant Vessel as set out in Article II.1 of
each of the relevant Shipbuilding Contracts;

 

“Creditor Borrower” has the
meaning given in Clause 2.6;

 

“Creditors”
means at any time each of the Parties to the Finance Documents other than the
Obligors;

 

“Credit Support Document” means any document described as such in the Master
Agreement and, where the context permits, any other document referred to in any
credit support document which has the effect of creating an Encumbrance in
favour of the Security Trustee or the Swap Agent in its capacity as a party to the Master Agreement;

 

“Credit Support Provider” means any person (other than the Borrowers) described as
such in the Master Agreement;

 

“Currency Equivalent”
means, as at any date upon which any part of either or both Post- Delivery
Facilities is denominated in one Approved Currency and is to be converted
(actually or notionally) into another Approved Currency as provided in this
Agreement, the amount of the relevant currency required for the purchase of the
Existing Currency with the New Currency converted at the applicable Forward
Rate of Exchange derived from Forward F/X Contracts maturing on such date or,
if none, at the Spot Rate of Exchange;

 

9

 

“Currency Tranches”
means, in relation to each Post-Delivery Facility, at any time, such part of
such Post-Delivery Facility which is denominated in Approved Currencies and, in
case such part of either or both Post-Delivery Facilities are denominated in
two such Approved Currencies, “Currency Tranche” means each part of each
Post-Delivery Facility which is denominated in one Approved Currency;

 

“Danaos” means
Danaos Holdings Limited, a company duly formed and validly existing under the
laws of the Republic of Liberia with its registered office at 80, Broad Street,
Monrovia in the Republic of Liberia;

 

“Danaos Guarantee” means the guarantee dated 17th December, 2002 granted
by Danaos to the Security Trustee, the Agent, the Paying Agent, and the other
Creditors in substantially in form and substance satisfactory to the Creditors
in their sole discretion (as the same may have been amended from time to time);

 

“Debt Proceeds”
means (i) any proceeds from the enforcement of any of the Security Documents,
and (ii) following an Event of Default any moneys standing to the credit of the
Borrowers in the Earnings Accounts, in each case where such monies do not
constitute Proceeds;

 

“Debtor Borrower”
has the meaning given in Clause 2.6;

 

“Declarations of Trust” means each of the declarations of trust made by the relevant Owner
in favour of the relevant Partnership conferring upon the relevant Partnership
a beneficial interest in the relevant Vessel and all other assets of the
relevant Owner and Declaration of Trust means
either of them.

 

“Deeds of Counter-Indemnity” means each the counter-indemnity granted by the Sponsor in favour
of the Security Trustee.

 

“Default Rate” means the aggregate of (i) LIBOR, (ii) the Applicable
Margin and (iii) Two per cent (2%) per annum;

 

“Delivery Date” means the date on which Samsung is to deliver to the
relevant Owner the relevant Vessel pursuant to Article VII paragraph 1 of the
respective Shipbuilding Contract;

 

“Deposit Accounts” means together the Containers Services Deposit Account and the
Containers Lines Deposit Account and “Deposit Account”
means either of them.

 

“Deposit Bank” means the Royal Bank of Scotland plc of 135 Bishopsgate, London,
EC3M 3LR.

 

10

 

“Distribution Monies”
means:

 

(a)           any monies received by any of the Creditors, the Paying Agent, the
Agent or the Security Trustee (or by any receiver or similar person appointed
by any of them) from an Enforcement Action, or from the proceeds or dissolution
or liquidation of any of the Obligors or the distribution of its assets among
its creditors (however such liquidation or distribution may occur);

 

(b)           any monies received by the Creditors or the Paying Agent, or the
Agent or the Security Trustee as named insured, loss payee, beneficiary or
assignee of any insurance polices of either of the Bareboat Charterers in
consequence of or after any Enforcement Action;

 

“Dollar Reference Amount”
means, when the whole or part of either or both Post-Delivery Facilities is,
for the time being, denominated in Dollars, the outstanding principal amount
thereof and, in relation to a Currency Tranche, the amount of Dollars which
would have been outstanding if such Currency Tranche had been advanced in and
always thereafter remained denominated in Dollars, as it would have been
reduced from time to time by repayments and prepayments (except for prepayment
made under Clause 8.3) under this Agreement if the same had been made in
Dollars;

 

“Drawdown Date” means the Business Day on which an Advance is advanced to
the Borrowers;

 

“Early Termination Date”
shall have the meaning attributed thereto in the Master Agreement;

 

“Earnings” means all freights, charter hires and any other amounts
whatsoever which may at any time be earned by, or become payable to or for the
account of the Borrowers or their agents arising out of or as a result of the
or operation of the Vessels by the Borrowers or their agents, or under or in
relation to any charterparties, contract of carriage or other contract
(including a salvage or towage contract) for the use, operation of the Vessels,
together with all payments for the variation of any such contract, all damages
for any breach of any such contract, all general average and salvage
remuneration and all compensation receivable in respect of any requisition for
hire;

 

“Earnings Accounts” means together the
Containers Services Earnings Account and the Containers Lines Earnings Account
and “Earnings Account” means either of them.

 

“Earnings Account Charges” means together the Containers Services Earnings Account
Charge and the Containers Lines Earnings Account Charge.

 

11

 

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

 

“Enforcement Action”
shall mean any of the following actions taken by any of the Creditors, by means
of an instruction to the Security Trustee, by the Instructing Group or
otherwise;

 

(a)           accelerating
the due date of any liability of the Borrowers;

 

(b)           commencing
to enforce, or enforcing any Finance Documents;

 

(c)           commencing to enforce or instructing the Security Trustee to
commence to enforce, the Finance Documents or any of them, or exercising any
power under any Finance Document;

 

(d)           taking any other action against any of the Obligors or their assets
or threatening any other action against any of the Obligors or their assets,
the taking of which could materially affect the common interests of the
Creditors;

 

“Environmental Approvals”
means any permit, licence, approval, ruling, certification, exemption or other
authorisation relating to the Vessels required under applicable Environmental
Laws;

 

“Environmental Claim”  means:

 

(a)           any claim by, or directive from, any applicable governmental,
judicial or other regulatory authority alleging breach of, or non-compliance
with, any Environmental Laws or Environmental Approvals or otherwise howsoever
relating to or arising out of an Environmental Incident; or

 

(b)           any claim by any other person howsoever relating to or arising out
of an Environmental Incident

 

and, in each such case, “claim” shall mean
a claim for damages, clean-up costs, compliance, remedial action or otherwise;

 

“Environmental Incident” means:

 

(a)           any release, discharge, disposal
or emission of Material of Environmental Concern by or from a Vessel;

 

12

 

(b)           any incident in which
Material of Environmental Concern is released, discharged, disposed of, or
emitted by or from a ship other than a Vessel and which involves collision
between a Vessel and such other ship or some other incident of navigation or
operation, in either case, where a Vessel or manager of the relevant Vessels is
or are actually or allegedly at fault or otherwise liable (in whole or in
part); or

 

(c)           any incident in which
Material of Environmental Concern is released, discharged, disposed of, or
emitted by or from a ship other than the Vessels and where the Vessels are
actually or potentially liable to be arrested or attached as a result and/or
where the Borrower or the managers of the Vessels is or are actually or
allegedly at fault or otherwise liable (in whole or in part);

 

“Environmental Laws” means all national and international laws, ordinances,
rules, regulations, rules of common law, conventions and agreements whatsoever
pertaining to pollution or protection of human health or the environment
(including, without limitation, the United States Oil Pollution Act of 1990 and
any comparable laws of the individual States of the United States of America);

 

“Event of Default” means any of the events listed in Clause 23;

 

“Existing Currency”
means, in relation to any conversion between Approved Currencies to be made
under Clause 8, the Approved Currency in which the relevant part of the
relevant Post-Delivery Facility is denominated before conversion;

 

“Facilities”
means together the Pre-Delivery Facility and the Post-Delivery Facilities
granted by the Banks under Clause 2.1 and in the singular means any of them;

 

“Final Availability Date”
means:

 

(a)           in the case of a
Pre-Delivery Facility Advance:  30th
December 2003; and

 

(b)           in case of a Post-Delivery
Senior Facility Advance:  30th
December 2004; and

 

(c)           in the case of a Post
Delivery Junior Facility Advance:  30th
December 2004;

 

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

 

“Finance Documents” means:

 

(a)           this Agreement;

 

13

 

(b)           the Security Documents;

 

(c)           the
Supplemental Agreement;

 

(d)           the
Supplemental Agreement No.2;

 

(e)           the Intercreditor Deed;

 

(f)            the
Multipartite Agreement; and

 

(g)           any other document (whether creating an Encumbrance or not) which is
executed any time by a Borrower 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 Creditors under this Agreement or any of the
documents referred to in this definition;

 

“Financial Statements”
means the audited annual consolidated financial statements of the Group
together with the audited annual financial statements of Danaos Shipping Co.
Ltd each comprising of a statement of income, balance sheet, cash flow
statement and relative notes;

 

“Forward F/X Contracts” means together contracts to be concluded between the
Borrowers and the Swap Agent pursuant to the Master Agreement for forward
purchase of one Relevant Currency with another, as referred to in Clause 8.4
and, in the singular, means any one of such contracts;

 

“Forward Rate of Exchange”
means the rate quoted by the Swap Agent for the forward purchase of one
Relevant Currency with another Relevant Currency;

 

“F/X Transaction”
means a Transaction entered into between the Swap Agent and the Borrowers
pursuant to the Master Agreement for the express purpose of hedging all or part
of the Borrowers currency risk under this Agreement and in respect of monies
held in the Deposit Account;

 

“General Assignments”
means each of the assignments entered or to be entered into by the relevant
Partnership, the General Partner, the relevant Owner and the Security Trustee
in respect of the Assigned Property (as such term is defined therein);

 

“General Partner” means Allco Finance Limited;

 

“Group” means
Danaos, the Borrowers and all other Subsidiaries of Danaos and “members of the
Group” shall be construed accordingly;

 

14

 

“Hedging Transaction”
means a Transaction entered into between the Swap Agent and the Borrowers
pursuant to the Master Agreement for the express purpose of hedging all or part
of the Borrowers’ interest rate risk pursuant to this Agreement;

 

“Indebtedness”
means together the Pre-Delivery Facility Indebtedness, the Post Delivery Senior
Facility Indebtedness, the Post Delivery Junior Facility Indebtedness and the
Master Agreement Liabilities;

 

“Instructing Group”  means:

 

(a)           subject
to (b) below, all the Banks, the aggregate of whose Commitments (as reduced
pursuant to the relevant provisions of this Agreement) equals or exceeds
seventy-five per cent (75%) of the Total Commitments; and

 

(b)           if any Bank transfers its Commitment (in part or in whole) pursuant
to Clause 34 (Assignments) its reduced Commitment shall be used in the
calculation in (a) above;

 

“Insurance Documents”
means all slips, contracts, policies, certificates of entry or other insurance
documents evidencing or constituting the Insurances;

 

“Insurances”
means all policies and contracts of insurance (including all entries of each of
the Vessels in a protection and indemnity and war risks association) or such
other arrangements by way of insurance which are from time to time taken out or
entered into in respect of or in connection with the Vessels and the Earnings
of the Vessels pursuant to Clause 22 of this Agreement and all benefits of
such insurances, including all claims of whatsoever nature and return of
premiums;

 

“Insurers” means
the underwriters, insurance companies and mutual insurance associations with or
by which the Insurances are effected;

 

“Intercreditor Deed”
means the deed entered into or to be entered into between the Investor, Danaos
and the Security Trustee;

 

“Interest Determination
Date” means the date of determination of an Interest Rate by the
Paying Agent for the relevant Interest Period;

 

“Interest Payment Date”
means the last day of any Interest Period save that in the case of any Interest
Period of more than three (3) months duration, the Interest Payment Dates shall
be each of the dates falling at consecutive three (3) monthly intervals after
the commencement thereof and the last day thereof provided that if any such
date is not a Business Day the relevant Interest Payment Date shall be the next
succeeding day which is a Business Day 

 

15

 

unless such next succeeding Business Day
falls in another calendar month in which event the relevant Interest Payment
Date shall be the immediately preceding Business Day;

 

“Interest Period”
means each of the successive periods determined in accordance with Clause 6 of
this Agreement;

 

“Interest Rate”
means in respect of each Facility the aggregate of (a) the Applicable Margin
and (b) LIBOR;

 

“Investor” means Lloyds TSB Equipment
Leasing (No 6) Limited, company number 04440302, whose registered office is at
25 Gresham Street, London, EC2V 7HN.

 

“ISM Code” means:

 

(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 the document of compliance (DOC)and
safety management certificate (SMC) issued
pursuant to the ISM Code in relation to each Vessel within the periods
specified by the ISM Code.

 

“ISM Responsible Person” means -

 

(a)           each and every person who has assumed responsibility for the
operation of either Vessel and has agreed to take over or is required to assume
responsibility for the performance or observance of the duties and
responsibilities imposed by the ISM Code; and

 

16

 

(b)           each and every person ashore who is a ‘designated person’ for the
purposes of the ISM Code with direct access to the highest level of management
of the Bareboat Charterer or operator and who, in that capacity, has under the
ISM Code responsibility and authority which includes -

 

(i)            monitoring the safety and
pollution prevention aspects of the operation of the relevant Vessel; and

 

(ii)          ensuring that adequate
resources and shore-based support are supplied,

 

as required under the ISM Code.”ISPS Code”
means the International Ship and Port Facility Security Code adopted by the
International Maritime Organization Assembly as the same may have been or may
be amended or supplemented from time to time;

 

“ISPS Code Documentation” includes the
ISSC issued pursuant to the ISPS Code in relation to each Vessel within the
periods specified by the ISPS Code.

 

“L/C Bank” means The Royal Bank of
Scotland plc of 135 Bishopsgate, London EC3M 3UR;

 

“Letter of Credit means the letter of
credit provided by the L/C Bank to the Investor;

 

“LIBOR” in
relation to any period means the arithmetic mean (rounded upwards, if not
already such a multiple, to the nearest whole multiple of one sixteenth of one
per cent) of the offered rates which appear on Telerate Page 3750 at or about
11.00 a.m. (London time) two (2) Business Days prior to the commencement of
that period or other relevant period provided that if at that time there are no
such rates for such deposits it means the rate determined by the Paying Agent
in consultation with the Banks to be that which expresses as a percentage rate
per annum the cost to them of obtaining such deposits for the relevant periods
from whatever sources they may select;

 

“Loan to Value Ratio”
shall have the meaning given to that term in Clause 19.2;

 

“Manager’s
Undertaking” means each undertaking given
by the Manager to the Security Trustee in form and substance satisfactory to
the Creditors in their sole discretion;

 

“Manager” means
Allocean Maritime Limited, a company incorporated in England & Wales having
its registered office at Ground Floor, 40 Queen Street, London EC4R 1DD;

 

“Master Agreement” means an agreement made or to be made between the Swap
Agent and the Borrowers comprising an ISDA Master Agreement,
Schedules thereto and each Confirmation (as defined therein) supplemental
thereto and includes any Transactions or other 

 

17

 

contracts (including without limitation any
Forward F/X Contracts) between the Swap Agent and the Borrowers entered into on
(inter alia) the terms of such agreement;

 

“Master Agreement
Liabilities” means, at any
relevant time, all liabilities of the Borrowers to the Swap Agent under or
pursuant to the Master Agreement, whether actual or contingent, present or
future;

 

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

 

“Mortgages”
means in respect of a Vessel together the first priority mortgage and deed of
covenants collateral thereto to be executed and delivered by the relevant Owner
in favour of the Security Trustee acting for and on behalf of the Creditors, in
form and substance satisfactory to the Creditors in their sole discretion;

 

“Multipartite Deeds” means each of the deeds entered or to be entered between the
Security Trustee, the relevant Borrower, the L/C Bank and the Deposit Bank.

 

“New Currency”
means, in relation to any conversion between Approved Currencies to be made
under Clause 8, the Approved Currency in which the relevant part of the
relevant Post-Delivery Facility is denominated after conversion;

 

“Newbuilding A”
means the fully cellular container vessel having hull no. 1455 being
constructed by Samsung pursuant to the Shipbuilding Contract A;

 

“Newbuilding B”
means the fully cellular container vessel having hull no. 1456 being
constructed by Samsung pursuant to the Shipbuilding Contract B;

 

“Notice of Drawdown” means the written notice in the form set out in
Schedule 2;

 

“Nomination Date”
means the Business Day which is three (3) Business Days prior to the
commencement of an Interest Period;

 

“Notional Amount” means in respect of any Hedging Transaction, the Notional
Amount as defined in the Confirmation (as defined in the Master Agreement)
relating to that Hedging Transaction;

 

“Novation Agreement”
means in respect of a Vessel, the agreement dated 18th February 2004
entered into by the relevant Borrower, the relevant Owner and Samsung whereby
the parties agreed that the relevant Vessel would be delivered to the relevant
Owner;

 

18

 

“Obligors” means
together the Borrowers and Danaos;

 

“Owners” means
each of Ocean Caribbean Limited and Ocean Caracas Limited;

 

“Partnership”
means each of the Ocean Caribbean Limited Partnership, and the Ocean Caracas
Limited Partnership each a limited partnership in England under the Limited
Partnerships Act 1907 whose principal place of business is at 5th Floor, 40
Queen Street, London EC4R 1DD acting by the General Partner;

 

“Party” means in
relation to any document, a party to that document;

 

“Permitted Encumbrance”
means:

 

(a)           any Encumbrance referred to
in the Finance Documents; and

 

(b)           any lien on any Vessel for crew’s wages or salvage or otherwise
arising in the normal course of trading and being regularly settled, the total
amount of such lien or liens not to be material in the sole opinion of the
Agent in relation to any security created in favour of the Security Trustee or
the Creditors pursuant to the Finance Documents;

 

“Post-Delivery Advances” means together the Post-Delivery Senior Facility Advances
and the Post-Delivery Junior Facility Advances and in the singular means any of
them;

 

“Post-Delivery Facilities” means together the Post-Delivery Senior Facility and the
Post-Delivery Junior Facility and in the singular means either of them;

 

“Post-Delivery Junior
Facility” means the principal amount of the aggregate of the
Advances under the Post-Delivery Junior Facility from time to time outstanding;

 

“Post-Delivery Junior
Facility Advances” means together Advance E and Advance F and in the
singular means either of them;

 

“Post-Delivery Junior
Facility Indebtedness” means any and all moneys, liabilities and
obligations (whether actual or contingent, whether existing or hereafter
arising, whether or not for the payment of money, and including, without
limitation, Broken Funding Costs (if any), and any obligation or liability to
pay damages) which are now or which may at any time and from time to time
hereafter be due, owing, payable or incurred or expressed to be due, owing,
payable or incurred from the Borrowers (whether as principal, surety or
otherwise) to the Agent and/or Paying Agent and/or Security Trustee and/or the
Post-Delivery Junior Lenders under this Agreement and the other Finance
Documents and related to the Post-Delivery Junior Facility;

 

19

 

“Post-Delivery Junior
Lenders” means together those Banks providing the Post-Delivery
Junior Facility or any part thereof;

 

“Post-Delivery Senior
Facility” means the principal amount of the aggregate of the
Advances under the Post-Delivery Senior Facility from time to time outstanding;

 

“Post-Delivery Senior
Facility Advances” means together Advance C and Advance D and in the
singular means either of them;

 

“Post-Delivery Senior
Facility Indebtedness” means any and all moneys, liabilities and
obligations (whether actual or contingent, whether existing or hereafter
arising, whether or not for the payment of money, and including, without
limitation, Broken Funding Costs (if any), and any obligation or liability to
pay damages) which are now or which may at any time and from time to time
hereafter be due, owing, payable or incurred or expressed to be due, owing,
payable or incurred from the Borrowers (whether as principal, surety or
otherwise) to the Agent and/or Paying Agent and/or Security Trustee and/or the
Post-Delivery Senior Lenders under this Agreement and the other Finance
Documents and related to the Post-Delivery Senior Facility;

 

“Post-Delivery Senior
Lenders” means together
those Banks providing the Post-Delivery Senior Facility or any part thereof;

 

“Potential Event of Default”
means any event which may become with the giving of notice or passage of time
or other condition, or any combination of the foregoing, an Event of Default;

 

“Pre-Delivery Advances”
means together Advance A and Advance B and in the singular means either of
them;

 

“Pre-Delivery Facility”
means the principal amount of the aggregate of the Advances under the
Pre-Delivery Facility from time to time outstanding;

 

“Pre-Delivery Facility
Indebtedness” means any and all moneys, liabilities and obligations
(whether actual or contingent, whether existing or hereafter arising, whether
or not for the payment of money, and including, without limitation, Broken
Funding Costs (if any), and any obligation or liability to pay damages) which
are now or which may at any time and from time to time hereafter be due, owing,
payable or incurred or expressed to be due, owing, payable or incurred from the
Borrowers (whether as principal, surety or otherwise) to the Agent and/or Paying
Agent and/or Security Trustee and/or the Banks under this Agreement and the
other Finance Documents and related to the Pre-Delivery Facility;

 

20

 

“Pre-Delivery Lenders” means together those Banks providing the Pre-Delivery
Facility or any part thereof;

 

“Proceeds” shall have the
meaning given thereto in the Intercreditor Deed;

 

“Protection and Indemnity
Risks” means the usual risks covered by a protection and indemnity
association that is a member of the International Group of Protection and
Indemnity Associations, including the proportion not otherwise recoverable in
case of collision under the ordinary running-down clause;

 

“Put Option Agreements”
means each of the put option agreement entered or to be entered into between
the Sponsor and the Investor under which the Investor may, in certain
circumstances, require the Sponsor to purchase (on a limited recourse basis)
its interest in the relevant Partnership.

 

“Refund Guarantees” means together the refund guarantees dated February 2004 by
the Refund Guarantors pursuant to the Shipbuilding Contracts and in the
singular means any of them;

 

“Refund Guarantors”
means the Export-Import Bank of Korea of Seoul, Korea;

 

“Relevant Currency”
means Dollars and/or the Approved Currency in which the Post-Delivery
Facilities or either of them or any part thereof are or will be denominated (as
the case may be) at the relevant time;

 

“Repayment Date”
means each of the dates referred to in Clauses 12.1.1, 12.1.2, 12.2.1, 12.2.2,
12.3.1 and 12.3.2;

 

“Repayment Instalments”
means together the Advance C Repayment Instalments, the Advance D Repayment
Instalments, the Advance E Repayment Instalments and the Advance F Repayment
Instalments and in the singular means any of them;

 

“Samsung” means
Samsung Heavy Industries Co., Ltd, having its registered office at  647-9, Yoksam-Dong, Kangnam-ku, Seoul,
Republic of Korea;

 

“Second Priority Deposit Account
Charges” means together the Containers
Services Second Priority Deposit Account Charge and the Containers Lines Second
Priority Deposit Account Charge;

 

“Security Documents”
means the Manager’s Undertakings, the Earnings Account Charges, the Danaos
Guarantee, the General Assignments, the Second Priority Deposit Account
Charges, the Mortgages, the Charter Assignment Agreements, the Deeds of 

 

21

 

Counter-Indemnity, the Master Agreement,
the Credit Support Documents, and any other agreement or document that may be
executed at any time by the Borrowers or any other person as security for all
or any part of the Indebtedness;

 

“Security Period”
means the period commencing with the execution of this Agreement and ending on
the date on which the Indebtedness is repaid in full to the Banks and the Swap
Agent to the full satisfaction of the Agent and the Security Trustee;

 

“Senior Debt”
means together the Pre-Delivery Senior Facility Indebtedness and the
Post-Delivery Facility Senior Indebtedness;

 

“Senior Lenders”
means together the Pre-Delivery Lenders and the Post-Delivery Senior Lenders;

 

“Shipbuilding Contract A” means the shipbuilding contract dated 31st May
2002 entered into between Samsung and Container Services as amended by a
supplemental agreement dated 31st May, 2002 as novated by the Novation
Agreement for the construction and completion of Newbuilding A at a contract
price of US$ 36,050,000 (subject to adjustment in accordance with the
Shipbuilding Contract);

 

“Shipbuilding Contract B”
means the shipbuilding contract dated 31st May 2002 entered into
between Samsung and Container Lines as amended by a supplemental agreement
dated 31st May, 2002 as novated by the Novation Agreement for the construction
and completion of Newbuilding B at a contract price of US$ 36,050,000 (subject
to adjustment in accordance with the Shipbuilding Contract);

 

“Shipbuilding Contracts”
means collectively Shipbuilding Contract A and Shipbuilding Contract B and
singularly either of them;

 

“Sponsor” means
Allco Finance (UK) Limited, a company registered in England & Wales with
company number 02818852 whose registered office is at 5th Floor, 40 Queen
Street, London, EC4R 1DD;

 

“Spot  Rate of Exchange” means the spot rate (based on the market
rate prevailing in the London Interbank Market) quoted by the Swap Agent at or about
11.00 a.m. (London time) on the second or, in the case of Japanese Yen, third
Business Day before the date for purchase of one Approved Currency with another
Approved Currency;

 

“Statement of Additional
Construction Expenses” means a
statement from the Borrowers to the Agent setting out any Additional
Construction Expenses that relate to a Vessel;

 

22

 

“Subject Documents” means all of the Finance Documents, the Refund Guarantees,
the Shipbuilding Contracts, the Novation Agreements, the Bareboat Charters, the
AML Time Charters, the Charters, the Approved Management Agreements (none to be
amended, varied, supplemented or modified without the consent of the Agent and
the Security Trustee) and together with any other instruments, document or
memorandum, scheduled to any of the documents referred to above, and any
notice, consent or acknowledgement referred to in or required pursuant to any
of the documents referred to above and any document, instrument or memorandum
which secures any of the obligations of the Borrowers under this Agreement or
under any other Subject Document;

 

“Subsidiary”
means a body corporate from time to time of which another (a) has direct or
indirect control, or (b) owns directly or indirectly more than fifty (50) per
cent. of the share capital or similar right of ownership (and in this
definition “control” means the power to direct
the management and the policies of a body corporate, whether through the
ownership of voting capital, by contract or otherwise);

 

“Supplemental Agreement” means the agreement dated 18th February 2004 entered into
between the parties hereto;

 

“Supplemental Agreement
No.2” means the agreement dated [l], 2005 entered into between the parties hereto and Danaos;

 

“Taxes” means
any present or future tax, levy, impost, duty, charge, fee, deduction or
withholding of any nature and whatever called, by whomsoever, on whomsoever and
wherever imposed, levied, collected, withheld or assessed (other than taxes on
the overall net income of the Banks) and “Tax” and “Taxation” shall be construed accordingly;

 

“Termination Event”
shall have the meaning attributed thereto in the Master Agreement;

 

“Total Commitments” means in relation to the Banks, the aggregate for the time
being of their respective Commitments in respect of each Facility;

 

“Total Construction Cost” means in respect of a Vessel, the aggregate of (i) the
Contract Price as per Article II paragraph 1 of the Shipbuilding Contract (ii)
the Additional Construction Costs and (iii) the Additional Construction
Expenses;

 

“Total Loss”
means, in respect of a Vessel:

 

(a)           the actual or constructive or compromised or arranged or agreed
total loss of such Vessel; and

 

23

 

(b)           the requisition for title or other compulsory acquisition of such
Vessel, other than requisition for hire; and

 

(c)           the capture, seizure, arrest, detention or confiscation of such
Vessel by any government or by a person acting or purporting to act on behalf
of any government where such Vessel is not released or discharged within sixty
(60) days or such lesser period provided in the Vessel’s Insurances;

 

“Tranche” means
such part of each Post-Delivery Advance requested by and made available to the
Borrowers and/or continued in a Relevant Currency;

 

“Transaction” means a transaction entered into between the Swap Agent and
the Borrowers and governed by the Master Agreement;

 

“Transfer Certificate”
means a certificate substantially in the form set out in Schedule 3 signed by a
Bank and a Transferee whereby:

 

(i)            such Bank seeks to procure the transfer to such Transferee of all or
a part of the Bank’s rights and obligations hereunder, subject to and upon the
terms and conditions set out in Clause 34; and;

 

(ii)           such Transferee undertakes to perform the obligations it will assume
as a result of delivery of such certificate to the Agent as contemplated in
Clause 34.5;

 

“Transferee” means a bank to which a Bank seeks to transfer all or part
of its rights and obligations in accordance with Clause 34;

 

“Trust Property” means
collectively -

 

(i)            the security, powers,
rights, titles, benefits and interests (both present and future) constituted by
and conferred on the Security Trustee under or pursuant to the Finance
Documents (including, without limitation, the benefit of all covenants and
undertakings given in the Finance Documents);

 

(ii)           all
moneys, property and other assets paid or transferred to or vested in the
Security Trustee (or any agent of the Security Trustee) or received or
recovered by the Agent and/or the Paying Agent (or any agent of the Agent
and/or the Paying Agent) pursuant to, or in connection with, any of the Finance
Documents; and

 

(iii)         all
rights, benefits, interests, money, investments, property, and other assets at
any time representing or deriving from any of the foregoing, including all
interest, income 

 

24

 

and other sums
at any time received or receivable by the Security Trustee (or any agent of the
Security Trustee) in respect of the same (or any part thereof);

 

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

 

“Vessels” means
together Newbuilding A and the Newbuilding B and in the singular either of
them;

 

“War Risks”
means the risk of any hostile acts, mines or torpedoes and all risks excluded
by F.C. & S Clauses 24 - 26 (inclusive) of the Institute Time Clauses
(Hulls) (1.11.95) (or any equivalent provision);

 

1.3          In
this Agreement references to the “Agent”, “Swap Agent”, “Paying Agent”, “Security Trustee”, or any “Bank”
shall be construed so as to include its and any subsequent successors, assigns,
transferees and sub-participants in accordance with their respective interests.

 

1.4          In
this Agreement references to periods of ‘months’ shall 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 in which such period
started and (a) if such numerically corresponding day is not a Business Day,
such period shall end on the next following Business Day in the same calendar
month, or if there is no such Business Day, such period shall end on the
preceding Business Day and (b) if there is no numerically corresponding day in
the next calendar month then such period shall end on the last Business Day in
that calendar month (and ‘month’ and ‘monthly’ shall be construed accordingly).

 

1.5          In
this Agreement unless the context otherwise requires -

 

1.5.1       clause
headings and sub-headings are inserted for convenience only and shall not
affect the construction of the Agreement and unless otherwise specified, all
references to Clauses and Schedules are to clauses of, and schedules to, this
Agreement;

 

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

 

1.5.3       fees,
costs and expenses shall be exclusive of any value added tax or similar tax (if
any) which shall accordingly be payable in addition;

 

1.5.4       any
reference to agreements, documents or instruments includes a reference to that
agreement, document or instrument as amended, supplemented, substituted,
novated or assigned from time to time;

 

25

 

1.5.5       references
to persons include any individual, partnership, firm, trust, body corporate,
government, governmental body, authority, agency, unincorporated body of
persons or association;

 

1.5.6       a
reference to any enactment or statutory provision include any enactment or
statutory provision which amends, extends, consolidates or replaces the same or
which has been amended, extended, consolidated or replaced by the same and
shall include any orders, regulations, codes of practice, instruments or other
subordinated legislation made under the relevant enactment or statutory
provision;

 

1.5.7       the
words ‘herein’, ‘hereto’ and ‘hereunder’ refer to this Agreement as a whole and
not to the particular Clause or Schedule in which the words may be used;

 

1.5.8       the
liquidation, winding-up or dissolution of a company or body corporate or the
appointment of a receiver, manager or administrator of or in relation to a
company or body corporate or any of its assets shall be construed so as to
include any equivalent or analogous proceedings under the law of the
jurisdiction in which it is incorporated or any jurisdiction in which it
carries on business or has assets or liabilities.

 

1.5.9       unless
expressly provided to the contrary in a Finance Document, a person who is not a
party to a Finance Document may not enforce any of its terms under the
Contracts (Rights of Third Parties) Act 1999 and notwithstanding any term of
any Finance Document, the consent of any third party is not required for any
variation (including any release or compromise of any liability) or termination
of that Finance Document.

 

2             THE
FACILITIES

 

2.1          The
Banks hereby agree to make available to the Borrowers, upon the terms and
subject to the conditions of this Agreement, the Facilities in an aggregate
amount not exceeding at any time Sixty million Dollars (US$60,000,000)
comprising -

 

(i)            prior
to the advance of the term loan facilities referred to in paragraphs (ii) and
(iii) below, a facility of up to Forty Nine million Dollars (US$49,000,000) (“the Pre-Delivery Facility”) which shall be divided in two
Advances of up to Twenty Four million Five hundred thousand Dollars  (US$ 24,500,000) each (each called “a Pre-Delivery Facility Advance”);

 

(ii)           a
term loan facility of up to Forty Five million Dollars (US$ 45,000,000) (the “Post Delivery Senior Facility”) which shall be made
available in two advances of up to Twenty Two million Five hundred thousand
Dollars (US$22,500,000) (each a “Post -Delivery Senior
Facility Advance”); and

 

26

 

(iii)         a
term loan facility of up to Fifteen million Dollars (US$15,000,000) ( the “Post Delivery Junior Facility”) which shall be made
available in two advances of up to Seven million Five hundred thousand Dollars
(US$7,500,000) each (each a “Post-Delivery Junior
Facility Advance”).

 

2.2          The
Borrowers shall use the entire proceeds of -

 

2.2.1       Each
Pre-Delivery Facility Advance to finance and/or refinance up to Eighty Seven
point Five per cent (87.5%) of the second predelivery instalment payable or
paid pursuant to the terms of the Shipbuilding Contract related to each Vessel;
and

 

2.2.2       Each
Post-Delivery Senior Facility Advance to refinance partly the Pre-Delivery
Facility Advance related to such Vessel, provided however that such
Post-Delivery Senior Facility Advance shall not exceed the lower of (a) sixty
per cent (60%) of the Total Construction Cost of the relevant Vessel and (b)
Twenty Two million Five hundred thousand Dollars (US$22,500,000); and

 

2.2.3       Each
Post-Delivery Junior Facility Advance to (i) refinance the remaining balance of
the Pre-Delivery Facility Advance not refinanced by the Post-Delivery Senior
Facility Advance related to such Vessel (ii) finance the payment of monies into
the Deposit Account in an amount equal to the on-delivery instalment payable by
the relevant Owner under the relevant Shipbuilding Contract and (iii) partly
finance the Additional Construction Expenses incurred in connection with the
relevant Vessel, provided however that each Post-Delivery Junior
Facility Advance shall not exceed the lower of (a) twenty per cent (20%) of the
Total Construction Cost of the relevant Vessel and (b) Seven million Five
hundred thousand Dollars (US$7,500,000).

 

2.3          Subject
to the terms of this Agreement, the Banks shall make Advances under the
Facilities to the Borrowers on the Drawdown Dates.

 

2.4          All
the liabilities and obligations of the Borrowers under this Agreement shall,
whether expressed to be so or not, be joint and several so that each Borrower
shall be jointly and severally responsible with the other Borrower for all
liabilities and obligations of the Borrowers under this Agreement and so that
such liabilities and obligations shall not be impaired by -

 

1.            any failure of this Agreement to be legal, valid, binding and
enforceable in relation to any of the Borrowers whether as a result of lack of
corporate capacity, due authorisation, effective execution or otherwise;

 

2.            any giving of time, forbearance, indulgence, waiver or discharge in
relation to any of the Borrowers or to any other party of the Security
Documents; or

 

27

 

3.            any other matter or event whatsoever which might have the effect of
impairing all or any of the liabilities and obligations of any of the
Borrowers.

 

2.5          Each
of the Borrowers declares that it is and will, throughout the Security Period,
remain a principal debtor for all amounts owing under this Agreement and none
of the Borrowers shall in any circumstances be construed to be a surety for the
obligations of the other Borrower hereunder.

 

2.6          Until
all sums owing to the Banks by the Borrowers under this Agreement and the
Security Documents have been paid in full none of the Borrowers (hereinafter
called a “Creditor Borrower”) will without the
prior written consent of the Agent ask, demand, sue for, take or receive from
any member of the Group (or any of them) (hereinafter called a “Debtor Borrower”) by set-off or any other manner the whole
or any part of all present and future sums, liabilities and obligations payable
or owing by the Debtor Borrower to the Creditor Borrower whether actual or
contingent jointly or severally or otherwise howsoever so long as any present
and future sums, liabilities and obligations whatsoever payable or owing by the
Borrowers (or any of them) pursuant to the Finance Documents or any of them or
otherwise whatsoever, whether actual or contingent jointly or severally or
otherwise howsoever).

 

3             AVAILABILITY
– COMMITMENTS BY THE BANKS – POSITION OF THE CREDITORS AND THE INSTRUCTING
GROUP

 

3.1          Subject
as herein provided -

 

(1)           the Pre-Delivery Facility is available to the Borrowers for drawing
during the Availability Period relating thereto in two (2) Advances (namely
Advance A and Advance B);

 

(2)           the Post-Delivery Senior Facility is available for drawing during
the Availability Period relating thereto in two (2) Advances (namely Advance C
and Advance D); and

 

(3)           the Post Delivery Junior Facility is available for drawing during
the Availability Period relating thereto in two (2) Advances (namely Advance E
and Advance F).

 

Any part of any Advance which remains
undrawn at the close of business in Hamburg on the expiration of the relevant
Availability Period shall be automatically cancelled.

 

3.2          The
Banks severally agree with the Borrowers to make each Facility available in the
proportionate amount of their Commitments to the Total Commitments in respect
of such Facility or any part thereof on the terms and conditions set out in
this Agreement. In the event that any Bank fails to make available its
Commitment in respect of any Facility

 

28

 

neither the
Agent, Paying Agent, nor the other Banks shall be liable to the Borrowers to
make available all or any part of such Commitment nor to compensate the
Borrowers for such failure.

 

3.3          Notwithstanding
any other term of this Agreement, the interests of the Creditors are several
and the aggregate of the amounts outstanding at any time hereunder or under the
other Finance Documents from the Borrowers to each Creditor is a separate and
independent debt; accordingly each Creditor shall be entitled to sue for any
amount which has become due and payable by the Borrowers to it under this
Agreement without joining the Agent, the Paying Agent, the Security Trustee or
any other Lender as additional parties in the proceedings.

 

3.4          However,
without the prior consent of the Instructing Group, a Creditor may not bring
proceedings in respect of:

 

(a)           any
other liability or obligation of any Obligor under or connected with a Finance
Document; or

 

(b)           any misrepresentation or
breach of warranty by any Obligor in or connected with a Finance Document.

 

3.5          The
obligations of the Creditors under this Agreement and the other Finance
Documents are several; and a failure of a Creditor to perform its obligations
under this Agreement or any other Finance Documents shall not result in:

 

(a)           the
obligations of the other Banks being increased; nor

 

(b)           any
Obligor or any other Creditor being discharged (in whole or in part)

 

from its obligations under any Finance Document;

 

and in no
circumstances shall a Creditor have any responsibility for a failure of another
Creditor to perform its obligations under this Agreement or any other Finance
Documents.

 

3.6          Every
Creditor and each Obligor shall be bound by:

 

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

 

(b)           any
instruction or authorisation given by the Instructing Group to the Agent, the
Paying Agent or the Security Trustee under or in connection with any Finance
Document;

 

29

 

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

 

3.7          However,
the Borrowers and each other Obligor:

 

(a)           shall
be entitled to assume that the Instructing Group has 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.

 

3.8          In
Clauses 3.6 and 3.7 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.

 

3.9          Nothing
contained in this Agreement and no action taken by the Creditors pursuant to
this Agreement or under the other Finance Documents shall be deemed to
constitute the Creditors as a partnership, association, joint venture or other
entity.

 

4             NOTICE
OF DRAWDOWN

 

4.1          The
Borrowers may make a request for an Advance by sending to the Agent a duly
completed Notice of Drawdown subject to the conditions in this Clause 4.

 

4.2          All
Advances shall be subject to the following conditions being complied with to
the Agent’s and the Security Trustee’s satisfaction -

 

4.2.1       on the
Drawdown Date of the relevant Advance the conditions precedent set out in
Clause 18 have either been satisfied or have been waived by the Agent and the
Security Trustee (whether with or without conditions) and the undertakings in
Clause 21 so far as they are relevant on the respective Drawdown Date have at
all times been complied with; and

 

4.2.2       on the
date of the Notice of Drawdown and on the Drawdown Date of the relevant Advance
no Event of Default or Potential Event of Default has occurred and is
continuing or might result from such Advance being paid to the Borrowers; and

 

4.2.3       on the
date of the Notice of Drawdown in respect of the relevant Advance the
representations and warranties set out in Clause 16 (updated mutatis mutandis
to the relevant Drawdown Date) are true and correct; and

 

4.2.4       the
Agent shall have received the Notice of Drawdown in respect of the relevant
Advance not later than 11.00 a.m. (London time) on the third (3rd) Business Day
prior to the Drawdown 

 

30

 

Date (or such
shorter period as may be agreed by the Agent) from the Borrowers setting out
the proposed Drawdown Date.

 

4.3          The
Borrowers may make a request for a Pre-Delivery Facility Advance by sending to
the Agent a duly completed Notice of Drawdown, subject that the Pre-Delivery
Facility Advances may only be made as follows -

 

(a)           by
Advance A in the amount of up to Twenty Four million Five hundred thousand
Dollars (US$24,500,000) to finance or refinance part of the amounts due or paid
to Samsung under Article II Paragraph(4)(b) of the Shipbuilding Contract A; and

 

(b)           by
Advance B in the amount of Twenty Four million Five hundred thousand Dollars
(US$24,500,000) to finance or refinance part of the amounts due or paid to
Samsung under Article II Paragraph (4)(b) of the Shipbuilding Contract B;

 

4.4          The
Borrowers may make a request for a Post-Delivery Senior Facility Advance by
sending to the Agent a duly completed Notice of Drawdown, subject that the
Post-Delivery Senior Facility Advances may only be made as follows:

 

(a)           by
Advance C in the amount of up to Twenty Two million Five hundred thousand
Dollars (US$22,500,000) to be applied for the purpose of Clause 2.2.2; and

 

(b)           by
Advance D in the amount of up to Twenty Two million Five hundred thousand
Dollars (US$22,500,000) to be applied for the purpose of Clause 2.2.2.;

 

4.5          The
Borrowers may make a request for a Post-Delivery Junior Facility Advance by
sending to the Agent a duly completed Notice of Drawdown, subject that the
Post-Delivery Junior Facility Advances may only be made as follows:

 

(a)           by
Advance E in the amount of up to Seven million Five hundred thousand Dollars
(US$7,500,000) to be applied for the purpose of Clause 2.2.3; and

 

(b)           by
Advance F in the amount of up to Seven million Five hundred thousand Dollars
(US$7,500,000) to be applied for the purpose of Clause 2.2.3.;

 

4.6          It
shall be a condition of the Borrowers making a request for a Post-Delivery
Junior Facility Advance that a request for the Post-Delivery Senior Facility
Advance related to the same Vessel has been made.

 

4.7          Where
the Borrowers make a request for a Post-Delivery Junior Facility Advance or
part thereof then the making of such Advance shall be subject to:

 

31

 

(a)           the
Agent receiving from the Borrowers on or before the date of the relevant Notice
of Drawdown, a Statement of Additional Construction Expenses approved by the
Agent which shall be in form and substance satisfactory to the Agent and the
Agent may request such further information as the Agent may reasonably require
to support the said Statement of Additional Construction Expenses; and

 

(b)           a
copy of the notice from Samsung under the relevant Shipbuilding Contract that
the Additional Construction Costs are due, shall be served on the Agent
together with the said Statement of Additional Construction Expenses such
notice to be certified by the Borrowers to be a true and complete copy, and the
Borrowers shall certify that Samsung can properly give such notice and that it
has been properly given under the terms of the relevant Shipbuilding Contract.

 

4.8          A
Notice of Drawdown once made shall be irrevocable and the Borrowers appoint
each other for the purpose of executing a Notice of Drawdown so that any one
Borrower executing a Notice of Drawdown binds all Borrowers to the Notice of
Drawdown so executed.

 

4.9          The
Paying Agent and/or the Banks shall consolidate any Advances made under each of
the Post-Delivery Senior Facility and the Post-Delivery Junior Facility.

 

5             INTEREST

 

5.1          On
each Interest Payment Date the Borrowers shall pay to the Paying Agent, for the
account of the Banks, for the period elapsed accrued interest at the Interest
Rate on the amount of each Facility in the Relevant Currency.

 

5.2          Interest
shall be calculated on the basis of the actual number of days elapsed and a
three hundred and sixty (360) day year or on such basis as the Paying Agent may
determine in accordance with market practice in relation to the Relevant
Currency.

 

5.3          Each
determination of an Interest Rate hereunder shall be promptly notified by the
Paying Agent to the Borrowers and the Banks.

 

6             INTEREST
PERIODS

 

6.1          Subject
to Clause 6.2, the Interest Periods shall be periods of a duration of one (1),
three (3), six (6) or nine (9) months (or such other Periods as the Paying
Agent and the Borrowers may agree) as selected by the Borrowers by written
notice to be received by the Agent not later than 11.00 a.m. (London time) on
the relevant Nomination Date.

 

6.2          Notwithstanding
the provisions of Clause 6.1 -

 

32

 

6.2.1       the
first Interest Period of an Advance shall commence on the Drawdown Date of such
Advance and each subsequent Interest Period shall commence on the expiry of the
preceding Interest Period in respect thereof;

 

6.2.2       if any
Interest Period would otherwise end on a day which is not a Business Day, that
Interest Period shall be extended to the next succeeding day which is a
Business Day unless such next succeeding Business Day falls in another calendar
month in which event the Interest Period shall end upon the immediately
preceding Business Day;

 

6.2.3       if any
Interest Period commences on the last Business Day in a calendar month or if
there is no numerically corresponding day in the month in which that Interest
Period ends, that Interest Period shall end on the last Business Day in that
later month;

 

6.2.4       where
any Repayment Date in respect of an Advance occurs other than at the end of an
Interest Period relating thereto there shall in respect of that part of such
Advance equivalent to the amount of the Repayment Instalment falling due on
such Repayment Date be a separate Interest Period expiring on such Repayment
Date and the Interest Rate relating to such part shall be fixed separately;

 

6.2.5       the
Borrowers shall not be permitted to select different Interest Periods in
respect of the Post-Delivery Facilities; and

 

6.2.6       if the
Borrowers fail to select an Interest Period in accordance with the above, such
Interest Period shall be of three (3) months duration or of such other duration
as the Paying Agent may in its sole discretion select.

 

7             HEDGING
TRANSACTIONS

 

7.1          The
Swap Agent and the Borrowers may, subject to the prior written consent of
Security Trustee and the Investor (unless the Security Trustee shall agree that
the consent of the Investor is not required, with the Security Trustee’s
decision and consent to be given in its absolute discretion) during the
Security Period enter, into one or more Hedging Transactions pursuant to the
Master Agreement, the terms and conditions of each of which are or will be
specified in a Confirmation sent by the Swap Agent to the Borrowers.

 

7.2          If
an Advance is for any reason not advanced to the Borrowers on or before its
Final Availability Date and the Swap Agent and the Borrowers have entered into
any Hedging Transactions on or before that Final Availability Date, for the
purposes of the Master Agreement an Additional Termination Event (as defined in
the Master Agreement) (with the Swap Agent as the Affected Party) shall be
deemed to have occurred on that Final Availability Date.

 

33

 

7.3          Any
Hedging Transactions in respect of the Post-Delivery Facilities shall be
apportioned pro rata between them;

 

7.4          If
the aggregate amount of an Advance or a Facility actually advanced by the Banks
to the Borrowers is less than the Notional Amount  (or the aggregate Notional Amounts) of the
Hedging Transactions entered into on or before the last Drawdown Date, the
obligations of the Borrowers in respect of those Hedging Transactions shall,
unless otherwise agreed by the Swap Agent, be calculated so far as the Swap
Agent considers it practicable to do so, by reference to a Notional Amount (or
aggregate Notional Amounts) equal to the amount of the Advance or the Facility
actually advanced, reduced (if appropriate) on each Repayment Date by the
amount of the Repayment Instalment due on that Repayment Date, adjusted if
necessary in accordance with Clauses 12.1, 12.2.5 or 12.3.5 as the case may be.

 

7.5          If
the Borrowers, subject always to Clause 10 prepay part of an Advance or a
Facility (whether pursuant to Clause 10, Clause 9 or any other provision of
this Agreement) and the amount of an Advance or a Facility remaining
outstanding after the application of that prepayment is less than the Notional
Amount (or the aggregate Notional Amounts) of the Hedging Transactions then in
effect (reduced, if appropriate, in accordance with the Confirmations relating
to those Hedging Transactions), the obligations of the Borrowers in respect of
those Hedging Transactions shall, unless otherwise agreed by the Swap Agent, be
calculated, so far as the Swap Agent considers it practicable to do so, by
reference to a Notional Amount (or aggregate Notional Amounts) equal to the
amount of that Advance or Facility remaining outstanding after application of
the prepayment in question, reduced on each Repayment Date by the amount of the
Repayment Instalment due on that Repayment Date after taking into account the
application of the prepayment.

 

7.6          In
order to give effect to Clauses 7.3 and 7.4, or in the event of voluntary or
mandatory prepayment by the Borrowers of the whole of the Facilities, the
Borrowers irrevocably authorise the Swap Agent to amend restructure, unwind,
cancel, net out, terminate, liquidate, transfer or assign any of the rights
and/or obligations created pursuant to the Master Agreement in respect of those
Hedging Transactions, and/or to enter into any other interest rate exchange
and/or hedging transaction or commitment with the Borrowers or with any other
counterparty approved by the Swap Agent.

 

7.7          If
the exercise of the Swap Agent’s rights under Clause 7.5 results in the
termination of any Transaction, that Hedging Transaction shall for the purposes
of the Master Agreement (including, without limitation section 6(e)(i) of the
Master Agreement) be treated as a Terminated Transaction (as defined in the
Master Agreement) resulting from an Event of Default by the Borrowers.

 

34

 

7.8          The
Borrowers will indemnify the Swap Agent from time to time on demand in respect
of all liabilities, losses, costs or expenses suffered, incurred or sustained
by the Swap Agent arising in any way in relation to the exercise by the Swap
Agent of its rights under this Clause, or arising in any way from any other
termination, cancellation, unwinding or restructuring of any transaction,
together (in each case) with interest at the Default Rate (applicable to the
Post-Delivery Junior Facility Indebtedness) from the date of the Swap Agent’s
demand until the date on which the Swap Agent receives payment or
reimbursement, before or after an relevant judgement.

 

8             ALTERNATIVE
AND FORWARD CURRENCY OPTIONS

 

8.1          (a)          (i)             Except in the
circumstances described in Clause 8.1(g) (in which case the provisions of such
Clause shall apply), at the commencement of any Interest Period in relation to
any Post-Delivery Advance the Borrowers, by written request to the Paying Agent
given not later than 10.00 a.m. (Hamburg time) two (2) Business Days before the
commencement of such Interest Period, may request that, from the time of
commencement of such Interest Period, part of the Post-Delivery Facilities be
converted from one Relevant Currency to another Relevant Currency as specified
in such notice, such request to be subject at all times to the consent of the
Paying Agent (in its absolute discretion)

 

(ii)          Upon receipt of each such
notice, the Paying Agent shall either reject the Borrowers’ request made
pursuant to Clause 8.1(a)(i) above or it shall notify each of the Banks, giving
each of them full details of the conversion request.

 

(b)           Subject only to:

 

(i)            at all times thirty
percent (30%) of the Post-Delivery Facilities being denominated in Dollars;

 

(ii)          the total Post-Delivery
Facilities being denominated in not more than three Relevant Currencies, one of
which must be Dollars, and

 

(iii)         any amount in any Approved
Currency outstanding under the Post-Delivery Facilities being not less than
twenty percent (20%) of the total amount outstanding thereunder;

 

(iv)         no Event of Default then having
occurred and being continuing

 

the amount in
respect of the Post-Delivery Facilities which the Borrowers have requested to
be converted from one Relevant Currency to another Relevant Currency 

 

35

 

shall be
converted by the Banks in accordance with the Borrowers’ request (subject
always to the consent of the Paying Agent) with effect from the commencement of
the relevant Interest Period.

 

(c)           Each conversion hereunder
shall be made at a rate which is the Spot Rate of Exchange unless such
conversion has already been made under a Forward F/X Contract or series of
Forward F/X Contracts maturing on such date, in which case the applicable
Forward Rate of Exchange shall apply.

 

(d)         (i)              Each conversion under
this Clause 8.1 shall made by the Borrowers being deemed to make a notional
repayment of the relevant part of the Post-Delivery Facilities which is to be
converted and the Banks being deemed to make a new advance in the New Currency
of such sum, after taking account of scheduled repayments due to be made in the
Existing Currency under Clause 12 and any mandatory prepayment under Clause
8.3.

 

(ii)          The proceeds of each such
new advance shall be deemed to be used to purchase the amount due in the
Existing Currency which is necessary so that the Borrowers may make the deemed
repayment of the part of the Post-Delivery Facilities which is being converted.
However, the Borrowers remain indebted to the Banks for the advance made in the
New Currency, which shall continue to form part of the Post-Delivery Facilities
as more particularly described in Clause 8.3(b).

 

(e)           Each amount requested by
the Borrowers to be converted in the manner described above shall be
apportioned pro rata to each of the Post-Delivery Advances (or following
consolidation pro rata to each of the Post-Delivery Facilities).

 

(f)         (i)               If the Paying Agent
does not receive a notice in accordance with Clause 8.1(a)(i) the relevant part
of the Post-Delivery Facilities shall remain denominated in the Relevant
Currency in which it was denominated during the then current Interest Period in
respect thereof.

 

(ii)          If the Borrowers have
requested that any Currency Tranche should remain denominated in or be
converted to an Approved Currency for the next Interest Period but the
requirements of Clause 8.1(b) would not then be complied with, then such
Currency Tranche shall be denominated in Dollars for the next Interest Period.

 

(g)         (i)              In relation to Forward
F/X Contracts which mature at the end of any Interest Period, it is agreed (and
the Borrowers hereby irrevocably agree and direct) that, subject to Clause
8.1(b), conversions shall be made in respect of the 

 

36

 

necessary
parts of the Post-Delivery Facilities into each Relevant Currency so as to
enable the Borrowers to meet their obligations under each such maturing Forward
F/X Contract.

 

(ii)          The Agent shall notify each
of the Banks no later than 11.00 a.m. (London time) three (3) Business Days
before the end of the relevant Interest Period of the conversion(s) to be made
under this Clause 8.1(g).

 

8.2          The
Borrowers’ obligations shall be to make all payments in respect of principal of
all parts of the Post-Delivery Facilities and interest thereon and other
payments under this Agreement in the Relevant Currency in which the
Post-Delivery Facilities or part thereof is for the time being denominated.

 

8.3          (a)           If on any Repayment Date the Paying Agent determines that:

 

(i)            the consolidated aggregate
of the Currency Equivalent in Dollars of all of the Currency Tranches, taking
into account all Forward F/X Contracts then maturing, PLUS

 

(ii)           the remaining part (if any)
of the Post-Delivery Facilities in Dollars, PLUS OR (AS THE CASE MAY BE) MINUS

 

(iii)         the net sum (if any) which
the Swap Agent certifies would then be payable by the Borrowers to the Swap
Agent or (as applicable) by the Swap Agent to the Borrowers if an Early
Termination Date were then to occur in respect of all Forward F/X Contracts maturing
after such Repayment Date

 

is more than
105% of the aggregate of:

 

(A)          the Dollar Reference Amount
of the Post-Delivery Facilities at that time (after taking account of any
scheduled repayment then due under Clause 12); and

 

(B)          the value of any additional
security provided in accordance with this Clause.

 

a mandatory
prepayment shall be made at the end of the current Interest Period in respect
of the Post-Delivery Facilities of a sum sufficient to reduce the aggregate of
the amounts detailed in clauses (i), (ii) and (iii) above to an amount equal to
no more than 100% of the aggregate of the amounts detailed in clauses (A) and
(B) above. However, before such prepayment is made, at the Borrowers’ request
the Agent shall give the Borrowers the opportunity, within two (2) Business
Days after being requested to do so, to provide alternative additional security
acceptable to the Agent (to which the provisions of Clause 19 shall apply) so
as to ensure that, after taking 

 

37

 

into account
all such additional security, the aggregate of the amounts detailed in clauses
(i), (ii) and (iii) above to an amount equal to no more than 100% of the
aggregate of the amounts detailed in clauses (A) and (B) above.

 

(b)           It is agreed that the
conversion operations contemplated by Clauses 8.1 and 8.3(a) constitute only a
banking mechanism and that such operations shall not constitute or be construed
as a novation or a repayment of all or any part of the Post –Delivery
Facilities or the grant of new loans. The Borrowers agree that the security to
be constituted by all the Security Documents shall secure both the initial
amount of all parts of each of the Post-Delivery Facilities and all advances
made by the Banks to effect such conversions.

 

Notwithstanding
and without prejudice to the validity of the foregoing, the Borrowers shall at
the Agent’s request sign such amendments to any of the Security Documents as
the Agent may reasonably require to preserve their validity.

 

8.4       In
case of any mandatory prepayment under Clauses 8.1 and/or 8.3 the sum to be
prepaid shall be apportioned first pro rata between all Balloon Payments of the
Post-Delivery Advances (or following consolidation pro rata between the Balloon
Payments of the Post-Delivery Facilities) and thereafter, shall be apportioned
pro rata between the Repayment Instalments due on each remaining Repayment Date
for each Post-Delivery Advance (or following consolidation each Post-Delivery
Facility) in inverse order of maturity.

 

8.5          (a)           Subject to all applicable provisions of the Master Agreement and
subject also to no Event of Default then having occurred, the Borrowers, for
hedging purposes in relation to the Borrower’s obligations in respect of the
Post-Delivery Facilities and as described herebelow and as may be approved by
the Swap Agent, may conclude Forward F/X Contracts with the Swap Agent:

 

(i)            to make forward purchases
of Relevant Currencies, in amounts and currencies corresponding to all or part
of the Post-Delivery Facilities but which may not, in any circumstances (after
having taken account of the concluding matched Forward F/X Contracts as is
described in paragraph 8.5(a) (ii) below) exceed the amount of the
Post-Delivery Facilities; and

 

(ii)          to make forward purchases in
the Relevant Currency or Currencies required by the Borrowers to match their
obligations under existing Forward F/X Contracts.

 

Unless
otherwise agreed by the Swap Agent, each such Forward F/X Contract shall mature
no later than the date of expiry of the then current Interest Period applicable
to the relevant part of the Post-Delivery Facilities.

 

38

 

(b)           It is agreed that the sums
which the Swap Agent makes available under Forward F/X Contracts which mature
at the time of a conversion under Clause 8.1 shall be applied in or towards
repayment of the sums due to be repaid in respect of the corresponding part of
the Post-Delivery Facilities at the time of such conversion. The sums to be
re-advanced by the Banks at that time under Clause 8.1 shall be applied in or
towards meeting the Borrowers’ corresponding payment obligations to the Swap
Agent under such Forward F/X Contracts.

 

The Borrowers
irrevocably authorise and direct that each such application shall be made as
aforesaid.

 

8.6          All costs and expenses,
losses and currency risks arising from the exercise by the Borrowers of the
multicurrency option and from entering into Forward F/X Contracts, including
all losses stemming from any conversion made under Clause 8.1, shall be for the
account of the Borrowers and shall, subject to the provisions of this
Agreement, be reflected in the amount of the Post-Delivery Facilities to which
they relate and/or the Master Agreement Liabilities (as the case may be).

 

9             SUBSTITUTE
BASIS

 

9.1          If
a Bank determines (which determination shall be conclusive) that -

 

9.1.1       at
11.00 a.m. (London time) on any Interest Determination Date such Bank was not
being offered by banks in the London and/or Luxembourg Interbank Eurocurrency
Market (in the option of such Bank) deposits in the Relevant Currency or
Currencies in the required amount and for the required period; or

 

9.1.2       such
deposits are not available by reason of circumstances affecting the London
and/or Luxembourg Interbank Eurocurrency Market (in the option of such Bank);
or

 

9.1.3       such
deposits are not available to such Bank in such market; or

 

9.1.4       adequate
and reasonable means do not or will not exist for such Bank to ascertain the
Interest Rate applicable to the next succeeding Interest Period; or

 

9.1.5       the
Relevant Currency or Currencies will not or may not continue to be freely
convertible or transferable, then, and in any such case the Agent shall give
notice of any such event to the Borrowers and, in case any of the above occurs
on the Interest Determination Date prior to the Drawdown Date of any
Post-Delivery Advance, such Post-Delivery Advance for the first Interest Period in
respect thereof shall be denominated in another Relevant Currency to be agreed
between the Borrowers and the Banks; provided that if the Banks and the
Borrowers 

 

39

 

do not agree
on such alternative Relevant Currency then the relevant Post-Delivery Advance
will be made available to the Borrowers in Dollars.

 

9.2          If,
however, any of the events described in Clause 9.1 occurs on any other Interest
Determination Date relative to any of the Facilities or any part thereof, then
the duration of the relevant Interest Period shall be up to one (1) month and
during such Interest Period the Interest Rate applicable to the relevant
Facility or the relevant part thereof shall be the rate per annum determined by
the Banks rounded upwards to the nearest whole multiple of one sixteenth per
cent (1/16th%) above the cost (expressed as a percentage rate per annum) to the
Banks of funding the amount of each Facility during such Interest Period.

 

9.3          During
such Interest Period the Borrowers and the Banks shall negotiate in good faith
in order to agree an Interest Rate and Interest Period satisfactory to the
Borrowers and the Banks to be substituted for those which but for the
occurrence of any such event as specified in this Clause would have applied or
redenominate the relevant Facility or the relevant part thereof in a different
currency or currencies which is freely convertible and transferable and in
which deposits are available to the Banks for determining the Interest Rate. If
the Borrowers and the Banks are unable to agree on such an Interest Rate and
Interest Period or such different currency by the day which is two (2) Banking
Days before the end of the Interest Period referred to above, the Borrowers
shall repay the relevant Facility or Facilities or the relevant part thereof
together with accrued interest thereon at the Interest Rate set out above
together with all other amounts due under this Agreement relative to such
Facility or Facilities but without any prepayment fee, on the last day of such
Interest Period.

 

10           PREPAYMENT

 

10.1        The
Borrowers may prepay the whole or any part of the Facilities or any of them on
any Business Day, provided that -

 

10.1.1    the Agent
shall have received from the Borrowers not less than thirty (30) days prior
notice of their intention to make such prepayment, the amount of such prepayment
and the date on which such prepayment is to be made;

 

10.1.2    the
amount of any partial prepayment shall be not less than Two million Dollars
(US$ 2,000,000) or a multiple thereof;

 

10.1.3    no amount
prepaid under this Agreement may be reborrowed;

 

40

 

10.1.4    each
prepayment under this Agreement shall be made together with accrued interest on
the amount prepaid and all other amounts then due and payable under this
Agreement and/or any of the Security Documents together with any Broken Funding
Costs.

 

10.2        Any
amount of a Facility prepaid pursuant to this Agreement (except for prepayment
made pursuant to Clause 8.3) shall be applied to reduce the outstanding Balloon
Payments and Repayment Instalments in respect thereof on a pro-rata basis

 

10.3        In
the event of a Total Loss of a Vessel or the sale or other disposal of a Vessel
(subject always to the prior written consent of the Agent and the Security
Trustee) the Borrowers must prepay the Post-Delivery Advances in respect of
that Vessel. Any Proceeds shall be applied in accordance with Clause 10.8 of
the Intercreditor Deed and any other amounts paid by the Borrowers in
satisfaction of the prepayment obligation shall be applied in accordance with
Clause 10.4.

 

10.4        On
the occurrence of any of the events referred to in Clause 10.3 in respect of
either Vessel the other prepayment amounts and amounts received by the Security
Trustee under Clause 10.8 of the Intercreditor Deed shall be paid by the
Security Trustee to the Paying Agent and applied by the Paying Agent as
follows -

 

FIRST: in payment of the Agent and/or, Paying Agent and/or the Security
Trustee and/or the Banks of all losses, costs, charges, fees (including without
limitation legal fees) including interest thereon that they may have incurred
in connection with the exercise of their powers under this Agreement and the
Security Documents;

 

SECOND:

 

(i)            if any such event occurs
prior to the repayment of the Pre-Delivery Facility Advance relating to such
Vessel, in mandatory prepayment of the Pre-Delivery Facility Advance relating
to such Vessel; and

 

(ii)          if any such event occurs after the repayment of the Pre-Delivery
Facility relating to such Vessel, in mandatory prepayment of the Repayment
Instalments and the Balloon Payment of all Post-Delivery Advances pursuant to
which such Vessel was financed on a pro rata basis and thereafter towards
payment of such part of the Master Agreement Liabilities as the Swap Agent may
require; and

 

THIRD: subject to no Event of Default or Potential Event of Default
having occurred, any balance shall be paid to the Borrowers.

 

The payments to the Security Trustee under
Clause 10.8 of the Intercreditor Deed shall be made (a) immediately upon
completion of any such sale or other disposal; or (b) within one 

 

41

 

hundred and eighty (180) days after the
occurrence of such Total Loss (or such longer period as the Agent and the
Security Trustee may agree).

 

10.5        For
the purposes of Clause 10.3 and 10.4 an actual Total Loss shall be deemed to
have occurred at the actual date and time the Vessel was lost but in the event
of the date of the loss being unknown then the actual Total Loss shall be
deemed to have occurred on the date on which such Vessel was last reported and
a constructive Total Loss shall be deemed to have occurred at the date and time
when notice of abandonment of the relevant Vessel is given to its Insurers for
the time being (provided a claim for such constructive Total Loss is admitted
by such Insurers) or is subsequently adjudged by a competent court of law or
arbitration tribunal to have occurred and a compromised, agreed or arranged
Total Loss shall be deemed to have occurred on the date of the relevant
compromise, agreement or arrangement.

 

10.6        The
Borrowers shall on the first written demand of the Agent indemnify the Agent,
the Paying Agent, the Security Trustee and the Banks in respect of all loss,
cost and expense (including but not limited to Broken Funding Costs and the
fees of legal advisers) incurred or sustained by the Agent, the Paying Agent,
the Security Trustee and/or the Banks as a consequence of or in relation to the
effecting of any matters or transactions referred to in this Clause 10.

 

10.7        Any
notice of prepayment given by the Borrowers under this Agreement shall be
irrevocable and the Borrowers shall be bound to prepay in accordance with each
such notice.

 

10.8        The
Borrowers may not prepay all or any part of a Facility except in accordance
with the express terms of this Agreement.

 

11           EARNINGS
ACCOUNTS

 

11.1        Each
of the Borrowers (without prejudice to the terms of the relevant Earnings
Account Charge and the relevant Charter Assignment Agreement) hereby agree that
all the Earnings relating to its Vessel shall be assigned to the Security
Trustee, and that all the relevant Borrower’s Earnings shall be paid into the
relevant Earnings Account which shall be charged to the Security Trustee by the
relevant Earnings Account Charges.

 

11.2        Unless and until the Security
Trustee gives notice to a Borrower that it requires that the relevant Earnings
to be paid directly to the Security Trustee (which notice may only be given in
accordance with the terms of the relevant Earnings Account Charge), all amounts
in the relevant Earnings Account shall be applied towards the payment of fees
and costs that are due and payable by the relevant Borrower to the Agent,
Paying Agent, 

 

42

 

Security Trustee and/or the Banks and any balance thereafter remaining
in the relevant Earnings Account shall be available to the relevant Borrower.

 

11.3        On each Repayment Date each Borrower
shall transfer from the relevant Earnings Account to the Paying Agent an amount
equal to the Repayment Instalment payable on that date by that Borrower and on
each Interest Payment Date each Borrower shall transfer from the relevant Earnings
Account to the Paying Agent an amount equal to the interest payable under
Clause 5 on that date by that Borrower.

 

12           REPAYMENT

 

12.1        Repayment
of the Pre-Delivery Facility

 

12.1.1    Advance A shall be fully repaid to the Banks by the
Borrowers in one amount in Dollars on the earlier of: (a) the Drawdown Date of
Advance C and (b) the Final Availability Date of the Post-Delivery Senior Facility.

 

12.1.2    Advance B shall be fully repaid to the Banks by the
Borrowers in one amount in Dollars on the earlier of (a) the Drawdown Date of
Advance D and (b) the Final Availability Date of the Post-Delivery Senior
Facility.

 

12.2        Repayment
of the Post-Delivery Senior Facility

 

12.2.1    Advance C shall be repaid to the Banks by the Borrowers by
forty (40) consecutive quarterly repayment instalments of US$375,000 each (“the
Advance C Repayment Instalment”) and a final payment equal to the outstanding balance of
Advance C (“the Advance C Balloon Payment”), payable together with the fortieth (40th) Advance C
Repayment Instalment, the first such Advance C Repayment Instalment being due
and payable three (3) months after the Advance C Drawdown Date and the succeeding
thirty-nine at quarterly intervals thereafter and Advance C shall be repaid in
full by the Advance C Maturity Date in any event.

 

12.2.2    Advance D shall be repaid to the Banks by the Borrowers by
forty (40) consecutive quarterly repayment instalments of US$375,000 each (“the
Advance D Repayment Instalment”) and a final payment equal to the outstanding balance of
Advance D (“the Advance D Balloon Payment”), payable together with the fortieth (40th) Advance D
Repayment Instalment, the first such Advance D Repayment Instalment being due
and payable three (3) months after the Advance D Drawdown Date and the
succeeding thirty-nine at quarterly intervals thereafter and Advance D shall be
repaid in full by the Advance D Maturity Date in any event.

 

43

 

12.2.3    The Paying Agent may require that any Post-Delivery Senior
Facility Repayment Instalment be due on a day otherwise than as provided in
Clauses 12.2.1 and 12.2.2 so that Advance C Repayment Instalments and Advance D
Repayment Instalment may be consolidated provided that nothing in this Clause
shall require the Borrowers to pay a Post-Delivery Senior Facility Repayment
Instalment earlier than provided in Clauses 12.2.1 and 12.2.2.

 

12.2.4    Where either of Advance C and Advance D has not been fully
drawn down at the Final Availability Date in respect thereof then the relevant
outstanding Repayment Instalments and Balloon Payments shall be reduced
proportionately by the relevant amount.

 

12.3        Repayment
of the Post-Delivery Junior Facility

 

12.3.1    Advance E shall be repaid to the Banks by the Borrowers by forty (40)
consecutive quarterly repayment instalments of US$125,000 each (“Advance E Repayment Instalment”) and a final payment equal to the outstanding balance of
Advance E (“the Advance E Balloon Payment”) payable together with the fortieth (40th) Advance E
Repayment Instalment, the first such Advance E Repayment Instalment being due
and payable three months after the Advance E Drawdown Date and the succeeding thirty-nine
at quarterly intervals thereafter and Advance E shall be repaid in full by the
Advance E Maturity Date in any event.

 

12.3.2    Advance F shall be repaid to the Banks by the Borrowers by forty (40)
consecutive quarterly repayment instalments of US$125,000 each (“Advance F Repayment Instalment”) and a final payment equal to the outstanding balance of
Advance F (“the Advance F Balloon Payment”) payable together with the fortieth (40th) Advance F
Repayment Instalment, the first such Advance F Repayment Instalment being due
and payable three months after the Advance F Drawdown Date and the succeeding
thirty-nine at quarterly intervals thereafter and Advance F shall be repaid in
full by the Advance F Maturity Date in any event.

 

12.3.3    The Paying Agent may require that any Post-Delivery Junior
Facility Repayment Instalment be due on a day otherwise than as provided in
Clauses 12.3.1 and 12.3.2 so that Advance E Repayment Instalments and Advance F
Repayment Instalment may be consolidated provided that nothing in this Clause
shall require the Borrowers to pay the a Post-Delivery Junior Facility
Repayment Instalment earlier than provided in Clauses 12.3.1 and 12.3.2.

 

12.3.4    Where either of Advance E and Advance F has not been fully
drawn down at the Final Availability Date then the relevant outstanding
Repayment Instalments and Balloon Payments shall be reduced proportionately by
the relevant amount.

 

12.4        Each repayment or prepayment of the Post-Delivery
Facilities or, as the case may be, any part thereof shall be made in the
currency in which the Post-Delivery Facilities or, as the case may be, the
relevant part thereof was outstanding on the relevant Repayment Date or, as the
case may be, the date of prepayment (in such proportions as between the
currencies in which the

 

44

 

Post-Delivery Facilities, is
denominated at the time of the relevant repayment or prepayment as the Tranche
or Tranches in the one currency bear to the Tranche or Tranches in the other
currency) and on the basis of the Spot Rate of Exchange applicable to such
Repayment Date or date of prepayment.

 

13           EVIDENCE
OF DEBT

 

The Paying Agent and each Bank shall
maintain in accordance with their usual practice accounts evidencing the
amounts from time to time lent and owing hereunder and in any legal action or
proceedings arising out of or in connection with this Agreement and/or the
Security Documents the entries made in such accounts shall be conclusive
evidence (absent manifest error) of the existence and the amounts of the
liabilities of the Borrowers hereunder and/or thereunder.

 

14           PAYMENTS

 

14.1        All
amounts payable under this Agreement and/or the Security Documents by the
Borrowers, including amounts payable under this Clause 14, shall be paid in
full to the Paying Agent on behalf of the Banks without set-off or counterclaim
or retention and free and clear of and without any deduction or withholding for
or on account of any Taxes or any charges or otherwise present or future. In
the event that the Borrowers are required by law to make any such deduction or
withholding from any payment hereunder, then the Borrowers shall forthwith pay
to the Paying Agent such additional amount as will result in the immediate
receipt by the Paying Agent of the full amount which would have been received
hereunder had no such deduction or withholding been made, but if any Bank shall
be or become entitled to any Tax credit or relief in respect of any Tax which
is deducted from any payment by the Borrowers and if that Bank in its sole
determination actually receives (and is entitled to retain) a benefit from such
Tax credit or relief in its country of domicile, incorporation or residence,
such Bank shall, subject to any laws or regulations applicable thereto, pay to
the Paying Agent for the benefit of the Borrowers after such benefit is
effectively received by such Bank such amounts (which shall be conclusively
certified by such Bank) as shall ensure that the net amount actually retained
by such Bank is equal to the amount which would have been retained if there had
been no such deduction and the Borrowers shall immediately forward to the
Paying Agent official receipts of the relevant taxation or other authority or
other evidence acceptable to the Paying Agent of the amount deducted or
withheld as aforesaid, provided that in the event that it shall be illegal for
the Borrowers to pay such additional amount as is referred to in this Clause
14.1 then the Indebtedness shall be repayable by the Borrowers to the Banks on
demand. Nothing in this Clause 14.1 shall interfere with the right of the
Paying Agent or the Banks to arrange their respective tax affairs in whatever
manner they think fit.

 

45

 

14.2        All
payments which are to be made in Dollars by the Borrowers under this Agreement
and/or the Security Documents shall be made in Dollars in immediately available
and freely transferable and convertible funds not later than 10.00 a.m. New
York time on the date upon which the relevant payment is due to such bank and
as the Paying Agent may from time to time nominate by written notice to the
Borrowers; and where payments are to be made in an Approved Currency then the
payment shall be made in such Approved Currency and in immediately available,
freely transferable, cleared funds to such account with such bank as the Paying
Agent may have specified for this purpose.

 

14.3        The
Borrowers authorise the Paying Agent and the Banks to apply any credit balance
to which the Borrowers are entitled on any account of the Borrowers with the
Paying Agent, or the relevant Bank (other than any account which will be opened
and administered hereunder) in satisfaction of any sum due and payable from the
Borrowers to the Paying Agent, or such Bank hereunder but unpaid; for this
purpose, the Paying Agent or such Bank is authorised to purchase with the
moneys standing to the credit of any such account such other currencies as may
be necessary to effect such application. Neither the Paying Agent nor any Bank
shall be obliged to exercise any right given to it by this Clause 14.3.

 

14.4        In
the event of a failure by the Borrowers to pay any amount on the date on which
such amount is due and payable pursuant to this Agreement and/or the Security
Documents and irrespective of any notice by the Paying Agent or any other
person to the Borrowers in respect of such failure, the Borrowers shall pay
interest on such amount on demand from the date of such failure up to the date
of actual payment (as well after as before judgment) at the applicable Default
Rate for such period as the Paying Agent may select at or about 11.00 a.m.
(London time) on the Business Day immediately following that on which the
Paying Agent becomes aware of the failure and, for so long as the failure continues,
at such rate as shall be recalculated on the same basis thereafter.

 

14.5        Any
interest which shall have accrued under Clause 14.4 in respect of an unpaid sum
shall be due and payable and shall be paid by the Borrowers at the end of the
period by reference to which it is calculated or such other date or dates as
the Paying Agent may specify by written notice to the Borrowers.

 

14.6        Without
prejudice to the foregoing and irrespective of any notice by the Paying Agent
or any other person to the Borrowers in respect of the Borrowers’ failure to
make any payment when due, the Borrowers shall indemnify the Paying Agent and
each Bank against any damages, losses or expenses (including losses incurred in
paying overdraft interest or in liquidating or employing deposits from third
parties acquired to make, fund or maintain the Commitment of each Bank or the
Facilities or any part thereof) which the Paying Agent and the Banks may
sustain or incur as a consequence of the failure by the 

 

46

 

Borrowers to
pay any amount when due and payable under this Agreement and/or the Security
Documents and/or as a consequence of the occurrence of any Event of Default.

 

14.7        The
Borrowers undertake to indemnify the Agent, the Paying Agent, the Security
Trustee and the Banks against any loss incurred by the Agent, the Paying Agent,
the Security Trustee and the Banks as a result of any judgment or order being
given or made for the payment of any amount due under this Agreement and/or the
Security Documents and such judgment or order being expressed in a currency
other than that in which the payment was due or payable under this Agreement
and/or the Security Documents and as a result of any variation having occurred
in rates of exchange between the date on which the currency is converted for
the purpose of such judgment or order and the date of actual payment thereof. This
indemnity shall constitute a separate and independent liability of the
Borrowers and shall continue in force and effect notwithstanding any such
judgment or order as aforesaid.

 

14.8        Any
prepayment or repayment of principal made or deemed to be made under this
Agreement shall, if made otherwise than at the end of an Interest Period
relative to the amounts prepaid or repaid, be made together with accrued
interest thereon and such additional amount (if any) as the Paying Agent may
certify as necessary to compensate the Banks for any damages or losses, as the
case may be, incurred or to be incurred by the Banks in connection with such
prepayment or repayment (including but not limited to loss of profit and losses
on account of funds borrowed in order to make, fund or maintain the Commitment
or the Facilities or any part thereof prepaid or repaid).

 

14.9        If the Borrowers give a Notice of Drawdown pursuant to Clause 4 and
the Banks make arrangements on the basis of such notice to acquire the Relevant
Currency in the London or Luxembourg Interbank Eurocurrency Market to fund any
one or more of the Facilities or any part of them and the Borrowers are not
permitted or otherwise fail to borrow in accordance with such Notice of
Drawdown (either on account of any condition precedent not being fulfilled or
otherwise) the Borrowers shall indemnify the Banks against any damages, losses
or expenses which the Banks may incur (either directly or indirectly) as a
consequence of the failure by the Borrowers to borrow in accordance with the
Notice of Drawdown.

 

15           CHANGE
OF CIRCUMSTANCES

 

15.1        If -

 

15.1.1    any law,
regulation, treaty or official directive (whether or not having the force of
law) or the interpretation thereof by any authority charged with the
administration thereof  (of which the Banks at the date of execution of
this Agreement are not aware):

 

47

 

(a)           subjects
any Bank to any Tax with respect to payments of principal or interest in
connection with the Facilities or any other amount payable hereunder (other
than Tax assessed, levied or collected on the overall net income of such Bank);
or

 

(b)           changes
the basis of Taxation of payments to any Bank of principal or interest in
connection with the Facilities or of any other amount payable hereunder (other
than a change in the rate of Tax on the overall net income of such Bank); or

 

(c)           imposes,
modifies or deems applicable any reserve and/or special deposit requirements
against or in respect of assets or liabilities of, or deposits with or for the
account of, or loans or credit extended by, any office of any Bank; or

 

(d)           imposes
on any Bank
any other condition affecting this Agreement, its Commitment or the Facilities
or any part thereof or their funding; or

 

15.1.2    any Bank
complies with any request, law, regulation or directive from any applicable
fiscal or monetary authority (whether or not having the force of law), and as a
result of any of the foregoing either directly or indirectly -

 

(a)           the
cost to any Bank of making, funding or maintaining its Commitment in respect of
the Facilities or any of them is increased; or

 

(b)           the
amount of principal, interest or other amount payable to any Bank or the
effective return to such Bank hereunder is reduced; or

 

(c)           any
Bank makes any payment or losses any interest or other return calculated by
reference to the gross amount of any sum receivable by it from the Borrowers
hereunder,

 

then and in each such case upon demand from
time to time the Borrowers shall pay to the Paying Agent for account of the
relevant Bank such amount as shall compensate the relevant Bank for such
increased cost, reduction, payment or lost interest or other return. If the
Bank is entitled to make a claim pursuant to this Clause 15, the Agent shall
notify the Borrowers of the event by reason of which they are so entitled. The
Agent shall submit to the Borrowers a certificate setting out details of the
event giving rise to such compensation, the amount thereof and the manner in
which it has been calculated and in the absence of manifest error such
certificate shall be conclusive.

 

15.2        If
any amount payable by the Borrowers hereunder and/or under the Security
Documents whether in respect of principal, interest or otherwise or any
recipient of any such amount by reason of its receiving such amount is or
becomes subject at any time to Taxation in the United Kingdom, the Federal Republic
of Germany or the Grand Duchy of 

 

48

 

Luxembourg,
the Republic of Liberia, the Republic of Cyprus, or the Republic of Greece, the
Borrowers will indemnify any such recipient of such amount in respect of such
Tax liability so that such recipient receives or retains a net sum equal to the
amount it would have received or retained had there been no such Tax liability
but if such recipient shall be or becomes entitled to any Tax credit or relief
in respect of any such Tax liability or deduction and if the recipient in its
sole determination actually receives (and is entitled to retain) a benefit from
such Tax credit or relief in its country of domicile, incorporation or
residence, that recipient shall, subject to any laws or regulations applicable
thereto, pay to the Borrowers after such benefit is effectively received by
that recipient such amount (which shall be conclusively certified by that
recipient) as shall ensure that the net amount actually retained by that
recipient is equal to the amount which would have been retained if there had
been no such liability or deduction. In addition the Borrowers shall indemnify
the Bank and each recipient of any sum payable by the Borrowers under this
Agreement and/or under the Security Documents against any liability for Taxes
in the United Kingdom, the Federal Republic of Germany or the Republic of
Cyprus or the Republic of Greece, imposed on any of them or on any agent,
branch, employee, representative or representative office of any of them by
virtue of the negotiation, preparation or execution of this Agreement and/or
the Security Documents, the performance of any duty or discharge of any
liability hereunder and/or under the Security Documents or the receipt of any
payment hereunder and/or under the Security Documents. Nothing in this Clause
15.2 shall interfere with the right of the Agent, Paying Agent, Security
Trustee or the Banks to arrange their respective tax affairs in whatever manner
they think fit.

 

15.3        Notwithstanding
anything to the contrary herein contained, if any change in law, regulation or
treaty or in the interpretation or application thereof by any authority charged
with the administration thereof shall make it unlawful for the Paying Agent or
the Banks to make, fund or maintain the Commitment of each Bank or the
Facilities the Agent may, by written notice thereof to the Borrowers, declare
that the Bank’s duty to provide the Borrowers with the Commitment or the
Facilities shall be terminated forthwith whereupon the Borrowers will prepay
forthwith (or if permitted by law on the next following Interest Payment Date)
the Facilities together with all interest accrued thereon and all fees and
other amounts payable to the Banks hereunder (including, but not limited to,
Broken Funding Costs). The Banks’ duties and liabilities hereunder and their
Commitment shall be cancelled on the giving of such notice. In any such event,
but without prejudice to the aforesaid liability of the Borrowers to prepay the
Facilities, the Borrowers, the Agent and the Banks shall negotiate in good
faith with a view to agreeing the terms for making the Facilities available
from another jurisdiction, or funding the Facilities from alternative sources,
or otherwise restructuring the Facilities on a basis which is not unlawful. If
the said terms are not agreed within thirty (30) days then the negotiations
shall forthwith terminate.

 

49

 

16           REPRESENTATIONS
AND WARRANTIES

 

16.1        The
Borrowers hereby jointly and severally represent and warrant to each other
party of this Agreement that -

 

16.1.1    each
Borrower is a corporation duly formed and validly existing under the laws of
the Republic of Liberia and has the power and authority to own its assets and
carry on business in each jurisdiction in which it owns assets or carries on
business.

 

16.1.2    each
Borrower has the power to enter into this Agreement and into the Security
Documents to which it is a party and to perform and discharge its duties and
liabilities hereunder and thereunder and to borrow hereunder and it has taken
all necessary action (whether corporate or otherwise) required to authorise the
execution, delivery and performance of this Agreement and such Security
Documents and the borrowings to be made hereunder;

 

16.1.3    the
execution, delivery and performance of this Agreement and the Security
Documents, to which the Borrowers are a party, will not violate or exceed the
powers granted to the Borrowers by, or any provision of, any law or regulation
in any jurisdiction to which the Borrowers are subject, any order or decree of
any governmental agency or court of or in any jurisdiction to which the
Borrowers are subject, the articles of incorporation and by-laws of the
Borrowers or any mortgage, deed, contract or agreement to which the Borrowers
are a party and which is binding upon the Borrowers or their assets, and will
not cause any Encumbrance to arise over or attach to all or any part of its
revenues or assets nor require the Borrowers to create any such Encumbrance
other than any Encumbrance to be created hereunder;

 

16.1.4    all
consents, licences, approvals, registrations, authorisations or declarations
(including, without limitation, all foreign exchange approvals) in any
jurisdiction to which the Borrowers are subject required to enable the
Borrowers to borrow hereunder and lawfully to enter into and perform and
discharge their duties and liabilities under this Agreement and the Subject
Documents, to ensure that the duties and liabilities of the Borrowers hereunder
and thereunder are legal, valid and enforceable in accordance with the terms of
this Agreement and the terms of the Subject Documents respectively and to make
this Agreement and the Subject Documents admissible in evidence in such
aforesaid jurisdictions, have been obtained or made and are in full force and
effect;

 

16.1.5    this
Agreement and each of the Subject Documents, to which the Borrowers are a
party, constitute the legal, valid, binding and unconditional duties and
liabilities of the Borrowers, enforceable against the Borrowers in accordance
with the terms thereof save as provided by any bankruptcy, insolvency or
similar laws of general application;

 

50

 

16.1.6    no
Borrower has failed to pay when due any material amount or to perform any
material duty under the provisions of any agreement relating to indebtedness to
which it is a party or by which it may be bound and no event has occurred and
is continuing which constitutes, or which with the giving of notice or lapse of
time or both would constitute, a material breach or default by the Borrowers
under any such agreement;

 

16.1.7    no
litigation or administrative proceedings before or of any court, arbitration
tribunal or governmental authority are pending or, to the knowledge of the
Borrowers, is threatened against any of the Borrowers or their assets which
might have a material adverse effect on the business, assets or financial
condition of any Borrower or the Borrowers’ ability to perform and discharge
their duties and liabilities hereunder and under the Security Documents to
which they are a party;

 

16.1.8    the
Financial Statements are complete and correct and present fairly the position
of the Group and Danaos Shipping Co. Ltd respectively as of such date and the
results of the operations of the Group ended on such date, and have been
prepared in accordance with the Applicable Accounting Principles consistently
applied and give a true and fair view of the financial condition, assets and
liabilities of the Group and Danaos Shipping Co. Ltd respectively at the date
to which such Financial Statements have been prepared and since that date there
has been no adverse change in the financial conditions of the business, assets
or operation of the Group, taken as a whole, which may have a material adverse
affect on the Group’s ability to comply with their respective duties hereunder;

 

16.1.9    the
information provided to the Agent in relation to this transaction is true and
correct in all material respects and does not omit any information necessary to
make any of the information so provided not misleading;

 

16.1.10  it is not
necessary or advisable to ensure the legality, validity, enforceability or
admissibility in evidence of this Agreement and the Security Documents (with
the exception of the Mortgages and the Deeds of General Assignment) that any of
them be filed, recorded or enrolled with any governmental authority or agency or
that they be stamped with any stamp, registration or similar transaction tax;

 

16.2        The
Borrowers hereby further represent and warrant to the Banks that on the
Drawdown Date for each Post-Delivery Advance and with reference to the Vessel
to be delivered on that day -

 

16.2.1    such
Vessel will have been unconditionally delivered by Samsung and accepted by the
relevant Owner pursuant to the relevant Shipbuilding Contract and the full
amount of the delivery instalment payable under the relevant Shipbuilding Contract
(including any amount in addition to the part thereof to be financed by way of
the relevant Advance) will have been duly paid to Samsung;

 

51

 

16.2.2    such
Vessel will be duly registered in the name of the relevant Owner under a flag
acceptable to the Banks;

 

16.2.3    such
Vessel will be in the absolute and unencumbered ownership of the relevant Owner
subject only to the relevant Declaration of Trust and Permitted Encumbrances
save as contemplated by this Agreement and the Security Documents;

 

16.2.4    such
Vessel will have been unconditionally delivered by the relevant Owner to the
Bareboat Charterer and accepted by the Bareboat Charterer under the Bareboat
Charter;

 

16.2.5    such
Vessel will have been unconditionally delivered by the Bareboat Charterer to
the relevant Borrower and accepted by the relevant Borrower under the AML Time
Charter;

 

16.2.6    such
Vessel will have been unconditionally delivered by the relevant Borrower to the
Charterer and accepted by the Charterer under the Charter;

 

16.2.7    such
Vessel will maintain the class 1A1 ‘Container Vessel’ with the Classification
Society free of all recommendations and qualifications of the Classification
Society;

 

16.2.8    such
Vessel will be operationally seaworthy;

 

16.2.9    such
Vessel will comply with all relevant laws, regulations and requirements
(statutory or otherwise), including without limitation, the ISM Code, the ISPS
Code, the ISM Code Documentation and the ISPS Code Documentation as is
applicable to (i) ships registered under the law of the flag it will be flying
and (ii) engaged in the same or a similar service as such Vessel is or is to be
engaged;

 

16.2.10  the
relevant Mortgage will have been duly recorded against such Vessel as a valid
first priority ship mortgage in accordance with the laws of its flag;

 

16.2.11  such Vessel
will be insured in accordance with the provisions of the relevant Mortgage and
this Agreement in respect of Insurances will have been complied with;

 

16.2.12  such Vessel
will be managed by the Manager under the terms of the Approved Management
Agreement, relating thereto;

 

16.2.13  the
Bareboat Charterer, the Manager and the relevant Owner shall have complied with
the provisions of all Environmental Laws in respect of such Vessel;

 

16.2.14  the
Bareboat Charterer, the Manager and the relevant Owner shall have obtained all
Environmental Approvals and are in compliance with all such Environmental
Approvals in respect of such Vessel;

 

52

 

16.2.15  the
Bareboat Charterer, the Manager and the relevant Owner shall have not received
notice of any Environmental Claim that alleges that any of the Bareboat
Charterer, the Manager or the Owners is not in compliance with any
Environmental Law or any Environmental Approval in respect of the Vessels or
either of them;

 

16.2.16  there shall
be no Environmental Claim pending against the Bareboat Charterer, the Manager
or the relevant Owner and/or the relevant Vessel; and

 

16.2.17  no
Environmental Incident shall have occurred which could or might give rise to
any Environmental Claim against the Bareboat Charterer, the Manager or the
relevant Owner and/or the relevant Vessel.

 

16.3        The
Borrowers further jointly and severally represent, warrant and confirm to each
other party of this Agreement that:

 

16.3.1    they are
the beneficiaries (within the meaning of Section 8 of the Germany Money
Laundering Act) (Gesetz über das Aufspüren von Gewinnen aus schweren Straftaten
(Geldwäschegesetz)) of each part of the Facilities to be made available to them
hereunder; and

 

16.3.2    they will
promptly inform the Banks (by written notice to the Agent) if they or either of
them is not, or ceases to be, such beneficiary(ies) and will then set down in
writing the name(s) and the address(es) of the relevant beneficiary(ies).

 

16.4        The
representations and warranties of the Borrowers insofar as they relate to the
Borrowers set out in Clause 16.1, 16.2 and 16.3 above shall survive the
execution of this Agreement and shall be deemed to be repeated on each Drawdown
Date and each Repayment Date with respect to the facts and circumstances
existing at each such time as if made at such time and the representations and
warranties insofar as the relate to any other party set out in Clause 16.1, 16.2
and 16.3 above shall survive the execution of this Agreement and shall be
deemed to be repeated on each Drawdown Date with respect to the facts and
circumstances existing at each such time as if made at such time.

 

17           SECURITIES

 

17.1        The
Borrowers hereby agree that the Security Documents shall secure the due payment
of the Indebtedness.

 

17.2        It is
agreed that the Facilities together with interest, costs and all other amounts
due hereunder and all Master Agreement Liabilities shall be secured with first
priority under the Security Documents.

 

53

 

18           CONDITIONS
PRECEDENT

 

18.1        The
obligation of the Banks to make any Advance under the Pre-Delivery Facility
available to the Borrowers shall be subject to the condition that the Agent and
the Security Trustee shall have received the following documents and evidence
in all respects in form and substance satisfactory to the Agent and the
Security Trustee and their legal advisers on or before the date on which a Notice
of Drawdown of the first Advance of the Pre-Delivery Facility is sent by the
Borrowers -

 

(a)           copies
of the Articles of Incorporation and by-laws (or equivalent documents) (and all
amendments thereto) of each of the Borrowers any other documents required to be
filed or registered or issued under the laws of the Republic of Liberia to
establish the incorporation or good standing of each of the Borrowers under the
laws of the Republic of Liberia;

 

(b)           copies
of resolutions passed at separate meetings of the board of directors and
shareholders of each of the Borrowers evidencing approval of such of this
Agreement, the Shipbuilding Contracts and the Subject Documents to which each
is a party and authorising appropriate officers or attorneys to execute the same
and to sign all notices required to be given hereunder or thereunder on its
behalf or other evidence of such approvals and authorisations as shall be
acceptable to the Agent and the Security Trustee;

 

(c)           the
original of any power of attorney issued in favour of any person executing this
Agreement or any of the Subject Documents related to the Pre-Delivery Facility
on behalf of each of the Borrowers;

 

(d)           evidence
that the Earnings Account of each relevant Borrower have been duly opened by
each relevant Borrower and that all board resolutions, mandates, signature
cards and other documents or evidence required in connection with the opening,
maintenance and operation of such Accounts have been duly delivered to the
Paying Agent;

 

(e)           a
list specifying the directors and officers of each of the Borrowers (together
with their specimen signatures) and specifying the authorised and issued share
capital of each of the Borrowers;

 

(f)            copies
of all governmental and other consents, licences, approvals and authorisations
as may be necessary to authorise the performance by the Borrowers of their
respective obligations under those of this Agreement, the Shipbuilding
Contracts and the Subject Documents related to the Pre-Delivery Facility to
which each is a party and the 

 

54

 

execution,
validity and enforceability of this Agreement, the Shipbuilding Contracts and
the Subject Documents related to the Pre-Delivery Facility;

 

(g)           all
the Subject Documents duly executed and delivered by the parties thereto
together with all other items and documents required to be delivered pursuant
to the terms thereof,

 

(h)           certified
copies of the Shipbuilding Contracts and the originals of each of the Refund
Guarantees together with such evidence as the Agent or the Security Trustee and
its legal advisers reasonably shall require in relation to the due
authorisation and execution by Samsung of the Shipbuilding Contracts and all
documents to be executed by Samsung pursuant thereto and by the Refund
Guarantors of the Refund Guarantees;

 

(i)            evidence
that the Manager has been appointed as technical supervisor under the
Shipbuilding Contracts and has accepted its appointment;

 

(j)            evidence
that the agent for service of process named in Clause 38 has accepted its
appointment for the purposes of this Agreement and the Subject Documents;

 

(k)           favourable
legal opinions from lawyers appointed by the Agent and the Security Trustee on
such matters concerning the laws of Liberia, Greece, Cyprus, England, and Korea
in relation to or in connection with this Agreement, the Subject Documents, or
any of them;

 

(l)            evidence
that the Paying Agent has received the arrangement fee referred to in Clause
26.1 and all accrued fees payable pursuant to Clause 26.2;

 

(m)          evidence
that an amount equal to the amount of each relevant Advance is due and payable
or it has been paid by the relevant Borrower under the relevant Shipbuilding
Contract; and

 

(n)           evidence
that any amount to be paid in respect of the Second Pre-Delivery Instalment
under the relevant Shipbuilding Contract other than the proceed of the relevant
Advance has been paid by the relevant Borrower.

 

18.2        Each
of the documents specified in sub-clauses (a), (b), (d) and (e) above shall be
certified as a true and up-to-date copy by a Director or Secretary (or
equivalent officer) or legal counsel of the relevant Borrower.

 

18.3        The
obligation of the Banks to make any Post-Delivery Advance to the Borrowers
shall be subject to the condition that the Agent and the Security Trustee shall
have received 

 

55

 

the following
documents and evidence relating to the Vessel to be delivered on such day in
all respects in form and substance satisfactory to the Agent and the Security
Trustee and their legal advisers on or before the relevant Drawdown Date -

 

18.3.1    the
Security Documents relating to the relevant Borrower and the relevant Vessel
duly executed and delivered by the parties thereto together with all other
items and documents required to be delivered pursuant to the terms thereof,
including (but without limitation) insurance notices of assignment,
acknowledgements and letters of undertaking pursuant to the Security Documents
relating to such Vessel;

 

18.3.2    each
Earnings Account Charge, each General Assignment, each Charter Assignment
Agreement, each Intercreditor Deed, each Second Priority Deposit Account
Charge; each Deed of Counter-Indemnity, each Put Option Agreement, each
Declaration of Trust, duly executed and delivered by the parties thereto
together with all other items and documents required to be delivered pursuant
to the terms thereof, including (but without limitation) notices of assignment,
acknowledgements and letters of undertaking pursuant to such documents;

 

18.3.3    evidence
that -

 

(a)           the
relevant Vessel has been unconditionally delivered by Samsung to, and accepted
by, the relevant Owner pursuant to the relevant Shipbuilding Contract together
with evidence that the full amount of the delivery instalment payable under
such Shipbuilding Contract (including any amount in addition to the part
thereof to be financed by way of the relevant Advance) has been duly paid;

 

(b)           the
relevant Vessel is duly registered in the name of the relevant Owner under a
flag approved by the Banks;

 

(c)           the
relevant Vessel is in the absolute and unencumbered ownership of the relevant
Owner, subject only to the relevant Declaration of Trust and Permitted
Encumbrances, save as contemplated by this Agreement and the relevant Subject
Documents;

 

(d)           the
relevant Vessel has been unconditionally delivered by the relevant Owner to the
Bareboat Charterer and accepted by the Bareboat Charterer under the Bareboat
Charter;

 

(e)           the
relevant Vessel has been unconditionally delivered by the Bareboat Charterer to
the relevant Borrower and accepted by the relevant Borrower under the AML Time
Charter;

 

56

 

(f)            the
relevant Vessel has been unconditionally delivered by the relevant Borrower to
the Charterer and accepted by the Charterer under the Charter;

 

(g)           the
relevant Vessel maintains the class 1A1 “Container Vessel” with the
Classification Society free of all recommendations and qualifications of the
Classification Society (other than those which have been or are being complied
with in accordance with their terms and which are not by their terms overdue
for compliance);

 

(h)           the
relevant Mortgage has been duly recorded against the relevant Vessel as a valid
first priority ship mortgage in accordance with the laws of the flag its is
flying; and

 

(i)            the
relevant Vessel is insured in accordance with this Agreement and that all
requirements therein in respect of Insurances have been complied with;

 

18.3.4    letters
from the relevant Owner to the protection and indemnity association in which
the relevant Vessel is or is to be entered instructing them to provide the
Security Trustee with a copy of the certificate of entry of such Vessel and any
other information relating to the entry of such Vessel in such protection and
indemnity association;

 

18.3.5    such
further favourable legal opinions from lawyers appointed by the Agent and the
Security Trustee on such matters concerning the laws of England, Liberia,
Cyprus and Korea as the Agent and the Security Trustee may require; and

 

18.3.6    evidence
of payment to Samsung of all amounts due by the relevant Owner (other than
amounts financed pursuant to this Agreement) in respect of each Shipbuilding
Contract;

 

18.3.7    the
statement of Additional Construction Expenses;

 

18.3.8    evidence
that at the time of the drawdown of the Advances of the Post-Delivery Senior
Facility and the Post-Delivery Junior Facility related to a Vessel, the
aggregate of all such Advances made shall not exceed the lower of (i) Thirty
million Dollars (US$ 30,000,000) and (ii) eighty per cent (80%) of the Total
Construction Cost of such Vessel;

 

18.3.9    copies of
the provisional DOC and the provisional SMC issued pursuant to the ISM Code in
respect of the relevant Vessel with full copies of such documents to be
provided as soon as practicable after the relevant Delivery Date and in any
event within 6 months of the relevant Delivery Date;

 

18.3.10  copies of
all documents issued pursuant to the ISPS Code, including without limitation a
valid International Ship Security Certificate (ISSC);

 

57

 

18.3.11  copies of
the Subject Documents;

 

18.3.12  evidence
satisfactory to the Security Trustee that immediately after the delivery of the
relevant Vessel, the relevant Deposit Account shall each have adequate funds
standing to its credit to satisfy the Loan to Value Ratio;

 

18.3.13  evidence
satisfactory to the Security Trustee that the relevant Earnings Account has
been opened and that an amount equal to at least US$1 is deposited in that account.

 

18.3.14  a
favourable opinion from an independent insurance consultant acceptable to the
Agent and the Security Trustee on such matters relating to the Insurances for
the Vessels as the Agent and the Security Trustee may require and evidence
satisfactory to the Security Trustee that such Insurances are in place;

 

18.4        The
obligation of the Banks to make any Advance is subject to the following further
conditions -

 

18.4.1    that both
at the date of the relevant Notice of Drawdown and on the relevant Drawdown
Date -

 

(a)           no
Event of Default or Potential Event of Default has occurred and is continuing
or might result from the making of the relevant Advance; and

 

(b)           the
representations and warranties of the Borrowers in Clause 16 and the representations
and warranties of the Borrowers and other parties to the Subject Documents set
out in the Subject Documents are true and accurate as of each such date, as if
made on each such date with reference to the facts then subsisting; and

 

(c)           none
of the circumstances specified in Clause 23 (Events of Default) has occurred
and is continuing.

 

18.4.2    the Agent
and the Security Trustee have received, and found to be satisfactory to them in
all respects, such further opinions, consents, agreements and documents in
connection with this Agreement and the Subject Documents as the Agent and the
Security Trustee may request by notice to the Borrowers prior to such Drawdown
Date.

 

19           MAINTENANCE
OF SECURITY

 

19.1        If
the Agent and the Security Trustee reasonably require, at any time and from
time to time (but not more often than every six (6) months), the Vessels shall
be valued in Dollars by a firm of shipbrokers chosen from Maersk Brokers K/S or
Howe Robinson or Menz Decker (or such other firm of shipbrokers as approved by
the Agent) nominated by 

 

58

 

the Borrowers
such valuations to be made without physical inspection (unless otherwise
required by the Agent), and on the basis of an arm’s-length purchase by a willing
buyer from a willing seller and without taking into account any charterparty. The
fees of the firm of shipbrokers appointed to give such valuation and all other
costs arising in connection with the obtaining of any such valuations shall be
paid by the Borrowers.

 

19.2        If at
any time after the delivery of Newbuilding B or after the expiry of the
Availability Period applicable to the Post-Delivery Advances the aggregate of (i) the values of the Vessels then subject to a Mortgage
determined pursuant to Clause 19.1 plus (ii) the value
of any additional security (valued in accordance with normal banking practice)
previously provided to the Security Trustee pursuant to this Clause, is less
than one hundred and twenty percent (120%) of the aggregate of (a) the part of
the Facilities denominated in Dollars, plus (b) 
the aggregate Currency Equivalent in Dollars at the time of all Currency
Tranches plus (iii) the net sum which the Swap
Agent certifies would then be payable by the Borrowers if an Early Termination Date
in respect of all Forward F/X Contracts were then to occur, plus (iv) any other sums which the Swap Agent certifies would
then be payable under the Master Agreement (the “Loan to
Value Ratio”), then the Borrowers shall within ten (10) Business
Days of receipt of a notice from the Agent advising the Borrowers of the amount
of such deficiency (which notice shall be conclusive)  either (a) provide to the Security Trustee
additional security (valued in accordance with normal banking practice) which
shall in all respects be satisfactory to the Agent and the Security Trustee
(after consultation with the Banks) which additional security shall take such
form, be constituted by such documentation and be entered into between such
parties as the Agent may approve or require or (b) prepay forthwith such part
of the Indebtedness as will ensure that the security coverage ratio of one
hundred and twenty percent (120%) calculated in the manner described above is
reinstated.

 

20           FINANCIAL
AND OTHER INFORMATION

 

20.1        The Borrowers
undertake to supply the Agent with sufficient copies of -

 

20.1.1    within
one hundred and eighty (180) days of the end of each fiscal year, the Financial
Statements, starting with the 2001 Financial Statements, of the Borrowers and
Danaos Shipping Co. Ltd prepared in accordance with Applicable Accounting
Principles;

 

20.1.2    such
other information with regard to the business, properties or condition,
financial or otherwise, of the Borrowers as the Agent may from time to time
reasonably request.

 

20.2        The
Borrowers undertake to permit or procure the permission for the Agent to
inspect at reasonable times and take copies of all resolutions and decisions of
the Borrowers and all books of accounts and business records of the Borrowers
and all documents relating to 

 

59

 

the Vessels
and to permit the Agent by itself or by its agents) to audit the books of
account of the Borrowers at the Borrowers’ cost and expense.

 

20.3        The
Borrowers undertake that they will obtain promptly at any time and from time to
time such registrations, licenses, consents and approvals as may be required in
respect of this Agreement and the Security Documents under any applicable law
or regulation to enable them to perform their duties hereunder and thereunder
and promptly supply the Agent and the Security Trustee with copies thereof.

 

20.4        The
Borrowers hereby irrevocably -

 

20.4.1    agree and
shall procure that the Owners and the Bareboat Charterer agree that the Agent
and the Security Trustee, or their authorised representatives may, without
prior notification, communicate directly with the Classification Society
concerning maintenance, repair, classification and seaworthiness of the
Vessels, and to the same extent with any regulatory authority having
jurisdiction over the Vessels;

 

20.4.2    undertake
to unconditionally authorise, or to procure the unconditional authorisation of
the Classification Society or regulatory authority, at the request of the Agent
and the Security Trustee, to give information to them, or their authorised
representatives and to conduct inspections and surveys of the Vessels, as if
requested by the Borrowers;

 

provided that the Agent and the Security
Trustee will not, without prior consultation with the Borrowers, take any
action under this Clause 20.4 unless an Event of Default or Potential Event of
Default has occurred.

 

21           UNDERTAKINGS

 

21.1        The
Borrowers hereby undertake with the Agent and the Security Trustee and the
Banks that throughout the Security Period the Borrowers shall or shall, where
relevant, procure that the Owners or as the case may be, the Bareboat Charterer
shall -

 

21.1.1    maintain
the corporate existence of the Borrowers under the laws of the Republic of
Liberia and comply with all relevant legislation applicable to them;

 

21.1.2    not
appoint a manager of the Vessels other than the Manager;

 

21.1.3    execute
any further document required by the Security Trustee in order to perfect or
complete the security created by the Security Documents;

 

21.1.4    promptly
notify the Agent in writing of any Event of Default or any Potential Event of
Default;

 

60

 

21.1.5    promptly
inform the Agent of any occurrence of which they become aware which might
adversely affect their ability to perform and discharge their duties and
liabilities under this Agreement and/or the Subject Documents;

 

21.1.6    not,
without the prior written consent of the Agent and the Security Trustee,
dissolve, merge into or consolidate with any other company or partnership;

 

21.1.7    not
amend, modify, vary or supplement or terminate or agree to any amendment,
modification, variation or supplement or cancellation of any of the
Shipbuilding Contracts, Refund Guarantees, Approved Management Agreements,
Charters, Bareboat Charters, AML Time Charters, Novation Agreements,
Declarations of Trust or the Put Option Agreements;

 

21.1.8    not
engage in any business or activity, apart from the ownership and operation of
the Vessels and activities ancillary thereto as permitted by this Agreement and
the Security Documents;

 

21.1.9    ensure
that at all times the claims of the Agent, Paying Agent, Security Trustee, the
Banks and the Swap Agent against them under this Agreement and/or the Security
Documents rank at least pari passu with the claims of all their other unsecured
creditors save those whose claims are preferred by any bankruptcy, insolvency
or other similar laws of general application;

 

21.1.10  not make
any advances, grant any credit (save in the routine course of their day-to-day
business) or give any guarantee or indemnity to or for the benefit of any
person or otherwise voluntarily assume any liability, whether actual or
contingent, in respect of any obligations of any person without the express
written consent of the Agent and the Security Trustee (such consent not to be
unreasonably withheld);

 

21.1.11  not issue
any further shares or alter any rights attaching to their issued shares in
existence at the date of this Agreement;

 

21.1.12  not sell,
lease, transfer or otherwise dispose of, by one or more transactions or series
of transactions (whether related or not), the whole or any part of their other
assets;

 

21.1.13  save in the
ordinary course of business, not incur any indebtedness other than the
Facilities without the prior written consent of the Agent and the Security
Trustee (such consent not to be unreasonably withheld);

 

21.1.14  not amend
their memorandum and articles of association or other constitutional documents;

 

21.1.15  procure
that the respective Vessels are kept registered under the laws of such register
as the Agent and the Security Trustee may approve in writing such approval not
to be unreasonably 

 

61

 

withheld and
not do or suffer to be done anything whereby the registration may be forfeited
or imperilled;

 

21.1.16  not, save
as contemplated in the Security Documents, the Declarations of Trust, create,
incur or permit to subsist any Encumbrance over the Vessels, the Earnings or
the Insurances or all or any of the present or future assets of the Borrowers
(other than any Permitted Encumbrance) which shall be promptly discharged or if
disputed shall be diligently contested;

 

21.1.17  not at any
time represent to a third party that the Agent and/or the Security Trustee
and/or the Banks are carrying cargo in the Vessels or are in any way connected
or associated with an operation or carriage being undertaken by them or have
any operational interest in the Vessels;

 

21.1.18  not,
without the prior written consent of the Agent and the Security Trustee, voyage
or time charter the Vessels or place them under contract for employment (a) for
any period which when aggregated with any optional periods of extension
contained in the said charter or contract, would exceed thirteen (13) months or
(b) at a charter rate which is below the market rate at the time of the charter
fixture other than the AML Charters, the Bareboat Charters and the Charters;

 

21.1.19  not without
the prior written consent of the Agent and the Security Trustee demise charter
the Vessels for any period whatsoever other than pursuant to the Bareboat
Charter;

 

21.1.20  not without
the prior written consent of the Agent put the Vessels into the possession of
any person for the purpose of work being done upon her in an amount exceeding
or likely to exceed US$1,000,000 (or the equivalent in any other currency)
unless the Borrowers shall have satisfied the Agent that the cost of such work
is fully recoverable under the Insurances (save for any applicable deductible)
or such person shall first have given to the Agent and in terms satisfactory to
it a written undertaking not to exercise any lien on the Vessels or her
Earnings or Insurances for the cost of such work or otherwise;

 

21.1.21  give the
Agent reasonable prior notice of any dry-docking of the Vessels so that the
Agent (if it so requires) can arrange for a representative to be present;

 

21.1.22  notify the
Agent of any intended laying-up or de-activation of the Vessels;

 

21.1.23  authorise
the Classification Society and all other regulatory authorities to disclose to
the Agent and the Security Trustee after the occurrence of an Event of Default
or Potential Event of Default any information or documents requested by the
Agent and the Security Trustee relating to the classification, repair,
maintenance or seaworthiness of the Vessels;

 

62

 

21.1.24  ensure
copies of the following certificates have been received by the Agent if so
requested by the Agent: the Class Annual and Intermediate, Remote Control
Systems Classification, Machinery Classification, Hull Classification, Cargo
Gear Annual, Loadline Annual, Safety Construction Annual and Safety Equipment
Annual Certificate, Safety Radio Equipment Annual, Safe Manning Certificate,
Oil Pollution Certificate, Certificate of Financial Responsibility,
Confirmation of Vessel Response Plan and International Tonnage Certificate;

 

21.1.25  provide the
Agent with copies of the SMC, the DOC and the ISSC duly issued to the Bareboat
Charterer, and the Vessels pursuant to the ISM Code and the ISPS Code
respectively;

 

21.1.26  keep, or
procure that there is kept, on board the Vessels a copy of all relevant ISM
Code Documentation and ISPS Code Documentation;

 

21.1.27  as soon as
any Borrower becomes aware inform the Agent immediately should the DOC and/or
the SMC and/or the ISSC be cancelled, rescinded, suspended or amended in any
way;

 

21.1.28  notify the
Agent promptly upon being made aware thereof upon the occurrence of-

 

(i)            any
Environmental Claim against the Borrowers, the Manager, the Owners, the
Bareboat Chartereror the Vessels;

 

(ii)           any
Environmental Incident which may give rise to an Environmental Claim which
could or might materially affect the interests of the Borrowers, the Manager,
the Owners, the Bareboat Charterer or any of them;

 

(iii)         any
claim for breach of the ISM Code or the ISPS Code being made against the
Borrowers or either of them, an ISM Responsible Person, the Manager, the
Owners, the Bareboat Charterer or otherwise in connection with the Vessels or
either of them; and

 

(iv)          any
other matter, event or incident actual or threatened, the effect of which would
lead to the ISM Code or the ISPS Code not being complied with;

 

and the
Borrowers shall keep the agent advised in writing on a regular basis and in
such detail as the Agent shall require, of the relevant Borrower’s, the ISM
Responsible Person’s, the Bareboat Charterer’s, the Manager’s or any other
person’s proposed or actual response to any of those events or matters;

 

21.1.29  permit, or
procure that the Agent and the Security Trustee shall have the right at any
time on reasonable notice to inspect or survey the Vessels or instruct a duly
authorised independent surveyor to carry out such survey on its behalf to ascertain
the condition of the Vessels and satisfy itself that the Vessels are being
properly repaired and maintained, provided that such

 

63

 

inspections
shall not unreasonably interfere with the Vessels’ running or operation (the
costs of such inspection or survey shall be payable by the Borrowers);

 

21.1.30  promptly
provide the Agent and the Security Trustee with information concerning the
classification, status and insurance of the Vessels from time to time as and
when so required in writing by the Agent and the Security Trustee;

 

21.1.31  execute and
deliver to the Agent and the Security Trustee such documents of transfer as the
Agent and the Security Trustee may require in the event of sale of the Vessels
pursuant to any power of sale contained in the Mortgages or which the Agent and
the Security Trustee may have in law;

 

21.1.32  provide the
Agent and the Security Trustee with a transcript of the register relating to
the Vessels issued by the relevant registry of the Vessels and a copy of the
entries in the relevant Company’s registers relative to the Borrowers when so
requested by the Agent and the Security Trustee; and

 

21.1.33  upon
becoming aware notify the Agent and the Security Trustee immediately by telefax
of any recommendation or requirement imposed by the Classification Society, the
Insurers or by any other competent authority that is not complied with in
accordance with its terms;

 

21.1.34  carry on
board each Vessel with the Vessel’s papers a properly certified copy of the
relevant Mortgage and exhibit the same to any person having a legal interest
in, or having business with, each Vessel and to any representative of the Agent
and the Security Trustee, and place and keep prominently in the Chart Room and in
the Master’s cabin of each Vessel a framed notice printed in plain type of such
size that the paragraph of reading matter shall cover a space not less than six
inches wide and nine inches high reading as follows -

 

“NOTICE OF MORTGAGE

 

This Vessel is owned by [        ]
and is subject to a [          ].
Under the terms of said Mortgage, neither the Owner, nor the Master nor any
other person has any right, power or authority to create, incur or permit to be
imposed upon this Vessel any other lien whatsoever other than for crew’s wages
and salvage”

 

21.1.35  pay when
due and payable all taxes, assessments, levies, governmental charges, fines and
penalties lawfully imposed on and enforceable against the Vessels unless
contested in good faith by the Borrowers and/or the Owners by the appropriate
proceedings;

 

21.1.36  if any writ
or proceedings shall be issued against any Vessel or if any Vessel shall be
otherwise attached, arrested or detained by any proceeding in any court or
tribunal or by any 

 

64

 

government or
other authority, immediately notify the Agent and the Security Trustee thereof
by telefax confirmed by letter and within thirty (30) days thereafter cause
that Vessel to be released;

 

21.1.37  not cause or
permit the Vessels to be operated 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 not to engage in any unlawful trade or carry any
cargo that will expose the Vessels to penalty, forfeiture or capture and in the
event of hostilities in any part of the world (whether a war be declared or
not) not employ the Vessels or voluntarily suffer their employment in carrying
any contraband goods;

 

21.1.38  promptly
pay all tolls, dues and outgoings in respect of the Vessels and all wages,
allotments, insurance and pension contributions of the Master and crew of the
Vessels when due and make all deductions from the wages in respect of any tax
liability, accounting to the relevant authority for them and if the Agent at
any time has reasonable cause to believe that such payments may not be being
made, to produce to the Agent at its request evidence confirming that all such
amounts have been paid when due;

 

21.1.39  at all
times maintain the Vessels in a seaworthy condition and in good running order
and repair in accordance with first class ship ownership and ship management
practice and keep the Vessels in such condition as will entitle them to be
classed 1A1 Container Vessel with the Classification Society (as may be amended
by the Classification Society) free of all recommendations and qualifications
(other than those which have been or are being complied with in accordance with
their terms and which are not by their terms overdue for compliance), to follow
any interim operational provisos to such recommendations and qualifications and
when so requested to provide the Agent and the Security Trustee with a
certificate issued by the Classification Society confirming that such classification
is maintained;

 

21.1.40  submit the
Vessels regularly to such periodical or other surveys as may be required for
classification purposes and, if so required by the Agent and the Security
Trustee in writing, supply to the Agent and the Security Trustee copies of all
survey reports issued in respect thereof;

 

21.1.41  at all
times comply with all legal requirements whether imposed by enactment,
regulation, common law or otherwise and have on board the Vessels as and when
legally required valid certificates showing compliance therewith;

 

21.1.42  comply or
procure that the Manager or any charterer of the Vessels will at all times
comply with the ISM Code and the ISPS Code, all Environmental Laws and all
other laws and regulations relating to the Vessels, their ownership, operation
and management or to the business of the Borrowers;

 

65

 

21.1.43  hold or
procure that the Bareboat Charterer holds the DOC, the SMC and the ISSC;;

 

21.1.44  not permit
any alterations to be made in the structure, type or speed of the Vessels which
materially reduce the value of the Vessels (unless such removal or alteration
is required by statute or by the Classification Society) without the prior
written consent of the Agent and the Security Trustee which shall not
unreasonably be withheld;

 

21.1.45  in the
event of requisition of the Vessels or either of them by any government
authority, execute any assignment that the Agent and the Security Trustee may
request in relation to any and all amounts which such government authority
shall be liable to pay as compensation for the Vessels or for her use and if
received by the relevant Owner or the Bareboat Charterer to procure that such
Owner pay such amounts immediately to the Borrowers who shall pay such amounts
to the Paying Agent, provided that if such requisition applies only to the use
of the Vessels the provisions of this Clause 21.1.45 shall not apply if there
has been no Event of Default.

 

21.1.46  ensure that
at all times during the Security Period, the balance of monies standing to the
credit of each of the Deposit Accounts when aggregated shall be in an amount at
least equal to 105% of the Post-Delivery Facilities.

 

21.2        The
Borrowers shall duly observe and perform all of the covenants, obligations and
conditions which are required to be observed and performed on their part under
this Agreement and each of the Security Documents to which they are a party and
shall use their best endeavours to procure that all covenants, obligations and conditions
required to be observed and performed, and undertakings made, by any of the
other parties (other than the Agent and/or the Banks) under any of the Security
Documents shall be observed and complied with in their entirety.

 

21.3        Without
prejudice to the terms of this Agreement or any of the Security Documents, the
Borrowers will promptly inform the Agent of any litigation or arbitration in
any Court or before any tribunal in which they are involved.

 

22           INSURANCE
UNDERTAKINGS

 

22.1        The
Borrowers hereby undertake with the Agent and the Security Trustee or shall
procure from the Owners or the Bareboat Charterers that, from the date of
delivery of each relevant Vessel and thereafter, throughout the Security
Period, at their own expense and upon such terms and conditions, in such
amounts and with such Insurers as shall from time to time be approved in
writing by the Security Trustee and, if so required by the Security Trustee
(but without, as between the Security Trustee and the Borrowers, the Owners or the
Bareboat Charterer’s liability on the part of the Security Trustee for premiums
or calls) with the Security Trustee named as co-assured -

 

66

 

22.1.1    to insure
and keep insured the Vessels in Dollars or such other currency as may be
approved in writing by the Security Trustee (such approval not to be
unreasonably withheld), in the full insurable value of the Vessels but in no
event for an aggregate amount less than one hundred and twenty per cent (120%)
of the Indebtedness against fire and usual marine (including Excess Risks) and
War Risks covered by hull and machinery policies;

 

22.1.2    to enter
the Vessels in the name of the Bareboat Charterer for their full value and
tonnage against all Protection and Indemnity Risks in a protection and
indemnity association approved by the Security Trustee with unlimited liability
if available otherwise with the least limited liability for the time being
US$1,000,000,000 in relation to oil pollution risks and to comply with the
rules of such protection and indemnity association from time to time in effect
and if so requested by the Security Trustee to obtain excess oil spillage and
pollution insurance in excess of the limit of the protection and indemnity
association with the highest possible cover;

 

22.1.3    if the
Vessels enter the territorial waters of the USA (or other jurisdiction having
legislation similar to the US Oil Pollution Act 1990) for any reason whatsoever
to take out such additional insurance to cover such risks as may be necessary
in order to obtain a Certificate of Financial Responsibility from the United
States Coastguard;

 

22.1.4    to pay to
the Security Trustee upon first demand all premiums and other amounts payable
by the Security Trustee in effecting mortgagees’ interest insurance policy in
the name of the Security Trustee (substantially based on German Conditions) in
relation to the Vessels in an amount of not less than one hundred and ten per
cent (110%) of the Indebtedness, upon such terms and conditions and with such
insurers as the Security Trustee may require;

 

22.1.5    to pay to
the Security Trustee upon first demand all premiums and other amounts payable
by the Security Trustee in effecting a mortgagees interest insurance
(additional perils, pollution) policy in relation to the Vessel in the name of
the Security Trustee, upon such terms and conditions and with such insurers as
the Security Trustee may require and in an aggregate amount of not less than
one hundred and ten per cent (110%) of the Indebtedness in the event that the
relevant Vessel enters into the territorial waters of the United States of
America (or other jurisdiction having legislation similar to the US Oil
Pollution Act 1990);

 

22.1.6    to effect
such additional Insurances that shall (in the reasonable opinion of the
Security Trustee) be necessary or advisable.

 

22.2        The
Borrowers further undertake with the Security Trustee or shall procure that the
Owners or the Bareboat Charterer undertakes, during the Security Period:

 

22.2.1    to renew
the Insurances at least ten (10) days before the relevant Insurances expire (or
give the Security Trustee evidence satisfactory to it that such Insurances will
be renewed upon their stated expiry dates) and to procure that the Approved
Brokers or the Insurers (as the case 

 

67

 

may be) shall
promptly confirm in writing to the Security Trustee the terms and conditions of
such renewal as and when the same occurs;

 

22.2.2    punctually
to pay all premiums, calls, contributions or other sums payable in respect of
the Insurances and to produce evidence of payment when so required in writing
by the Security Trustee;

 

22.2.3    to
arrange for the execution of such guarantees as may from time to time be
required by any Protection and Indemnity or War Risks association;

 

22.2.4    to
procure that the Insurance Documents shall be deposited with the Approved
Brokers or the Insurers (as the case may be) and that the Approved Brokers or
the Insurers (as the case may be) shall provide the Security Trustee with pro
forma copies thereof and shall issue to the Security Trustee a letter or
letters of undertaking in such form as the Security Trustee shall reasonably
require;

 

22.2.5    to
procure that the Protection and Indemnity and/or War Risks associations in
which the Vessels are entered shall provide the Security Trustee with a letter
or letters of undertaking in such form as may be reasonably required by the
Security Trustee and shall provide the Security Trustee with a copy of the
certificate of entry and, if so requested by the Security Trustee, a copy of
each certificate of financial responsibility for pollution by oil or other
substances issued by such Protection and Indemnity and/or War Risks association
in relation to the Vessels;

 

22.2.6    to
procure that the interest of the Security Trustee is endorsed on the Insurance
Documents by means of a Notice of Assignment in the form in Schedule 1 to the
Insurance Assignment Agreements or such other form as the Security Trustee may
require and that the Insurance Documents (including all certificates of entry
in any Protection and Indemnity and/or War Risks association) shall contain a
loss payable clause during the Security Period in the form in Schedule 2 or
Schedule 3 (as may be appropriate) to the Insurance Assignment Agreements or
such other form as the Security Trustee may require;

 

22.2.7    to
procure that the Insurance Documents shall provide that the lien or set off for
unpaid premiums or calls shall be limited to only the premiums or calls due in
relation to the Insurances on the Vessels and the Insurers shall not cancel any
of the Insurances by reason of non-payment of premium or calls due in respect
of other vessels or in respect of other insurances and for fourteen (14) days
prior written notice to be given to the Security Trustee by the Insurers (such
notice to be given even if the Insurers have not received an appropriate
enquiry from the Security Trustee) in the event of cancellation or termination
of the Insurances and in the event of the non-payment of the premium or calls,
the right to pay the said premium or calls within a reasonable time;

 

68

 

22.2.8    promptly
to provide the Security Trustee with full information regarding any casualties
or damage to the Vessels in an amount in excess of US$1,000,000 or in
consequence whereof the Vessels have become or may become a Total Loss;

 

22.2.9    at the
reasonable request in writing of the Security Trustee to provide the Security
Trustee, at the Owners’ cost (but not more often than once in every twelve (12)
months), with a detailed report issued by a firm of marine insurance brokers or
consultants appointed by the Owners, the Bareboat Charterers and/or the
Borrowers and approved by the Security Trustee in relation to the Insurances;

 

22.2.10  not to do
any act nor voluntarily suffer nor permit any act to be done whereby any
Insurance shall or may be suspended or avoided and not to suffer nor permit the
Vessels to engage in any voyage nor to carry any cargo not permitted under the
Insurances in effect without first obtaining the Insurers’ consent for such
voyage or the carriage of such cargo
and complying with such requirements as to extra premiums or otherwise as the
Insurers may prescribe;

 

22.2.11  not to
employ the Vessels, or offer the Vessels to be employed, otherwise than in
conformity with the terms of the Insurance Documents (including any express or
implied warranties they contain), without first obtaining the Insurers’ consent
to such other employment and complying with such requirements as to extra
premiums or otherwise as the Insurers may prescribe, or arranging for
additional insurance;

 

22.2.12  (without
limitation to the generality of the foregoing) in particular not to permit the
Vessels to enter or trade to any zone which is declared a war zone by any
government or by the Vessels’ War Risks Insurers unless there shall have been
effected by the Bareboat Charterer and at their expense such special insurance
or the consent of the Insurers to enter or trade into such zone is obtained and
the relevant Bareboat Charterer is complying with such requirements as to extra
premiums or otherwise as the Insurers may prescribe;

 

22.2.13  to procure
that all amounts payable under the Insurances are paid in accordance with the
relevant loss payable clause under Clause 22.2.6 and subject always to the
terms of the Intercreditor Deed, to apply all amounts as are paid to the
Bareboat Charterer for the purpose of making good the loss and fully repairing
all damage in respect of which the said amounts shall have been received; and

 

22.2.14  should the
Vessels be laid up for any period, to arrange ‘lay-up’ insurances for the
Vessels during such period, at their own cost and upon such terms and
conditions, in such amounts and with such Insurers as shall from time to time
be approved in writing by the Security Trustee.

 

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23           EVENTS
OF DEFAULT

 

23.1        Each
of the following events shall constitute an Event of Default (whether such
event shall occur or come about voluntarily or involuntarily or by operation of
law or regulation or pursuant to, or in compliance with any judgment, decree or
order of any court or other authority) -

 

23.1.1    the
Borrowers shall fail to pay when due any amount (whether in respect of
principal, interest or otherwise) under this Agreement or any of the Security
Documents to which they are a party on the due date;

 

23.1.2    any
representation, warranty or statement made by any party (other than the Agent,
Paying Agent, Security Trustee and the Banks) in this Agreement or in the
Security Documents or any certificate, statement or opinion delivered or made
hereunder or under the Security Documents or in connection herewith or with the
Security Documents shall be incorrect or inaccurate when made in any material
respect;

 

23.1.3    an event
of default or a potential event of default under any of the Subject Documents
(as defined therein) (other than the Management Agreements and the Bareboat
Charters) has occurred provided always that if such event has occurred as a
consequence of a default by a party to the Subject Documents (other than a
Finance Document and other than by an Obligor), the Security Trustee shall, for
a period of thirty (30) days neither terminate the chartering of the relevant
Vessel nor attempt to re-possess the relevant Vessel or exercise any rights of
disposition in relation thereto, provided that (i) in the opinion of the
Security Trustee, any delay in the enforcement by the Security Trustee of its
rights and privileges is not likely to adversely affect the rights of the
Security Trustee and (ii) the Obligors shall continue to fulfil all other of
their obligations under the Subject Documents during such period;

 

23.1.4    an event
of default or a potential event of default under either of the Bareboat
Charters (as defined therein) has occurred, which event of default or potential
event of default is not remedied within thirty (30) days of the date of its
occurrence to the satisfaction of the Security Trustee (in its absolute
discretion) provided always that such event of default or potential event of
default shall constitute an immediate Event of Default if (i) the parties to
the Intercreditor Deed do not, or cease to, consult in accordance with the
provisions of Clause 31 of the Intercreditor Deed, or (ii) the Security Trustee
is of the opinion that the delay in declaring an Event of Default and
thereafter the enforcement by the Security Trustee of its rights and privileges
is likely to adversely affect the rights of the Security Trustee, or (iii) the
Obligors or any of them cease to fulfil any of their obligations under the
Subject Documents during such period;

 

23.1.5    any party
to this Agreement or a Finance Document (other than the Security Trustee, the
Agent, the Banks and the Paying Agent) does not punctually perform or observe
any other 

 

70

 

term of this
Agreement or the Finance Documents unless (i) such non-compliance is capable of
remedy and (ii) is remedied either fourteen (14) days after the Agent and the
Security Trustee shall have given to the Borrowers notice of such failure, or
in the case of any failure punctually to perform or to observe the provisions
of any of Clauses 21.1.6, 21.1.10, 21.1.11, 21.1.13 or 21.1.14, thirty (30)
days after the Agent and the Security Trustee shall have given to the Borrowers
notice of such failure. The Borrowers acknowledge that for the purposes of
paragraph (i) above, non-compliance with the following provisions of this
Agreement shall not be capable of remedy:

 

(a)           Clause
21.1.15; and

 

(b)           Clause
22 (Insurances);

 

23.1.6    a breach
of any of the obligations owed to the Security Trustee under the Multipartite
Deed;

 

23.1.7    except
where contested in good faith by the appropriate proceedings, any other
indebtedness of the Borrowers shall become due and payable or, with the giving
of notice or lapse of time or both, capable of being declared due and payable,
prior to its stated maturity by reason of any circumstance entitling the
creditor(s) thereof to declare such indebtedness due and payable and such
indebtedness is not paid within fourteen (14) days thereof;

 

23.1.8    any of
the Borrowers, the Owner, the Bareboat Charterer, the L/C Bank (or any
replacement bank providing a letter of credit) or (prior to the release or
discharge of the Second Deposit Charge) the Deposit Bank (or any replacement
bank holding the Borrowers’ deposit accounts) shall enter into voluntary or
involuntary bankruptcy, liquidation or dissolution, or shall become insolvent,
or an administrator, administrative receiver, receiver or liquidator shall be
appointed of all or a material part of their undertakings or assets or
proceedings are commenced by or against them under any reorganisation, arrangement,
readjustment of debts, dissolution or liquidation law or regulation;

 

23.1.9    the
Borrowers shall cease or threaten to cease to carry on their business;

 

23.1.10  there shall
be a transfer or disposal of all or a substantial part of the assets of the
Borrowers, whether by one or a series of transactions, related or not;

 

23.1.11  the
Security Documents or any of them shall cease, in whole or in part, to be
valid, binding and enforceable;

 

23.1.12  If a notice
is sent by the Swap Agent under Section 6(a) of the Master Agreement, or by any
person under section 6(b)(iv) of the Master Agreement, in either case
designating an Early Termination Date (as defined in the Master Agreement) for
the purposes of the Master

 

71

 

Agreement, or
if the Master Agreement is for any other reason terminated, cancelled,
suspended, rescinded, revoked or otherwise ceases to remain in full force and
effect;

 

23.1.13  any Vessel
is arrested or detained and such arrest or detention is not released within
fourteen (14) days, or an order for the sale of any Vessel is made by a court
of competent jurisdiction or the Owners cease to retain possession and/or
control of any Vessel for a period in excess of thirty (30) days provided that
it shall not be an Event of Default if the detention or loss of possession of
any Vessel results in the Vessel becoming a Total Loss under the Insurances or
any Vessel is requisitioned for title and the requisitioning authority pays the
requisition compensation to the Paying Agent and the Security Trustee within
sixty (60) days of the date of detention or loss of possession;

 

23.1.14  the Owners
sell, transfer, dispose of or encumber any Vessel or any interest or share
therein, or agree so to do (other than Permitted Encumbrances) without the
Borrowers obtaining the prior written consent of the Agent and the Security
Trustee;

 

23.1.15  there is a
considerable deterioration in the financial position of the Borrowers which in
the reasonable opinion of the Agent and the Security Trustee is likely to
affect the ability of the Borrowers to pay all amounts due from time to time
under this Agreement and/or the Security Documents;

 

23.1.16  any
governmental or other consent, licence or authority required to make this
Agreement and/or the Security Documents legal, valid, binding, enforceable and
admissible in evidence or required to enable the Borrowers to perform their
duties and discharge their liabilities hereunder or under the Security
Documents is withdrawn or ceases to be in full force and effect unless the
Borrowers procure that such consent, licence or authority is reinstated or
re-issued to the satisfaction of the Agent and the Security Trustee within
fifteen (15) days of the said withdrawal or cessation;

 

23.1.17  any Vessel
is a Total Loss and the Paying Agent and the Security Trustee shall not have
received within ninety (90) days following the occurrence of the Total Loss (or
such earlier date as the Total Loss claim is paid) from the Insurers the
insurance proceeds paid in conformity with the terms of Clauses 10.3 and 10.4.

 

23.1.18  the
Shipbuilding Contracts or the Refund Guarantees are rescinded or terminated for
any reason whatsoever;

 

23.1.19  any
Shipbuilding Contract is amended or varied in any material (in the opinion of
the Agent and the Security Trustee) way without the prior written consent of
the Agent and the Security Trustee;

 

72

 

23.1.20  the
relevant Owner does not accept delivery of the relevant Vessel when tendered
for delivery by Samsung;

 

23.1.21  a Vessel is
not delivered to the relevant Owner by the Final Availability Date of the
Post-Delivery Advances; or

 

23.1.22  the Refund
Guarantors fail to pay under any Refund Guarantee.

 

23.2        Upon
the occurrence of an Event of Default and at any time thereafter, the Agent may
by notice to the Borrowers -

 

(a)           declare
the Indebtedness immediately due and payable whereupon the same shall become so
payable; and/or

 

(b)           by
written notice to the Borrowers declare that the Commitment of the Banks shall
be cancelled, whereupon the same shall be cancelled.

 

23.3        The
Agent and the Security Trustee may take any other action, exercise any other
right or pursue any other remedy conferred upon the Agent and the Security
Trustee by this Agreement and/or the Security Documents or by any applicable
law or regulation or otherwise as a consequence of such Event of Default.

 

24           PROCEEDS
AND APPLICATION

 

24.1        All
Proceeds received by the Agent and/or the Paying Agent shall be paid to the
Security Trustee who shall apply such funds in accordance with the provisions
of Clause 10.8 of the Intercreditor Deed. Subject to the provisions of Clause
10.4, all amounts received by the Security Trustee pursuant to Clause 10.8 of
the Intercreditor Deed for and on behalf of the Creditors and all Debt Proceeds
shall, notwithstanding anything to the contrary whether express or implied in
any of the Security Documents, be applied and divided as follows:

 

24.1.1    First: in
satisfying claims which at law rank in priority to sums owing under or in
respect of any of the Finance Documents;

 

24.1.2    Secondly:
in paying all proper costs, charges and expenses incurred by the Agent or the
Paying Agent or the Security Trustee or any other Creditor in the enforcement
of the Finance Documents or any part thereof, or in respect of the dissolution
or liquidation of the relevant Obligor or otherwise in collecting the
Distribution Monies.

 

73

 

24.1.3    Thirdly:
in paying to the Senior Lenders interest, fees and other amounts, excluding
unpaid principal, due and payable in respect of the Senior Debt including but
not limited to Broken Funding Costs.

 

24.1.4    Fourthly:
in paying to the Senior Lenders the principal due in respect of the Senior Debt
pro-rata in the proportion which the total principal amount outstanding in
respect of each of the Pre-Delivery Facility or the Post-Delivery Senior
Facility (as the case may be) bearing to the total principal amount outstanding
in respect of the Senior Debt.

 

24.1.5    Fifthly:
in paying to the Post-Delivery Junior Lenders interest, fees and the amounts,
excluding unpaid principal, due and payable in respect of the Post-Delivery
Junior Facility Indebtedness including but not limited to Broken Funding Costs;

 

24.1.6    Sixthly:
in paying to the Post-Delivery Junior Lenders the principal, due in respect of
the Post-Delivery Junior Facility Indebtedness;

 

24.1.7    Seventhly:  in paying to the Swap Agent any and all
amounts which many be owing to it under the Master Agreement;

 

24.1.8    Eightly:
once the Indebtedness has been repaid to the Creditors to the full satisfaction
of the Agent, the Paying Agent and the Security Trustee, then any balances
shall be paid to the Borrowers.

 

24.2        If
any Proceeds or Debt Proceeds recovered by the Agent, Paying Agent and the
Security Trustee have to be repaid by the Agent, Paying Agent and the Security
Trustee on the ground of unfair or fraudulent preference or on any other
ground, the Agent, Paying Agent the Security Trustee and the Creditors shall
have the same rights hereunder and/or under the other Finance Documents against
the Borrowers as if such amounts had never been applied in payment of the
Indebtedness.

 

25           FEES

 

25.1        The
Borrowers shall pay to the Paying Agent for the account of the Banks and the
Agent an arrangement fee in respect of the Facilities of Two hundred Forty
thousand Dollars (US$ 240,000) on the date of execution of this Agreement.

 

25.2        The
Borrowers shall pay to the Paying Agent the following agency fees throughout
the Security Period:

 

(a)           in
respect of the Pre-Delivery Facility Nine Thousand three hundred and Seventy
Five Dollars (US$ 9,375)  for each three
month period commencing on the earlier of (i) the 

 

74

 

Drawdown Date
of the first Advance of the Pre-Delivery Facility and (ii) 1st
January 2003 and payable quarterly in advance; and

 

(b)           in
respect of each of the Post-Delivery Senior Facility and the Post-Delivery
Junior Facility an amount equal to zero point zero Five per cent (0.05%) per
annum on the aggregate amount outstanding under the Post-Delivery Senior
Facility and the Post-Delivery Junior Facility commencing on the date of
drawdown of the first Advance of the Post-Delivery Senior Facility and payable
quarterly in advance.

 

25.3        During
the Availability Period the Borrowers shall pay to the Agent for the account of
the Banks a commitment fee of zero point three percent (0.3%) on the aggregate
amount of the Post-Delivery Facilities which is from time to time available and
has not been drawndown from the date of this Agreement until the expiry of the
Availability Period relating thereto less any amounts drawndown under the
Pre-Delivery Facilities, such fee to be payable quarterly in arrears.

 

26           EXPENSES

 

26.1        The
Borrowers shall reimburse the Agent, the Paying Agent, the Security Trustee and
the Banks on demand for all reasonable charges and expenses incurred by the
Agent, the Paying Agent, the Security Trustee and the Banks in connection with
the preparation, negotiation and conclusion of this Agreement and the Security
Documents (including, but not limited to, all costs and expenses of the Agent,
the Paying Agent, the Security Trustee and the Banks in connection with the
assignment, transfer and sub-participation of their rights under this
Agreement) including fees and expenses of legal advisers and reasonable out-of-pocket
expenses.

 

26.2        The
Borrowers shall reimburse the Agent, the Paying Agent, the Security Trustee and
the Banks on demand for all charges and expenses (including legal fees)
incurred by the Agent and/or the Paying Agent and/or the Security Trustee
and/or the Banks in or in connection with the exercise of the Agent’s and the
Paying Agent’s and the Security Trustee’s and/or the Banks’ rights and powers
under this Agreement and the Security Documents (including but not limited to
the fees and charges of auditors, brokers, surveyors and legal counsel
instructed by the Agent and/or the Paying Agent and/or the Security Trustee
and/or the Banks) and with the actual, attempted or purported enforcement of,
or preservation of rights under, this Agreement or the Security Documents.

 

27           INDEMNITY

 

The Borrowers hereby undertake and agree to
indemnify the Agent, the Paying Agent, the Security Trustee and the Banks, upon
their first demand, from and against any losses, costs or 

 

75

 

expenses (including legal expenses) which
they incur in consequence of any Event of Default including (but without limitation)
all losses, premiums and penalties incurred or to be incurred in liquidating or
redeploying deposits made by third parties or funds acquired or arranged to
effect or maintain the Facilities or any part thereof.

 

28           STAMP
DUTIES

 

The Borrowers shall pay any and all stamp,
registration and similar taxes and charges of whatsoever nature which may be
payable or determined to be payable on, or in connection with, the execution,
registration, notarisation, performance or enforcement of this Agreement or the
Security Documents. The Borrowers shall indemnify the Agent, the Paying Agent,
the Security Trustee and the Banks against any and all liabilities with respect
to or resulting from delay or omission on the part of the Borrowers to pay any
such taxes.

 

29           NO
WAIVER

 

No failure to exercise and no delay in
exercising on the part of the Agent, the Paying Agent, the Security Trustee and
the Banks any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, power or
privilege preclude any other or future exercise thereof, or the exercise of any
other right, power or privilege. The rights, powers and remedies herein
provided are cumulative and not exclusive of any rights, powers or remedies provided
by law.

 

30           PARTIAL
INVALIDITY

 

In the event that any term or condition of
this Agreement is rendered or declared illegal, invalid or inoperative in whole
or in part by any statute, rule or regulation or any decision of any court or
tribunal of competent jurisdiction then such determination or declaration shall
neither affect nor impair the validity of any other term or condition of this
Agreement which (save as aforesaid) will remain in full force and effect nor
the legality, validity or enforceability of such term or condition under the
law of any other jurisdiction.

 

31           THE
AGENT, THE PAYING AGENT, THE SECURITY TRUSTEE, AND THE BANKS

 

31.1        Each
Bank (which, for the purpose of this Clause, shall include the Swap Agent in
its capacity as party to the Master Agreement) irrevocably appoints the Agent
as its agent in connection with the administration of the Facilities, the
Paying Agent in connection with all payments and repayments of the Indebtedness
and the Security Trustee for the purposes of the Finance Documents and
authorises each of them (whether or not by or through employees or agents) to
take such action on such Bank’s behalf and to exercise such rights, remedies,
powers and discretion’s as are specifically delegated to them by 

 

76

 

this Agreement
and the Finance Documents, together with such powers and discretion’s as are
reasonably incidental thereto. The Agent, the Paying Agent and the Security
Trustee shall not however, have any duties, obligations or liabilities to the
Banks beyond those expressly stated in this Agreement and the other Finance
Documents.

 

31.2        The
Agent shall:

 

(a)           promptly
send to each Bank details of each communication received by it from the
Borrowers under this Agreement or any other Finance Document, except that
details of any communication relating to a Bank shall be sent only to that Bank
as appropriate;

 

(b)           promptly send to each Bank a copy of any legal opinion delivered
under this Agreement or any other Finance Document and of any document or
information received by it under Clause 20;

 

(c)           subject to the other provisions of this Clause 31, act in
accordance with any instructions from the Instructing Group or, if so
instructed by the Instructing Group, refrain from exercising a right, power or
discretion vested in it under this Agreement or any other Finance Document; and

 

(d)           have only those duties, obligations and responsibilities,
of an administrative nature, expressly specified in this Agreement and the other Finance Documents.

 

31.3        The
Paying Agent shall:

 

(a)           subject
to the other provisions of this Clause 31, act in accordance with any
instructions from the Instructing Group or, if so instructed by the Instructing
Group, refrain from exercising a right, power or discretion vested in it under
this Agreement and the other Finance Documents; and

 

(b)           immediately
upon receipt of any Proceeds, pay such sums to the Security Trustee for
application in accordance with the provisions of Clause 10.8 of the
Intercreditor Deed;

 

(c)           immediately
upon receipt of any Debt Proceeds, pay such sums to the Security Trustee for
application in accordance with the provisions of Clause 24.1,

 

31.4        have
only those duties, obligations and responsibilities expressly specified in this
Agreement and the other Finance Documents. The Security Trustee shall -

 

77

 

(a)           subject
to the other provisions of this Clause 31, act in accordance with any
instructions from the Instructing Group or, if so instructed by the Instructing
Group, refrain from exercising a right, power or discretion vested in it under
this Agreement or the other Finance Documents;

 

(b)           have
only those duties, obligations and responsibilities expressly specified in this
Agreement and the other Finance Documents.

 

31.5        Each
of the Agent, the Paying Agent and the Security Trustee may:

 

(a)           perform
any of its functions under this Agreement and the other Finance Documents by or
through its personnel or agents;

 

(b)           refrain
from doing anything under this Agreement and the other Finance Documents until
it has received instructions from the Instructing Group as to whether (and, if
it is to be, the way in which) it is to be done and shall in all cases be fully
protected when acting, or (if so instructed) refraining from acting, in
accordance with instructions from the Instructing Group;

 

(c)           treat (a) each Bank as the person entitled to repayment of the
Facilities of which it is a lender and the Swap Agent as the person entitled to
the payment of all Master Agreement Liabilities unless all or part of the
relevant Banks’ Commitment has been transferred to another bank (or the Agent
has received notice of assignment of all or part of it) in accordance with
Clause 33 whereupon such other bank shall
be entitled to repayment of its share in the Commitment and (b) the office
notified by each Bank to the Agent for this purpose before the signing of this
Agreement (or, as the case may be, set out in the relevant Transfer
Certificate) as its facility office unless the Agent has received from such
Bank or such other bank a notice of change of facility office. Each of the
Agent, Paying Agent and the Security Trustee may act on any such certificate
until it is superceded by a further transfer;

 

(d)           refrain from disclosing any document or information if such
disclosure (and may refrain from doing anything which) would or might in its
opinion be contrary to any law, be a breach of any duty of secrecy or
confidentiality or otherwise render it liable to any person and may do anything
which is in its opinion necessary to comply with any law and the Borrowers
acknowledge that each of the Agent,
the Paying Agent and the Security Trustee may release such
information to such parties it is required to pursuant to the terms of the
Intercreditor Deeds;

 

(e)           assume that no Event of Default or Potential Event of
Default has occurred unless an officer of the Agent, the Paying Agent or the
Security Trustee (as the case may be) acquires actual knowledge to the
contrary; and

 

78

 

(f)            refrain from taking any step (or further step) to protect
or enforce the rights of any person under this Agreement and the other Finance
Documents until it has been indemnified (or received confirmation that it will
be so indemnified) and/or secured to its satisfaction against any and all
costs, losses, expenses or liabilities (including legal fees) which it would or
might sustain or incur as a result.

 

31.6        Each
of the Agent, Paying Agent and the Security Trustee may:

 

(a)           rely
on any communication, certificate, legal opinion or other document believed by
it to be genuine;

 

(b)           rely
as to any matter of fact which might reasonably be expected to be within the
knowledge of any person on a statement by or on behalf of that person;

 

(c)           obtain
and pay for such legal or other expert advice or services as may to it seem
necessary or desirable and rely on any such advice;

 

(d)           provide
to any person engaged to provide expert advice or services in connection with
this Agreement and the other Finance Documents, copies of all information in
its possession or to which it is entitled under or in connection with this
Agreement and the other Finance Documents; and

 

(e)           retain
for its own benefit and without liability to account any fee or other sum
receivable by it for its own account.

 

31.7        The
Security Trustee hereby accepts its appointment and constitution under this
Clause 31 as trustee in relation to the Trust Property and the Finance
Documents with effect from the date of this Agreement and irrevocably
acknowledges and declares that from such date it holds the same on trust for
the Banks and that it shall apply, and deal with, the Trust Property in
accordance with the provisions of this Agreement.

 

31.8        The
trusts constituted or evidenced by this Agreement shall remain in full force
and effect until whichever is the earlier of the expiration of a period of
eighty (80) years from the date of this Agreement and the expiration of the
Security Period.

 

31.9        The
Agent or Security Trustee may not, except to the extent expressly authorised by
the other provisions of this Agreement or any Finance Document, agree
amendments or modifications to any of the Finance Documents.

 

31.10      With
respect to any sums due to the Security Trustee for its own account under this
Agreement and/or the other Finance Documents, the Agent, the Paying Agent and
the Security Trustee shall have the same rights and powers under this Agreement
as the 

 

79

 

Banks and may
exercise the same as though it were not performing the duties and functions
delegated to it under this Agreement and the term “Bank”
shall, unless the context clearly otherwise indicates, include the Agent,
Paying Agent and the Security Trustee in its individual capacity.

 

31.11      The
Agent, which for the purpose of this Clause shall include the Paying Agent and
the Security Trustee shall not  -

 

31.11.1  be obliged
to request any certificate or opinion under this Agreement or any of the other
Finance Documents unless (in the case of the Agent) so required in writing by
any Bank, in which case the Agent shall promptly make the appropriate request
or be obliged to make any enquiry as to any default in the performance or
observance of any of the provisions of this Agreement or the other Finance
Documents or as to the existence of an Event of Default unless (in the case of
the Agent) the Agent has actual knowledge thereof or has been notified in
writing thereof by the Banks, in which case the Agent shall promptly notify the
Banks of the relevant event or circumstance; or

 

31.11.2  be liable
to any Bank for any action taken or omitted under or in connection with this
Agreement and the other Finance Documents unless caused by its gross negligence
or wilful misconduct.

 

31.12      The
Agent and/or Security Trustee shall (subject to its being indemnified to its
satisfaction) take such action or, as the case may be, refrain from taking such
action with respect to any Event of Default of which the Agent and/or Security
Trustee has actual knowledge, as the Instructing Group may reasonably direct.

 

31.13      Each
Bank acknowledges that it has not relied on any statement, opinion, forecast or
other representation made by the Agent to induce it to enter into this
Agreement and/or the other Finance Documents and that it has made and will
continue to make, without reliance on the Agent and based on such documents as
it considers appropriate, its own appraisal of the creditworthiness of the
Borrowers and its own independent investigation of the financial condition and
affairs of the Borrowers in connection with the making and continuation of the
Facilities under this Agreement and/or the execution of the Master Agreement. The
Agent shall not have any duty or responsibility, either initially or on a
continuing basis, to provide the Banks with any credit or other information
with respect to the Borrowers.

 

31.14      Neither
the Agent, nor the Paying Agent nor the Security Trustee shall have any
responsibility to any Bank on account of the failure of the Borrowers to
perform or to procure the performance of their obligations under this Agreement
and/or the other Finance Documents or for the financial condition of the
Borrowers or for the completeness or accuracy of any statements, representations
or warranties in this 

 

80

 

Agreement
and/or the other Finance Documents or any document delivered under this
Agreement and/or the other Finance Documents or for the execution,
effectiveness, adequacy, genuineness, validity, enforceability or admissibility
in evidence of this Agreement and/or the other Finance Documents or of any
certificate, report or other document executed or delivered under this
Agreement and/or the Security Documents or otherwise in connection with the
Facilities and/or the Master Agreement Liabilities made available pursuant to
this Agreement or its negotiation or for acting (or, as the case may be,
refraining from acting) in accordance with the instructions of the Instructing
Group. The Agent, the Paying Agent and the Security Trustee shall be entitled
to rely on any communication, instrument or document believed by it to be
genuine and correct and to have been signed or sent by the proper person and
shall be entitled to rely as to legal or other professional matters on opinions
and statements of any legal or other professional advisers.

 

31.15      The
Agent, the Paying Agent and the Security Trustee may, without any liability to
account to the Banks, accept deposits from, lend money to, and generally engage
in any kind of banking or trust business with, the Borrowers or any Bank as if
it were not the Agent, Paying Agent and the Security Trustee.

 

31.16      Each
Bank shall reimburse the Agent and the Security Trustee in the proportion borne
by its commitment to the Total Commitments, for the charges and expenses
incurred by the Agent and/or Security Trustee in connection with the
negotiation, preparation, syndication, execution and, where relevant,
registration of this Agreement and the other Finance Documents and/or in
contemplation of, or otherwise in connection with, the enforcement of, or the
preservation of any rights under, or in carrying out its duties under, the
Agreement and the Security Documents including (in each case) the fees and expenses
of legal or other professional advisers. Each Bank shall indemnify the Agent,
Paying Agent and the Security Trustee in the proportion borne by its Commitment
to the Total Commitments against all liabilities, damages, costs and claims
whatsoever incurred by the Agent and/or the Security Trustee in connection with
this Agreement and the Security Documents or any action taken or omitted by the
Agent, the Paying Agent and the Security Trustee under this Agreement and the
Security Documents, unless such liabilities, damages, costs or claims arise
from the Agent’s and/or the Security Trustee’s own gross negligence or wilful
misconduct.

 

31.17      The
Agent, the Paying Agent and the Security Trustee shall have full power to
determine all questions and doubts arising in relation to the interpretation or
application of any of the provisions of this Agreement or any of the Security
Documents as it affects the Agent, Paying Agent and the Security Trustee and
every such determination (whether made upon a question actually raised or
implied in the acts or proceedings of the Agent and the Security Trustee) shall
be conclusive.

 

81

 

31.18      In its
capacity as trustee in relation to the Finance Documents and in relation to the
Trust Property, the Security Trustee -

 

31.18.1  shall,
without prejudice to any of the powers, discretions and immunities conferred
upon trustees by law (and to the extent not inconsistent with the provisions of
this Agreement or any of the other Finance Documents), have all the same powers
and discretions as a natural person acting as the beneficial owner of such
property and/or as are conferred upon the Security Trustee by this Agreement
and/or any other Finance Document provided that the Security Trustee may only
exercise such powers and discretions to the extent that the Security Trustee is
authorised so to exercise the same in accordance with the provisions of this
Agreement and/or any other Finance Document;

 

31.18.2  shall be
entitled to invest moneys forming part of the Trust Property and which, in the
opinion of the Security Trustee may not be paid out promptly following receipt
in the name or under the control of the Security Trustee in any of the
investments for the time being authorised by law for the investment by trustees
of trust moneys or in any other property or investments whether similar to the
aforesaid or not or by placing the same on deposit in the name or under the
control of the Security Trustee as the Security Trustee may think fit without
being under any duty to diversify its investments and the Agent may at any time
vary or transpose any such property or investments for or into any others of a
like nature and shall not be responsible for any loss due to depreciation in
value or otherwise of such property or investments (and on the basis that any
investment of any part or all of the Trust Property may, at the discretion of
the Security Trustee be made or retained in the names of nominees); and

 

31.18.3  may, in the
conduct of its obligations under and in respect of the Finance Documents
(otherwise than in relation to its right to make any declaration, determination
or decision), instead of acting personally, employ and pay any agent (whether
being a lawyer or any other person) to transact or concur in transacting any
business and to do or concur in doing any acts required to be done by the
Security Trustee (including the receipt and payment of money) on the basis
that -

 

(a)           any
such agent engaged in any profession or business shall be entitled to be paid
all usual professional and other charges for business transacted and acts done
by him or any partner or employee of his in connection with such trusts; and

 

(b)           the
Security Trustee shall not be bound to supervise, or be responsible for any
loss incurred by reason of any act or omission of any such agent if the
Security Trustee shall have exercised reasonable care in the selection of such
agent.

 

82

 

32           RETIREMENT
OF THE AGENT, PAYING AGENT AND THE SECURITY TRUSTEE

 

32.1        Each
of the Agent, the Paying Agent and the Security Trustee may and if requested by
the Instructing Group shall (which the Instructing Group may only request if
they have good cause to do so) retire its appointment under this Agreement and
the other Finance Documents at any time without assigning any reason thereof or
by giving not less than 30 days prior written notice to that effect to each of
the other parties hereto, provided that no such retirement shall be effective
until a successor for such Agent, Paying Agent and the Security Trustee is
appointed in accordance with the following provisions of this Clause 32 -

 

32.1.1    if the
Agent (which for the purpose of this clause shall refer to any one of the Agent
or the Paying Agent or the Security Trustee, as the case may be) gives notice
of its retiring pursuant to sub-clause 32.1, during the period of such notice -

 

(a)           the
retiring Agent may appoint as successor Agent a banking corporation or
financial institution or related company owned by such retiring Agent by at
least 50% or a banking corporation or financial institution or related company
owned by one of the Banks by at least 50%, without requiring for such
appointment the prior written consent and/or consultation of the Instructing
Group and/or the Borrowers, or such appointment not being applicable;

 

(b)           the
Instructing Group may appoint as successor Agent any of the Banks, or failing
such appointment;

 

(c)           the
retiring Agent may appoint as successor Agent any reputable and experienced
bank or financial institution or related company approved by the Instructing
Group, with the prior consultation of the Borrowers;

 

33.1.2    if during the period of such
notice no successor is so appointed pursuant to sub-clauses 32.1.1(a), (b) and
(c), the retiring Agent may appoint a successor Agent itself any reputable and
experienced bank or financial institution nominated by the Agent after
consultation with the Borrowers;

 

and either the provisions of Clause 32.1.1
or 32.1.2 have been complied with.

 

32.2        Upon
any such successor as aforesaid being appointed, the retiring Agent, Paying
Agent or Security Trustee shall be discharged from any further obligation under
this Agreement and the other Finance Documents and its successor and each of the
other parties to this Agreement and/or the other Finance Documents shall have
the same rights and obligations among themselves as they would have had if such
successor had been a party 

 

83

 

to this Agreement
and/or the other Finance Documents in place of the retiring Agent or Paying Agent or
Security Trustee and the parties to this Agreement and/or the other Finance
Documents and the successor agent, successor paying agent and the security
trustee shall, prior to such retirement, execute such amendments to this
Agreement and/or the other Finance Documents as may be necessary as a result of
such substitution.

 

33           ASSIGNMENTS
AND TRANSFERS

 

33.1        This
Agreement shall be binding upon and enure to the benefit of each party hereto
and its successors and permitted assigns and transferees;

 

33.2        No
Borrower (in any of its capacities) shall be entitled to assign or transfer all
or any of its rights, benefits and obligations hereunder or under the Subject
Documents;

 

33.3        Any
Bank may at any time assign to any one or more banks or other financial
institutions all or any part of such Bank’s rights and benefits hereunder or
transfer in accordance with Clause 33.5 all or any part of such Bank’s rights,
benefits and obligations to any bank or financial institution provided that (a)
(except in the case of such an assignment or transfer to an affiliate of such
Bank) no such assignment or transfer may be made without the prior written
consent of the Borrowers (any such consent not to be unreasonably withheld) and
(b) no such assignment or transfer shall be made if the result thereof, at the
time of such assignment or transfer or immediately thereafter, would be that
the Borrowers would be liable to pay an additional amount or amounts pursuant
to Clause 15.1 or 15.2 (Taxes) which additional amount or amounts would not
have been payable had no such assignment or transfer occurred, unless the
assignee or Transferee accepts responsibility to reimburse that Borrower for
any additional amount or amounts;

 

33.4        If
any Bank assigns all or any of its rights and benefits hereunder in accordance
with Clause 33.3, then, unless and until the assignee has undertaken to all the
other parties hereto that it shall be under the same obligations towards each
of them as it would have been under if it had been party hereto, the other
parties hereto shall not be obliged to recognise such assignee as having the
rights against each of them which it would have had if it had been a party
hereto;

 

33.5        Subject
to the provisions of Clauses 33.6, 33.7 and 33.8, if any Bank wishes to
transfer all or any part of its Commitment as contemplated in Clause 33.3,
then such transfer may be effected by the delivery to the Agent of a duly
completed and duly executed Transfer Certificate (together with the related
consent from the Borrowers) and upon the later of the date of receipt by the
Agent of such Transfer Certificate and the date of transfer specified therein:

 

84

 

(i)            the
Commitment of such Bank party to such Transfer Certificate shall be reduced by
the amount expressed in such Transfer Certificate to be transferred to the
Transferee;

 

(ii)           the
Transferee party to such Transfer Certificate shall become a party hereto as a
Bank entitled to the rights and liable to observe the obligations of a Bank
with a Commitment equal to the amount expressed in such Transfer Certificate to
be transferred to such Transferee; and

 

(iii)         the
other parties hereto shall acquire the same rights and benefits (including but
not limited to rights in the trust declared by the Security Trustee in Clause
33) and assume the same obligations between themselves vis-à-vis the Transferee
as they would have acquired and assumed had such Transferee been an original
party hereto as the Bank with a Commitment equal to the amount expressed in
such Transfer Certificate to be transferred to the Transferee.

 

33.6        Each
of the parties hereto confirms that (a) the delivery to a Transferee of a
Transfer Certificate signed by a Bank constitutes an irrevocable offer by each
of the parties hereto to accept such Transferee (subject to the conditions set
out herein) as a Bank party hereto with the rights and obligations so expressed
to be transferred and (b) such offer may be accepted by such Transferee by the
execution of such Transfer Certificate by such Transferee and (c) the
provisions of this Agreement shall apply to the contract between the parties
thereto arising as a result of the acceptance of such offer;

 

33.7        the
Transferee and all other relevant parties undertake to execute all further
documents, at the expense of the Transferee, to give effect and validity to the
required transfer of all interests in the Trust Property and Security Documents
in consequence of the Transfer Certificate;

 

33.8        Any
transfer pursuant to this Clause 33 of part of a Bank’s Commitment shall be in
a minimum amount of US$3,000,000 and an integral multiple of US$1,000,000;

 

33.9        On
the date on which a transfer takes effect pursuant to this Clause 34 the
Transferee in respect of such transfer shall pay to the Agent for its own
account a fee of US$500;

 

33.10      The
Agent and the Security Trustee shall not be obliged to accept any Transfer
Certificate received by it hereunder and no such Transfer Certificate may take
effect on any day on or after the receipt by the Agent of a Notice Drawdown and
prior to the relevant Drawdown Date;

 

85

 

33.11      The
Agent shall promptly notify the Borrowers of the receipt by it of any Transfer
Certificate, identifying in such notice the parties thereto in their respective
capacities and the portion of the Commitment transferred (as specified in such
Transfer Certificate); and

 

33.12      The
Agent shall be fully entitled to rely on any Transfer Certificate delivered to
it in accordance with the foregoing provisions which is complete and regular on
its face as regards its contents and purportedly signed on behalf of the
relevant Bank and the Transferee and shall have no liability or responsibility
to any party as a consequence of placing reliance upon and acting in accordance
with any such Transfer Certificate;

 

33.13      Any
Bank may provide or disclose to any actual or potential Transferee or assignee
or to any person who may otherwise enter into contractual relations with such
Bank in relation to this Agreement, a copy of this Agreement, copies of all
information provided by the Borrowers pursuant to each Subject Document to
which they are party, details of drawings made by the Borrowers thereunder,
information regarding the performance of the Borrowers of its obligations
thereunder;

 

33.14      A Bank
may change its lending office by giving notice to the Agent and the change
shall become effective on the later of:

 

(a)           on
the date of which the Agent receives a notice; and

 

(b)           the date, if any, specified
in the notice as the date on which the change shall come into effect.

 

33.15      On
receiving such a notice, the Agent shall notify the Borrowers, the Paying Agent
and the Security Trustee and until the Agent receives such a notice, it shall
be entitled to assume that a Bank is acting through its lending office of which
the Agent last had notice.

 

34           LANGUAGE

 

34.1        Each
document, instrument, certificate or statement referred to herein or to be
delivered hereunder by the Borrowers shall, if not in the German or English
language, be accompanied by an English translation thereof certified by the
Borrowers, which translation shall prevail in the case of conflict with the
non-English or non-German version.

 

35           NON-IMMUNITY

 

35.1        The
Borrowers do not have any right of immunity from set-off, suit or execution,
attachment or other legal process under the laws of England or any other
jurisdiction.

 

86

 

35.2        The
exercise by the Borrowers of their rights and performance and discharge of
their duties and liabilities hereunder will constitute commercial acts done and
performed for private and commercial purposes.

 

35.3        To
the extent that the Borrowers may in any jurisdiction, in which proceedings may
at any time be taken for the enforcement of this Agreement and/or any of the
Security Documents, claim for themselves or their assets immunity from suit,
judgment, execution, attachment (whether in aid of execution, before judgment
or otherwise) or other legal process, and to the extent that in any such
jurisdiction there may be attributed to themselves or their assets any such
immunity (whether or not claimed), the Borrowers hereby irrevocably agree not
to claim and hereby irrevocably waive any such immunity to the full extent
permitted by the laws of such jurisdiction.

 

36           NOTICES

 

36.1        Every
notice, demand or other communication under this Agreement shall be in writing
and may be given or made by telefax.

 

36.2        Any
notices or other documents to be served on the Borrowers hereunder or pursuant
hereto may be served on the Manager and are to be addressed to c/o Danaos
Shipping Company Limited, 57, Akti Miaouli, 185 36 Piraeus, Greece facsimile
no, +30 210 429-3592 telex no. 212133 DECU GR and, in the case of a telefax,
shall be deemed to have been received at the time it is sent (provided it is in
business hours in the place of receipt otherwise the next Business Day in the
place of receipt and that an error free transmission slip is issued on
completion of transmission) and, in the case of a letter, shall be effective on
the actual receipt thereof by the Borrowers.

 

36.3        Any
notices or other documents to be sent to the Agent shall be sent to it at 28,
Diligianni Street, 145 62 Kifissia, Greece, facsimile no. +30 210  6234192-3 and, in the case of a telefax,
shall be deemed to have been received at the time it is sent (provided it is in
business hours in the place of receipt otherwise the next Business Day in the
place of receipt and that an error free transmission slip is issued on
completion of transmission) and, in the case of a letter, shall be effective on
the actual receipt thereof by the Agent.

 

36.4        Any
notice or other document to be sent to the Paying Agent and for the Security
Trustee shall be sent to it at Gerhart–Hauptmann–Platz–50, D-20095, Hamburg,
Germany, facsimile no. +49 40 3333 34118 and, in the case of a telefax, shall
be deemed to have been received at the time it is sent (provided it is in business
hours in the place of receipt otherwise the next Business Day in the place of
receipt and that an error free transmission slip is issued on completion of
transmission) and, in the case of a letter, shall be effective on the actual
receipt thereof by the Agent.

 

87

 

37           APPLICABLE
LAW AND JURISDICTION

 

37.1        This
Agreement shall be governed by and construed in accordance with the laws of
England.

 

37.2        Any
legal action or proceedings arising out of or in connection with this Agreement
and the other Finance Documents may be brought in the English Courts. The
Borrowers hereby accept for themselves and their assets and revenues generally
and unconditionally the jurisdiction of the aforesaid courts. The submission to
such jurisdiction shall not (and shall not be construed so as to) limit the
right of the Agent, the Paying Agent and the Security Trustee to bring any
legal action or proceedings with respect to this Agreement in any competent
jurisdiction and/or the competent court where the Vessel may be found. The
Borrowers hereby irrevocably waive any objection they may now or hereafter have
to the selection of venue of any such action or proceedings and any claim they
may have that such action or proceedings have been brought in an inconvenient
forum. Nothing herein contained shall affect the right of the Agent and the
Security Trustee to serve process in any other manner permitted by law.

 

38           AGENT
FOR SERVICE OF PROCESS

 

38.1        The
Borrowers jointly authorise and appoint SH Process Agents Limited currently
located at One St Pauls Churchyard, London EC4M 8SH (or such other person being
a firm of solicitors in England as they may from time to time substitute by
notice to the Agent) to accept service of all legal process arising out of or
connected with this Agreement and each of the other Finance Documents of which
they are party and service on such person (or substitute) shall be deemed to be
service on the Borrowers. Except upon a substitution the Borrowers shall not revoke
any such authority or appointment and shall at all times maintain an agent for
service of process in England and if any such agent ceases for any reason to be
an agent for this purpose shall forthwith appoint another agent and advise the
Agent accordingly.

 

39           THIS
AGREEMENT AND THE OTHER FINANCE DOCUMENTS

 

In case of any conflict between the
provisions of this Agreement and any of the other Finance Documents the
provisions of this Agreement shall prevail.

 

40           COUNTERPARTS

 

This Agreement shall be executed in any
number of counterparts, each of which shall constitute an original.

 

88

 

AS WITNESS the hands of the duly authorised representatives of the parties
hereto the day and year first before written.

 

	
  BORROWERS

  	
   

  
	
   

  	
   

  
	
  Signed by

  	
  )

  
	
   

  	
  )

  
	
   

  	
   

  	
  )

  
	
  the duly authorised attorney-in-fact

  	
  )

  
	
  for and on behalf of

  	
  )

  
	
  Containers Services Inc.

  	
  )

  
	
  in the presence of -

  	
  )

  
	
   

  	
   

  
	
   

  	
   

  
	
  Signed by

  	
  )

  
	
   

  	
  )

  
	
   

  	
   

  	
  )

  
	
  the duly authorised attorney-in-fact

  	
  )

  
	
  for and on behalf of

  	
  )

  
	
  Containers Lines Inc.

  	
  )

  
	
  in the presence of -

  	
  )

  
	
   

  	
   

  
	
   

  	
   

  
	
  AGENT

  	
   

  
	
   

  	
   

  
	
  Signed by

  	
  )

  
	
   

  	
  )

  
	
   

  	
   

  	
  )

  
	
  the duly authorised attorney-in-fact

  	
  )

  
	
  for and on behalf of Aegean
  Baltic Bank S.A.

  	
  )

  
	
  in the presence of -

  	
  )

  
	
   

  	
   

  
	
   

  	
   

  
	
  PAYING AGENT AND SECURITY TRUSTEE

  
	
   

  
	
  Signed by

  	
  )

  
	
   

  	
  )

  
	
   

  	
   

  	
  )

  
	
  the duly authorised attorney-in-fact

  	
  )

  
	
  for and on behalf of

  	
  )

  

 

89

 

	
  HSH NORDBANK AG

  	
  )

  
	
  in the presence of -

  	
  )

  
	
   

  	
   

  
	
  BANK

  	
   

  
	
   

  	
   

  
	
  Signed by

  	
  )

  
	
   

  	
  )

  
	
   

  	
   

  	
  )

  
	
  the duly authorised attorney-in-fact

  	
  )

  
	
  for and on behalf of

  	
  )

  
	
  HSH NORDBANK AG

  	
  )

  
	
  in the presence of -

  	
  )

  
	
   

  	
   

  
	
   

  	
   

  
	
  PARTY TO THE MASTER AGREEMENT

  
	
   

  
	
  Signed by

  	
  )

  
	
   

  	
  )

  
	
   

  	
   

  	
  )

  
	
  the duly authorised attorney-in-fact

  	
  )

  
	
  for and on behalf of

  	
  )

  
	
  HSH NORDBANK AG

  	
  )

  
	
  in the presence of -

  	
  )

  

 

90

 

SCHEDULE 1

 

THE BANKS AND THEIR COMMITMENTS

 

Pre-Delivery Facility 

 

	
  NAME OF BANK

  	
   

  	
  COMMITMENT

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  HSH NORDBANK AG

  	
   

  	
  US$

  	
  49,000,000

  	
   

  
					

 

Post-Delivery Senior Facility 

 

	
  NAME OF BANK

  	
   

  	
  COMMITMENT

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  HSH NORDBANK AG

  	
   

  	
  US$

  	
  45,000,000

  	
   

  
					

 

Post-Delivery Junior Facility 

 

	
  NAME OF BANK

  	
   

  	
  COMMITMENT

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  HSH NORDBANK AG

  	
   

  	
  US$

  	
  15,000,000

  	
   

  
					

 

91

 

SCHEDULE 2

 

NOTICE OF DRAWDOWN

 

Dated [                 ]
2002

 

To:          [Insert name of Agent]

 

[Insert address of Agent]

 

Dear Sirs

 

FINANCIAL AGREEMENT DATED [           ]
2002

 

We refer to the above Agreement and hereby
give you this Drawdown Notice in accordance with Clause 4 thereof.

 

We hereby give you notice that we wish an
Advance be made as follows: [amount] [date] the proceeds of the Advance to be
transferred to [account] [Bank details].

 

Terms defined in the Agreement shall have
the same meanings when used in this Notice of Drawdown.

 

	
  Yours faithfully

  
	
   

  
	
   

  
	
   

  	
   

  
	
  For and on behalf

  
	
  [                           ]

  

 

92

 

SCHEDULE 3

 

FORM OF TRANSFER CERTIFICATE

 

To:          [Agent]

 

TRANSFER
CERTIFICATE

 

relating to the agreement (the ‘Agreement’)
dated                  
2002 made between (1) Containers Services Inc. and Containers Lines Inc..,
(2) Aegean Baltic Bank S.A. as Agent (3) HSH Nordbank AG (as Paying Agent and
Security Trustee) (4) HSH Nordbank AG, (as Bank). Terms defined in the
Agreement shall bear the same meaning herein.

 

1.          Transferor (the ‘Bank’) hereby confirms the accuracy of the summary
of its Commitment in the Agreement set out in the Schedule below and requests
[Transferee] (the ‘Transferee’) to accept and procure the transfer to the
Transferee of the portion of such Commitment specified in the Schedule by
counter-signing and delivering this Transfer Certificate to the Agent at its
address for the service of notices specified in the Agreement.

 

2.          The Transferee hereby requests the Agent to accept this transfer
Certificate as being delivered to the Agent pursuant to and for the purposes of
Clause 31 and Clause 33 (Assignments) of the Agreement so as to take
effect in accordance with the terms thereof on the date of receipt by it of
this Transfer Certificate or (if later) on [specify date of transfer] subject
only to the provisions of the Agreement.

 

3.          The Transferee confirms that it has received from the Bank a copy of
the Agreement together with such other documents and information as it has
required in connection with this transaction and that it has not relied and
will not hereafter rely on the Bank or any other party to the Agreement to
check or enquire on its behalf into the legality, validity, effectiveness,
adequacy, accuracy or completeness of any such documents or information and
further agrees that it has not relied and will not rely on the Bank or any
other party to the Agreement to assess or keep under review on its behalf the
financial condition, creditworthiness, condition, affairs, status or nature of
each Borrower or any other party to the Agreement.

 

4.          Execution of this Transfer Certificate by the Transferee constitutes
its representation to the Bank and all other parties to the Agreement that it
has power to become a party to the Agreement as a Bank on the terms herein and
therein set out, has taken all necessary steps to authorise execution and
delivery of this Transfer Certificate.

 

5.          The Transferee hereby undertakes with the Bank and each of the other
parties to the Agreement that it will perform in accordance with their terms
all those obligations which by the terms of the Agreement will be assumed by it
after delivery of this Transfer Certificate to the Agent and 

 

93

 

satisfaction of the conditions subject to which this Transfer
Certificate is expressed to take effect.

 

6.          The Bank makes no representation or warranty and assumes no
responsibility with respect to the legality, validity, effectiveness, adequacy
or enforceability of the Agreement or any document relating thereto and assumes
no responsibility for the financial condition of each Borrower or any other
party to the Agreement or for the performance and observance by each Borrower
or any other such party of any of its obligations under the Agreement or any
document relating thereto and any and all such conditions and warranties,
whether express or implied by law or otherwise, are hereby excluded.

 

7.          The Bank hereby gives notice that nothing herein or in the Agreement
(or any document relating thereto) shall oblige the bank to (i) accept a re-transfer
from the Transferee of the whole or any part of its rights, benefits and/or
obligations under the Agreement transferred pursuant hereto or (ii) support any
losses directly or indirectly sustained or incurred by the Transferee for any
reason whatsoever including, without limitation, the non-performance by each
Borrower or any other party to the Agreement (or any document relating thereto)
of its obligations under any such document. The Transferee hereby acknowledges
the absence of any such obligation as is referred to in (i) or (ii) above.

 

8.          This Transfer Certificate and the rights and obligations of the
parties hereunder shall be governed by and construed in accordance with English
law.

 

Notes:

 

(i)            A
transfer fee of US$500 is payable by the Transferee to the Agent for its own
account on the date upon which the transfer takes effect.

 

(ii)           The
Borrowers written consent to the transfer is delivered to the Agent with this
Transfer Certificate.

 

AS WITNESS the hands of the authorised
signatures of the parties hereto on the date appearing below.

 

94

 

THE SCHEDULE

 

	
  Commitment

  	
  Portion Transferred

  
	
   

  	
   

  
	
  [Transferor]

  	
  [Transferee]

  
	
   

  	
   

  
	
  By:

  	
  By:

  
	
   

  	
   

  
	
  Date:

  	
  Date:

  

 

Administrative
Details of Transferee

 

	
  Facility Office:

  	
   

  
	
   

  	
   

  
	
  Contact Name:

  	
   

  
	
   

  	
   

  
	
  Account for payments in dollars:

  	
   

  
	
   

  	
   

  
	
  Account for payments in sterling:

  	
   

  
	
   

  	
   

  
	
  Account for payments in Euros:

  	
   

  
	
   

  	
   

  
	
  Telephone:

  	
   

  
	
   

  	
   

  
	
  Telex:

  	
   

  
	
   

  	
   

  
	
  Telefax

  	
   

  

 

95

 

Allen & Overy LLP

 

EXECUTION VERSION

 

SUPPLEMENTAL AGREEMENT

 

 

DATED 21 APRIL,
2005

 

BETWEEN

 

CONTAINER
SERVICES INC. and CONTAINERS LINES INC.

as Borrowers

 

AND

 

DANAOS HOLDINGS
LIMITED

as Guarantor

 

AND

 

The BANKS AND
FINANCIAL INSTITUTIONS listed in Schedule 1

as Banks

 

AND

 

AEGEAN BALTIC
BANK S.A.

as Agent

 

AND

 

HSH NORDBANK AG

as Paying Agent
and Security Trustee

 

relating to a
FINANCIAL AGREEMENT

dated 17th December 2002 and amended and
restated pursuant to a

Supplemental Agreement dated 18th February,
2004

 

1

 

CONTENTS

 

	
   

  	
  Page

  
	
  Clause

  	
   

  
	
  1.

  	
  Interpretation

  	
  3

  
	
  2.

  	
  Conditions Precedent

  	
  4

  
	
  3.

  	
  Amendments

  	
  4

  
	
  4.

  	
  Representations

  	
  4

  
	
  5.

  	
  Consents

  	
  5

  
	
  6.

  	
  Miscellaneous

  	
  5

  
	
  7.

  	
  Governing law

  	
  5

  
	
  8.

  	
  Enforcement

  	
  5

  
	
   

  	
   

  	
   

  
	
  Schedules

  	
   

  
	
  1.

  	
  The Banks and their
  Commitments

  	
  7

  
	
  2.

  	
  Restated Financial Agreement

  	
  8

  
	
  3.

  	
  Amendments to Danaos
  Guarantee

  	
  9

  
	
  4.

  	
  Conditions precedent
  documents

  	
  11

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SIGNATORIES

  	
  13

  

 

2

 

THIS AGREEMENT is dated 21 April, 2005 between:

 

(1)                                  CONTAINERS
SERVICES INC. and CONTAINERS LINES INC. each being a corporation organised and
existing under the laws of the Republic of Liberia each having its registered
office at 80 Broad Street, Monrovia, Liberia (the Borrowers);

 

(2)                                  DANAOS HOLDINGS
LIMITED a corporation organised and existing under the laws of the Republic of
Liberia, having its registered office at 80 Broad Street, Monrovia, Liberia
(the Guarantor);

 

(3)                                  HSH NORDBANK AG
as paying agent and security trustee (in this capacity the Security
Trustee).

 

(4)                                  The BANKS listed
in Schedule 1 (the Banks); and

 

(5)                                  AEGEAN BALTIC
BANK S.A. of 28, Diligianni Street, Kifissia 14562, Athens, Republic of Greece
(the Agent).

 

BACKGROUND

 

(A)                              This Agreement is
supplemental to and amends a financial agreement dated 17th December, 2002
between, the Borrowers, the Security Trustee, the Banks, the Agent and the
Paying Agent as previously amended and restated by a supplemental agreement
dated 18th February, 2004 between the parties hereto (the Financial Agreement).

 

(B)                                This Agreement is
supplemental to and amends a guarantee agreement dated 17th December, 2002
between the Security Trustee, the Banks, the Agent and the Paying Agent (the Danaos Guarantee).

 

(C)                                The Borrowers
have requested that the Security Trustee agree to certain amendments to the
Financial Agreement and to the Danaos Guarantee and accordingly the parties
have agreed to amend the Financial Agreement and the Danaos Guarantee on the
terms set out in this Agreement.

 

IT IS AGREED as follows:

 

1.                                      INTERPRETATION

 

1.1                               Definitions

 

In this Agreement:

 

(a)                                  Effective Date means  the date upon which the Agent has issued the
notification referred to in Clause 2.1 (Conditions Precedent) or such other
date as the Borrowers and the Agent may agree.

 

(b)                                 Fee Letter means any letter entered
into by reference to this Agreement between the Paying Agent and the Borrowers
setting out the amount of certain fees referred to in this Agreement.

 

(c)                                  Capitalised
terms defined in the Financial Agreement have, unless expressly defined in this
Agreement, the same meaning in this Agreement.

 

(d)                                 References
in the Financial Agreement to this Agreement
and expressions of similar import shall be deemed to be references to the
Financial Agreement as amended and restated by this Agreement and to this
Agreement.

 

3

 

(e)                                  References
in the Danaos Guarantee to this Guarantee
and expressions of similar import shall be deemed to be references to the
Danaos Guarantee as amended by this Agreement and to this Agreement.

 

(f)                                    The
provisions of Clause 1.2 (Construction) of the Financial Agreement apply to
this Agreement as though they were set out in full in this Agreement except
that references to the Financial Agreement are to be construed as references to
this Agreement.

 

2.                                      CONDITIONS PRECEDENT

 

2.1                                 The
provisions of Clause 3 (Amendments) shall take effect on and from the date that
the Agent notifies the Borrowers, the Guarantor and the Banks that it has
received all of the documents and evidence set out in Schedule 4 (Conditions
precedent documents) in form and substance satisfactory to the Agent and the
Security Trustee. The Agent must give this notification to the Borrowers, the
Guarantor and the Banks promptly upon being so satisfied.

 

2.2                                 If
the Effective Date has not occurred by the date falling 30 days after the date
of this Agreement or such other date as may be agreed between the parties, the
Financial Agreement and the Danaos Guarantee will not be amended in the manner
contemplated by this Agreement.

 

3.                                      AMENDMENTS

 

(a)                                  Subject
as set out below, the Financial Agreement will be amended from the Effective
Date so that it reads as if it were restated in the form set out in Schedule 2
(Restated Financial Agreement).

 

(b)                                 Subject
as set out below, the Danaos Guarantee will be amended from the Effective Time
as more particulary described in Schedule 3 (Amendments to Danaos Guarantee).

 

4.                                      REPRESENTATIONS

 

4.1                               Representations

 

The representations set out in this Clause are made
by each of the Borrowers and the Guarantor on the date of this Agreement to
each Creditor.

 

4.2                               Powers and
authority

 

It has the power to enter into and perform, and has
taken all necessary action to authorise the entry into and performance of this
Agreement and the transactions contemplated by this Agreement.

 

4.3                               Legal validity

 

Subject to any general principles of law limiting
its obligations and specifically referred to in any legal opinion delivered
under Schedule 4 (Conditions precedent documents), this Agreement constitutes
its legally binding, valid and enforceable obligation.

 

4.4                               Non-conflict

 

The entry into and performance by it of, and the
transactions contemplated by, this Agreement do not and will not conflict with:

 

(a)                                  any
law or regulation applicable to it; or

 

(b)                                 conflict
with its or, in respect of the Guarantor any of its Subsidiaries’
constitutional documents; or

 

4

 

(c)                                  conflict
with any document which is binding on it or , in respect of the Guarantor any
of its Subsidiaries, or any of its or, in respect of the Guarantor its
Subsidiaries’ assets.

 

4.5                               Authorisations

 

All authorisations required by it in connection with
the entry into, performance, validity and enforceability of, and the
transactions contemplated by, this Agreement have been obtained or effected (as
appropriate) and are in full force and effect.

 

4.6                               Financial
Agreement and Danaos Guarantee

 

The representations set out in Clause 16
(Representations and Warranties) of the Financial Agreement in respect of the
Borrowers and Schedule 3 of the Danaos Guarantee in respect of the Guarantor
are true as if made on the date of this Agreement and as if references to the
Financial Agreement are references to the Financial Agreement, as amended and
restated by this Agreement, and as is references to the Danaos Guarantee are
references to the Danaos Guarantee as amended by this Agreement, with reference
to the facts and circumstances then existing.

 

5.                                      CONSENTS

 

(a)                                  Each
of the Borrowers and the Guarantor confirms its consent to the amendment and
restatement of the Financial Agreement as contemplated by this Agreement and,
with effect from the Effective Date, confirms that in respect of any security
which has been created or guarantee which has been given in favour of the
Security Trustee as agent and trustee for each Creditor under a Finance
Document, that security or guarantee includes all the liabilities and
obligations of the Creditor to the Creditors under the Finance Documents as
amended.

 

(b)                                 For
avoidance of doubt, the Guarantor confirms and acknowledges that the Danaos
Guarantee (as amended pursuant to this Agreement) remains in full force and
effect notwithstanding the amendment and restatement of the Financial Agreement
pursuant to this Agreement.

 

6.                                      MISCELLANEOUS

 

(a)                                  Each
of this Agreement, the Financial Agreement, as amended by this Agreement, and
the Danaos Guarantee, as amended by this Agreement, is a Finance Document.

 

(b)                                 Subject
to the terms of this Agreement, the Financial Agreement will remain in full
force and effect and the Financial Agreement and this Agreement will be read
and construed as one document.

 

(c)                                  Subject
to the terms of this Agreement, the Danaos Guarantee will remain in full force
and effect and the Danaos Guarantee and this Agreement will be read and
construed as one document.

 

(d)                                 The
Borrowers agree to pay the Paying Agent a restructuring fee for Banks in the
manner agreed in the Fee Letter between the Paying Agent and the Borrowers.

 

7.                                      GOVERNING LAW

 

This Agreement is governed by English law.

 

8.                                      ENFORCEMENT

 

8.1                               Jurisdiction

 

(a)                                 The
English courts have jurisdiction to settle any dispute in connection with any
Finance Document.

 

5

 

(b)                                 The
English courts are the most appropriate and convenient courts to settle any
such dispute.

 

(c)                                  This
Clause is for the benefit of the Creditors only. To the extent allowed by law,
the Creditors may take:

 

(i)                                     proceedings
in any other court; and

 

(ii)                                  concurrent
proceedings in any number of jurisdictions.

 

8.2                               Service of
process

 

(a)                                  Each
of the Borrowers and the Guarantor irrevocably appoints SH Process Agents
Limited of One St Paul’s Churchyard, London, EC4M 8SH as its agent under the
Finance Documents to which it is a party for service of process in any
proceedings before the English courts.

 

(b)                                 If
any person appointed as process agent is unable for any reason to act as agent
for service of process, the Borrowers and the Guarantor must immediately
appoint another agent on terms acceptable to the Security Trustee. Failing
this, the Security Trustee may appoint another agent for this purpose.

 

(c)                                  Each
of the Borrowers and the Guarantor agree that failure by a process agent to
notify it of any process will not invalidate the relevant proceedings.

 

(d)                                 This
Clause does not affect any other method of service allowed by law.

 

8.3                               Waiver of
immunity

 

Each of the Borrowers and the Guarantor irrevocably
and unconditionally:

 

(a)                                  agrees
not to claim any immunity from proceedings brought by a Creditor against it in
relation to a Finance Document 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 those proceedings; and

 

(c)                                  waives
all rights of immunity in respect of it or its assets.

 

This Agreement has been entered into on the date
stated at the beginning of this Agreement.

 

6

 

SCHEDULE 1

 

THE BANKS AND THEIR COMMITMENTS

 

Pre-Delivery Facility

 

	
  NAME OF BANK

  	
   

  	
  COMMITMENT

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  HSH
  Nordbank AG

  	
   

  	
  US$

  	
  49,000,000

  	
   

  
					

 

Post-Delivery Senior Facility

 

	
  NAME OF BANK

  	
   

  	
  COMMITMENT

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  HSH
  Nordbank AG

  	
   

  	
  US$

  	
  20,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Dresdner
  Bank AG

  	
   

  	
  US$

  	
  25,000,000

  	
   

  

 

Post-Delivery Junior Facility

 

	
  NAME OF BANK

  	
   

  	
  COMMITMENT

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  HSH
  Nordbank AG

  	
   

  	
  US$

  	
  15,000,000

  	
   

  
					

 

7

 

SCHEDULE 2

 

RESTATED FINANCIAL AGREEMENT

 

8

 

SCHEDULE 3

 

AMENDMENTS TO DANAOS GUARANTEE

 

As of and with effect from the Effective Time the
Danaos Guarantee shall be amended as follows:

 

1.                                       The definition of
“Group Vessel” and “Group
Vessels” in Schedule 3 to the Danaos Guarantee shall be amended by
deleting the words “collectively the Vessels and any other vessels including
vessels under construction or owned or, in the case of a vessel under
construction, ordered by” and inserting the words “the vessels owned by and
registered (or to be owned by and registered) in the name of”;

 

2.                                       The definition of
“Group Vessels Values” in Schedule 3 to
the Danaos Guarantee shall be amended by deleting the words “(which shall
consist of the acquisition price for each Group Vessel, all material expense
incurred in the acquisition (including the cost of financing) and subsequent
expenditures which appreciably extend the life, increase the earning capacity
or improve the efficiency or safety of the Group Vessel, less depreciation
computed in accordance with the Applicable Accounting Principles)-” and
inserting the words “determined in accordance with the Applicable Accounting
Principles.”;

 

3.                                       The definition of
“Liquid Funds” in Schedule 3 to the
Danaos Guarantee shall be amended by deleting the word “Encumbrances” in
paragraph (a) and inserting the words “Security Interest (other than a Security
Interest created under a Bank Credit Agreement)” and deleting the words “rated
at least as having an investment grade A1 and is free of any Encumbrances” in
paragraph (b) and inserting the words “free of any Security Interest (other
than a Security Interest created under a Bank Credit Agreement)”;

 

4.                                       The definition of
“Net Consolidated Indebtedness” in Schedule
3 to the Danaos Guarantee shall be amended by deleting the words “the amount of”
and deleting the words “reduced by an amount of US$5,000,000”;

 

5.                                       The definition of
“Net Worth” in Schedule 3 to the Danaos
Guarantee shall be deleted in its entirety and replaced with the words “means,
in respect of the relevant period, the Total Shareholders Equity as defined by
the Applicable Accounting Principles”;

 

6.                                       The definition of
“Pro Forma” in Schedule 3 to the Danaos
Guarantee shall be amended by deleting the words “paragraph 3(h)(iii)(2)” and
inserting the words “paragraph 3(h)(ii)(1)”;

 

7.                                       The following new
definition shall be inserted into Schedule 3 to the Danaos Guarantee:

 

““Security Interest”
means

 

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

 

(b)                                 the
rights of the plaintiff under an action in rem in which the asset 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 it held a security interest over an
asset of A; but this paragraph (c) does not apply to a right of set off or
combination of accounts conferred by the standard terms of business of a bank or
financial institution;”

 

9

 

8.                                       The definition of
“Tangible Fixed Assets” in Schedule 3 to
the Danaos Guarantee shall be amended by deleting the word “Tangible” from the
definition and deleting the word “tangible” before the words “fixed assets” and
all references to “Tangible Fixed Assets” in Schedule 3 to the Danaos Guarantee
will be construed to be references to “Fixed Assets”.

 

9.                                       The definition of
“Total Oustanding Debt” in Schedule 3 to
the Danaos Guarantee shall be deleted in its entirety and replaced with the
following and replaced with the words “means, in respect of the relevant
period, the aggregate amount of principal due under the Bank Credit Agreements
less cash held with banks or other financial institutions and any other
short-term investments over which, in each case, a Bank Credit Agreement has
created a Security Interest”;

 

10.                                 Clause 3(c)(i) of
Schedule 3 to the Danaos Guarantee will be amended by deleting the words “shall
be at least” and inserting the words “will always exceed”;

 

11.                                 Clause 3(c)(ii)
of Schedule 3 to the Danaos Guarantee will be amended by deleting the value “100,000,000”
and inserting the value “250,000,000”;

 

12.                                 Clauses 3(c)(v), (vi)
and (vii) of Schedule 3 to the Danaos Guarantee shall be deleted in their
entirety;

 

13.                                 Clause
3(h) of Schedule 3 to the Danaos Guarantee shall be amended by inserting the
words “, nor permit any Subsidiary to “ after
the words “without the Banks’ consent to”;

 

14.                                 Clause 3(h)(i) of
Schedule 3 to the Danaos Guarantee shall be deleted in its entirety and
replaced by the words “incur additional Financial Indebtedness”;

 

15.                                 Clause 3(h)(ii) and
(iii) of Schedule 3 to the Danaos Guarantee shall be deleted in their entirety
and the following new Clause 3(h)(ii) shall be inserted:

 

“(ii)                            declare or pay any
dividend or other distribution to shareholders

 

unless after the effectuation of the events
stated under 3(h)(i) and 3(h)(ii) as the case may be –

 

(1)                              the ratio of
EBITDA to the Net Interest Expenses would be at least 2.50 to 1 on a Pro Forma
Basis for the period immediately preceding the date thereof for which Financial
Statements are available; and

 

(2)                               the
Liquid funds of the Group would not be less than US$30,000,000”.

 

16.                                 The following new
Clause 3(k) shall be inserted into Schedule 3 to the Danaos Guarantee:

 

“to procure that all the capital stock of the
Borrowers is owned directly or indirectly by the Guarantor and that the present
shareholders of the Guarantor shall maintain at all times beneficial ownership
or control, directly or indirectly, of at least sixty per centum (60%) of each
Borrower’s capital stock.”

 

17.                                 The following new
Clause 3(l) shall be inserted into Schedule 3 to the Danaos Guarantee:

 

“without limitation to Clause 3(k), not, without the
prior written consent of the Security Trustee, to sell, transfer, lend, lease
or otherwise dispose of (in any such case otherwise than for full consideration
in the ordinary course of trading) any of its shares in any Borrower or the
whole or, in the opinion of the Security Trustee, any substantial part of its
business, property or assets, whether by a single transaction or by a series of
transactions (related or not).”

 

10

 

SCHEDULE 4

 

CONDITIONS PRECEDENT DOCUMENTS

 

1.                                       A copy of the
constitutional documents of the Borrowers or, if the Security Trustee and the
Agent already have a copy, a certificate of an authorised signatory of each of
the Borrowers confirming that the copy in the Security Trustee’s and Agent’s
possession is still correct, complete and in full force and effect as at a date
no earlier than the date of this Agreement.

 

2.                                       A copy of a
resolution of the board of directors of each of the Borrowers (or a committee
of its board of directors) approving the terms of, and the transactions
contemplated by, this Agreement.

 

3.                                       If applicable, a
copy of a resolution of the board of directors of each of the Borrowers
establishing the committee referred to in paragraph 2 above.

 

4.                                       A certificate of
an authorised signatory of each of the Borrowers certifying that each copy
document specified in this Schedule is correct, complete and in full force and
effect as at a date no earlier than the date of this Agreement.

 

5.                                       A copy of any
other authorisation or other document, opinion or assurance which the Security
Trustee or the Agent has notified the Borrowers is necessary or desirable in
connection with the entry into and performance of, and the transactions
contemplated by, this Agreement or for the validity and enforceability of this
Agreement.

 

6.                                       A copy of the
constitutional documents of the Guarantor or, if the Security Trustee and the
Agent already has a copy, a certificate of an authorised signatory of the
Guarantor confirming that the copy in the Security Trustee’s and the Agent’s
possession is still correct, complete and in full force and effect as at a date
no earlier than the date of this Agreement.

 

7.                                       A copy of a
resolution of the board of directors of the Guarantor (or a committee of its board
of directors) approving the terms of, and the transactions contemplated by,
this Agreement.

 

8.                                       If applicable, a
copy of a resolution of the board of directors of the Guarantor establishing
the committee referred to in paragraph 7 above.

 

9.                                       A certificate of
an authorised signatory of the Guarantor certifying that each copy document
specified in this Schedule is correct, complete and in full force and effect as
at a date no earlier than the date of this Agreement.

 

10.                                 A copy of any
other authorisation or other document, opinion or assurance which the Security
Trustee or the Agent has notified the Guarantor is necessary or desirable in
connection with the entry into and performance of, and the transactions
contemplated by, this Agreement or for the validity and enforceability of this
Agreement.

 

11.                                 A duly executed
original of the Fee Letter.

 

12.                                 Deeds of release
and reassignment of the Retention Account Charges.

 

13.                                 A legal opinion
of Allen & Overy, English legal advisers to the Security Trustee and the
Agent addressed to the Creditors.

 

11

 

14.                                 A legal opinion
of Seward & Kissel, Liberian legal advisers to the Security Trustee and the
Agent, addressed to the Creditors.

 

15.                                 A duly executed
original of a supplemental agreement in relation to the Deeds of
Counter-Indemnity between the Sponsor and the Security Trustee.

 

16.                                 A letter from the
Guarantor to the Sponsor and Security Trustee consenting to the amendments to
each of the Deeds of Counter Indemnity.

 

17.                                 A letter from
Lloyds TSB Equipment Leasing (No. 6) Limited to the Sponsor and Security
Trustee consenting to the amendments to each of the Deeds of Counter Indemnity.

 

18.                                 Confirmation from
the Agent of receipt of the fees described in the Fee Letter together with such
amount of costs and expenses incurred by the Creditors (including, without
limitations, by way of legal fees) as shall be advised to the Borrowers by the
Security Trustee.

 

19.                                 A letter from SH
Process Agents Limited agreeing to its appointment as process agent for the
Borrower and the Guarantor under the Finance Documents.

 

12

 

Exhibit 10.6

 

SIGNATORIES

 

	
  Borrowers

  	
   

  
	
   

  	
   

  
	
  CONTAINERS SERVICES INC.

  	
   

  
	
   

  	
   

  
	
  By:

  	
   [ILLEGIBLE]

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  CONTAINERS LINES INC.

  	
   

  
	
   

  	
   

  
	
  By:

  	
   [ILLEGIBLE]

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Paying Agent and Security Trustee

  	
   

  
	
   

  	
   

  
	
  HSH NORDBANK AG

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Oliver Brandt

  	
   

  	
  /s/ Gunnar Kordes

  	
   

  
	
   

  	
   

  
	
  The Guarantor

  	
   

  
	
   

  	
   

  
	
  DANAOS HOLDINGS LIMITED

  	
   

  
	
   

  	
   

  
	
  By:

  	
   [ILLEGIBLE]

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  The Agent

  	
   

  
	
   

  	
   

  
	
  AEGEAN BALTIC BANK S.A,

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Banks

  	
   

  
	
   

  	
   

  
	
  HSH NORDBANK AG

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Oliver Brandt

  	
   

  	
  /s/ Gunnar Kordes

  	
   

  
	
   

  	
   

  
	
  DRESDNER BANK AG

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
   

  
						

 

13Exhibit 10.7

 

AGREEMENT

 

DATED MAY 13, 2003

 

 

US$127,856,000

CREDIT FACILITY

 

FOR

 

OCEANEW SHIPPING LIMITED

OCEANPRIZE NAVIGATION LIMITED

 

WITH

 

THE EXPORT-IMPORT BANK OF KOREA

as Lender

 

 

London

 

 

CONTENTS

 

	
  Clause

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
   

  	
  Interpretation

  	
   

  	
  1

  
	
  2.

  	
   

  	
  Facility

  	
   

  	
  19

  
	
  3.

  	
   

  	
  Conditions Precedent

  	
   

  	
  19

  
	
  4.

  	
   

  	
  Utilisation

  	
   

  	
  20

  
	
  5.

  	
   

  	
  Repayment

  	
   

  	
  21

  
	
  6.

  	
   

  	
  Prepayment and Cancellation

  	
   

  	
  22

  
	
  7.

  	
   

  	
  Interest

  	
   

  	
  25

  
	
  8.

  	
   

  	
  Terms

  	
   

  	
  26

  
	
  9.

  	
   

  	
  Market Disruption

  	
   

  	
  26

  
	
  10.

  	
   

  	
  Taxes

  	
   

  	
  27

  
	
  11.

  	
   

  	
  Increased Costs

  	
   

  	
  29

  
	
  12.

  	
   

  	
  Earnings, Retention and Operating
  Expenses Accounts

  	
   

  	
  29

  
	
  13.

  	
   

  	
  Payments

  	
   

  	
  32

  
	
  14.

  	
   

  	
  Representations

  	
   

  	
  33

  
	
  15.

  	
   

  	
  Information Covenants

  	
   

  	
  38

  
	
  16.

  	
   

  	
  General Covenants

  	
   

  	
  39

  
	
  17.

  	
   

  	
  Valuation

  	
   

  	
  54

  
	
  18.

  	
   

  	
  Default

  	
   

  	
  55

  
	
  19.

  	
   

  	
  Evidence and Calculations

  	
   

  	
  60

  
	
  20.

  	
   

  	
  Fees

  	
   

  	
  60

  
	
  21.

  	
   

  	
  Indemnities and Break Costs

  	
   

  	
  61

  
	
  22.

  	
   

  	
  Expenses

  	
   

  	
  63

  
	
  23.

  	
   

  	
  Waiver of Consequential Damages

  	
   

  	
  63

  
	
  24.

  	
   

  	
  Amendments and Waivers

  	
   

  	
  63

  
	
  25.

  	
   

  	
  Changes to the Parties

  	
   

  	
  64

  
	
  26.

  	
   

  	
  Disclosure of Information

  	
   

  	
  66

  
	
  27.

  	
   

  	
  Set-Off

  	
   

  	
  67

  
	
  28.

  	
   

  	
  Severability

  	
   

  	
  67

  
	
  29.

  	
   

  	
  Counterparts

  	
   

  	
  67

  
	
  30.

  	
   

  	
  Notices

  	
   

  	
  67

  
	
  31.

  	
   

  	
  Language

  	
   

  	
  69

  
	
  32.

  	
   

  	
  Governing Law

  	
   

  	
  69

  
	
  33.

  	
   

  	
  Enforcement

  	
   

  	
  69

  

 

 

	
  Schedules

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
   

  	
  The Borrowers and the Vessels

  	
   

  	
  71

  
	
  2.

  	
   

  	
  Initial Conditions Precedent Documents

  	
   

  	
  72

  
	
  3.

  	
   

  	
  Delivery Date Conditions Precedent Documents

  	
   

  	
  75

  
	
  4.

  	
   

  	
  Form of Request

  	
   

  	
  78

  
	
   

  	
   

  	
  Part 1

  	
  Form of Request

  	
   

  	
  78

  
	
   

  	
   

  	
  Part 2

  	
  Payment Advice

  	
   

  	
  80

  
	
  5.

  	
   

  	
  Form of Transfer Certificate

  	
   

  	
  81

  
	
  6.

  	
   

  	
  Repayment Schedule

  	
   

  	
  83

  
	
  7.

  	
   

  	
  Annual Compliance Certificate

  	
   

  	
  86

  
	
  8.

  	
   

  	
  Incidental Vessel Costs

  	
   

  	
  87

  

 

 

THIS AGREEMENT is dated May 13, 2003

 

BETWEEN:

 

(1)           THE COMPANIES
listed
in Schedule 1, each of which is a company incorporated according to the law of
the country indicated against its name in Schedule 1, with registered
office at the address indicated against its name in Schedule 1 (each a Borrower and together the Borrowers);
and

 

(2)           THE
EXPORT-IMPORT BANK OF KOREA as lender of 16-1 Yoido-dong, Youngdeungpo-gu, Seoul
150-996, Korea (the Lender).

 

IT IS AGREED as follows:

 

1.             INTERPRETATION

 

1.1          Definitions

 

In this Agreement:

 

Accounts means together the Earnings
Accounts,  the Retention Accounts and the
Operating Expenses Accounts.

 

Account
Bank
means the Royal Bank of Scotland plc of acting through its branch at Akti
Miaouli Str G1, Piraeus 185 IC, Greece or any other bank or financial
institution with which, with the prior written consent of the Lender, any of
the Accounts are at any time held.

 

Affiliate means a Subsidiary or a
Holding Company of a person or any other Subsidiary of that Holding Company.

 

Agreement
means
this credit agreement, including any schedules or appendices hereto, as amended
from time to time.

 

Annual
Compliance Certificate means the form of certificate attached at Schedule 7.

 

AML
Time Charter means, in respect of a Vessel, the time charter entered or to be
entered into between the Bareboat Charterer and the relevant Borrower.

 

AML
Time Charter Assignments means together the deeds of
assignment of the AML Time Charters granted by the relevant Borrower in favour
of the Lender together with any and all notices and acknowledgments entered
into in connection therewith and AML Time Charter
Assignment means either of them.

 

Applicable
Law
means any or all applicable law (whether civil, criminal or administrative),
common law, statute, statutory instrument, treaty, convention, regulation, directive,
by-law, demand, decree, ordinance, injunction, resolution, order, judgment,
rule, permit, licence or restriction (in each case having the force of law) and
codes of practice or conduct, circulars and guidance notes generally accepted
and applied by the global container shipping industry, in each case of any
government, quasi-government, supranational, federal, state or local
government, statutory or regulatory body, court, agency or association relating
to all laws, rules, directives and regulations, national or international,
public or private in any applicable jurisdiction from time to time.

 

1

 

Approved
Valuers
means such independent reputable shipbrokers nominated by the Borrowers and
approved by the Lender from time to time.

 

Availability
Period
means, in respect of a Loan, the period from and including the date of this
Agreement to and including the Delivery Date of the relevant Vessel.

 

Bareboat
Charter
means, in respect of a Vessel, the bareboat charter entered or to be entered
into between the relevant Owner and the Bareboat Charterer.

 

Bareboat
Charterer means Allocean Maritime Container (No.3) Limited, a company
incorporated under the laws of England and Wales (registered
number 4806608) whose registered office is at Ground Floor, 40 Queen
Street, London EC4R 1DD.

 

Break
Costs
means the amount (if any) which the Lender is entitled to receive under this
Agreement as compensation if any part of a Loan or overdue amount is prepaid
other than on the last day of a Term for such Loan or overdue amount as
determined pursuant to Clause 21.3 hereof.

 

Builder means Samsung Heavy
Industries Co. Ltd, a corporation organised and existing under the laws of the
Republic of Korea with its registered office at Samsung Yoksam Building, 647-9,
Yoksam-Dong, Kangnam-Ku, Seoul, Korea.

 

Business
Day
means a day (other than a Saturday or a Sunday) on which banks are open for
general business in London, England, New York, United States of America, Seoul,
Korea and Athens, Greece.

 

Charter
Assignment Agreements means together each of the deeds of assignment entered
or to be entered into between the Bareboat Charterer and the relevant Owner
together with any and all notices and acknowledgments entered into in
connection therewith and Charter Assignment
Agreement means either of them.

 

Charterer means China Shipping (Group)
Company or any substitute charterer from time to time in accordance with the
provisions of Clause 16.25.

 

Confidentiality
Undertaking means a confidentiality undertaking in a form agreed between the
relevant Borrower and the Lender.

 

Contract
Price
means in respect of either Vessel, the lower of (i) the amount specified in
Article II Clause 1 of the Shipbuilding Contract for that Vessel as the
contract price as at the date of that Shipbuilding Contract without adjustment
and (ii) the total amount actually paid to the Builder by the relevant Owner
under that Shipbuilding Contract.

 

Danaos means Danaos Holdings Limited
of 80 Broad Street, Monrovia, Liberia.

 

Danaos
Group
means Danaos and its Subsidiaries.

 

Date
of Total Loss means, in respect of a Vessel, the date of Total Loss of that Vessel
which date shall be deemed to have occurred:

 

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

 

2

 

(b)           in the case of a constructive
total loss, upon the date and at the time notice of abandonment is given to the
Insurers 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 subsequently adjudged by a competent court of
law or arbitration tribunal to have occurred;

 

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

 

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

 

(e)           in the case of capture,
seizure, arrest, detention, requisition for hire or confiscation by any
government or by persons acting or purporting to act on behalf of any
government which deprives the Borrower or, as the case may be, the Charterer of
the use of that Vessel for more than 60 days, upon the expiry of the period of
60 days after the date upon which the relevant capture, seizure, arrest,
detention, requisition or confiscation occurred.

 

Debt
Service Reserve Account means a bank account opened or to be opened in the
name of a Borrower with the Account Bank and designated “Name of
Borrower” – Debt Service Reserve Account.

 

Debt
Service Reserve Account Charges means  a fixed
charge in respect of all monies standing to the credit from time to time of a
Debt Service Reserve Account to be entered into by a Borrower in a form and
substance satisfactory to the Lender together with any and all notices and
acknowledgements entered into in connection therewith.

 

Declarations
of Trust means
together each of the declarations of trust made by the relevant Owner in favour
of the relevant Partnership conferring upon the relevant Partnership a
beneficial interest in the relevant Vessel and all other assets of the relevant
Owner and Declaration of Trust means either of
them.

 

Deeds
of Counter-Indemnity means together each of the deeds of counter-indemnity
granted by the Sponsor in favour of the Lender and Deed of
Counter-Indemnity means either of them.

 

Default means:

 

(a)           an Event of Default; or

 

(b)           an event which would be (with the
expiry of a grace period, the giving of notice or the making of any
determination under the Finance Documents or any combination of them) an Event
of Default.

 

Delivery
Date means,
in respect of a Vessel, the date of actual delivery of that Vessel to the
relevant Owner under the terms of  the
relevant Shipbuilding Contract.

 

Delivery
Date Instalment means, in respect of a Vessel, the amount due and
payable by the relevant Owner in accordance with the Shipbuilding Contract
relating to that Vessel on or one (1) Business Day prior to the relevant
Delivery Date under that Shipbuilding Contract.

 

3

 

Deposit
Accounts means
together the Oceanew Deposit Account and the Oceanprize Deposit Account and Deposit Account means either of them.

 

Deposit
Bank
means the Royal Bank of Scotland plc of 135 Bishopsgate, London, EC3M 3LR.

 

Dollars or US$
means the lawful currency for the time being of the United States of America.

 

Drawing means, in respect of a Loan
under the Facility, the amount of each advance made by the Lender.

 

Earnings means, in respect of a
Vessel, all present and future moneys and claims which are earned by or become
payable to or for the account of the relevant Borrower in connection with the
operation of that Vessel and including but not limited to:

 

(a)           freights, passage and hire
moneys (howsoever earned);

 

(b)           remuneration for salvage and
towage services;

 

(c)           demurrage and detention
moneys;

 

(d)           all moneys and claims in
respect of the requisition for hire of that Vessel; or

 

(e)           payments received in respect
of off-hire insurance.

 

Earnings
Accounts
means together the two bank accounts one to be opened by each of the Borrowers
with the Account Bank and designated “name of Borrower”
– Earnings Account and Earnings Account
means either of them.

 

Earnings
Account Charges means together the two charges each in respect of all
monies standing to the credit from time to time of one of the Earnings
Accounts, one entered into by each of the Borrowers together with any and all
notices and acknowledgements entered into in connection therewith and Earnings Account Charge means either of them.

 

Environment means:

 

(a)           any land including, without
limitation, surface land and sub-surface strata, sea bed or river bed under any
water (as referred to below) and any natural or man-made structures;

 

(b)           water including, without
limitation, coastal and inland waters, surface waters, ground waters and water
in drains and sewers; and

 

(c)           air including, without
limitation, air within buildings and other natural or man-made structures above
or below ground.

 

Environmental
Affiliate
means each Borrower, each Owner, the Bareboat Charterer, Danaos and the Manager
together with their respective employees and, during the Post-Delivery Period
in respect of any activities undertaken in relation to either of the Vessels by
persons for whom they are responsible under any Applicable Law.

 

Environmental
Approvals
means any permit, licence, approval, ruling, variance, exemption or other
authorisation required under applicable Environmental Laws.

 

4

 

Environmental
Claim
means any claim by any person or persons or any governmental, judicial or
regulatory authority which arises out of any breach, contravention or violation
of Environmental Law or of the existence of any liability or potential
liability arising from such breach, contravention or violation or the presence
of Hazardous Material in contravention of Environmental Laws.  In this context, 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 by any
governmental, judicial or regulatory authority, and any form of enforcement or
regulatory action.

 

Environmental
Laws
means any or all Applicable Law relating to or concerning:

 

(a)           pollution or contamination of
the Environment, any ecological system or any living organisms which inhabit
the Environment or any ecological system;

 

(b)           the generation, manufacture,
processing, distribution, use (including abuse), treatment, storage, disposal,
transport or handling of Hazardous Materials; and

 

(c)           the emission, leak, release,
spill or discharge into the Environment of noise, vibration, dust, fumes, gas,
odours, smoke, steam effluvia, heat, light, radiation (of any kind), infection,
electricity or any Hazardous Material and any matter or thing capable of
constituting a nuisance or an actionable tort or breach of statutory duty of
any kind in respect of such matters,

 

including,
without limitation, the following laws of the United States of America: the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
as amended, the Hazardous Materials Transportation Act, as amended, the Oil
Pollution Act of 1990, as amended, the Resource Conservation and Recovery Act,
as amended, and the Toxic Substances Control Act, as amended, together, in each
case, with the regulations promulgated and the guidance issued pursuant
thereto.

 

Equity
Contribution means, in respect of a Vessel, an amount equal to US$15,982,000 to be
contributed by the Borrower towards the cost of acquiring that Vessel.

 

Equity
Contribution Side Letter means the letter setting out the manner in which
adjustments to the Equity Contribution shall be dealt with.

 

Event
of Default means an event specified as such in Clause 18 of this Agreement.

 

Excess
Risks
means, in respect of a Vessel:

 

(a)           the proportion of claims for
general average, salvage and salvage charges which are not recoverable as a
result of the value at which that Vessel is assessed for the purpose of such
claims exceeding her hull and machinery insured value; and

 

(b)           collision liabilities not
recoverable in full under the hull and machinery insurance by reason of those
liabilities exceeding such proportion of the insured value of that Vessel as is
covered by the hull and machinery insurance.

 

Exposure
Fee
means the fee payable by each Borrower pursuant to Clause 20.1.

 

Facility means the credit facility
made available under this Agreement.

 

5

 

Facility
Office
means the office through which the Lender will perform its obligations under
this Agreement from time to time, which, as at the date of this Agreement, is
Seoul, Korea.

 

Final
Maturity Date means, in respect of a Loan, the day which is the twelfth anniversary
of the Delivery Date of the Vessel to which that Loan relates.

 

Finance
Document
means:

 

(a)           this Agreement;

 

(b)           a Security Document;

 

(c)           the Manager’s Undertaking;

 

(d)           the Supplemental Agreement;

 

(e)           the Intercreditor Deed;

 

(f)            the Multipartite Deed;

 

(g)           the Second Deposit Charge Side
Letter;

 

(h)           a Transfer Certificate; and

 

(i)            any other document designated
as such by the Lender and the Borrowers.

 

Financial
Indebtedness means any indebtedness for or in respect of:

 

(a)           moneys borrowed;

 

(b)           any acceptance credit;

 

(c)           any bond, note, debenture,
loan stock or other similar instrument;

 

(d)           any redeemable preference
share;

 

(e)           any finance or capital lease;

 

(f)            receivables sold or discounted
(otherwise than on a non-recourse basis);

 

(g)           the acquisition cost of any
asset to the extent payable after its acquisition or possession by the party
liable where the deferred payment is arranged primarily as a method of raising
finance or financing the acquisition of that asset;

 

(h)           any derivative transaction
protecting against or benefiting from fluctuations in any rate or price (and,
except for non-payment of an amount, the then mark to market value of the
derivative transaction will be used to calculate its amount);

 

(i)            any other transaction
(including any forward sale or purchase agreement) which has the commercial
effect of a borrowing;

 

(j)            any counter-indemnity
obligation in respect of any guarantee, indemnity, bond, letter of credit or
any other instrument issued by a bank or financial institution; or

 

6

 

(k)           any guarantee, indemnity or
similar assurance against financial loss of any person.

 

First
Priority Deposit Account Charge means each of the first priority deposit agreement
and deposit charge granted by the relevant Borrower in respect of the relevant
Deposit Account.

 

First
Required Amount means, in respect of a Vessel, that amount which from
the Delivery Date of that Vessel until the last day of the second year after
the Delivery Date of that Vessel is 110 per cent. of the aggregate of the
outstanding Loan relating to that Vessel.

 

Forex
Guarantee
means the guarantee and indemnity granted by Danaos in favour of the Lender in
respect of the Forex Obligations of each of the Borrowers.

 

Forex
Obligations means, in respect of a Borrower, the obligations of that Borrower
pursuant to Clause 2.3 of the relevant Second Priority Deposit Account Charge.

 

General
Assignments means together each of the assignments entered or to be entered into
by the relevant Partnership (acting by its General Partner), the relevant Owner
and the Lender in respect of the Assigned Property (as such term is defined
therein) together with any and all notices and acknowledgments entered into in
connection therewith and General Assignment
means either of them.

 

General
Partner
means Allco Finance Limited.

 

Hazardous
Material
means any element or substance, whether natural or artificial, and whether
consisting of gas, liquid, solid or vapour, whether on its own or in any
combination with any other element or substance, which is listed, identified,
defined or determined by any Environmental Law or other Applicable Law to be,
to have been, or to be capable of being or becoming harmful to mankind or any
living organism or damaging to the Environment, including, without limitation,
oil (as defined in the United States Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended).

 

Holding
Company
means a holding company within the meaning of section 736 of the Companies Act
1985.

 

Incidental
Costs
means, in respect of a Vessel, the Incidental Vessel Costs and the Incidental
Loan Costs.

 

Incidental
Loan Costs means, in respect of a Vessel, the exposure fee payable in accordance
with Clause 20.1, the commitment fee payable in accordance with Clause 20.2,
the management fee payable in accordance with Clause 20.3, and interest
calculated and payable in accordance with Clause 7.1(a).

 

Incidental
Vessel Costs means, in respect of a Vessel, costs paid or in respect of costs
arising or to be paid after the Delivery Date, to be paid in connection with that
Vessel in excess of the Contract Price, in respect of those items detailed in
Schedule 8 for which supporting invoices or receipts have been provided to the
Lender or, in respect of costs to be paid after the Delivery Date, pro-forma
invoices, and which are, in respect of each item, in an aggregate amount not
exceeding the amount detailed against that item in Schedule 8.

 

Increased
Cost means:

 

(a)           an additional or increased
cost;

 

7

 

(b)           a reduction in the rate of
return under a Finance Document or on its overall capital; or

 

(c)           a reduction of an amount due
and payable under any Finance Document,

 

which is incurred or suffered by the Lender
or any of its Subsidiaries but only to the extent attributable to the Lender
having entered into any Finance Document or funding or performing its
obligations under any Finance Document.

 

Instalment means in respect of each
Shipbuilding Contract an amount due and payable by the relevant Owner under the
terms of that Shipbuilding Contract.

 

Insurers means the underwriters or
insurance companies with whom any Obligatory Insurances are effected and the
managers of any protection and indemnity or war risks association in which
either of the Vessels may at any time be entered.

 

Intercreditor
Deed
means the deed entered into or to be entered into between the Investor, Danaos
and the Lender.

 

Investor means Lloyds TSB Equipment
Leasing (No.6) Limited, company number 04440302, whose registered office
is at 25 Gresham Street, London EC2V 7HN.

 

ISM
Code
means the International Safety Management Code (including the guidelines on its
implementation), adopted by the International Maritime Organization Assembly as
Resolutions A.741(18) and A.788(19), as the same may have been or may be
amended or supplemented from time to time. 
The terms “safety management system”, “Safety Management Certificate”,
“Document of Compliance” and “major non-conformity” shall have the same
meanings as are given to them in the ISM Code.

 

ISPS
Code
means the International Ship and Port Facility Security Code adopted by the
International Maritime Organization Assembly as the same may have been or may
be amended or supplemented from time to time.

 

Korea
means
the Republic of Korea.

 

L/C
Bank
means the Royal Bank of Scotland plc of 135 Bishopsgate, London EC3M 3UR.

 

Letter
of Credit
means the letter of credit provided by the L/C Bank to the Investor.

 

LIBOR means for a Term of any Loan
or overdue amount:

 

(a)           the applicable Screen Rate; or

 

(b)           if no Screen Rate is available
for the relevant currency or Term of that Loan or overdue amount, the
arithmetic mean (rounded upward to four decimal places) of the rates, as
supplied to the Lender at its request, quoted by the Reference Bank to leading
banks in the London interbank market,

 

as of 11.00 a.m. on the second London
Business Day before the start of the Term for the offering of deposits in the
currency of that Loan or overdue amount for a period comparable to that Term.

 

Loans means together Vessel Loan 1
and Vessel Loan 2 (each a Loan).

 

8

 

London
Business Day means a day (other than a Saturday or a Sunday) on which banks are
open for business in London.

 

Losses means each and every
liability, loss, charge, claim, demand, action, proceeding, damage, judgment,
order or other sanction, enforcement, penalty, fine, fee, commission, interest,
lien, salvage, general average, cost and expense of whatsoever nature suffered
or incurred by or imposed on the Lender.

 

Manager means Allocean Maritime
Limited having its registered office at Ground Floor, 40 Queen Street,
London EC4R 1DD, a company incorporated according to the laws of England and
Wales or such other professional manager or managers as may be approved by the
Lender from time to time.

 

Manager’s
Undertaking means a letter of undertaking to be issued by the Manager to the
Lender confirming it shall not make a claim to security ranking ahead of the
Lender’s security in respect of a Vessel in form and substance satisfactory to
the Lender.

 

Material
Adverse Effect means a material adverse effect on:

 

(a)           the business, condition
(financial or otherwise) or operations of any of the Borrowers;

 

(b)           the ability of any Borrower to
perform its obligations under any Finance Document; or

 

(c)           the validity or enforceability
of any Finance Document.

 

Maximum
Available Loan Amount means, in respect of a Vessel, sixty-three million
nine hundred and twenty eight thousand dollars (US$63,928,000).

 

Maximum
Facility Amount means one hundred and twenty seven million eight
hundred and fifty six thousand Dollars (US$127,856,000,000).

 

Mortgage means, in respect of a
Vessel, the first priority Republic of Cyprus ship mortgage and deed of
covenant collateral thereto to be given by the relevant Owner of that Vessel in
favour of the Lender on the Delivery Date.

 

Multipartite
Deeds
means together each of the deeds entered or to be entered between the Lender,
the relevant Borrower, the L/C Bank and the Deposit Bank and Multipartite Deed means either of them.

 

Novation
Agreement means, in respect of a Vessel, the agreement dated
            March
2004 entered into by the relevant Borrower, the relevant Owner and the Builder
whereby the parties agreed that the relevant Vessel would be delivered to the
relevant Owner.

 

Obligatory
Insurances means in respect of each Vessel:

 

(a)           all contracts and policies of
insurance and all entries in clubs and/or associations which are from time to
time required to be effected and maintained in accordance with this Agreement
in respect of each of the Vessels; and

 

(b)           all benefits under the
contracts, policies and entries under paragraph (a) above and all claims in
respect of them and the return of premiums.

 

9

 

Oceanew means Oceanew Shipping
Limited.

 

Oceanew
Deposit Account means the account held with the Deposit Bank,
designated “OCEASHIP GBP” with account number 98091818 in the name of  Oceanew.

 

Oceanew
Second Priority Deposit Account Charge” means the
second priority charge granted by Oceanew in favour of the Lender in respect of
the Oceanew Deposit Account in form and substance satisfactory to the Lender in
its absolute discretion.

 

Oceanprize means Oceanprize Navigation
Limited.

 

Oceanprize
Deposit Account” means the account held with the Deposit Bank,
designated “OCEANAVI GBP” with account number 98091850 in the name of the
Oceanprize.

 

Oceanprize
Second Priority Deposit Account Charge” means the
second priority charge granted by Oceanprize in favour of the Lender in respect
of the Oceanprize Deposit Account in form and substance satisfactory to the
Lender in its absolute discretion.

 

Operating
Expenses
means, in respect of a Vessel, expenses properly and reasonably incurred by the
Borrower of that Vessel in connection with the operation, employment,
maintenance, repair and insurance of that Vessel (whether by way of payment of
the operating expenses element of charterhire under the relevant AML Time
Charter or otherwise).

 

Operating
Expenses Accounts means together the two bank accounts one to be opened
by each of the Borrowers with the Account Bank and designated “Name of Borrower” – Operating
Expenses Account and Operating Expenses Account
means either of them.

 

Operating
Expenses Account Charges means together the two charges each in respect of all
monies standing to the credit from time to time of one of the Operating
Expenses Accounts one to be entered into by each of the Borrowers together with
any and all notices and acknowledgements entered into in connection therewith
and Operating Expenses Account Charge means
either of them.

 

Original
Financial Statements means the audited financial statements of Danaos for
the year ended 2001.

 

Owners means each of Ocean Container
(No.1) Limited and Ocean Container (No.2) Limited and Owner means
either of them.

 

Owners
Pledges of Shares means together the two pledges each in respect of the
issued share capital of an Owner to be granted by the relevant Partnership
acting by the General Partner in favour of the Lender and Owners
Pledge of Shares means either of them.

 

Partnerships means together each of the
Ocean Container (No.1) Limited Partnership, and the Ocean Container (No.2)
Limited Partnership each a limited partnership in England under the Limited
Partnerships Act 1907 whose principal place of business is at 5th Floor, 40
Queen Street, London EC4R 1DD acting by the General Partner and Partnership means either of them.

 

Party means a party to this
Agreement or any Finance Document or any Related Contract.

 

Permitted
Liens
means, in respect of a Vessel:

 

10

 

(a)           Security Interests created by
the Security Documents;

 

(b)           Security Interests created by
the Second Security Documents and the Third Security Documents (as each such
term is defined under the Intercreditor Deed);

 

(c)           liens for unpaid crew’s wages
including wages of the master and stevedores employed by the Vessel,
outstanding in the ordinary course of trading for not more than one calendar
month after the due date for payment;

 

(d)           liens for salvage;

 

(e)           liens for classification or
scheduled dry docking or for necessary repairs to that Vessel whose aggregate
cost does not exceed US$3,000,000 at any one time in respect of that Vessel;

 

(f)            liens for collision,

 

(g)           liens for master’s
disbursements incurred in the ordinary course of trading, and

 

(h)           statutory and common law liens
of carriers, warehousemen, mechanics, suppliers, materials men, repairers or
other similar liens, including maritime liens, in each case arising in the
ordinary course of business, outstanding for not more than one month whose
aggregate value does not exceed US$500,000,

 

in the case of paragraphs (b) to (g)
inclusive provided that the amounts which give rise to such liens are paid when
due or, if not paid when due are being disputed in good faith by appropriate
proceedings (and for the payment of which adequate reserves or security are at
the relevant time maintained or provided), provided further that such
proceedings, whether by payment of adequate security into Court or otherwise,
do not give rise to a material risk of the relevant Vessel or any interest
therein being seized, sold, forfeited or otherwise lost or of criminal
liability on the Lender.

 

Pledges
of Shares
means together the two pledges each in respect of the issued share capital of a
Borrower to be granted by Bayard Maritime Limited in respect of Oceanprize and
Erato Navigation Inc. in respect of Oceanew in favour of the Lender and Pledge of Shares means either of them.

 

Post-Delivery
Interest Rate means 4.64 per cent. per annum.

 

Post-Delivery
Period means,
in respect of a Vessel, the period from the Delivery Date of that Vessel until
the Final Maturity Date of the Loan which relates to that Vessel.

 

Pre-delivery
Margin
means 0.8 per cent. per annum.

 

Pre-delivery
Period
means, in respect of a Vessel, the period from the date of the first Drawing
under this Agreement in respect of the Loan relating to that Vessel, to the
Delivery Date of that Vessel.

 

Proceeds means:

 

(i)            any Final Disposition
Proceeds;

 

(ii)           any Total Loss Proceeds;

 

11

 

(iii)          any and all other proceeds of
enforcement of, or moneys otherwise payable to the Lender under the Security
Documents;

 

(iv)          any moneys received by the Lender
from any chartering of the Vessel by the Lender (after the termination of the
chartering of the Vessel pursuant to Clause 34.2 of the Bareboat Charter) prior
to the Final Disposition thereof;

 

(v)           all other moneys which by the
terms of any Transaction Document (other than the Intercreditor Deed) or any
Other Transaction Documents are expressed to be payable to the Lender or the
Proceeds Account for application pursuant to the Intercreditor Deed;

 

where
each capitalised terms used above shall have the meaning given to that term in
the relevant Intercreditor Deed.

 

Put
Option Agreements means each of the put option agreements entered or to
be entered into between the Sponsor and the Investor under which the Investor
may, in certain circumstances, require the Sponsor  to purchase (on a limited recourse basis) its
interest in the relevant Partnership and Put Option Agreement
means either of them.

 

Quarter
Day
means each of 15th March, 15th June, 15th September or 15th December in each
year provided always that such date is a Business Day.

 

Reference
Bank
means KEXIM Bank (UK) Limited.

 

Refund
Guarantee
means, in respect of a Vessel, the refund guarantee issued by the Refund
Guarantor in favour of the Relevant Owner dated March 2004 or such other refund
guarantee as may replace the same from time to time (with the approval of the
Lender).

 

Refund
Guarantor
means The Export-Import Bank of Korea, Seoul, Korea.

 

Related
Contracts
means any or all of the following (as the context requires):

 

(a)           the Refund Guarantees;

 

(b)           the Shipbuilding Contracts;

 

(c)           the Novation Agreements;

 

(d)           the Bareboat Charters;

 

(e)           the AML Time Charters;

 

(f)            the Time Charters;

 

(g)           the Charterer’s Assignments;

 

(h)           the Declarations of Trust;

 

(i)            the Letters of Credit;

 

(j)            the First Priority Deposit
Charges; and

 

12

 

(k)           the Vessel Management
Agreements.

 

Release means an emission, spill,
release or discharge into or upon the air, surface water, groundwater, or soils
of any Hazardous Materials for which any of the Environmental Affiliates has
any liability under Environmental Law, except in accordance with a valid
Environmental Approval.

 

Repayment
Date
means, in respect of a Loan, each of the forty eight (48) dates which fall on
the Quarter Days as detailed in the Repayment Schedule.  In the event that the Delivery Date of a
Vessel to which a Loan relates is a Quarter Day, the first repayment date in
respect of that Loan shall be the next Quarter Day.  If the Delivery Date of a Vessel to which a
Loan relates falls on any day other than a Quarter Day, the first repayment
date of that Loan shall be the second Quarter Day after the Delivery Date of
the Vessel to which that Loan relates. 
In any event, the final Repayment Date shall fall on the Final Maturity
Date.

 

Repayment
Instalment means, in respect of a Loan, each instalment for repayment of that
Loan in accordance with the relevant Repayment Schedule.

 

Repayment
Schedule
means the schedule of Repayment Dates as detailed in Schedule 6 (Repayment
Schedule), to be replaced as required in accordance with Clause 5.1(b).

 

Request means a request made by a
Borrower for a Drawing, substantially in the form of  Schedule 4 (Form of Request).

 

Required
Amount
means, as the context may require, the relevant First Required Amount, Second
Required Amount or Third Required Amount.

 

Required
Insurance Amount means, in respect of a Vessel, 120 per cent. of the
aggregate of the outstanding Loan relating to that Vessel.

 

Requisition
Compensation means, in respect of a Vessel, all moneys or other compensation
payable by reason of requisition for title to, or other compulsory acquisition
of, that Vessel including requisition for hire.

 

Retention
Accounts means
together the two bank accounts one to be opened by each of the Borrowers with
the Account Bank and designated [“name of Borrower”]
– Retention Account and Retention Account means
either of them.

 

Retention
Account Charges means together the two fixed charges each in respect
of all monies standing to the credit from time to time of one of the Retention
Accounts granted or to be granted by each of the Borrowers in favour of the
Lender together with any and all notices and acknowledgements entered into in
connection therewith and Retention Account Charge
means either of them .

 

Retention
Period
means, in respect of a Loan, each period commencing, in the case of the first
such period, on the Delivery Date of the Vessel to which that Loan relates and,
in the case of each other such period, on a Repayment Date and ending on the
next Repayment Date during the Post-Delivery Period or, in the case of the
final such period, the Final Maturity Date.

 

Screen
Rate
means, for LIBOR, the British Bankers Association Interest Settlement Rate (if
any) and in respect of a Term, the percentage rate per annum for a period
substantially the same as the relevant Term displayed on page 3750 of the
Telerate screen.  If the relevant page

 

13

 

is
replaced or the service ceases to be available, the Lender may specify another
page or service displaying the appropriate rate.

 

Second
Deposit Charges means together the Oceanew Second Priority Deposit
Account Charge and the Oceanprize Deposit Account Charge.

 

Second
Deposit Charge Side Letter means the side letter provided by the General Partner
to the Lender confirming its obligations in respect of the Second Deposit
Charges.

 

Second
Required Amount means, in respect of a Vessel, that amount which from
the  first day of the third year after
the Delivery Date of that Vessel until the last day of the fourth year after
the Delivery Date of that Vessel is 120 per cent. of the aggregate of the
outstanding Loan relating to that Vessel.

 

Secured
Liabilities means all present and future obligations and liabilities (actual or
contingent) of the Borrowers to the Lender under or in connection with any
Finance Document.

 

Security
Agreements means:

 

(i)            the Mortgages;

 

(ii)           the Pledges of Shares;

 

(iii)          the Owners Pledges of Shares;

 

(iv)          the Time Charter and Earnings
Assignments;

 

(v)           the Forex Guarantee;

 

(vi)          the General Assignments;

 

(vii)         the Second Priority Deposit
Account Charges;

 

(viii)        the Deeds of
Counter-Indemnity;

 

(ix)           the Support Letter;

 

(x)            the Earnings Account Charges;

 

(xi)           the Debt Service Reserve
Account Charges;

 

(xii)          the Retention Account Charges;

 

(xiii)         the Operating Expenses Account
Charges;

 

(xiv)        the AML Time Charter
Assignments;

 

(xv)         the Standby Letter of Credit;
and

 

(xvi)        any other document designated
as such in writing by the Borrowers and the Lender.

 

Security
Assets
means any asset which is the subject of a Security Interest created by a
Security Document.

 

14

 

Security
Document
means:

 

(a)           each Security Agreement; and

 

(b)           any other document evidencing
or creating security over any asset of a Borrower to secure any obligation of a
Borrower to the Lender under the Finance Documents.

 

Security
Interest
means any mortgage, pledge, lien, charge, assignment, hypothecation or security
interest or any other agreement or arrangement having a similar effect.

 

Shipbuilding
Contract
means, in respect of a Vessel, the agreement between the Builder and Seaspan
(Cyprus) Limited dated 25th December, 2002 and which has been assigned to, and
the obligations of which have been assumed by the relevant Borrower pursuant to
an assignment agreement dated 23rd January, 2004 made between Seaspan (Cyprus)
Limited and the relevant Borrower which assignment has been acknowledged by the
Builder by its countersignature of the notice of assignment dated 11th May,
2003 pursuant to which the Builder agreed to build and deliver that Vessel to
the relevant Borrower and which has been novated to the relevant Owner by the
Novation Agreement.

 

Sponsor means Allco Finance (UK)
Limited, a company registered in England & Wales with company number
02818852 whose registered office is at 5th Floor, 40 Queen Street, London, EC4R
1DD.

 

Standby
L/C Bank
means the Royal Bank of Scotland plc acting through its branch at Akti Miaouli
Stre. G1, Piraeus, Greece or such other bank as shall be acceptable to the
Lender from time to time.

 

Standby
Letter of Credit means the letter of credit to the value of
US$1,400,000 to be issued to the Lender by the Standby L/C Bank on the Delivery
Date, or such other letter of credit issued by the Standby L/C Bank to the
Lender in form and substance satisfactory to the Lender from time to time.

 

Subsidiary means:

 

(a)           a subsidiary within the
meaning of section 736 of the Companies Act 1985; and

 

(b)           unless the context otherwise
requires, a subsidiary undertaking within the meaning of section 258 of the
Companies Act 1985.

 

Supplemental
Agreement
means the agreement dated March 2004 entered into between the parties hereto.

 

Support
Letter
means the letter of support to be granted by Danaos in favour of the Lender.

 

Tax means any tax, levy, impost,
duty or other charge or withholding of a similar nature (including, without
limitation, any penalty or interest payable in connection with any failure to
pay or any delay in paying any of the same).

 

Tax
Deduction
means a deduction or withholding for or on account of Tax made from a payment
under a Finance Document by a payer for or on account of Tax imposed on that
payer by any jurisdiction from which such payment is made or within which such
payment arises.

 

15

 

Tax
Payment
means a payment made by a Borrower to the Lender in any way relating to a Tax
Deduction or under any indemnity given by that Borrower in respect of Tax under
any Finance Document.

 

Term means each period determined
under this Agreement by reference to which interest payable on a Loan or, as
the case may be, a Drawing under a Loan, or an overdue amount is calculated.

 

Third
Required Amount means, in respect of a Vessel, that amount which from
the first day of the fifth year after the Delivery Date of that Vessel until
the Final Maturity Date is 130 per cent. of the aggregate of the outstanding
Loan relating to that Vessel.

 

Time
Charter
means, in respect of a Vessel, the time charterparty dated 25th December, 2002
entered into by Seaspan (Cyprus) Limited or its nominee and the Charterer which
has been assigned to, and the obligations of which have been assumed by the
relevant Borrower pursuant to an assignment agreement dated 4th February, 2003
made between Seaspan (Cyprus) Limited and the relevant Borrower (the Time Charter Assignment) which assignment has been
acknowledged by the Charterer by its countersignature of the notice of
assignment dated 28th March, 2003 (the Time Charter Assignment
Notice) or such other time charterparty entered into from time to
time in connection with this Agreement.

 

Time
Charter and Earnings Assignment means, in respect of a Vessel, the assignment of the
Time Charter and the Earnings granted or to be granted by the Borrower in
respect of that Vessel in favour of the Lender together with any and all
notices and acknowledgements entered into in connection therewith.

 

Total
Loss
means in relation to a Vessel:

 

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

 

(b)           requisition for title or other
compulsory acquisition of that Vessel otherwise than by requisition for hire;

 

(c)           capture, seizure, arrest,
detention, or confiscation of that Vessel by any government or by persons
acting or purporting to act on behalf of any government which deprives the
Borrower or as the case may be the Charterer of the use of that Vessel for more
than 30 days after that occurrence; and

 

(d)           requisition for hire of that
Vessel by any government or by persons acting or purporting to act on behalf of
any government which deprives the Borrower or as the case may be the Charterer
of the use of that Vessel for a period of 60 days, other than a charter of the
Vessel to a government or government agency approved by the relevant Borrower
and by the Lender.

 

Transfer
Certificate means the form of certificate attached at Schedule 5.

 

Utilisation
Date
means each date on which the Facility or any part thereof is utilised.

 

Vessel
1
means the 8,100 TEU vessel to be constructed in accordance with the relevant
Shipbuilding Contract with Hull Number 1489.

 

Vessel
2
means the 8,100 TEU vessel to be constructed in accordance with the relevant
Shipbuilding Contract with Hull Number 1490.

 

16

 

Vessels means together Vessel 1 and
Vessel 2, being the Vessels detailed in Schedule 1 and Vessel
means either of them.

 

Vessel
Cost
means, in respect of each Vessel the total of (i) the Contract Price and (ii)
the Incidental Costs, such amount not to exceed US$79,910,000.

 

Vessel
Loan 1 means such part of the Facility as is drawndown in respect
of the acquisition of Vessel 1 and is in the maximum principal amount of the
lesser of:

 

(i)            80 per cent. of the
Vessel Cost of Vessel 1, and

 

(ii)           when aggregated with Vessel
Loan 2, the Maximum Facility Amount,

 

or the
principal amount thereof from time to time outstanding under this Agreement.

 

Vessel
Loan 2 means
such part of the Facility as is drawndown in respect of the acquisition of
Vessel 2 and is in the maximum principal amount of the lesser of:

 

(i)            80 per cent. of the
Vessel Cost of Vessel 2; and

 

(ii)           when aggregated with Vessel
Loan 1, the Maximum Facility Amount.

 

or the
principal amount thereof from time to time outstanding under this Agreement.

 

Vessel
Management Agreement means, in respect of a Vessel, the management
agreement entered into or to be entered into between, the Manager and the
Bareboat Charterer.

 

1.2          Construction

 

(a)           In this Agreement, unless the
contrary intention appears, a reference to:

 

(i)            an amendment
includes a supplement, novation, restatement or re-enactment and amended will be construed accordingly;

 

assets includes present and future
properties, revenues and rights of every description;

 

an authorisation
includes an authorisation, consent, approval, resolution, licence, exemption,
filing, registration or notarisation;

 

disposal means a sale, transfer,
grant, lease or other disposal, whether voluntary or involuntary, and dispose will be construed accordingly;

 

indebtedness includes any obligation
(whether incurred as principal or as surety) for the payment or repayment of
money;

 

a person includes
any individual, company, corporation, unincorporated association or body (including
a partnership, trust, joint venture or consortium), government, state, agency,
organisation or other entity whether or not having separate legal personality
and their successors in title, permitted assigns and permitted transferees;

 

a regulation includes
any regulation, rule, official directive, request or guideline (whether or not
having the force of law but, if not having the force of law, being of a

 

17

 

type with which any person to which it
applies is accustomed to comply) of any governmental, inter-governmental or
supranational body, agency, department or regulatory, self-regulatory or other
authority or organisation;

 

(ii)           a currency is a reference to
the lawful currency for the time being of the relevant country;

 

(iii)          a Default being outstanding
means that it has not been cured, remedied or waived;

 

(iv)          a provision of law is a
reference to that provision as extended, applied, amended or re-enacted and
includes any subordinate legislation;

 

(v)           a Clause, a Subclause or a
Schedule is a reference to a clause or subclause of, or a schedule to, this
Agreement;

 

(vi)          a Finance Document or another
document is a reference to that Finance Document or other document as amended;
and

 

(vii)         a time of day is a reference
to London time.

 

(b)           Unless the contrary intention
appears, a reference to a month or months is a reference to a period starting on one day in a
calendar month and ending on the numerically corresponding day in the next
calendar month or the calendar month in which it is to end, except that:

 

(i)            if the numerically
corresponding day is not a Business Day, the period will end on the next
Business Day in that month (if there is one) or the preceding Business Day (if
there is not);

 

(ii)           if there is no numerically
corresponding day in that month, that period will end on the last Business Day
in that month; and

 

(iii)          notwithstanding sub-paragraph
(i) above, a period which commences on the last Business Day of a month will
end on the last Business Day in the next month or the calendar month in which
it is to end, as appropriate.

 

(c)           Unless expressly provided to
the contrary in a Finance Document, a person who is not a party to a Finance
Document may not enforce any of its terms under the Contracts (Rights of Third
Parties) Act 1999 and notwithstanding any term of any Finance Document, the
consent of any third party is not required for any variation (including any
release or compromise of any liability) or termination of that Finance
Document.

 

(d)           Unless the contrary intention
appears or unless the context otherwise permits:

 

(i)            a reference to a Party will
not include that Party if it has ceased to be a Party under this Agreement;

 

(ii)           a word or expression used in
any other Finance Document or in any notice given in connection with any
Finance Document has the same meaning in that Finance Document or notice as in
this Agreement; and

 

(iii)          any obligation of a Borrower
under the Finance Documents which is not a payment obligation remains in force
in accordance with its terms for so long as any payment obligation of a
Borrower is or may be outstanding under the Finance Documents.

 

18

 

(e)           Joint and
several liability

 

(i)            All obligations, covenants,
representations, warranties and undertakings in or pursuant to the Finance
Documents assumed, given, made or entered into by the Borrowers shall, unless
otherwise expressly provided, be assumed, given, made or entered into by the
Borrowers jointly and severally.

 

(ii)           Each of the Borrowers agrees
that any rights which it may have at any time during the term of the Facility
by reason of the performance of its obligations under the Finance Documents to
be indemnified by the other Borrower and/or to take the benefit of any security
taken by the Lender pursuant to the Finance Documents shall be exercised in
such manner and on such terms as the Lender may require or as provided in this
Agreement.  Each of the Borrowers agrees
to hold any sums received by it as a result of its having exercised any such
right on trust for the Lender absolutely.

 

(iii)          Each of the Borrowers agrees
that it will not at any time during the term of the Facility claim any set-off
or counterclaim against the other Borrower in respect of any liability owed to
it by that other Borrower under or in connection with the Finance Documents,
nor prove in competition with the Lender in any liquidation of (or analogous
proceeding in respect of) the other Borrower in respect of any payment made
under the Finance Documents or in respect of any sum which includes the
proceeds of realisation of any security held by the Lender for the repayment of
the Loans.

 

(f)            The headings in this Agreement
do not affect its interpretation.

 

2.             FACILITY

 

2.1          Facility and Purpose

 

Subject to the terms of this Agreement, the
Lender makes available to the Borrowers a term loan facility in a maximum
aggregate amount equal to the Maximum Facility Amount.  The term loan facility shall be made available
in two Loans (Vessel Loan 1 and Vessel Loan 2, each of which shall be made
available to the relevant Borrower). 
Each Loan shall be capable of being drawn, up to the maximum amount of
the relevant Vessel Loan, on the dates described in Clause 4.2(a).

 

2.2          Loans

 

Each Loan may be used only in or towards
assisting with financing the cost of acquiring 
the Vessel to which it relates and such other items and costs as are
included in the relevant Vessel Cost.

 

2.3          No obligation to monitor

 

The Lender is not obliged to monitor or
verify the utilisation of any Loan.

 

3.             CONDITIONS
PRECEDENT

 

3.1          Conditions precedent and subsequent documents

 

(a)           A Request in respect of a
Drawing under a Loan may not be given until the Lender has notified the
Borrower that it has received all of the documents and evidence set out in

 

19

 

Schedule
2 (Initial Conditions Precedent Documents) in form and substance satisfactory
to the Lender.  The Lender must give this
notification to the relevant Borrower promptly upon being so satisfied.

 

(b)           On or before the date falling
60 days from the date of this Agreement, the Borrowers shall provide to the
Lender all documents set out in Schedule 2 (Conditions Subsequent to first
Drawing) in form and substance satisfactory to the Lender.

 

(c)           A Request representing the
amount of a Delivery Date Instalment may not be given until the Lender has
notified the relevant Borrower that it has received all of the documents and
evidence set out in Schedule 3 (Delivery Date Conditions Precedent Documents )
and Schedule 2 (Conditions Subsequent to first Drawing) in form and substance
satisfactory to the Lender or that it expects to receive outstanding documents
or evidence on or before the relevant Delivery Date.  The Lender must give this notification to the
relevant Borrower promptly upon being so satisfied.

 

3.2          Further conditions precedent

 

The obligations of the Lender to advance
any Loan are subject to the further conditions precedent that on both the date
of the Request and the Utilisation Date for that Loan:

 

(a)           the representations made under Clause 14 are correct
in all material respects; and

 

(b)           no Default is outstanding or would result from the
Drawing.

 

4.             UTILISATION

 

4.1          Giving of Requests

 

(a)           Each Borrower may borrow its
relevant Loan by giving to the Lender a duly completed Request in respect of a
Drawing under that Loan.

 

(b)           Unless the Lender otherwise
agrees, the latest time for receipt by the Lender of a duly completed Request
is 11.00 a.m., Seoul time, three Business Days prior to the proposed date for
the borrowing.

 

(c)           Each Request is irrevocable.

 

4.2          Completion of Requests

 

A Request for a Drawing under a Loan will
not be regarded as having been duly completed unless:

 

(a)           the Utilisation Date is a Business Day falling within
the Availability Period and is a date which either (i) falls on or after the
date on which the relevant Instalment under the relevant Shipbuilding Contract
falls due or (ii) in respect of a Request for Incidental Costs only, is the
last day of a Term;

 

(b)           in respect of a Drawing under a Loan:

 

(i)            in respect of the first Drawing it is in an amount not
exceeding the aggregate of (x) the balance of the amount of the Instalments
paid or payable to the Builder after deducting therefrom an amount equal to the
Equity Contribution

 

20

 

and (y) the
Incidental Vessel Costs in respect of the relevant Vessel on the relevant
Utilisation Date;

 

(ii)           in respect of a Drawing other than the Drawing
referred to in paragraph (i) and the Drawing of the Delivery Date Instalment,
it is in an amount not exceeding the Incidental Vessel Costs in respect of the
relevant Vessel on the relevant Utilisation Date less the amount of any such
Incidental Vessel Costs which have been reimbursed in an earlier Drawing;

 

(iii)          in respect of the Drawing on the Delivery Date, it is
in an amount not exceeding the aggregate of (x) the balance of the amount of
the Instalment payable to the Builder on the Delivery Date, and (y) the
Incidental Vessel Costs not taken into account under sub-paragraphs (i) and
(ii) above and (z) an amount equal to the reduction (if any) in the Equity
Contribution calculated in accordance with the Equity Contribution Side Letter,
in respect of the relevant Vessel on the relevant Utilisation Date;

 

(iv)          the amount requested for the Drawing in respect of
Incidental Vessel Costs when aggregated with any other amount in respect of
Incidental Vessel Costs drawndown under the Loan and any amounts capitalised or
to be capitalised on the proposed Utilisation Date pursuant to Clause 4.3 in
respect of Incidental Loan Costs, does not exceed US$6,910,000;

 

(v)           the amount requested for the Drawing does not exceed,
when aggregated with (x) existing Drawings under that Loan, (y) the amounts to
be drawndown under any other Request under that Loan issued for drawdown on the
proposed Utilisation Date and (z) any amounts capitalised or to be capitalised
on the proposed Utilisation Date pursuant to Clause 4.3 in respect of
Incidental Loan Costs for that Loan, the Maximum Available Loan Amount; and

 

(c)           the proposed Term complies with this Agreement.

 

Only one Drawing may be requested in a
Request.

 

4.3          Capitalisation of Incidental Loan Costs

 

To the extent that the amount of any
incidental Loan Costs to be capitalised does not exceed, when aggregated with
the Drawings already made, and amounts already capitalised under the relevant
Loan, the Maximum Available Loan Amount:

 

(a)           On the date of the first Drawing under a Loan, the
management fee relating to that Loan, calculated in accordance with Clause 20.3
shall be capitalised and added to the principal amount of the Loan outstanding
on that date.

 

(b)           During the Pre-Delivery Period, in respect of a
Vessel, the Exposure Fee, the commitment fee payable in accordance with
Clause 20.2 and interest calculated and payable in accordance with Clause
7.1(a), relating to that Vessel, shall accrue on the Loan relating to that
Vessel and shall, on the last day of each Term during the Pre-Delivery
Period, be capitalised and added to the principal amount of the Loan
outstanding.

 

21

 

5.             REPAYMENT

 

5.1          Repayment of the Loans

 

(a)           The Borrowers must repay each
Loan by 48 consecutive Repayment Instalments on each Repayment Date for that
Loan in accordance with the Repayment Schedule.

 

(b)           The Lender shall notify the
Borrowers of any change in the amount or the timing of any Repayment
Instalment, as soon as practicable after the Delivery Date for the relevant
Vessel.  In the event of any such
notification, the Lender shall replace the relevant Repayment Schedule attached
at Schedule 6 with a new Repayment Schedule reflecting the correct Repayment
Instalments and the correct Repayment Dates and promptly provide a copy thereof
to the Borrowers.

 

(c)           In any event, each Loan shall
be repaid in full on the Final Maturity Date.

 

6.             PREPAYMENT
AND CANCELLATION

 

6.1          Mandatory prepayment - illegality

 

If it becomes, or to the knowledge of the
Lender is to become, unlawful in any jurisdiction for the Lender to perform any
of its obligations as contemplated by this Agreement or a Finance Document or
to fund or maintain one or more of the Loans (the Event of
Illegality), the Lender shall notify the Borrowers. The Borrowers
and the Lender shall thereafter consult with each other in good faith for a
period of thirty (30) days or in the event that the Event of Illegality takes
effect before the expiration of 30 days, for the maximum number of days
available before the Event of Illegality takes effect with a view to
restructuring the Facility in such a way as to avoid the effect of the Event of
Illegality.  If agreement cannot be
reached between the parties within this period, the Borrowers shall repay the
relevant Loan or Loans to the Lender on the last day of the Term for each
relevant Loan which is current at the time the Lender notifies the Borrowers
or, if earlier, the date specified by the Lender in the notice delivered to the
Owners (being no earlier than the last day of any applicable grace period
permitted by Applicable Law).

 

6.2          Mandatory prepayment – change of control of Danaos

 

(a)           The Borrowers must promptly
notify the Lender if any of them becomes aware of any person or group of
persons acting in concert gaining control of Danaos from Mr John Coustas and
his immediate family, be it direct or indirect.

 

(b)           After notification under
paragraph (a) above or if the Lender otherwise becomes aware of the same,
the Lender may, by notice to the Borrowers delivered to the Borrowers within 30
days of such notification:

 

(i)            cancel the Facility; and

 

(ii)           declare all outstanding Loans
to be promptly, and in any event within 60 days of such declaration due and
payable.

 

Any
such notice will take effect in accordance with its terms.

 

(c)           In paragraph (a) above:

 

22

 

control has the meaning given to it
in section 416 of the Income and Corporation Taxes Act 1988; and

 

acting
in concert has the meaning given to it in the City Code on Takeovers and Mergers.

 

6.3          Mandatory prepayment- Change of control of the
Charterer

 

(a)           The Borrowers must promptly
notify the Lender if any of them becomes aware of any person or group of
persons acting in concert gaining control of the Charterer, be it direct or indirect.

 

(b)           After notification under
paragraph (a) above or if the Lender otherwise becomes aware of the same in
respect of the Charterer, the Lender may undertake a credit review, in good
faith, of the terms of this Agreement. The Lender’s determination pursuant to
the credit review shall be made in the Lender’s absolute discretion and the
Lender shall inform the Borrowers upon having reached such determination.  In the event that the Lender does not find
the results of the credit review satisfactory, the Lender shall be entitled to
require any amendments to this Agreement which, in its absolute discretion, it
may consider appropriate.

 

(c)           After notification by the
Lender to the Borrowers of the results of its determination the Borrowers shall
within a period of 90 days from the date of the Lender’s notification, during
which time no Event of Default may occur or be continuing, either:

 

(i)            comply with the requirements
of the Lender’s credit review; or

 

(ii)           prepay all outstanding Loans.

 

(d)           In paragraph (a) above:

 

control and acting in
concert shall have the meaning given to them in Clause 6.2(c).

 

6.4          Mandatory prepayment - Sale or Total Loss of a Vessel

 

(a)           The Borrowers shall be obliged
to prepay the whole of the Loan then outstanding in relation to a Vessel in the
following circumstances and at the following times:

 

(i)            if that Vessel is sold, on or
before the date on which the sale is completed by delivery of that Vessel to a
buyer;

 

(ii)           if there is a Total Loss, on
the earlier of the date falling 90 days after the Date of Total Loss and the
date of receipt by the Lender of the proceeds of insurance relating to such
Total Loss;

 

(iii)          if the Shipbuilding Contract
relating to that Vessel is terminated in circumstances where the Refund
Guarantee is payable, upon the date of receipt of the monies under the Refund
Guarantee;

 

(iv)          if the Shipbuilding Contract
relating to that Vessel is terminated in circumstances other than those
referred to in paragraph (iii), on the date of its termination.

 

(b)           In the event that a mandatory
prepayment obligation arises under Clause 6.4(a) upon a sale or Total Loss of a
Vessel or in the event of a termination of a Shipbuilding Contract, the Lender
shall be entitled to procure immediate valuations of the remaining Vessel in
accordance with Clause 17, at no cost to the Lender. In the event that such
valuations show that the relevant

 

23

 

Required
Amount is not satisfied, the Borrowers shall be obliged to apply the balance of
any funds received by the Borrowers pursuant to the relevant Intercreditor Deed
to the extent required to ensure that the relevant Required Amount is
satisfied. Any balance of funds received by the Borrowers pursuant to the
relevant Intercreditor Deed after such application shall be available to the
relevant Borrower. In the event that the funds received pursuant to the
relevant Intercreditor Deed are not adequate to ensure that the relevant
Required Amount is satisfied, the Borrowers shall be obliged to pay an amount
equal to such shortfall to the Lenders no later than 5 Business Days after
receipt of notification from the Lender of details of the amount required to
satisfy the Required Amount.

 

6.5          Voluntary prepayment

 

(a)           A Borrower may, by giving not
less than sixty days’ prior notice to the Lender, prepay a Loan in whole or
from time to time in part on a Repayment Date.

 

(b)           A prepayment must be in a
minimum amount or multiple of US$3,000,000.

 

(c)           Unless the Lender otherwise
agrees, any voluntary prepayment under this Clause 6.5 shall be applied against
the Repayment Instalments of the relevant Loan in the inverse order of their
maturity.

 

6.6          Automatic cancellation

 

The obligation of the Lender to advance the
undrawn amount of a Loan will be automatically cancelled at the close of
business on the last day of the relevant Availability Period.

 

6.7          Voluntary cancellation

 

(a)           The Borrowers may, by giving
not less than ten Business Days’ prior notice to the Lender, cancel the
unutilised portion of the Facility in whole or in part.

 

(b)           Partial cancellation of the
Facility must be in a minimum amount or multiple of US$1,000,000.

 

6.8          Voluntary prepayment and cancellation

 

(a)           If one or more of the
Borrowers is, or will be, required to pay to the Lender a Tax Payment or an
Increased Cost, the relevant Borrower(s) may, while the requirement continues,
give notice to the Lender requesting prepayment and cancellation in respect of
the relevant Loan(s).

 

(b)           After notification under
paragraph (a) above the relevant Borrower(s) must repay or prepay the Loan(s).

 

(c)           The date for repayment or
prepayment of the Loan(s) will be the last day of the Term of each relevant
Loan which is current at the time of the notice from the Borrower(s) or, if
earlier, the date specified by the Borrower(s) in the notice delivered to the
Lender.

 

6.9          Partial prepayment of 
Loans

 

(a)           Except where this Clause 6
expressly provides otherwise any partial prepayment of a Loan will be applied
against the remaining Repayment Instalments in respect of that Loan, in the
inverse order of their maturity.

 

24

 

(b)           Upon any such partial
prepayment, the Lender shall replace the relevant Repayment Schedule attached
at Schedule 6 with a new Repayment Schedule reflecting the correct Repayment
Instalments and promptly provide a copy thereof to the relevant Borrower.

 

(c)           No amount of a Loan prepaid
under this Agreement may subsequently be re-borrowed.

 

6.10        Miscellaneous provisions

 

(a)           Any notice of prepayment
and/or cancellation under this Agreement is irrevocable and must specify the
relevant date(s).

 

(b)           All prepayments under this
Agreement must be made with accrued interest on the amount prepaid.  A prepayment made other than in accordance
with Clause 6.1, Clause 6.2, Clause 6.3 and Clause 6.4(a)(ii) shall be subject
to a prepayment fee equal to 0.5% of the amount of principal prepaid.  All prepayments shall also be subject to
Break Costs.

 

(c)           No prepayment or cancellation
is allowed except in accordance with the express terms of this Agreement.

 

7.             INTEREST

 

7.1          Calculation of interest

 

(a)           The rate of interest on each
Loan for each Term during the Pre-Delivery Period is the percentage rate per
annum equal to the aggregate of the applicable:

 

(i)            Pre-Delivery Margin;

 

(ii)           the Exposure Fee; and

 

(iii)          LIBOR

 

(b)           The rate of interest on each
Loan for each Term during the Post-Delivery Period shall be 5.0125 per
cent. being the aggregate of:

 

(i)            Post-Delivery Interest Rate;
and

 

(ii)           the Exposure Fee.

 

(c)           Interest shall be calculated
by reference to the actual number of days elapsed and on the basis of a year of
360 days.  Interest shall accrue from and
including the first day of each Term to but excluding the last day of such
Term.

 

7.2          Payment of interest

 

Except where it is provided to the contrary
in this Agreement, the Borrowers must pay accrued interest and Exposure Fee on
each Loan on the last day of each Term. 
During the Pre-Delivery Period in respect of a Vessel, interest
and the Exposure Fee shall accrue on the basis set out in Clause 7.1 above and
shall, on the last day of each Term during the Pre-Delivery Period, be
capitalised and added to the principal amount of the Loan outstanding.

 

25

 

7.3          Interest on overdue amounts

 

(a)           If the Borrowers fail to pay
any amount payable by them under the Finance Documents, they must immediately
on demand by the Lender pay interest on the overdue amount from its due date up
to the date of actual payment, both before, on and after judgment.

 

(b)           Interest on an overdue amount
is payable at a rate determined by the Lender to be two per cent. per annum
above the rate which would have been payable if the overdue amount had, during
the period of non-payment, constituted a Loan of the overdue amount.  For this purpose, the Lender may (acting
reasonably):

 

(i)            select successive Terms of any
duration of up to three months;

 

(ii)           during the Pre-Delivery
Period, determine the appropriate day to calculate LIBOR;

 

(c)           Notwithstanding paragraph (b)
above, if the overdue amount is a principal amount of a Loan and becomes due
and payable prior to the last day of its current Term, then:

 

(i)            the first Term for that
overdue amount will be the unexpired portion of that Term; and

 

(ii)           the rate of interest on the
overdue amount for that first Term will be two per cent. per annum above the
rate then payable on that Loan.

 

After the expiry of the first Term for that
overdue amount, the rate on the overdue amount will be calculated in accordance
with paragraph (b) above.

 

(d)           Interest (if unpaid) on an
overdue amount will be compounded with that overdue amount at the end of each
of its Terms but will remain immediately due and payable.

 

7.4          Notification of rates of interest

 

In respect of a Vessel, during the
Pre-delivery Period, the Lender must promptly notify the Borrowers of the
determination of a rate of interest under this Agreement.

 

8.             TERMS

 

8.1          Selection

 

(a)           Each Loan has successive Terms.

 

(b)           Each Term shall be of a period of three months subject
always to the provisions of Clauses 8.2, 8.3 and 8.4.

 

8.2          Consolidation

 

The first Term for a Drawing under a Loan
will commence on the date that Drawing is made and each subsequent Term shall
commence on the last day of the previous Term. 
Each Term for such a Drawing during the Pre-Delivery Period will be of
three months’ duration (subject to Clause 8.3) provided always that the first
Term for the second and subsequent Drawings under a Loan shall end on the last
day of the current Term for existing Drawings under that Loan and each Term
during the Post-Delivery Period will end on the next Repayment Date for that
Loan or, in the case of the final Term for a Loan, on the Final Maturity Date.

 

26

 

8.3          End of Term on Delivery Date

 

If a Term in relation to a Loan or a
Drawing under a Loan would otherwise overrun the Delivery Date of the Vessel to
which the relevant Loan relates, it will be shortened so that it ends on the
Delivery Date of that Vessel.  Each
subsequent Term will be ascertained in accordance with Clause 8.2.

 

8.4          No overrunning the Final Maturity Date

 

If a Term would otherwise overrun the Final
Maturity Date, it will be shortened so that it ends on the Final Maturity Date.

 

8.5          Other adjustments

 

The Lender and the Borrowers may enter into
such other arrangements as they may agree for the adjustment of Terms and the
consolidation and/or splitting of Loans.

 

9.             MARKET
DISRUPTION

 

9.1          Failure of the Reference Bank to supply a rate

 

If LIBOR is to be calculated by reference
to the Reference Bank but if the Reference Bank is unable to supply a rate by
11:00 a.m. on the second Business Day before the first day of the relevant
Term, the applicable LIBOR will be calculated in accordance with
Clause 9.2.

 

9.2          Market disruption

 

(a)           A market disruption event
shall arise where,

 

(i)            the Reference Bank is unable
to supply a rate by 11:00 a.m. on the second Business Day before the first day
of the relevant Term; or

 

(ii)           the cost of Dollar deposits to
the Lender exceeds LIBOR.

 

(b)           The Lender must promptly
notify the Borrowers of a market disruption event.

 

(c)           After notification under
paragraph (b) above, the rate of interest on the affected Loan for the relevant
Term will be the aggregate of the applicable:

 

(i)            Pre-delivery Margin;

 

(ii)           Exposure Fee; and

 

(iii)          the rate notified by the
Lender to the Borrowers as soon as practicable, and in any event before
interest is due to be paid in respect of that Term, to be that which expresses
as a percentage rate per annum the cost to the Lender of funding the Loan from
whatever source it may reasonably select.

 

9.3          Alternative basis of interest or funding

 

If a market disruption event occurs and the
Lender or the Borrowers so require, the Borrowers and the Lender must enter
into negotiations for a period of not more than 30 days with a view

 

27

 

to agreeing an alternative basis for
determining the rate of interest and/or funding for the affected Loan and any
future Loan.

 

10.          TAXES

 

10.1        Tax gross-up

 

(a)           Each Borrower must make all
payments to be made by it under the Finance Documents without any Tax
Deduction, unless a Tax Deduction is required by an Applicable Law.

 

(b)           If a Tax Deduction is required
by an Applicable Law to be made by a Borrower, the amount of the payment due
from the Borrower will be increased to an amount which (after making the Tax
Deduction) leaves an amount equal to the payment which would have been due if
no Tax Deduction had been required.

 

(c)           If a Borrower is required to
make a Tax Deduction, that Borrower must make the minimum Tax Deduction and
must make any payment required in connection with that Tax Deduction within the
time allowed by the Applicable Law.

 

(d)           Within 15 days of making
either a Tax Deduction or a payment required in connection with a Tax Deduction
or, if later, forthwith following receipt of the same, the Borrower making that
Tax Deduction or payment must deliver to the Lender original tax receipts (or
certified copies thereof) evidencing satisfactorily to the Lender that the Tax
Deduction has been made or (as applicable) the appropriate payment has been
paid to the relevant taxing authority.

 

10.2        Tax Indemnity

 

Without prejudice to the provisions of 10.1
(Tax Gross Up), if the Lender is required to make any payment on account of Tax
(not being a Tax imposed on the net income of its Facility Office by the
jurisdiction in which it is incorporated or in which its Facility Office is
located or on the capital of the Lender employed in such jurisdiction) on any
sum received or receivable hereunder (including, without limitation, any sum
received or receivable under this Clause 10.2) or any liability in respect of
any such payment is asserted, imposed, levied or assessed against the Lender,
each Borrower shall, upon demand of the Lender promptly indemnify the Lender
against such payment or liability, together with any interest, penalties and
expenses payable or incurred in connection therewith.

 

10.3        Tax Credit

 

If the Lender determines in its absolute discretion,
acting in good faith, that it has received, realised, utilised and retained a
Tax benefit by reason of any deduction or withholding in respect of which a
Borrower has made an increased payment or paid a compensating sum under this
Clause 10 the Lender shall, provided it has received all amounts which are then
due and payable by the Borrowers under any of the provisions of this Agreement
and the other Finance Documents, pay to the Borrowers (to the extent that the Lender
can do so without prejudicing the amount of that benefit and the right of the
Lender to obtain any other benefit, relief or allowance which may be available
to it), such amount, if any, as the Lender shall determine in its absolute
discretion acting in good faith, will leave the Lender in no better and no
worse position than it would have been in if the deduction or withholding had
not been required and so that it retains no benefit as a result of the receipt
of such deduction.

 

28

 

10.4        Confidentiality of Tax Affairs

 

If the Lender intends to make a claim
pursuant to Clause 10.2 (Tax Indemnity) it shall, as soon as reasonably
practicable after becoming aware that it may be entitled to make a claim under
Clause 10.2, notify each Borrower of the event by reason of which it is
entitled to do so, provided that nothing herein shall require the Lender to
disclose any confidential information relating to the organisation of its
affairs.

 

10.5        Stamp taxes

 

Each Borrower must pay and indemnify the
Lender against any stamp duty, registration or other similar Tax payable by the
Lender in connection with the entry into, performance or enforcement of any
Finance Document, except for any such Tax payable in connection with the entry
into a Transfer Certificate.

 

10.6        Value added taxes

 

Any amount (including costs and expenses)
payable under a Finance Document by a Borrower is exclusive of any value added
tax or any other Tax of a similar nature which might be chargeable in
connection with that amount.  If any such
Tax is chargeable, the Borrower must pay to the Lender (in addition to and at
the same time as paying that amount) an amount equal to the amount of that Tax.

 

11.          INCREASED
COSTS

 

11.1        Increased Costs

 

Except as provided below in this Clause 11,
each Borrower must pay to the Lender the amount of any Increased Cost incurred
by the Lender or its Subsidiaries as a result of:

 

(a)           the introduction of, or any change in, or any change
in the interpretation or application of, any law or regulation; or

 

(b)           compliance with any law or regulation,

 

made after the date of this Agreement.

 

11.2        Exceptions

 

A Borrower need not make any payment for an
Increased Cost to the extent that the Increased Cost is:

 

(a)           compensated for under another Clause or would have
been but for an exception to that Clause;

 

(b)           a Tax on the Lender or any of its Subsidiaries; or

 

(c)           attributable to the Lender or any of its Subsidiaries
wilfully failing to comply with any law or regulation.

 

29

 

11.3        Claims

 

If the Lender intends to make a claim for
an Increased Cost it must notify the Borrowers promptly of the circumstances
giving rise to, and the amount of, the claim.

 

11.4        Mitigation

 

(a)           The Lender must, in
consultation with the Borrowers, use its best endeavours to mitigate any
circumstances which arise and which result or would result in any Increased
Cost being payable to the Lender;

 

(b)           Each Borrower must indemnify
the Lender for all costs and expenses reasonably incurred by the Lender as a
result of any step taken by it under Clause 11.4(a) above.

 

(c)           The Lender is not obliged to
take any step under this subclause if, in the opinion of the Lender (acting
reasonably), to do so might be prejudicial to it in any material respect and is
not otherwise capable of being compensated under paragraph (b).

 

12.          EARNINGS,
RETENTION AND OPERATING EXPENSES ACCOUNTS

 

12.1        Maintenance of accounts

 

The Borrowers shall maintain the Earnings
Accounts, the Retention Accounts and the Operating Expenses Accounts with the
Account Bank until the Final Maturity Date free of Security Interests and
rights of set-off other than as created by or pursuant to the Security
Documents.

 

12.2        Earnings

 

Each of the Borrowers shall procure that
there is credited to the relevant Earnings Account for the Vessel chartered by
that Borrower all Earnings for the Vessel chartered by that Borrower.

 

12.3        Transfers to Retention Accounts

 

In respect of each Loan, upon payment of
any Earnings into the relevant Earnings Account (an Earnings
Deposit Date) the relevant Borrower shall procure that there is
transferred from the relevant Earnings Account for the Vessel which is the
subject of that Loan (and irrevocably authorise the Lender to instruct the
Account Bank to transfer from the relevant Earnings Account) to the relevant
Retention Account an amount calculated in accordance with the following
formula:

 

a              =              A             X             n/N

 

where:

 

a=            the relevant amount of the Earnings to be transferred
to that Retention Account out of the relevant Earnings Account;

 

A=          amount required to repay the principal, interest and
Exposure Fee payable on the next Repayment Date or, in the final Retention
Period, the Final Maturity Date in respect of the Loan to which the Earnings
Account relates;

 

N=           the number of days in a
Retention Period; and

 

30

 

n=           actual number of days elapsed from (and including) the
immediately preceding Earning Deposit Date in the Retention Period or the first
day of the Retention Period (where there is no preceding Earning Deposit Date
in a Retention Period) up to (but excluding) the Earning Deposit Date.

 

PROVIDED ALWAYS that on the last Earning Deposit Date
for a Retention Period, and, if there remains a shortfall, on the last day of a
Retention Period there shall be transferred to the relevant Retention Account
out of the relevant Earnings Account an amount (taking into account the
existing balance of the relevant Retention Account) required to repay the
principal, interest and Exposure Fee payable in respect of that Loan on the
next Repayment Date or, as the case may be, the Final Maturity Date in full.

 

12.4        Additional payments to Retention Accounts

 

If for any reason the amount standing to
the credit of the relevant Earnings Account shall be insufficient to make any
transfer to the relevant Retention Account required by Clause 12.3, the
Borrowers shall, without demand, procure that there is credited to the relevant
Retention Account, within 5 Business Days of the date on which the relevant
amount would have been transferred from the Earnings Account, an amount equal
to the amount of the shortfall.

 

12.5        Application of Retention Accounts

 

The relevant Borrower shall procure that
there is transferred from the relevant Retention Account (and irrevocably
authorise the Lender to instruct the Account Bank to transfer from the relevant
Retention Account) to the Lender in respect of each Loan:

 

(a)           on each Repayment Date for that Loan, the amount of
the Repayment Instalment for that Loan then due; and

 

(b)           on the last day of each Term of that Loan, the amount
of interest and Exposure Fee then due on that Loan.

 

12.6        Payment to Debt Service Reserve Accounts

 

In the event that a Borrower proposes to
make a payment of dividends in accordance with Clause 16.8 and does not intend
to provide to the Lender a letter of credit in accordance with Clause
16.8(ii)(b), then prior to the payment of such dividends or such other
distribution as the Borrower may be entitled to make, the Borrower shall be
required to open a Debt Service Reserve Account and shall be required to pay
into such account an amount equal to the amount of interest and Exposure Fee
payable at the end of the current Term. 
Immediately thereafter the relevant Borrower shall execute the Debt
Service Reserve Account Charge.

 

If the relevant Borrower has credited to
the Debt Service Reserve Account an amount equal to the amount specified in
Clause 16.8(ii)(a), then provided that no Event of Default has occurred and is
continuing, the Lender shall, on the Business Day following each Repayment
Date, instruct the Account Bank to release to the Operating Expenses Account
for the relevant Vessel an amount equal to the difference between (i) the
aggregate of the amount paid in respect of interest and Exposure Fee on the
relevant Loan on such Repayment Date and (ii) the amount payable in respect of
interest and Exposure Fee on the relevant Loan on the next Repayment Date.

 

31

 

12.7        Borrowers’ obligations not affected

 

If for any reason the amount standing to
the credit of the Retention Accounts shall be insufficient to pay any Repayment
Instalment or to make any payment of interest when due, the Borrowers’
obligation to pay that Repayment Instalment or to make that payment of interest
shall not be affected.

 

12.8        Release of surplus

 

The Lender shall instruct the Account Bank
to release to the Operating Expenses Account for the relevant Vessel any amount
remaining to the credit of the relevant Earnings Account following the making
of any transfer required by Clause 12.3 (unless an Event of Default shall have
occurred and be continuing).  Thereafter,
the relevant Borrower shall be entitled to withdraw sums of money standing to
the credit of the Operating Expenses Account in the following circumstances (i)
in and towards payment of any Operating Expenses; (ii) in the event of a
reduction in the relevant Borrower’s Equity Contribution, an amount equal to
such reduction, (iii) an amount equal to any late payment of Earnings made to
the Earnings Account of the relevant Borrower after the Borrower has funded the
transfer from the Earnings Account required by Clause 12.3; (iv) distribution
to shareholders in accordance with and subject to Clause 16.8 and (v) in or
towards a voluntary prepayment of the relevant Loan in accordance with Clause
6.5 (Voluntary prepayment).

 

12.9        Restriction on withdrawal

 

During the term of the Facility no sum may
be withdrawn from any of the Earnings Accounts or the Retention Accounts
(except in accordance with this Clause 12) without the prior written consent of
the Lender.

 

13.          PAYMENTS

 

13.1        Place

 

Unless a Finance Document specifies that
payments under it are to be made in another manner, all payments by a Borrower
under the Finance Documents must be made to the Lender to its account no.
04-029-695 with Deutsche Bank Trust Company Americas, New York, the United
States of America or such other account in the United States of America as it
may notify to that Borrower for this purpose by not less than five Business
Days’ prior notice.

 

13.2        Funds

 

Payments under the Finance Documents to the
Lender must be made for value on the due date at such times and in such funds
as the Lender may specify to the Borrower concerned as being customary at the
time for the settlement of transactions in the relevant currency in the place
for payment.

 

13.3        Distribution

 

The Lender may apply any amount received by
it from any of the Borrowers in or towards payment (on the date and in the
currency and funds of receipt) of any amount due from the Borrowers under the
Finance Documents or in or towards the purchase of any amount of any currency
to be so applied.

 

32

 

13.4        Currency

 

All amounts payable under the Finance
Documents are payable in Dollars provided always that amounts payable in
respect of costs and expenses are payable in the currency in which those costs
and expenses are incurred.

 

13.5        No set-off or counterclaim

 

All payments made by a Borrower under the
Finance Documents must be made without set-off or counterclaim.

 

13.6        Business Days

 

(a)           If a payment under the Finance
Documents is due on a day which is not a Business Day, the due date for that
payment will instead be the next Business Day in the same calendar month (if
there is one) or the preceding Business Day (if there is not).

 

(b)           During any extension of the
due date for payment of any principal under this Agreement interest is payable
on that principal at the rate payable on the original due date.

 

13.7        Payments

 

Except to the extent otherwise provided in
any Finance Document any and all 
Proceeds received by the Lender shall be applied in accordance with
Clause 10.8 of the relevant Intercreditor Deed. Any amounts received by the
Lender under Clause 10.8 of the Intercreditor Deed and any and all other
proceeds of the enforcement of the security conferred by the Security
Agreements shall be applied as follows:

 

(i)            first, in or towards payment of all
costs and expenses whatsoever, incurred or to be incurred by the Lender in
connection with such enforcement;

 

(ii)           second, in or towards payment of any
unpaid fees, costs and expenses of the Lender under the Finance Documents;

 

(iii)          third, in or towards payment of any
accrued but unpaid interest under the Finance Documents;

 

(iv)          fourth in or towards payment of any
Break Costs due but unpaid under the Finance Documents;

 

(v)           fifth, in or towards payment of any
principal amount due but unpaid under the Finance Documents;

 

(vi)          sixth, in or towards payment to the
Lender of any other amounts which are or may become owing by any of the
Borrowers to the Lender under the Finance Documents;

 

(vii)         seventh, after all amounts payable or
which may become payable under the Finance Documents have been paid in full and
the Finance Documents have been discharged in or towards payment of the surplus
if any, to the relevant Borrower or other persons entitled thereto.

 

This Subclause will override any
appropriation made by a Borrower.

 

33

 

13.8        Timing of payments

 

If a Finance Document does not provide for
when a particular payment is due, that payment will be due within three
Business Days of demand by the Lender.

 

14.          REPRESENTATIONS

 

14.1        Representations

 

The representations set out in this Clause
are made, unless otherwise stated, by each of the Borrowers to the Lender.

 

14.2        Status

 

(a)           It is a limited liability
company, duly incorporated and validly existing under the laws of  the Republic of Cyprus.

 

(b)           It and each of its
Subsidiaries has the power to own and hold on charter its assets and carry on
its business as it is being conducted.

 

(c)           It is wholly owned by the
Sponsor.

 

14.3        Powers and authority

 

It has the power to enter into and perform,
and has taken all necessary action to authorise the entry into and performance
of, the Finance Documents to which it is or will be a party and the
transactions contemplated by those Finance Documents.

 

14.4        Legal validity

 

Subject to any general principles of law
limiting its obligations and referred to in any legal opinion required under
this Agreement, each Finance Document to which it is a party is its legally
binding, valid and enforceable obligation.

 

14.5        Non-conflict

 

The entry into and performance by it of,
and the transactions contemplated by, the Finance Documents to which it is a
party do not conflict in any material respect with:

 

(a)           any law or regulation applicable to it;

 

(b)           its or any of its Subsidiaries’ constitutional
documents; or

 

(c)           any document which is binding upon it or any of its
Subsidiaries or any of its or its Subsidiaries’ assets.

 

14.6        No default

 

(a)           No Default is outstanding or
will result from the execution of, or the performance of any transaction
contemplated by, any Finance Document; and

 

34

 

(b)           No other event is outstanding
which constitutes a default under any document which is binding on it or any of
its Subsidiaries or any of its or its Subsidiaries’ assets to an extent or in a
manner which is reasonably likely to have a Material Adverse Effect.

 

14.7        Authorisations

 

Except for registration of the Mortgages at
the Cyprus Ships Registry, any Security Agreement creating a charge over
Security Assets of the Borrowers or either of them at the Cyprus Companies
Registry and of any relevant Security Agreement under the Companies Act 1985,
all authorisations required by it in connection with the entry into,
performance, validity and enforceability of, and the transactions contemplated
by, the Finance Documents have been obtained or effected (as appropriate) and
are in full force and effect.

 

14.8        Financial statements

 

The audited financial statements of the
Borrowers and Danaos most recently delivered to the Lender (which at the date
of this Agreement, are the Original Financial Statements) together with any
other financial information supplied to the Lender by the Borrowers:

 

(a)           have been prepared in accordance with accounting
principles and practices generally accepted in its jurisdiction of
incorporation, consistently applied; and

 

(b)           fairly represent its financial condition
(consolidated, if applicable) as at the date to which they were drawn up,

 

except, in each case, as disclosed to the
contrary in those financial statements.

 

14.9        No material adverse change

 

There has been no material adverse change
in the business, condition (financial or otherwise) or operations of the
Borrowers, or either of them, or any member of the Danaos Group since 31st
December, 2002, or if incorporated after 31st December, 2002, since the date of
incorporation or following the receipt by the Lender of an Annual Compliance
Certificate, since the date of the then latest Annual Compliance
Certificate.  Insofar as this
representation relates to the members of the Danaos Group (other than the
Borrowers) it is given on the date of this Agreement and each Utilisation Date
only.

 

14.10      Litigation

 

No litigation, arbitration or
administrative proceedings of or before any court, arbitral body or agency (including,
but not limited to, investigative proceedings) which, if adversely determined,
might reasonably be expected to have a Material Adverse Effect have (to the
best of its knowledge and belief) been started or threatened against the
Borrowers or either of them, or any member of the Danaos Group.  Insofar as this representation relates to the
members of the Danaos Group (other than the Borrowers) it is given on the date
of this Agreement and each Utilisation Date only.

 

14.11      Pari passu ranking

 

Its payment obligations under the Finance
Documents rank at least pari passu with all its other present and future
unsecured payment obligations, except for obligations mandatorily preferred by
law applying to companies generally.

 

35

 

14.12      Taxes on payments

 

All amounts payable by it to the Lender
under the Finance Documents and the Related Contracts may be made without any
Tax Deduction.

 

14.13      Stamp duties

 

Except as notified in writing to and
accepted by the Lender no stamp or registration duty or similar Tax or charge
is payable in its jurisdiction of incorporation in respect of any Finance
Document or Related Contract.

 

14.14      Environment

 

Except as may already have been disclosed
by a Borrower in writing to the Lender:

 

(a)           each Borrower and the Environmental Affiliates have
without limitation complied with the provisions of all applicable Environmental
Laws in relation to each Vessel;

 

(b)           each Borrower and the Environmental Affiliates have
obtained all requisite Environmental Approvals in relation to each Vessel and
are in compliance with such Environmental Approvals;

 

(c)           no Borrower nor any of the Environmental Affiliates
has received notice of any Environmental Claim in relation to the relevant
Vessel which alleges that such Borrower is not in compliance with applicable
Environmental Laws in relation to such Vessel or Environmental Approvals in
relation to such Vessel;

 

(d)           there is no Environmental Claim in relation to either
Vessel pending or threatened which is such that a first class owner or operator
of vessels such as the Vessels making all due enquiries and complying in all
respects with its obligations under the ISM Code ought to have known about; and

 

(e)           there has been no Release of Hazardous Materials by or
in respect of either Vessel about which a first class owner or operator of
vessels such as the Vessels making all due enquiries and complying in all
respects with its obligations under the ISM Code ought to have known about.

 

14.15      Security Interests

 

No Security Interest exists over its or any
of its Subsidiary’s assets which would cause a breach of Clause 16.5 (Security
Interests).

 

14.16      Security Assets

 

Each Borrower is solely and absolutely
entitled to the Security Assets over which it has or will create any Security
Interest pursuant to the Security Documents to which it is a party, or will be,
a party and there is no agreement or arrangement under which it is obliged to
share any proceeds of or derived from such Security Assets with any third party.

 

14.17      ISM Code compliance

 

On each Delivery Date, each Owner  and the Bareboat Charterer is in full
compliance with the ISM Code in respect of its Vessel.

 

36

 

14.18      ISPS Code Compliance

 

On each Delivery Date, each Owner and the
Bareboat Charterer  is in full compliance
with the ISPS Code in respect of its Vessel.

 

14.19      No amendments to Related Contracts

 

Other than as notified to and agreed by the
Lender in writing, there have been no amendments to any of the Related
Contracts.

 

14.20      Money Laundering

 

Any borrowing by any Borrower and the
performance of its obligations hereunder and under the other Finance Documents
to which it is a party will be for its own account and will not involve any
breach by it of any law or regulatory measure relating to money laundering as
defined in Article 1 of the Directive (91/308/EEC) of the Council of the
European Communities or any equivalent law or regulatory measure in any other
jurisdiction.

 

14.21      Insolvency

 

(a)           No Borrower, nor any member of
the Danaos Group is unable, or admits or has admitted its inability, to pay its
debts or has suspended making payments on any of its debts.

 

(b)           No Borrower nor any member of
the Danaos Group, by reason of actual or anticipated financial difficulties has
commenced, or intends to commence, negotiations with one or more of its
creditors with a view to rescheduling any of its Financial Indebtedness.

 

(c)           The value of the assets of
each Borrower, and each member of the Danaos Group is not less than its
liabilities (taking into account contingent and prospective liabilities).

 

(d)           No moratorium has been, or
may, in the reasonably foreseeable future be, declared in respect of any
indebtedness of any Borrower or any member of the Danaos Group.

 

14.22      Immunity

 

(a)           The execution by it of each
Finance Document to which it is a party constitutes, and the exercise by it of
its rights and performance of its obligations under each such Finance Document
will constitute, private and commercial acts performed for private and
commercial purposes.

 

(b)           It will not be entitled to
claim immunity from suit, execution, attachment or other legal process in any
proceedings taken in its jurisdiction of incorporation in relation to any
Finance Document.

 

14.23      No adverse consequences

 

(a)           It is not necessary under the
laws of its jurisdiction of incorporation:

 

(i)            in order to enable the Lender
to enforce its rights under any Finance Document; or

 

(ii)           by reason of the execution of
any Finance Document or the performance by it of its obligations under any
Finance Document,

 

37

 

that the Lender should be licensed,
qualified or otherwise entitled to carry on business in its jurisdiction of
incorporation; and

 

(b)           The Lender will not be deemed
to be resident, domiciled or carrying on business in its jurisdiction of
incorporation by reason only of the execution, performance and/or enforcement
of any Finance Document.

 

14.24      Jurisdiction/governing law

 

(a)           Its:

 

(i)            irrevocable submission under
this Agreement to the jurisdiction of the courts of England;

 

(ii)           agreement that this Agreement
is governed by English law; and

 

(iii)          agreement not to claim any
immunity to which it or its assets may be entitled,

 

are legal, valid and binding under the laws
of its jurisdiction of incorporation; and

 

(b)           Any judgment obtained in
England will be recognised and be enforceable by the courts of its jurisdiction
of incorporation, subject to any statutory or other conditions of such
jurisdiction.

 

14.25      Times for making representations

 

(a)           The representations set out in
this Clause are made by each Borrower on the date of this Agreement.

 

(b)           Unless a representation is
expressed to be given at a specific date, each representation is deemed to be
repeated by each relevant Party during the Pre-delivery Period in respect
of the relevant Vessel on each Utilisation Date and during the Post Delivery
Period in respect of the relevant Vessel, annually on each anniversary of the
first Utilisation Date by the relevant Borrower only when such relevant
Borrower shall provide to the Lender an Annual Compliance Certificate.

 

(c)           When a representation is
repeated, it is applied to the circumstances existing at the time of
repetition.

 

15.          INFORMATION
COVENANTS

 

15.1        Financial statements

 

(a)           Each Borrower must supply and
must procure that Danaos supplies to the Lender:

 

(i)            its audited financial
statements for each of its financial years ending after the date hereof;

 

(ii)           its interim unaudited financial
statements for the first half-year of each of its financial years; and

 

(iii)          if and to the extent a
Borrower or Danaos is required by any Applicable Law to produce quarterly
financial statements, the quarterly financial statements for that

 

38

 

Borrower
as the case may be for the first and third quarters of each of its financial
years.

 

(b)           Each Borrower must procure
that the Charterer supplies to the Lender its audited financial statements for
each of its financial years ending after the date hereof.

 

(c)           All financial statements must
be supplied as soon as they are available and:

 

(i)            in the case of audited
financial statements, within 180 days;

 

(ii)           in the case of interim
semi-annual financial statements, within 90 days; and

 

(iii)          in the case of interim
quarterly financial statements, within 60 days;

 

of the end of the relevant financial
period.

 

15.2        Form of financial statements

 

(a)           Each Borrower and Danaos must
ensure that each set of its financial statements supplied under this Agreement
gives (if audited) a true and fair view of, or (if unaudited) fairly
represents, the financial condition (consolidated or otherwise) of the relevant
person as at the date to which those financial statements were drawn up.

 

(b)           Each Borrower and Danaos must
notify the Lender of any change to the basis on which its audited financial
statements are prepared.

 

(c)           If requested by the Lender,
each Borrower must supply or procure that the following are supplied to the Lender:

 

(i)            a full description of any
change notified under paragraph (b) above; and

 

(ii)           sufficient information to
enable the Lender to make a proper comparison between the financial position
shown by the set of financial statements prepared on the changed basis and its
most recent audited consolidated financial statements delivered to the Lender
under this Agreement.

 

(d)           If requested by the Lender,
each Borrower and Danaos must enter into discussions for a period of not more
than 30 days with a view to agreeing any amendments required to be made to this
Agreement to place the Lender in the same position as it would have been in if
the change had not happened.

 

(e)           If no agreement is reached
under paragraph (d) above on the required amendments to this Agreement, each
Borrower must ensure that its auditors certify those amendments; the
certificate of the auditors will be, in the absence of manifest error, binding
on all the Parties.

 

15.3        Access to Books and Records

 

Upon the request of the Lender, each Borrower
shall provide the Lender and any of its representatives, professional advisors
and contractors with access to and permit inspection of its books and records,
in each case at reasonable times and upon reasonable notice.

 

39

 

15.4        Information - miscellaneous

 

Each Borrower, must supply to the Lender:

 

(a)           copies of all documents despatched by it to its
creditors generally or any class of them at the same time as they are
despatched;

 

(b)           promptly upon becoming aware of them, details of any
litigation, arbitration or administrative proceedings which are current,
threatened or pending against it and which might, if adversely determined, have
a Material Adverse Effect; and

 

(c)           promptly on request, such further information
regarding the financial condition and operations of a Borrower as the Lender
may reasonably request.

 

15.5        Notification of Default

 

(a)           Unless the Lender has already
been so notified, each Borrower must notify the Lender of any Default (and the
steps, if any, being taken to remedy it) promptly upon becoming aware of its
occurrence.

 

(b)           Promptly on request by the
Lender but not more often than once in each period of 12 months, unless the
Lender, acting reasonably, believes an Event of Default has occurred and is
continuing (in which event the Lender shall be entitled to make such requests
as and when it considers it appropriate to do so), each Borrower must supply to
the Lender a certificate, signed by two of its authorised signatories on its behalf,
certifying that no Default is outstanding or, if a Default is outstanding,
specifying the Default and the steps, if any, being taken to remedy it.

 

15.6        Year end

 

The Borrowers may not change their
financial year end.

 

16.          GENERAL
COVENANTS

 

16.1        General

 

Each of the Borrowers agrees to be bound by
the covenants set out in this Clause relating to it, or where relevant, agrees
to procure that the Bareboat Charterer will be bound.

 

16.2        Authorisations

 

Each Borrower must promptly obtain,
maintain and comply, in all material respects, with the terms of any
authorisation required under any Applicable Law to enable it to perform its
obligations under, or for the validity or enforceability of, any Finance
Document.

 

16.3        Compliance with laws

 

Each Borrower must comply and must procure
that the Manager, the Owners and the Bareboat Charterer each complies in all
respects with all Applicable Laws to which it is subject where failure to do so
is reasonably likely to have a Material Adverse Effect.

 

40

 

16.4        Pari passu ranking

 

Each Borrower must ensure that its payment
obligations under the Finance Documents rank at least pari passu with all its
other present and future unsecured payment obligations, except for obligations
mandatorily preferred by law applying to companies generally.

 

16.5        Security Interests

 

Each Borrower shall not, and the Borrowers
shall procure that the Manager, the Owners and the Bareboat Charterer do not
create or permit to subsist any Security Interest over the Obligatory
Insurances or any other Security Assets or any Related Contract other than:

 

(a)           Permitted Liens; or

 

(b)           with the prior written consent of the Lender.

 

16.6        Disposals

 

(a)           Except as provided below, no
Borrower may, either in a single transaction or in a series of transactions and
whether related or not, dispose of all or any part of its assets.

 

(b)           Paragraph (a) does not apply
to any disposal made in the ordinary course of trading of the disposing entity.

 

16.7        No other business  assets or
Financial Indebtedness

 

No Borrower shall engage in any business
other than the direct or indirect ownership, operation and chartering of the
relevant Vessel or any business incidental thereto nor shall any Borrower own
any asset other than any asset incidental to the operation and chartering of
the relevant Vessel, nor shall any Borrower incur any Financial Indebtedness
other than the Financial Indebtedness contemplated by this Agreement and any
other short term indebtedness not exceeding, when aggregated with such other
Financial Indebtedness of that Borrower, US$1,000,000 incurred in the ordinary
course of business solely for the purpose of funding Operating Expenses.

 

16.8        Payment of dividends

 

No Borrower shall pay any dividends or make
any other distributions to shareholders or issue any new shares unless it has
available surplus funds which, under Applicable Law and accounting principles
in its jurisdiction of incorporation it is entitled to distribute as dividends
and where the following conditions are satisfied:

 

(i)            the Standby Letter of Credit
is in place and continues to be in full force and effect; and

 

(ii)           it either (a) pays an amount
equal to the amount of interest and Exposure Fee payable at the end of the
current Term into the relevant Debt Service Reserve Account in accordance with
Clause 12.6 or (b) provides a letter of credit in an amount equal to the amount
of interest and Exposure Fee payable at the end of the current Term to the
Lender in form and substance satisfactory to the Lender;

 

(iii)          its Retention Account is fully
funded in accordance with Clauses 12.3 and 12.4; and

 

41

 

(iv)          no Default has occurred and is
continuing.

 

16.9        Change of business

 

(a)           Each Borrower must ensure that
no change is made to the general nature of its business from that carried on at
the date of this Agreement.

 

(b)           Each Borrower must maintain
its place of business, and keep its corporate documents and records, at the
address stated opposite its name in Schedule 1, and the Borrowers will not
establish, or do anything as a result of which it would be deemed to have, a
place of business in any country other than the Republic of Cyprus.

 

16.10      Mergers

 

None of the Borrowers shall enter into any
amalgamation, demerger, merger or reconstruction otherwise than under an
intra-group re-organisation on a solvent basis or other transaction agreed by
the Lender.

 

16.11      Security

 

Each Borrower:

 

(a)           will procure that the relevant Mortgage is on the
Delivery Date, and continues to be, registered as a first priority mortgage
with the Cyprus Ships Registry;

 

(b)           will procure that the Mortgage and any other security
conferred on the Lender under any Security Document is registered as a first
priority interest with the relevant authorities within the period prescribed by
the Applicable Laws and is maintained and perfected with the relevant
authorities;

 

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

 

(d)           without limiting the generality of paragraph (a)
above, will at its own cost, promptly register, file, record or enrol, or
procure the registration, filing, recording or enrolment of any Finance Document
with any court or authority, pay, or procure the payments of any stamp,
registration or similar tax payable in respect of any Finance Document, give,
or procure the giving of any notice or take any other step which, in the
reasonable opinion of the Lender, 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.

 

16.12      Registration of the Vessels

 

Each Borrower shall procure that the
relevant Owner shall :

 

(a)           procure and maintain with effect from the Delivery
Date of the relevant Vessel, the valid and effective provisional registration
of the Vessel under the flag of the Republic of Cyprus and shall effect permanent
registration of the Vessel within 3 months from the relevant Delivery Date, or
such other flag of equivalent reputation as is satisfactory to the Lender in
its absolute discretion, and shall ensure nothing is done or omitted by which
the registration of the Vessels would or might be defeated or imperilled; and

 

42

 

(b)           not change the name or port of registration of the
Vessels without the prior written consent of the Lender (such consent not to be
unreasonably withheld).

 

16.13      Partial prepayments or additional security

 

(a)           If and so often as, at any
time on or after the Delivery Date of the first Vessel to be delivered until
the date falling on the last day of the second year after the Delivery Date of
the first Vessel to be delivered, the market value of either of the delivered
Vessels (determined in accordance with Clause 17) shall be less than the First
Required Amount in respect of that Vessel, the Borrowers will, within thirty
Business Days of the request of the Lender to do so, either (i) prepay such
amount of the Loan relating to that Vessel as will ensure that the market value
of that Vessel (determined as aforesaid) is not less than the First Required
Amount in respect of that Vessel; or (ii) provide or cause to be provided to
the Lender such additional security as may be satisfactory to the Lender acting
in good faith but otherwise in its entire discretion. Clauses 6.9 and 6.10
shall apply, mutatis mutandis, to any
prepayment made pursuant to this Clause save that no prepayment fee equal to
0.5% of the amount of principal shall be payable.  Any prepayment made in accordance with Clause
16.13(a)(i) shall be applied against the Repayment Instalments of the relevant
Loan in the inverse order of their maturity.

 

(b)           If and so often as, at any
time on or after the date falling on the last day of the second year after the
Delivery Date of the first Vessel until the date falling on the last day of the
fourth year after the Delivery Date of the first Vessel, the market value of either
of the delivered Vessels (determined in accordance with Clause 17) shall be
less than the Second Required Amount in respect of that Vessel, the Borrowers
will, within thirty Business Days of the request of the Lender to do so, either
(i) prepay such amount of the Loan relating to that Vessel as will ensure that
the market value of that Vessel (determined as aforesaid) is not less than the
Second Required Amount in respect of that Vessel or (ii) provide or cause to be
provided to the Lender such additional security as may be satisfactory to the
Lender acting in good faith but otherwise in its entire discretion.  Clauses 6.9 and 6.10 shall apply, mutatis mutandis, to any prepayment made pursuant to this
Clause save that no prepayment fee equal to 0.5% of the amount of principal
shall be payable.  Any prepayment made in
accordance with Clause 16.13(b)(i) shall be applied against the Repayment
Instalments of that Loan in the inverse order of their maturity.

 

(c)           If and so often as, at any
time on or after the date falling on the last day of the fourth year after the
Delivery Date of the first Vessel until the Final Maturity Date, the market
value of either of the delivered Vessels (determined in accordance with Clause
17) shall be less than the Third Required Amount in respect of that Vessel, the
Borrowers will, within thirty Business Days of the request of the Lender to do
so either (i) prepay such amount of the Loan relating to that Vessel as will
ensure that the market value of that Vessel (determined as aforesaid) is not
less than the Third Required Amount in respect of that Vessel or (ii) provide
or cause to be provided to the Lender such additional security as may be
satisfactory to the Lender acting in good faith but otherwise in its entire
discretion.  Clauses 6.9 and 6.10 shall
apply, mutatis mutandis, to any prepayment made
pursuant to this Clause save that no prepayment fee equal to 0.5% of the amount
of principal shall be payable Any such prepayment made in accordance with Clause
16.13(c)(i) shall be applied against the Repayment Instalments of that Loan in
the inverse order of their maturity.

 

43

 

16.14      Classification and repair

 

Each Borrower will, and will procure that
the Manager, the Owners and the Bareboat Charterer will, at all times after the
Delivery Date:

 

(a)           ensure that the Vessels are surveyed from time to time
as required by the classification society in which the Vessel is for the time
being entered and maintain and preserve the Vessel in good working order and
repair, ordinary wear and tear excepted, and in any event in such condition as
will entitle each to the classification of 100AI Containership, Shipright (SDA,
FDA, CM)* IWS, @ LMC, UMS, SCM, EP, CAC NAVI or, if such
classification is not available with the highest equivalent classification
available, with Lloyds Register of Shipping, (or to the equivalent
classification in another internationally recognised classification society of
like standing acceptable to the Lender), free of all overdue requirements and
recommendations of that classification society;

 

(b)           procure that all repairs to or replacement of any
damaged, worn or lost parts or equipment shall be effected in such manner (both
as regards workmanship and quality of materials) as not to diminish the value
of the Vessels;

 

(c)           not remove any material part of either of the Vessels,
or any item of equipment installed on either of the Vessels unless the part or
item so removed is forthwith replaced by a suitable part or item which is in
the same condition as or better condition than the part or item removed, is
free from any Security Interest or any right in favour of any person other than
the Lender and becomes on installation on that Vessel the property of the Owner
and subject to the security constituted by the relevant Security Document(s)
provided that the Owner may install and remove equipment owned by a third party
if the equipment can be removed without any risk of damage to a Vessel;

 

(d)           ensure that each Vessel complies with all Applicable
Laws from time to time applicable to vessels registered under the laws and flag
of the Republic of Cyprus or such other flag, under which the Vessels may be
registered from time to time in accordance with this Agreement; and

 

(e)           not without the prior written consent of the Lender
(such consent not to be unreasonably withheld) cause or permit to be made any
substantial change in the structure, type or performance characteristics of
either of the Vessels and provide notification of such substantial changes in
structure, type or performance characteristics of either of the Vessels to the
Lender and furthermore provide confirmation to the Lender that such substantial
change in structure, type or performance characteristics of either of the
Vessels shall not result in a breach of any covenant under this Agreement.

 

16.15      Lawful and Safe Operation

 

Each Borrower will, and will procure that the
Manager, the Owners and the Bareboat Charterer will, at all times after the
Delivery Date:

 

(a)           operate each Vessel and cause each of the Vessels to
be operated in a manner consistent in all material respects with any and
all  laws, regulations, treaties and
conventions (and all rules and regulations issued thereunder) from time to time
applicable to the Vessel;

 

44

 

(b)           not cause or permit either of the Vessels to trade
with, or within the territorial waters of any country in which her safety may
be imperilled by exposure to piracy, terrorism, arrest, requisition,
confiscation, forfeiture, seizure, destruction or condemnation as prize;

 

(c)           not cause or permit either of the Vessels to be
employed in any manner which will or may give rise to any reasonable degree of
likelihood that such Vessel would be liable to requisition, confiscation,
forfeiture, seizure, destruction or condemnation as prize;

 

(d)           not cause or permit either of the Vessels to be employed
in any trade or business which is forbidden by international law or is illicit
or in carrying illicit or prohibited goods;

 

(e)           in the event of hostilities in any part of the world
(whether war be declared or not) not cause or permit either of the Vessels to
be employed in carrying any contraband goods and that she does not trade in any
zone after it has been declared a war zone by any authority or by any of that
Vessel’s war risks insurers unless that Vessel’s insurers shall have confirmed
to the relevant Owner that such Vessel is held covered under the Obligatory
Insurances for the voyage(s) in question; and

 

(f)            not charter either of the Vessels or permit either of
the Vessels to serve under any contract of affreightment with any foreign
country or national of any foreign country which is specified by legislation or
regulations of Korea or any other jurisdiction in which the Facility Office is
located and such that, if the earnings or any part of earnings were derived
from such charter or affreightment, that fact would render any Finance Document
or the security conferred by the Security Documents unlawful.

 

16.16      Repair of the Vessels

 

Each Borrower will not and will procure
that the Manager, the Owners and the Bareboat Charterer will not, at any time after
the Delivery Date, of a relevant Vessel put either of the Vessels into the
possession of any person for the purpose of work being done upon her beyond the
amount of US$3,000,000 (or equivalent), other than for classification or
scheduled dry docking unless such person shall have given an undertaking to the
Lender not to exercise any lien on that Vessel or Obligatory Insurances for the
cost of that work or otherwise.

 

16.17      Arrests and Liabilities

 

Each Borrower will, and will procure that
the Manager, the Owners and the Bareboat Charterer will, at all times after the
Delivery Date of a Vessel:

 

(a)           pay and discharge all obligations and liabilities
whatsoever which have given or may give rise to liens (other than liens arising
in the ordinary course of operation of either of the Vessels in each case for
amounts the payment of which is not yet due or, if due and payable, is being
disputed in good faith by appropriate proceeding (and for the payment of which
adequate reserves have been provided or are and continue to be available)) on
or claims enforceable against either of the Vessels and take all reasonable
steps to prevent a threatened arrest of either of the Vessels;

 

(b)           notify the Lender promptly in writing of the levy of
any distress on either of the Vessels or her arrest, detention, seizure,
condemnation as prize, compulsory acquisition or requisition for title or use
and (save in the case of compulsory acquisition or requisition for title or
use) obtain her release within 21 days;

 

45

 

(c)           pay and discharge when due all dues, taxes,
assessments, governmental charges, fines and penalties lawfully imposed on or
in respect of either of the Vessels or the relevant Borrower, the Manager, the
relevant Owner or the Bareboat Charterer except those which are being disputed
in good faith by appropriate proceedings (and for the payment of which adequate
reserves have been provided or are and continue to be available) and provided
that the continued existence of such dues, taxes, assessments, governmental
charges, fines or penalties does not give rise to any reasonable degree of
likelihood that the Vessel would be liable to arrest, requisition,
confiscation, forfeiture, seizure, destruction or condemnation as prize; and

 

(d)           pay and discharge all other obligations and
liabilities whatsoever in respect of either of the Vessels and the Obligatory
Insurances except those which are being disputed in good faith by appropriate
proceedings (and for the payment of which adequate reserves have been provided
or are and continue to be available) and provided that the continued existence
of those obligations and liabilities in respect of either of the Vessels and
the Obligatory Insurances does not give rise to any reasonable degree of
likelihood that either of the Vessels would be liable to arrest, requisition,
confiscation, forfeiture, seizure, destruction or condemnation as prize and
provided always that each Vessel remains properly managed and insured at all
times in accordance with the terms of this Agreement.

 

16.18      Related Contracts

 

The Borrowers shall not and shall procure
that the Manager, the Owners and the Bareboat Charterer shall not, take any
action, enter into any document or agreement or omit to take any action or to enter
into any document or agreement which would, or could reasonably be expected to,
cause any Related Contract to cease to remain in full force and effect and
shall use all reasonable endeavours to procure that each other party to any
Related Contract does not take any action, enter into any document or agreement
or omit to take any action or to enter into any document or agreement which
would, or could reasonably be expected to, cause any Related Contract to cease
to remain in full force and effect.

 

16.19      Environment

 

Each of the Borrowers shall, and shall
procure that the Manager, the Owners and the Bareboat Charterer shall, at all
times after the Delivery Date of a Vessel:

 

(a)           comply with all applicable Environmental Laws
including, without limitation, requirements relating to the establishment of
financial responsibility (and shall require that all Environmental Affiliates
of each Borrower comply with all applicable Environmental Laws and obtain and
comply with all required Environmental Approvals, which Environmental Laws and
Environmental Approvals relate to either 
of the Vessels or her operation or her carriage of cargo); and

 

(b)           promptly upon the occurrence of any of the following
events, provide to the Lender a certificate of an officer of the relevant
Borrower or of the relevant Borrower’s agents specifying in detail the nature
of the event concerned:

 

(i)            the receipt by the Borrower or any Environmental
Affiliate (where the Borrower has knowledge of the receipt) of any
Environmental Claim; or

 

(ii)           any Release of Hazardous Materials.

 

46

 

16.20      Information regarding the Vessels

 

Each Borrower shall, and shall procure that
the Manager, the Owners and the Bareboat Charterer shall, at all times after the
relevant Delivery Date:

 

(a)           promptly notify the Lender of the occurrence of any
accident, casualty or other event which has caused or resulted in or may cause
or result in its Vessel being or becoming a Total Loss;

 

(b)           promptly notify the Lender of any requirement or
recommendation made by any Insurer or classification society or by any
competent authority which is not complied with in a timely manner;

 

(c)           promptly notify the Lender of any intended dry docking
of either of the Vessels;

 

(d)           promptly notify the Lender of any Environmental Claim
being made in connection with either of the Vessels or its operation;

 

(e)           promptly notify the Lender of any claim for breach of
the ISM Code being made in connection with either of the Vessels or its
operation;

 

(f)            promptly notify the Lender of any claim for breach of
the ISPS Code being made in connection with any of the Vessels or its
operation;

 

(g)           give to the Lender from time to time on request such
information as the Lender may reasonably require regarding either of the
Vessels, her employment, position and engagements;

 

(h)           provide the Lender with copies of the classification
certificate of the Vessels and of all periodic damage or survey reports on
either of the Vessels which the Lender may reasonably request;

 

(i)            promptly furnish the Lender with full information of
any casualty or other accident or damage to either of the Vessels involving an
amount in excess of US$3,000,000 (or equivalent):

 

(j)            give to the Lender and its duly authorised
representatives reasonable access to either of the Vessels for the purpose of
conducting on board inspections and/or surveys of the Vessel and pay the
reasonable expenses incurred by the Lender in connection with the inspections
and/or surveys provided that, unless a Default has occurred and is continuing,
such inspections and/or surveys shall not take place at the expense of the
Borrower and the Lender shall co-operate with the Borrower in respect of the
timing for and the place where such surveys take place in order to minimise
disruption to the activities of either of the Vessels; and

 

(k)           if the Lender reasonably believes an Event of Default
may have occurred, furnish to the Lender from time to time upon reasonable
request certified copies of the ship’s log in respect of either of the Vessels.

 

16.21      Provision of further information

 

Each Borrower shall, and shall procure that
the Manager , the Owners and the Bareboat Charterer shall, as soon as
practicable following receipt of a request by the Lender, provide

 

47

 

the Lender with any additional or further
financial or other information relating to either of the Vessels, the
Obligatory Insurances or to any other matter relevant to, or to any provision
of, a Finance Document which the Lender may reasonably request.

 

16.22      Management

 

Each Borrower shall, and shall procure that
the Manager, the Owners and the Bareboat Charterer shall, ensure that at all
times after the relevant Delivery Date:

 

(a)           the relevant Vessel is managed by the Manager; and

 

(b)           the Manager shall not terminate or materially vary the
terms of its management or appoint an alternative manager, provided that the
Bareboat Charterer  shall be entitled so
to do with the prior written consent of the Lender.

 

However, in the event that the Manager’s
appointment as manager of either one of the Vessels ceases or is terminated in
circumstances where it was not possible for the Bareboat Charterer to obtain
the prior written consent of the Lender, the relevant Borrower shall promptly
and in any event within 10 days from the date of the termination of the
Manager’s appointment, provide to the Lender details of a replacement manager,
such manager to be satisfactory to the Lender.

 

16.23      Proceeds from sale or Total Loss of a Vessel

 

(a)           Each Borrower shall procure
that the proceeds from a sale or Total Loss of the relevant Vessel shall
immediately upon receipt by the Owner or a Borrower be paid to the Lender for
application in accordance with the relevant provisions of the relevant
Intercreditor Deed and the provisions of Clause 13.7.

 

(b)           For and so long as an Owner or
a Borrower holds any such proceeds as referred to in paragraph (a) it
shall do so on trust for the Lender.

 

16.24      Charters

 

(a)           The Borrowers shall not and shall
procure that neither of the Owners nor the Bareboat Charterer will let either
of the Vessels on demise, consecutive voyage or voyage charter for any period
without the consent of the Lender such consent not to be unreasonably withheld
other than the AML Charters, the Bareboat Charters and the Time Charters.

 

(b)           Each Borrower shall be
entitled to let its Vessel, in accordance with the terms of the Time Charter
PROVIDED always that:

 

(i)            the Borrower shall remain
liable under any time charter to perform all the obligations assumed by it
under the Time Charter;

 

(ii)           the Lender shall not be under
any obligations or liability under any time charter or liable to make any
payment under that time charter;  and

 

(iii)          the Lender shall not be
obliged to enforce against any charterer any term of any time charter, or to
make any enquiries as to the nature or sufficiency of any payment received by
the Lender.

 

48

 

(c)           If so required by the Lender
each of the Borrowers shall exercise its respective rights to extend the
charter period in respect of the relevant Vessel beyond the Initial Charter
Period (as such term is defined in the AML Time Charters) for such period as
the Lender may require, all in accordance with the provisions of Clause 32.1 of
the AML Time Charters.

 

16.25      Substitution of Charterer

 

(a)           At all times during the
Post-Delivery Period, the Borrowers shall advise the Lender of any of the
following events;

 

(i)            any breach by the Charterer of
the terms of a Time Charter of which the relevant Borrower becomes aware;

 

(ii)           the termination of a Time
Charter by either the relevant Borrower or the Charterer;

 

(iii)          as soon as it becomes aware of
such event, the occurrence of an event of cross default of the nature referred
to in Clause 18.5 in respect of the Charterer, PROVIDED always that such event
shall not arise in respect of the Charterer where the aggregate amount of the
relevant Financial Indebtedness of the Charterer is less than US$50,000,000 or
its equivalent; or

 

(iv)          as soon as it becomes aware of
such event, the occurrence of an insolvency event of the nature referred to in
Clause 18.6, 18.7 or 18.8 in respect of the Charterer.

 

Upon
the occurrence of any such event the Lender shall be entitled to require that
the relevant Borrower exercises all of its rights under the relevant Time
Charter including, where applicable, the termination of the Time Charter in
respect of the relevant Vessel.

 

(b)           In the event of a termination
of a Time Charter in accordance with Clause 16.25(a) or otherwise, the
relevant Borrower shall within 45 days of such termination either:

 

(i)            propose by written notice to
the Lender, a substitute charterer; or

 

(ii)           prepay the outstanding Loan in
respect of that Vessel, together with accrued interest and all other amounts
accrued under the Finance Documents in respect of that Vessel in accordance
with Clause 6.

 

provided always that, until either a
substitute charterer is in place or the Loan has been prepaid, the Borrower
shall on each date which would, had the Time Charter not terminated, have been
an Earnings Deposit Date, deposit in the relevant Earnings Account an amount
equal to the amount which would have been required, on that date, to have been
transferred to the relevant Retention Account. 
Such deposit by the Borrower shall be treated as Earnings and Clause 12
shall apply thereto on that basis. If the Borrower fails to make such deposit
into the Earnings Account, the Borrowers’ rights in Clause 16.25 shall
immediately cease and the Lender shall be entitled to treat such failure to pay
(after any applicable grace period) as an Event of Default.

 

(c)           In the event that the relevant
Borrower proposes a substitute charterer in accordance with
Clause 16.25(b), the Lender shall then be required to undertake a credit
review, in good faith but in a manner which it considers appropriate, of the
terms of this Agreement.  The Lender
shall be entitled, as part of the credit review process for a valuation to be
carried out in respect of the relevant Vessel in accordance with Clause 17
(Valuation) except that the provisions of Clause 17.1(b) shall not apply
and the valuation shall be carried out on both a with and

 

49

 

without
charter basis.  The Lender’s
determination pursuant to the credit review shall be made in the Lender’s
absolute discretion and the Lender shall inform the Borrowers upon having
reached such determination.  In the event
that the Lender does not find the results of the credit review satisfactory,
the Lender shall be entitled to require any amendments to the Agreement which,
in its absolute discretion, it may consider appropriate.

 

(d)           After notification by the
Lender to the relevant Borrower of the results of its determination the
relevant Borrower shall within a period of 60 days from the date of the
Lender’s notification, during which time no Event of Default may occur or be
continuing either:

 

(i)            comply with the requirements
of the Lender’s credit review; or

 

(ii)           prepay the outstanding Loan in
respect of that Vessel, together with accrued interest and all other amounts
accrued under the Finance Documents in respect of the Vessel in accordance with
Clause 6.

 

(e)           In the event the relevant
Borrower enters into a substitute charter in accordance with Clause 16.25(c) or
16.25(d), the Borrower shall execute an assignment of time charter and earnings
in the same form (mutatis mutandis) as the Time
Charter and Earnings Assignment together with all notices and acknowledgements
thereto.

 

16.26      Scope of Obligatory Insurances

 

Each Borrower shall or shall procure that
the Owners or the Bareboat Charterers, in respect of each Vessel:

 

(a)           obtain the Builder’s compliance with the Builder’s
Risk Insurances as detailed in Article XVII of each Shipbuilding Contract.

 

(b)           at all times after the relevant Delivery Date keep the
Vessel insured in the Required Insurance Amount, in Dollars in the name of the
relevant Owner and the Bareboat Charter or (if the Lender so requires) in the
joint names of the relevant Owner the Lender and the Bareboat Charter without
the Lender being liable but having the right to pay premiums, through brokers
approved by the Lender against fire and usual marine risks (including hull and
machinery and Excess Risks) with approved underwriters or insurance companies
approved by the Lender and by policies in form and content approved by the
Lender;

 

(c)           at all times after the relevant Delivery Date keep
that Vessel insured in the Required Insurance Amount in the same manner as above
against war risks (including risks of mines and all risks, whether or not
regarded as war risks, London Blocking and Trapping Addendum and Lost Vessel
Clause, excepted by the free of capture and seizure clauses in the standard
form of Lloyds marine policy) either:

 

(i)            with underwriters or insurance companies approved by
the Lender and by policies in form and content approved by the Lender; or

 

(ii)           by entering the relevant Vessel in an approved war
risks association,

 

and for the avoidance of doubt, such war
risks insurance will include protection and indemnity liability up to at least
the Required Insurance Amount, excluding any liability in respect of death,
injury or damage to crew;

 

50

 

(d)           at all times after the relevant Delivery Date keep
that Vessel entered in respect of her full value and tonnage in an approved
protection and indemnity association against all risks as are normally covered
by such protection and indemnity association (including pollution risks and the
proportion not recoverable in case of collision under the running down clause
inserted in the ordinary Lloyds policies), such cover for pollution risks to be
for:

 

(i)            a minimum amount of US$1,000,000,000 or such other
amount of cover against pollution risks as shall at any time be comprised in
the basic entry of each Vessel with either a protection and indemnity
association which is an acceptable member of either the International Group of
protection and indemnity associations (or any successor organisation designated
by the Lender for this purpose) or the International Group (or such successor
organisation) itself; or

 

(ii)           if the International Group or any such successor
ceases to exist or ceases to provide or arrange any cover for pollution risks
(or any supplemental cover for pollution risks over and above that afforded by
the basic entry of each Vessel with its protection and indemnity association),
such aggregate amount of cover against pollution risks as shall be available on
the open market and by basic entry with a protection and indemnity association
for ships of the same type, size, age and flag as each respective Vessel,

 

provided that, if any Vessel has ceased
trading or is in lay up and in either case has unloaded all cargo, the level of
pollution risks cover afforded by ordinary protection and indemnity cover
available through a member of the International Group or such successor
organisation or, as the case may be, on the open market in such circumstances
shall be sufficient for such purposes;

 

(e)           at all times after either of the Vessels is let on
charter, maintain in full force and effect off-hire insurance in respect of
that Vessel with underwriters or insurance companies approved by the Lender in
form and content approved by the Lender; and

 

(f)            at all times after the Delivery Date, whenever either
Vessel is trading to Japanese territorial waters and when so required by the
Lender, maintain in full force and effect social responsibility insurance in
respect of the Vessel with underwriters or insurance companies approved by the
Lender and by policies in form and content approved by the Lender provided
always that a first class owner or operator of vessels such as the Vessels
would maintain such social responsibility insurance.

 

16.27      Mortgagee’s interest and additional perils insurances

 

The Lender shall, in respect of each
Vessel, be entitled from time to time to effect from the Delivery Date,
maintain and renew all or any of the following insurances in the relevant
Required Insurance Amount, and on such terms, through such insurers and in such
manner as the Lender may from time to time consider appropriate:

 

(a)           a mortgagee’s interest marine insurance providing for
the indemnification of the Lender for any Losses under or in connection with
any Finance Document which directly or indirectly result from loss of or damage
to a Vessel or a liability of a Vessel or a Borrower, 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

 

51

 

payment) by
the underwriters by reason of, or on the basis of any allegation concerning:

 

(i)            any act or omission on the part of an Owner or the
Bareboat Charterer or a Borrower, of any operator or manager of any Vessel or
of any officer, employee or agent of an Owner or the Bareboat Charterer 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 or the Bareboat Charterer
or any other person referred to in paragraph (i) above, or of any officer,
employee or agent of an Owner or the Bareboat Charterer or of such a person,
including the casting away or damaging of any Vessel and/or any Vessel being
unseaworthy; and/or

 

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

 

(b)           where any Vessel is trading into the waters of the
United States of America or any other jurisdiction which in the future
introduces unlimited liability regimes, a mortgagee’s interest additional
perils policy providing for the indemnification of the Lender against, amongst
other things, any Losses or other consequences of any Environmental Claim,
including the risk of expropriation, arrest or any form of detention of any
Vessel, or the imposition of any Security Interest over any Vessel and/or any
other matter capable of being insured against under a mortgagee’s interest
additional perils (pollution) policy whether or not similar to the foregoing,

 

and the Borrowers shall upon demand fully
indemnify the Lender in respect of all premiums 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.

 

16.28      Obligatory Insurances

 

Without prejudice to its obligations under
Clause 16.26 (Scope of Obligatory Insurances), each Borrower will or shall
procure that the Manager or the Bareboat Charterer will:

 

(a)           not without the prior consent of the Lender alter any
Obligatory Insurance nor make, do, consent or agree to any act or omission
which would or might render any Obligatory Insurance invalid, void, voidable or
unenforceable or render any sum paid out under any Obligatory Insurance
repayable in whole or in part;

 

(b)           not cause or permit any Vessel to be operated in any
way inconsistent with the provisions or warranties of, or implied in, or
outside the cover provided by, any Obligatory Insurance or to be engaged in any
voyage or to carry any cargo not permitted by any Obligatory Insurances without
first covering the relevant Vessel in the relevant Required Insurance Amount
and her freights for an amount approved by the Lender in Dollars or another
approved currency with approved insurers;

 

(c)           duly and punctually pay all premiums, calls,
contributions or other sums of money from time to time payable in respect of
any Obligatory Insurance;

 

52

 

(d)           renew all Obligatory Insurances at least 14 days
before the relevant policies or contracts expire and procure that the approved
brokers and/or war risks and protection and indemnity clubs and associations
shall promptly confirm in writing to the Lender as and when each renewal is
effected;

 

(e)           forthwith upon the effecting of any Obligatory
Insurance, give written notice of the insurance to the Lender stating the full
particulars (including the dates and amounts) of the insurance, and on request
produce the receipts for each sum paid by it pursuant to paragraph (c) above;

 

(f)            not settle, release, compromise or abandon any claim
in respect of any Total Loss unless the Lender is satisfied that such release,
settlement compromise or abandonment will not prejudice its interests under or
in relation to any Finance Document;

 

(g)           arrange for the execution and delivery of such guarantees
as may from time to time be required by any protection and indemnity or war
risks club or association;

 

(h)           procure that the interest of the  Lender is noted on all policies of insurance;

 

(i)            procure that a loss payee provision in the form scheduled
to the relevant Bareboat Charter and reflecting the provisions of Clause 16.29
(Application of Insurance Proceeds) is endorsed on all policies of insurance;

 

(j)            obtain from the relevant insurance brokers and P&I
Club letters and undertakings in  form and
substance satisfactory to the Lender; and

 

(k)           in the event that an Owner, a Borrower or the Bareboat
Charterer receives payment of any moneys under the General Assignment, save as
provided in the loss payable clauses scheduled to the relevant Bareboat
Charter, forthwith pay over the same to the Lender and until paid over such
moneys shall be held in trust for the Lender by a Borrower, the Owner or the
Bareboat Charterer, as the case may be.

 

16.29      Application of Insurance Proceeds

 

(a)           All sums receivable in respect
of the Obligatory Insurances after the occurrence of an Event of Default shall
be paid to the Lender and the Lender shall apply them in accordance with the
relevant provisions of the relevant Intercreditor Deed and thereafter in
accordance with Clause 13.7 (Payments).

 

(b)           Subject to paragraph (a)
above:

 

(i)            each sum receivable in respect
of a major casualty (being any casualty in respect of which the claim or the
aggregate of the claims exceeds US$3,000,000 (or its equivalent)), other than in
respect of protection and indemnity risk insurances, shall be paid to the
Lender; and

 

(ii)           the insurance moneys received
by the Lender in respect of any such major casualty shall be paid:

 

(A)          to the person to whom the
relevant liability shall have been incurred; or

 

53

 

(B)           upon a Borrower furnishing
evidence satisfactory to the Lender that all loss and damage resulting from the
casualty has been properly made good and repaired, to the Owner or, at the option
of the Lender, to the person by whom any repairs have been or are to be
effected.

 

(iii)          The receipt by any such person
referred to in paragraph (A) and (B) of paragraph (ii) above shall be a full
and sufficient discharge of the same to the Lender.

 

(c)           Subject to paragraph (a)
above, each sum receivable in respect of the Obligatory Insurances (insofar as
the same are hull and machinery or war risks insurances) which does not exceed
US$3,000,000 or its equivalent shall be paid in full to the Bareboat Charterer
or to its order and shall be applied by it for the purpose of making good the
loss and fully repairing all damage in respect of which the receivable shall
have been collected.

 

(d)           Subject to paragraph (a)
above, each sum receivable in respect of protection and indemnity risk
Obligatory Insurances shall be paid direct to the person to whom the liability,
to which that sum relates, was incurred, or to the Bareboat Charterer in
reimbursement to it of moneys expended in satisfaction of such liability.

 

(e)           Subject to paragraph (a), each
sum receivable in respect of off-hire insurance shall be paid into the relevant
Earnings Account and shall be applied in accordance with the provisions of
Clause 12.

 

(f)            Notwithstanding any other
provision in this Clause 16.29, all sums receivable in respect of Obligatory
Insurances relating to a Total Loss shall be applied in accordance with the
relevant provisions of the relevant Intercreditor Deed and thereafter in
accordance with Clause 13.7 (Payments).

 

16.30      Power of Lender to Insure

 

If an Owner, the Borrowers or the Bareboat
Charterer fails to effect and keep in force Obligatory Insurances in accordance
with this Agreement, it shall be permissible, but not obligatory, for the
Lender to effect and keep in force insurance or insurances in the amounts
required under this Agreement and entries in a protection and indemnity
association or club and, if it deems necessary or expedient, to insure the war
risks upon either Vessel, and the Borrowers will reimburse the Lender for the
costs of so doing.

 

16.31      ISM Code

 

Each Borrower shall, and shall procure that
the Manager, the Owners and the Bareboat Charterer shall:

 

(a)           at all times after the Delivery Date of a Vessel
comply, and be responsible for compliance by itself and by such Vessel, with
the ISM Code;

 

(b)           at all times after the Delivery Date of a Vessel
ensure that:

 

(i)            the Vessel has a valid Safety Management Certificate;

 

(ii)           the Vessel is subject to a safety management system
which complies with the ISM Code; and

 

54

 

(iii)          there is a valid Document of Compliance for the
Vessel, which is held on board the Vessel,

 

and shall deliver to the Lender, on or
before the Delivery Date in respect of that Vessel, a copy of a valid Safety
Management Certificate and a valid Document of Compliance in respect of the
relevant Vessel, in each case duly certified by an officer of the Owner of that
Vessel;

 

(c)           promptly notify the Lender of any actual or, upon
becoming aware of the same, threatened withdrawal of an applicable Safety
Management Certificate or Document of Compliance;

 

(d)           promptly notify the Lender of the identity of the
person ashore designated for the purposes of paragraph 4 of the ISM Code and of
any change in the identity of that person; and

 

(e)           promptly upon becoming aware of the same notify the
Lender of the occurrence of any accident or major non-conformity requiring
action under the ISM Code.

 

16.32      ISPS Code

 

Each Borrower shall, and shall procure that
the relevant Manager the Owners and the Bareboat Charterer shall, at all times
after the Delivery Date of a Vessel:

 

(a)           comply and be responsible for compliance by itself and
by such Vessel with the ISPS Code;

 

(b)           ensure that:

 

(i)            the Vessel has a valid International Ship Security
Certificate;

 

(ii)           the Vessel’s security system and its associated
security equipment comply with section 19.1 of Part A of the ISPS Code;

 

(iii)          the Vessel’s security system and its associated
security equipment comply in all respects with the applicable requirements of
Chapter XI-2 of SOLAS and Part A of the ISPS Code; and

 

(iv)          an approved ship security plan is in place.

 

16.33      No amendment to Related Contracts

 

The Borrowers shall not and shall procure that the
Owners and the Bareboat Charterer shall not, amend or agree to any amendment to
the Related Contracts without the prior written consent of the Lender, subject
always to the provisions of Clause 8.2 of the Multipartite Deed.

 

17.          VALUATION

 

17.1        Valuation

 

For the purposes of this Clause 17:

 

55

 

(a)           the value of either Vessel shall be the mean average
of two valuations each certified in Dollars and carried out by two of the
Approved Valuers, reporting to the Lender on the basis of sale for prompt
delivery of the Vessel for cash (free of Security Interests) at arm’s-length on
normal commercial terms as between willing seller and buyer;

 

(b)           any valuation shall be on a with charter basis
provided always that if the Time Charter terminates, the Lender shall be
entitled to require a further valuation of the relevant Vessel on a without
charter basis. Such valuation shall be at the expense of the Borrowers
notwithstanding the provisions of Clause 17.2(e); and

 

(c)           there shall be deducted from any value or valuation
the amount which is owing or might become owing and which is secured on the
asset concerned by any prior or equal ranking Security Interest (other than in
favour of the Lender to secure the Secured Liabilities).

 

17.2        Delivery of Valuations

 

(a)           In respect of a Vessel, the
Borrower will from the Delivery Date of such Vessel procure one valuation per
annum from two of the Approved Valuers prepared in accordance with Clause
 17.1 (Valuation).

 

(b)           The Borrowers will procure in
favour of the Lender and the Approved Valuers all such information, facilities
and rights of inspection as they may reasonably (having regard to the use and
operation of the relevant Vessel) require in order to effect such valuations.

 

(c)           Subject to Clause 17.2(e)
below, all valuations shall be, as between the Borrowers and the Lender at the
expense of the relevant Borrower.

 

(d)           The Lender shall be entitled
to require that the relevant Borrower procure a valuation in respect of a
Vessel at any time during the Post-Delivery Period.  In the event that such valuation shows that
the value of any of the Vessels does not reach the relevant Required Amount as
required under Clause 16.13 (a), (b) or, as the case may be, (c), the
provisions of that Clause shall apply.

 

(e)           In the event that a valuation
procured by the Lender pursuant to Clause 17.2(d) does show that the value of
the Vessels reaches the relevant Required Amount as required under Clause 
16.13 (a), (b) or, as the case may be, (c), such valuation shall be at the
expense of the Lender.

 

(f)            If an Event of Default has
occurred and is continuing, the relevant Borrower shall be liable to pay for up
to five valuations of any Vessel (one from each of the Approved Valuers) under
Clause 17.2(a) in any one calendar year.

 

(g)           Any valuation under this
Clause 17 shall be binding and conclusive (save for manifest error).

 

18.          DEFAULT

 

18.1        Events of Default

 

Each of the events set out in this Clause
is an Event of Default.

 

56

 

18.2        Non-payment

 

A Borrower does not pay on the due date any
amount payable by it under the Finance Documents in the manner required under
the Finance Documents, unless the non-payment:

 

(a)           is caused by technical or administrative error; and

 

(b)           is remedied within three Business Days of the due
date.

 

18.3        Breach of other obligations

 

(a)           A Borrower does not comply
with any term of Clause 16 (General Covenants), unless the non-compliance;

 

(i)            is capable of remedy; and

 

(ii)           is remedied within 14 days of
the earlier of the Lender giving notice and the Borrower becoming aware of the
non-compliance.

 

The Borrower acknowledges that for the
purposes of paragraph (i) above, non-compliance with the following provisions
of this Agreement shall not be capable of remedy;

 

(i)            Clause 3.1(b) (Conditions Precedent and Subsequent
Documents);

 

(ii)           Clause 16.11(a) and (b) (Security), but in respect of
sub-paragraph (b) only in so far as it relates to the Mortgage, the General
Assignment, the Time Charter and Earnings Assignment, the Second Priority
Deposit Account Charge and the Deed of Counter-Indemnity;

 

(iii)          Clause 16.12(a) (Registration of Vessels); and

 

(iv)          Clause 16.26(b),(c) and (d) (Scope of Obligatory
Insurances) .

 

(b)           Subject to paragraph (c)
below, any Party (other than the Lender) does not comply with any other term of
the Finance Documents or the Related Contracts (other than the Vessel
Management Agreements and the Bareboat Charters) not already referred to in
this Clause which the Lender considers to be material, unless the
non-compliance:

 

(i)            is capable of remedy; and

 

(ii)           is remedied within 14 days of
the earlier of the Lender giving notice and the relevant Party becoming aware
of the non-compliance.

 

(c)           Any Party (other than the
Lender) does not comply with any other term of the Management Agreements or the
Bareboat Charter which the Lender considers to be material, unless the
non-compliance:

 

(i)            is capable of remedy; and

 

(ii)           is remedied within 30 days of
the earlier of the Lender giving notice and the relevant Party becoming aware
of the non-compliance.

 

57

 

provided always that (i) in the opinion of
the Lender, any delay in the enforcement by the Lender of its rights and
privileges is not likely to adversely affect the rights of the Lender and (ii)
the Borrowers shall continue to fulfil all other of their obligations under the
Finance Documents and the Related Contracts during such period;

 

(d)           The termination or expiry
without renewal of either of the Bareboat Charters or either of the AML Time
Charters

 

(e)           A Borrower does not serve an
extension notice on AML under the AML Time Charter by the date falling 5 days
before the last day on which it is able to serve such notice in accordance with
the provisions of Clause 32 of the AML Time Charter.

 

18.4        Misrepresentation

 

A representation made or repeated by a
Borrower (or by any other Party other than the Lender) in any Finance Document
or in any document delivered by or on behalf of a Borrower under any Finance
Document is incorrect in any respect which the Lender considers to be material
when made or deemed to be repeated, unless the circumstances giving rise to the
misrepresentation:

 

(a)           are capable of remedy; and

 

(b)           are remedied within fourteen days of the earlier of
the Lender giving notice and the relevant Party becoming aware of the
misrepresentation.

 

18.5        Cross-default

 

Any of the following occurs in respect of a
Borrower, or any other member of the Danaos Group:

 

(a)           any of its Financial Indebtedness is not paid when due
(after the expiry of any originally applicable grace period);

 

(b)           any of its Financial Indebtedness:

 

(i)            becomes prematurely due and payable;

 

(ii)           is placed on demand; or

 

(iii)          is capable of being declared by a creditor to be
prematurely due and payable or being placed on demand,

 

in each case, as a result of an event of
default (howsoever described) and after the expiry of any applicable grace
period; or

 

(c)           any commitment for its Financial Indebtedness is
cancelled or suspended as a result of an event of default (howsoever
described),

 

unless the aggregate amount of Financial
Indebtedness falling within paragraphs (a)-(c) above is less than US$5,000,000
or its equivalent (in the case of a Borrower) or US$20,000,000 or its
equivalent (in the case of any other member of the Danaos Group).

 

58

 

18.6        Insolvency

 

Any of the following occurs in respect of a
Borrower or any other member of the Danaos Group:

 

(a)           it is, or is deemed for the purposes of any Applicable
Law to be, unable to pay its debts as they fall due or insolvent;

 

(b)           it admits its inability to pay its debts as they fall
due;

 

(c)           it suspends making payments on any of its debts or
announces an intention to do so;

 

(d)           by reason of actual or anticipated financial
difficulties, it begins negotiations with any creditor for the rescheduling of
any of its indebtedness; or

 

(e)           a moratorium is declared in respect of any of its
indebtedness.

 

If a moratorium occurs in respect of a
Borrower or any other member of the Danaos Group, the ending of the moratorium
will not remedy any Event of Default caused by the moratorium.

 

18.7        Insolvency proceedings

 

(a)           Except as provided below, any
of the following occurs in respect of a Borrower or any other member of the
Danaos Group, the Owners, the L/C Bank (or any replacement bank providing a
letter of credit) or prior to the release or discharge of the Second Deposit
Charge, the Deposit Bank (or any replacement bank holding the Deposit
Accounts), the Bareboat Charterer:

 

(i)            any step is taken with a view
to a moratorium, a composition, assignment or similar arrangement with any of
its creditors;

 

(ii)           a meeting of its shareholders,
directors or other officers is convened for the purpose of considering any
resolution to petition for or to file documents with a court for  its winding-up, administration or dissolution
or any such resolution is passed;

 

(iii)          any person presents a
petition, or files documents with a court 
for its winding-up, administration or dissolution;

 

(iv)          an order for its winding-up,
administration or dissolution is made;

 

(v)           any liquidator, trustee in
bankruptcy, judicial custodian, compulsory manager, receiver, administrative
receiver, administrator or similar officer is appointed in respect of it or any
of its assets;

 

(vi)          its directors, shareholders or
other officers request the appointment of, or give notice of their intention to
appoint a liquidator, trustee in bankruptcy, judicial custodian, compulsory manager,
receiver, administrative receiver, administrator or similar officer; or

 

(vii)         any other analogous step or
procedure is taken in any jurisdiction.

 

59

 

(b)           Paragraph (a) above does not
apply to a frivolous or vexatious petition for winding-up presented by a
creditor which is being contested in good faith and with due diligence and is
discharged or struck out within fourteen days.

 

18.8        Creditors’ process

 

Any attachment, sequestration, distress,
execution or analogous event affects any asset(s) of a Borrower, or any other
member of the Danaos Group, having an aggregate value of five Million Dollars
(US$5,000,000) or its equivalent (in the case of a Borrower) and US$20,000,000
or its equivalent (in the case of any other member of the Danaos Group), and is
not discharged within fourteen days.

 

18.9        Cessation of business

 

A Borrower or any other member of the
Danaos Group ceases, or threatens to cease, to carry on business except as a
result of any disposal not prohibited under this Agreement.

 

18.10      Failure to pay final judgment

 

A Borrower or any other member of the
Danaos Group fails to comply with or pay any sum due from it under any final
judgement or any final order made or given by any court of competent
jurisdiction.

 

18.11      Effectiveness of Finance Documents

 

(a)           It is or becomes unlawful for
any Borrower or any other Party (other than the Lender) to perform any of its
obligations under the Finance Documents which the Lender considers material.

 

(b)           Any Finance Document is not
effective or is alleged by the relevant Borrower to be ineffective for any
reason.

 

(c)           Any Finance Document is not
effective or is alleged by any Party (other than the Lender or a Borrower) to
be ineffective for any reason and in any respect which the Lender considers to
be material.

 

(d)           A Borrower repudiates a
Finance Document or evidences an intention to repudiate a Finance Document.

 

(e)           Any Party (other than a
Lender) repudiates any material provision of a Finance Document or evidences an
intention to repudiate any material provision of a Finance Document.

 

18.12      Material adverse change

 

Any event or series of events occurs in
respect of a Borrower which, in the reasonable opinion of the Lender, is likely
to have a Material Adverse Effect.

 

18.13      Invalidity of Security Documents

 

Any of the Security Documents ceases to be
valid or any of those Security Documents creating a Security Interest in favour
of the Lender ceases to provide a perfected first priority security interest in
favour of the Lender.

 

60

 

18.14      Acceleration

 

If an Event of Default is outstanding, the
Lender may, by notice to the Borrowers:

 

(a)           cancel the undrawn, uncancelled amount of the Maximum
Facility Amount; and/or

 

(b)           declare that all or part of any amounts outstanding
under the Finance Documents are:

 

(i)            immediately due and payable; and/or

 

(ii)           payable on demand by the Lender.

 

Any notice given under this Subclause will
take effect in accordance with its terms.

 

19.          EVIDENCE
AND CALCULATIONS

 

19.1        Accounts

 

Accounts maintained by the Lender in
connection with this Agreement are conclusive (save for manifest error)
evidence of the matters to which they relate for the purpose of any litigation
or arbitration proceedings.

 

19.2        Certificates and determinations

 

Any certification or determination by the
Lender of a rate or amount under the Finance Documents will be, in the absence
of manifest error, conclusive evidence of the matters to which it relates.

 

19.3        Calculations

 

Any interest or fee accruing under this
Agreement accrues from day to day and is calculated on the basis of the actual
number of days elapsed and a year of 360 days or otherwise, depending on what
the Lender determines is market practice.

 

20.          FEES

 

20.1        Exposure fee

 

(a)           Each Borrower must pay to the
Lender an exposure fee calculated at the rate of 0.3725% per annum in respect
of all amounts drawn under their respective Loan.

 

(b)           The exposure fee in respect of
each Loan shall accrue from the first Drawing under that Loan and shall be
payable as part of the interest payment in accordance with Clause 7.

 

20.2        Commitment fee

 

(a)           The Borrowers must pay a
commitment fee calculated at the rate of 0.3 per cent. per annum on the
undrawn, uncancelled amount of each Maximum Available Loan Amount.  The commitment fee shall accrue from the
earlier of (i) the date falling 60 days of the date of this Agreement and (ii)
the date of the first Drawing under the relevant Loan.

 

61

 

(b)           Accrued commitment fee is
payable quarterly in arrears on the last day of each Term.  Accrued commitment fee on that part of any
Maximum Available Loan Amount which is cancelled is payable to the Lender on
the date such part of such Loan(s) is cancelled in full.

 

20.3        Management fee

 

(a)           The Borrowers must pay to the
Lender a one time management fee calculated at the rate of 0.3% of the amount
of each Maximum Available Loan Amount.

 

(b)           The management fee shall be
payable on the date of the first Drawing under the relevant Loan and shall be
capitalised and added to the principal amount of the Loan outstanding on that
date.

 

20.4        Refund of fees

 

The fees referred to in this Clause 20
shall not be refunded under any circumstances whatsoever once they have been
paid to the Lender.

 

21.          INDEMNITIES
AND BREAK COSTS

 

21.1        Currency indemnity

 

(a)           Each of the Borrowers shall,
as an independent obligation and within 3 Business Days of demand, indemnify
the Lender against any cost, loss or liability which the Lender incurs as a
consequence of:

 

(i)            the Lender receiving an amount
in respect of a Borrower’s liability under the Finance Documents; or

 

(ii)           that liability being converted
into a claim, proof, judgment or order,

 

in a currency other than the currency in
which the amount is expressed to be payable under the relevant Finance
Document.

 

(b)           Each of the Borrowers waives
any right it may have in any jurisdiction to pay any amount under the Finance
Documents in a currency other than that in which it is expressed to be payable.

 

21.2        Other indemnities

 

(a)           Each of the Borrowers shall,
as an independent obligation and within 3 Business Days of demand, indemnify
the Lender against any cost, loss or liability which the Lender incurs as a
consequence of:

 

(i)            the occurrence of any Event of
Default;

 

(ii)           any failure by a Borrower to
pay any amount due under a Finance Document on its due date;

 

(iii)          (other than by reason of
negligence or default by the Lender) a Loan not being made after a Request has
been delivered for that Loan; or

 

62

 

(iv)          a Loan (or part of a Loan) not
being prepaid in accordance with a notice of prepayment.

 

The liability of the Borrowers in each case
includes any cost, loss or expense on account of funds borrowed, contracted for
or utilised to fund any amount payable under any Finance Document, any amount
repaid or prepaid or any Loan.

 

(b)           Each Borrower must indemnify
against any cost, loss or liability incurred by the Lender as a result of:

 

(i)            investigating any event which
the Lender reasonably believes to be a Default; or

 

(ii)           acting or relying on any
notice from any Party which the Lender reasonably believes to be genuine,
correct and appropriately authorised.

 

(c)           Each Borrower must indemnify
and hold the Lender harmless on a full indemnity basis, from and against each
and every Loss:

 

(i)            arising directly or indirectly
out of or in any way connected with the ownership, possession, performance,
transportation, management, sale, import to or export from any jurisdiction,
control, use or operation, registration, navigation, certification,
classification, management, manning, provisioning, the provision of bunkers and
lubricating oils, testing, design, condition, delivery, acceptance, leasing,
sub-leasing, chartering, insurance, maintenance, repair, service, modification,
refurbishment, drydocking, survey, conversion, overhaul, replacement, removal,
repossession, return, redelivery, storage, sale, disposal, the complete or
partial removal, decommissioning, making safe, destruction, abandonment or loss
by either of the Borrowers or any other person of either of the Vessels or
caused by either of the Vessels becoming a wreck or an obstruction to
navigation, whether or not such Liability may be attributable to any defect in
either of the Vessels or to the design, construction or use thereof or from any
maintenance, service, repair, drydocking, overhaul, inspection or for any other
reason whatsoever (whether similar to any of the foregoing or not), and
regardless of when the same shall arise and whether or not either of the
Vessels (or any part thereof) is in possession or control of the relevant
Borrower or  the Manager or any other
person and whether or not the same is in United Kingdom waters or abroad;

 

(ii)           arising directly or indirectly
out of or in any way connected with any Release of Hazardous Material, any
Environmental Claim, or any breach of an Environmental Law or the terms and
conditions of an Environmental Approval;

 

(iii)          as a consequence of any claim
that any design, article or material in either of the Vessels or any part
thereof or relating thereto or the operation or use thereof constitutes an
infringement of patent, copyright, design or other proprietary right; or

 

(iv)          in preventing or attempting to
prevent the arrest, seizure, taking in execution, requisition, impounding,
forfeiture or detention of either of the Vessels or in securing or attempting
to secure the release of either of the Vessels.

 

21.3        Break Costs

 

(a)           Each Borrower must pay to the
Lender its Break Costs in accordance with this Agreement.

 

(b)           Break Costs are the amount (if
any) determined by the Lender by which:

 

63

 

(i)            the interest which the Lender
would have received for the period from the date of receipt of payment of a
Loan or an overdue amount to the last day of the current Term for that Loan or
overdue amount if the principal or overdue amount received had been paid on the
last day of that Term;

 

exceeds

 

(ii)           the amount which the Lender
would be able to obtain by placing an amount equal to the amount received by it
on deposit with a leading bank in the appropriate interbank market for a period
starting on the Business Day following receipt and ending on the last day of
the applicable Term.

 

(c)           The Lender must supply to the
Borrowers details of the amount of any Break Costs claimed by it under this
Clause.

 

22.          EXPENSES

 

22.1        Initial costs

 

The Borrowers must pay to the Lender the
amount of all reasonable costs and expenses (including legal fees) incurred by
it in connection with (but not limited to) the negotiation, preparation,
printing and execution of the Finance Documents.

 

22.2        Subsequent costs

 

The Borrowers must pay to the Lender the
amount of all costs and expenses (including legal fees) incurred by it in
connection with:

 

(a)           the negotiation, preparation, printing and execution
of any Finance Document executed after the date of this Agreement; and

 

(b)           any amendment, waiver or consent requested by or on
behalf of an Owner or specifically allowed by this Agreement.

 

The Borrowers shall not be required to bear
the amount of any costs and expenses (including legal fees) incurred by the
Lender or the New Lender (as that term is defined in Clause 25.2) in connection
with any voluntary transfer made by the Lender under this Agreement or any of
the Security Agreements.  In the event
that the Lender is required to undertake any such transfers as a result of the
provisions of Clause 11.4 (Mitigation) any costs of the Lender or the New
Lender arising out of such transfer shall be payable by the Borrowers.

 

22.3        Enforcement costs

 

The Borrowers must pay to the Lender the
amount of all costs and expenses (including legal fees) incurred by it in
connection with the enforcement or attempted enforcement of, or the
preservation or attempted preservation of any rights under, any Finance
Document.

 

23.          WAIVER OF
CONSEQUENTIAL DAMAGES

 

In no event shall the Lender be liable on
any theory of liability for any special, indirect, consequential or punitive
damages and each Borrower hereby waives, releases and agrees (for itself and on
behalf of its Subsidiaries) not to sue upon any such claim for any such
damages,

 

64

 

unless caused by the fraud, wilful default
or recklessness of the Lender in performance of any of its obligations under
this Agreement or any of the Finance Documents.

 

24.          AMENDMENTS
AND WAIVERS

 

24.1        Procedure

 

Except as provided in this Clause, no term
of the Finance Documents may be amended or waived without the agreement of the
Borrowers and the Lender.

 

24.2        Change of currency

 

If a change in any currency of a country
occurs (including where there is more than one currency or currency unit
recognised at the same time as the lawful currency of a country), the Finance
Documents will be amended to the extent the Lender (acting reasonably and after
consultation with the Borrowers) determines is necessary to reflect the change.

 

24.3        Waivers and remedies cumulative

 

The rights of the Lender under the Finance
Documents:

 

(a)           may be exercised as often as necessary;

 

(b)           are cumulative and not exclusive of its rights under
the general law; and

 

(c)           may be waived only in writing and specifically.

 

Delay in exercising or non-exercise of any
right is not a waiver of that right.

 

25.          CHANGES TO
THE PARTIES

 

25.1        Assignments and transfers by Borrowers

 

The Borrowers may not assign or transfer
any of their respective rights and obligations under the Finance Documents without
the prior consent of the Lender.

 

25.2        Assignments and transfers by Lender

 

(a)           The Lender may, subject to the
following provisions of this Subclause, at any time assign or transfer
(including by way of novation) any of its rights and obligations under this
Agreement to (i) any commercial bank organized under the laws of any country
that is a member of the OECD or has concluded special lending arrangements with
the International Monetary Fund Associated with its General Arrangements to
Borrow, or a political subdivision of any such country, and having total assets
in excess of US$300,000,000 so long as such bank is acting through a branch or
agency located in the country in which it is organized or another country that
is described in this clause (i); or (ii) the central bank of any country that
is a member of the OECD; (iii) any Chinese bank having total assets in excess
of US$300,000,000 (iv) any finance company, insurance company or other
financial institution or fund (whether a corporation, partnership, trust or
other entity) that is engaged in making, purchasing or otherwise investing in
commercial loans in the ordinary course of its business and has total assets in
excess of US$300,000,000; and (v) any other person approved by the Lender and
the

 

65

 

Owners,
such approval not to be unreasonably withheld (the New Lender),
provided always that:

 

(i)            each assignment or transfer
shall be uniform, and not a varying percentage of all rights and obligations under
this Agreement;

 

(ii)           each assignment or transfer
shall not result in increased liability to the Borrowers;

 

(iii)          the Lender shall provide to
the Borrowers details of the proposed new lenders at least 7 Business Days
prior to the proposed transfer date. The Borrowers shall be entitled to object
to the identity of any one or more of the proposed new lenders on such list
(such objections to be made on reasonable grounds). The Lender shall be
entitled to effect a transfer or assignment to any proposed new lender on such
list to which the Borrowers have not objected on reasonable grounds within such
7 Business Day period;

 

(iv)          at no time shall the number of
New Lenders and the Lender exceed 8; and

 

(v)           at all times, the Lender shall
act as agent and security trustee in respect of the transaction.

 

(b)           A transfer of obligations will
be effective only if either:

 

(i)            the obligations are novated in
accordance with the following provisions of this Clause 25; or

 

(ii)           the New Lender confirms to the
Lender and the Borrowers in form and substance reasonably satisfactory to the
Lender and the Borrowers that it is bound by the terms of this Agreement.

 

(c)           On the transfer becoming
effective in this manner the Lender will be released from its obligations under
this Agreement to the extent that they are transferred to the New Lender.

 

(d)           Any reference in this
Agreement to the Lender includes a New Lender but excludes the Lender if no
amount is or may be owed to or by it under this Agreement.

 

25.3        Procedure for transfer by way of novations

 

(a)           In this Subclause:

 

Transfer
Date
means, for a Transfer Certificate, the later of:

 

(i)            the proposed Transfer Date
specified in that Transfer Certificate; and

 

(ii)           the date on which the Lender
executes that Transfer Certificate.

 

(b)           A novation is effected if the
Lender and the New Lender execute a duly completed Transfer Certificate;

 

(c)           On the Transfer Date:

 

66

 

(i)            the New Lender will assume the
rights and obligations of the Lender expressed to be the subject of the
novation in the Transfer Certificate in substitution for the Lender; and

 

(ii)           the Lender will be released
from those obligations and cease to have those rights.

 

25.4        Limitation of responsibility of Lender

 

(a)           Unless expressly agreed to the
contrary, the Lender is not responsible to a New Lender for:

 

(i)            the legality, validity,
effectiveness, completeness, accuracy, adequacy or enforceability of any
Finance Document or any other document;

 

(ii)           the financial condition of any
Borrower;

 

(iii)          the performance and observance
by any Borrower of its obligations under the Finance Documents or any other
documents; or

 

(iv)          the accuracy of any statement
or information (whether written or oral) made in or supplied in connection with
any Finance Document,

 

and any representations or warranties
implied by law are excluded.

 

(b)           Each New Lender confirms to
the Lender that it:

 

(i)            has made, and will continue to
make, its own independent appraisal of all risks arising under or in connection
with the Finance Documents (including the financial condition and affairs of
each Borrower and its related entities and the nature and extent of any
recourse against any Party or its assets) in connection with its participation
in this Agreement; and

 

(ii)           has not relied exclusively on
any information supplied to it by the Lender in connection with any Finance
Document.

 

(c)           Nothing in any Finance
Document requires the Lender to:

 

(i)            accept a re-transfer from a
New Lender of any of the rights and obligations assigned or transferred under
this Clause; or

 

(ii)           support any losses incurred by
the New Lender by reason of the non-performance by a Borrower of its
obligations under any Finance Document or otherwise.

 

25.5        Costs resulting from change of Lender or Facility Office

 

If:

 

(a)           the Lender assigns or transfers any of its rights and
obligations under the Finance Documents or changes its Facility Office; and

 

(b)           as a result of circumstances existing at the date the
assignment, transfer or change occurs, a Borrower would be obliged to pay a Tax
Payment or an Increased Cost,

 

67

 

then, unless the assignment, transfer or
change is made by the Lender to mitigate any circumstances giving rise to a Tax
Payment, Increased Cost or a right to be prepaid and/or cancelled by reason of
illegality, the relevant Borrower need only pay that Tax Payment or Increased
Cost to the same extent that it would have been obliged to if no assignment,
transfer or change had occurred.

 

26.          DISCLOSURE
OF INFORMATION

 

The Lender may disclose to any of its
Affiliates or any other person who has not been objected to by the Borrowers
pursuant to Clause 25.2(a)(ii):

 

(a)           to (or through) whom the Lender assigns or transfers
(or may potentially assign or transfer) all or any of its rights and
obligations under this Agreement;

 

(b)           with (or through) whom the Lender enters into (or may
potentially enter into) any sub-participation in relation to, or any other
transaction under which payments are to be made by reference to, this Agreement
or a Borrower;

 

(c)           to whom, and to the extent that, information is
required to be disclosed by any Applicable Law; or

 

(d)           to its and the Borrowers’ professional advisors,

 

any information about a Borrower, any other
member of the Danaos Group, or the Finance Documents as the Lender shall
consider appropriate if, in relation to paragraphs (a) and (b) above, the
person to whom the information is to be given has entered into a  Confidentiality Undertaking.  Except as provided in this clause, the Lender
may not disclose any information about an Owner, any other member of the Danaos
Group, or the Finance Documents to any person.

 

27.          SET-OFF

 

The Lender may set off any matured
obligation owed to it by either of the Borrowers under the Finance Documents
against any obligation (whether or not matured) owed by the Lender to that
Borrower, regardless of the place of payment, booking branch or currency of
either obligation.  If the obligations
are in different currencies, the Lender may convert either obligation at a
market rate of exchange in its usual course of business for the purpose of the
set-off.

 

28.          SEVERABILITY

 

If a term of a Finance Document is or
becomes illegal, invalid or unenforceable in any jurisdiction, that shall not
affect:

 

(a)           the legality, validity or enforceability in that
jurisdiction of any other term of the Finance Documents; or

 

(b)           the legality, validity or enforceability in other
jurisdictions of that or any other term of the Finance Documents.

 

68

 

29.          COUNTERPARTS

 

Each Finance Document may be executed in
any number of counterparts and by facsimile provided that original signed
copies are provided within a reasonable period of time thereafter.  This has the same effect as if the signatures
on the counterparts were on a single copy of the Finance Document.

 

30.          NOTICES

 

30.1        In writing

 

(a)           Any communication in
connection with a Finance Document must be in writing and, unless otherwise
stated, may be given in person, by post, fax or, e-mail or by any other
electronic communication approved by the Lender;

 

(b)           For the purpose of the Finance
Documents, an electronic communication will be treated as being in writing.

 

(c)           Unless it is agreed to the
contrary, any consent or agreement required under a Finance Document must be
given in writing.

 

30.2        Contact details

 

(a)           Except as provided below, the
contact details of each Party for all communications in connection with the
Finance Documents are those notified by that Party for this purpose to the
Lender on or before the date it becomes a Party.

 

(b)           The contact details of the
Borrowers for this purpose are:

 

Address:                10 Skopa Street,

Tribune House P.C.

1075 Nicosia, Cyprus

 

Fax number:           +357 227 61542

Attention:              Mr. S. Karydes

 

with a copy to each of:

 

Address:                Danaos Shipping Co. Ltd

57 Akti Miaouli,

185 36 Piraeus

Greece

 

Fax number:           +30 210 4293592

Attention:              Mr. I. Prokopakis

 

(c)           The contact details of the
Lender for this purpose are:

 

Address:                16-1 Yoido-dong

Youngdeungpo-gu

Seoul 150-996, Korea

Fax number:           +82 2 3779 6745

 

69

 

Attention:              Head of Ship Financing Team
III/Ship Financing Department

 

(d)           A Party may change its contact
details by giving five Business Days’ notice to the Lender or (in the case of
the Lender) to the other Parties.

 

(e)           Where a Party nominates a
particular department or officer to receive a communication, a communication
will not be effective if it fails to specify that department or officer.

 

30.3        Effectiveness

 

(a)           Except as provided below, any
communication in connection with a Finance Document will be deemed to be given
as follows:

 

(i)            if delivered in person, at the
time of delivery;

 

(ii)           if posted, five days after
being deposited in the post, postage prepaid, in a correctly addressed
envelope;

 

(iii)          if by fax, when received in
legible form; and

 

(iv)          if by e-mail or any other
electronic communication, when received in legible form.

 

(b)           A communication given under
paragraph (a) above but received on a non-working day or after business hours
in the place of receipt will only be deemed to be given on the next working day
in that place.

 

(c)           A communication to the Lender
will only be effective on actual receipt by it.

 

30.4        Entire Agreement

 

This Agreement and the other Finance
Documents entered into pursuant to this Agreement contain the whole agreement
between the parties relating to the transactions contemplated by this Agreement
and supersede all previous agreements between the parties relating to such
transactions.

 

31.          LANGUAGE

 

(a)           Any notice given in connection
with a Finance Document must be in English.

 

(b)           Any other document provided in
connection with a Finance Document must be:

 

(i)            in English; or

 

(ii)           (unless the Lender otherwise
agrees) accompanied by a certified English translation.  In this case, the English translation
prevails unless the document is a statutory or other official document.

 

32.          GOVERNING
LAW

 

This Agreement is governed by English law.

 

70

 

33.          ENFORCEMENT

 

33.1        Jurisdiction

 

(a)           The English courts have
jurisdiction to settle any dispute in connection with any Finance Document.

 

(b)           The English courts are the
most appropriate and convenient courts to settle any such dispute.

 

(c)           This Clause is for the benefit
of the Lender only.  To the extent
allowed by law, the Lender may take:

 

(i)            proceedings in any other
court; and

 

(ii)           concurrent proceedings in any
number of jurisdictions.

 

33.2        Service of process

 

(a)           Each of the Borrowers
irrevocably appoints SH Process Agents Limited of One, St Pauls Churchyard,
London, EC4M as its agent under the Finance Documents for service of process in
any proceedings before the English courts.

 

(b)           If any person appointed as
process agent is unable for any reason to act as agent for service of process,
the relevant Borrower or Borrowers must immediately appoint another agent on
terms acceptable to the Lender.  Failing
this, the Lender may appoint another agent for this purpose.

 

(c)           Each of the Borrowers agree
that failure by a process agent to notify it of any process will not invalidate
the relevant proceedings.

 

(d)           This Clause does not affect
any other method of service allowed by law.

 

33.3        Waiver of immunity

 

The Borrowers each irrevocably and
unconditionally:

 

(a)           agrees not to claim any immunity from proceedings
brought by the Lender against it in relation to a Finance Document 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 those proceedings; and

 

(c)           waives all rights of immunity in respect of it or its
assets.

 

THIS AGREEMENT has been entered into on the
date stated at the beginning of this Agreement.

 

71

 

SCHEDULE 1

 

THE BORROWERS AND THE VESSELS

 

	
  Name of

  Borrower

  	
   

  	
  Country of

  Incorporation

  	
   

  	
  Registered Office

  	
   

  	
  Hull Number

  	
   

  	
  Flag of Vessel

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Oceanew Shipping Limited

  	
   

  	
  Republic of Cyprus

  	
   

  	
  10 Skopa Street,

  Tribune House, P.C.

  1075 Nicosia, Cyprus

  	
   

  	
  1489

  	
   

  	
  Republic of Cyprus

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Oceanprize Navigation Limited

  	
   

  	
  Republic of Cyprus

  	
   

  	
  10 Skopa Street,

  Tribune House, P.C.

  1075 Nicosia, Cyprus

  	
   

  	
  1490

  	
   

  	
  Republic of Cyprus

  	
   

  

 

72

 

SCHEDULE 2

 

INITIAL CONDITIONS PRECEDENT DOCUMENTS

 

1.             Owners

 

(a)           A certified copy* of the constitutional documents of
each Borrower together with an up to date Certificate of Goodstanding dated no
more than ten Business Days prior to the first Utilisation Date.

 

(b)           A certified copy* of a resolution of the board of
directors of each Borrower:

 

(i)            approving the terms of, and the transactions
contemplated by, each Finance Document and each Related Contract to which each
Borrower is a party and resolving that it executes each such Finance Document
and each Related Contract, then to be executed;

 

(ii)           authorising a specified person or persons to execute
each Finance Document and each Related Contract on its behalf to which it is a
party, then to be executed; and

 

(iii)          authorising a specified person or persons, on its
behalf, to sign and/or despatch all other documents and notices to be signed
and/or despatched by it under or in connection with each Finance Document and
each Related Contract to which it is a party, then to be executed.

 

(c)           A specimen of the signature of each person authorised
by the resolution referred to in paragraph 1(b) above.

 

(d)           A certified copy* of all other resolutions, consents,
licences, exemptions and filings, corporate, official or otherwise which the
Lender may reasonably require in connection with this Agreement or any other
Finance Document.

 

2.             Finance Documents and Related
Contracts

 

(a)           A duly executed original of this Agreement.

 

(b)           A duly executed original of each of the Time Charter
and Earnings Assignments.

 

(c)           A duly executed original of the Pledges of Shares,
together with all certificates in respect of the Shares, undated letters of
resignation by each of the directors and officers of the Borrowers and all (if
any) unissued share or stock certificates of the Borrowers.

 

(d)           A duly executed original of the Support Letter.

 

(e)           A duly executed original of the Equity Contribution
Side Letter.

 

(f)            A certified copy* of each of the Refund Guarantees.

 

(g)           A certified copy* of each Shipbuilding Contract, duly
executed.

 

(h)           A certified copy* of each Time Charter, duly executed.

 

73

 

(i)            A certified copy* of each Refund Guarantee Assignment,
duly executed.

 

(j)            A certified copy of each Refund Guarantee Assignment
Notice, duly executed and certified by a director of Seaspan (Cyprus) Limited.

 

(k)           A certified copy * of each Shipbuilding Contract
Assignment, duly executed.

 

(l)            A certified copy of each Shipbuilding Contract
Assignment Notice, duly executed and certified by a director of Seaspan
(Cyprus) Limited.

 

(m)          A certified copy * of each Time Charter Assignment,
duly executed.

 

(n)           A certified copy of each Time Charter Assignment
Notice, duly executed and certified by a director of Seaspan (Cyprus) Limited.

 

(o)           Duly executed originals of all notices of assignment
required to be served under each Security Document referred to above and faxed
copies of the acknowledgements thereof (where it is not possible to provide
originals of the same, with such originals to follow as soon as practicable
after the first Utilisation Date), duly executed by each relevant counterparty.

 

3.             Other documents

 

(a)           A copy of any other authorisation or other document,
opinion or assurance which the Lender considers to be necessary or desirable in
connection with the entry into and performance of, and the transactions
contemplated by, any Finance Document or any Related Contract or for the
validity and enforceability of any Finance Document or any Related Contract.

 

(b)           A letter from Danaos Management Consultants (UK)
Limited agreeing to its appointment as process agent for the Borrowers under
the Finance Documents.

 

(c)           A letter from China Shipping (UK) Co., Ltd. agreeing
to its appointment as process agent for the Charterer in respect of the
acknowledgement of the Time Charter and Earnings Assignment.

 

(d)           Evidence satisfactory to the Lender of receipt by the
Builder from the Borrowers of the Equity Contribution in respect of the relevant
Loan.

 

4.             Legal opinions

 

(a)           A legal opinion of Allen & Overy, London office,
English legal advisers to the Lender, addressed to the Lender.

 

(b)           A legal opinion of Chrysses & Demetriades, Cypriot
legal advisors to the Lender, addressed to the Lender, in respect of the
Borrowers.

 

(c)           A legal opinion of King & Wood, Chinese legal
advisors to the Lender.

 

5.             Other Requirements

 

*              Each certified copy document
must be certified by a director, officer or duly authorised attorney of the
relevant Borrower as being true and complete as at a date no earlier than the
date of the Request for a first Drawing.

 

74

 

CONDITIONS SUBSEQUENT
TO FIRST DRAWING

 

The Lender shall require the following
documentation from the Borrowers within a period of 60 days from the date of
the first Drawing.

 

1.             Finance Documents

 

(a)           A duly executed original of each Earnings Account
Charge.

 

(b)           A duly executed original of each Operating Expenses
Account Charge.

 

(c)           A duly executed original of
each Retention Account Charge.

 

(d)           Duly executed originals of all notices required under
each Security Document referred to in (a) to (c) inclusive above.

 

2.             Legal Opinions

 

(a)           A legal opinion of Pologiorgis, Babalis, Troullinos
& Mavrou Greek legal advisors to the Lender.

 

3.             Other

 

(a)           A letter from Danaos Management Consultants (UK)
Limited agreeing to its appointment as process agent for the Borrowers in
respect of the documents detailed in 1(a) to (c) inclusive above.

 

75

 

SCHEDULE 3

 

DELIVERY DATE CONDITIONS PRECEDENT DOCUMENTS

 

At the time of delivery of each Vessel, the
Lender shall require the following documentation from the relevant Borrower:-

 

1.             Borrower

 

(a)           A certified copy of the constitutional documents of
the Borrower or a certificate of the Borrower certifying that such documents
have not been amended since the first Drawing.

 

(b)           A certified copy of a resolution of the board of
directors of the Borrower (unless such a resolution in relation to the issues
below is still in force):

 

(i)            authorising a specified person or persons to execute
such necessary documentation as is required to permit the Borrower to take
physical possession of the relevant Vessel from the Bareboat Charterer; and

 

(ii)           authorising a specified person or persons, on its
behalf, to sign or despatch all documents and notices to be signed or
despatched as necessary to take physical possession of the relevant Vessel from
the Bareboat Charterer.

 

(c)           A specimen of the signature of each person authorised
by the resolution referred to in paragraphs (b) and (c) above.

 

2.             Documents

 

(a)           A duly executed original of the relevant Mortgage.

 

(b)           A duly executed original of the Vessel Management
Agreement Assignment.

 

(c)           A duly executed original of the Standby Letter of
Credit together with evidence satisfactory to the Lender of its due execution.

 

(d)           A duly executed original of the Manager’s Undertaking.

 

(e)           A certified copy * of the Vessel Management Agreement,
duly executed.

 

(f)            A copy of any other authorisation or other document,
opinion or assurance which the Lender considers to be necessary or desirable in
connection with the entry into and performance of, and the transactions
contemplated by, the Security Documents or for the validity and enforceability
of any of those documents.

 

3.             The Vessel to be delivered

 

(a)           Evidence that:

 

(i)            the title to the Vessel is held by the Owner free of
all Security Interests other than Permitted Liens;

 

76

 

(ii)           Confirmation acceptable to the Lender that the Owner
has accepted the Vessel pursuant to the terms of the relevant Shipbuilding
Contract and executed a protocol of delivery and acceptance.

 

(iii)          Confirmation acceptable to the Lender that the
Bareboat Charterer has accepted the Vessel pursuant to the terms of the
relevant Bareboat Charter and executed an acceptance certificate.

 

(iv)          Confirmation acceptable to the Lender that the
Borrower has accepted the Vessel pursuant to the terms of the relevant AML Time
Charter and executed an acceptance certificate.

 

(v)           Confirmation acceptable to the Lender that the
Charterer has accepted the Vessel pursuant to the terms of the relevant Time
Charter and executed an acceptance certificate.

 

(vi)          the Vessel is provisionally registered in the name of
the Owner, as appropriate, as a Republic of Cyprus flag ship at the port of
Limassol;

 

(vii)         the Mortgage in respect of the Vessel has been duly
recorded in the Republic of Cyprus Registry of Ships and constitutes a first
priority security interest over the Vessel and that all taxes and fees payable
to the Republic of Cyprus Registry of Ships in respect of the Vessel have been
paid in full; and

 

(b)           A certified copy* of:

 

(i)            a classification certificate in respect of the Vessel
showing the Vessel to be in class without recommendation, condition or
qualification or, in the event that this is not available, a faxed copy with a
certified copy to follow as soon as practicable after the relevant Delivery Date;

 

(ii)           a valid Interim Safety Management Certificate for the
Vessel or, in the event that this is not available, a faxed copy with a
certified copy to follow as soon as practicable after the relevant Delivery
Date;

 

(iii)          a valid Document of Compliance; and

 

(iv)          a valid International Ship Security Certificate

 

(c)           A copy of the commercial invoice in respect of the
Vessel.

 

(d)           A copy of the builder’s certificate in respect of the
Vessel.

 

4.             Insurance

 

(a)           A certified copy of all current insurance policies in
respect of the Vessel.

 

(b)           A duly executed and, where necessary, notarised notice
of assignment (and acknowledgement of the same) of the Obligatory Insurances in
respect of the Vessel duly executed by the Owner substantially in the form
provided for in the General Assignment.

 

(c)           Fax confirmation from each broker, insurer and club
concerned with the Obligatory Insurances of the Vessel that:

 

77

 

(i)            the relevant cover is in effect;

 

(ii)           they will accept notice of assignment of the
Obligatory Insurances in favour of the Lender and execute an acknowledgement of
the notice in the form required by the Lender;

 

(iii)          they will restrict their lien for unpaid premiums
under any fleet policy to unpaid premiums in respect of that Vessel only;

 

(iv)          they will issue a letter of undertaking in the current
LIBA form (in the case of Lloyds brokers), in the form provided for in the
General Assignment (in the case of non-Lloyds brokers and insurers other than
clubs) or in their current standard form (in the case of clubs);

 

(v)           they will accept endorsement of a loss payable clause
on the policies in the form provided for in the General Assignment (in the case
of brokers and insurers other than clubs) or will note the interest of the
Lender in the entry for the Vessel by way of a loss payable clause in their
current standard form (in the case of clubs); and

 

(vi)          they are not aware of any mortgage, charge, assignment
or other encumbrance affecting the Obligatory Insurances with which they are
concerned (other than any previously disclosed by the Borrower to the Lender in
writing).

 

Confirmation from the Lender of its
satisfaction with a final insurance report prepared by Marsh Insurance Brokers.

 

5.             Legal Opinions

 

(a)           A legal opinion of Allen & Overy, London office,
English legal advisers to the Lender.

 

(b)           A legal opinion of the Republic of Cyprus legal
advisers or such other jurisdiction as may be chosen to be the flag of a Vessel
to the Lender.

 

(c)           A legal opinion of Lee & Co, Korean legal
advisers  to the Lender.

 

*              Each certified copy document
must be certified by a director, officer or duly authorised attorney of the
Borrower as being true and complete as at a date no earlier than the Delivery
Date of a Vessel.

 

78

 

SCHEDULE 4

 

FORM OF REQUEST

 

PART 1

 

FORM OF REQUEST

 

	
  To:

  	
   

  	
  The Export-Import Bank of Korea

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  From:

  	
   

  	
  [The relevant Borrower]

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
  [                           ]

  	
   

  	
   

  

 

US$127,856,000 Credit Agreement
dated                    , 2003

Hull No. 1489, 1490

 

1.             We wish to borrow a Drawing under a Loan from you as
follows:

 

(a)           Utilisation Date:                   [                                  ]

 

(b)           Amount/currency:               [                                  ]

 

Loan 1/Loan 2

 

	
  Amount payable to the Builder towards the
  Instalment under Shipbuilding Contract:

  	
   

  	
  US$[       ]

  
	
   

  	
   

  	
   

  
	
  Amount payable in respect of Incidental
  Vessel Costs as set out below (as supported by the relevant invoices:

  	
   

  	
  US$[        ]

  
	
   

  	
   

  	
   

  
	
  (a)

  	
   

  	
  Details of item:

  	
   

  	
  US$[        ]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (b)

  	
   

  	
  Details of item:

  	
   

  	
  US$[        ]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total drawdown:

  	
   

  	
  US$[        ]

  

 

2.             Payment Instructions:         to include provisions that:

 

(i)            amount of Instalment payable under the relevant
Shipbuilding Contract to be payable to the Builder’s account.

 

(ii)           Incidental Costs to be credited to the relevant
Operating Expenses Account.

 

* Delete as appropriate.

 

3.             We confirm that each condition specified in Clause 3.2
(Further conditions precedent) is satisfied on the date of this Request.

 

79

 

	
  By:

  
	
   

  	
   

  
	
  BORROWER

  
	
   

  
	
  Authorised Signatory

  

 

80

 

PART 2

 

PAYMENT ADVICE

 

	
  To:

  	
   

  	
  [The relevant Borrower]

  
	
   

  	
   

  	
   

  
	
  From:

  	
   

  	
  The Export-Import Bank of Korea

  
	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
  [               ]

  

 

US$127,856,000 Credit Agreement
dated                     ,
2003

 

Hull No. 1489/1490

 

1.             Further to receipt of your request dated
[     ] and attached hereto, requesting the advance of
a Drawing under a Loan we confirm that all amounts have been advanced in
accordance with the requirements of the attached Request.

 

81

 

SCHEDULE 5

 

FORM OF TRANSFER CERTIFICATE

 

	
  To:

  	
   

  	
  The Borrowers

  
	
   

  	
   

  	
   

  
	
  From:

  	
   

  	
  [THE EXISTING BANK] and [THE NEW BANK]

  
	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
  [               ]

  

 

US$127,856,000 Credit Agreement
dated                     ,
2003

 

Hull No. 1489, 1490

 

We refer to Clause 25.3 (Procedure for
transfer by way of novations).

 

1.             We [              
] (the Existing Bank) and [                      ] (the New Bank) agree to the Existing Bank and the New Bank
novating all the Existing Bank’s rights and obligations referred to in the
Schedule in accordance with Clause 25.3. (Procedure for transfer by way of
novations).

 

2.             The specified date for the purposes of Clause 25.3(a)
is [date of novation].

 

3.             The Facility Office and address for notices of the New
Bank for the purposes of Clause 30.2 (Contact details) are set out in the
Schedule.

 

4.             This Novation Certificate is governed by English law.

 

THE SCHEDULE

 

Rights and obligations to be
novated

 

[Choose one of the following options
(a) to (d):

 

(a)           all of the rights and
obligations of the Existing Lender in respect of the Facility - principal
amount US$[      ].

 

(b)           all of the rights and
obligations of the Existing Lender in respect of Vessel Loan
[    ] [and Vessel Loan [   ]] -principal
amount US$[      ].

 

(c)           the principal amount of
US$[      ] in respect of each of the Loans and
all the rights and obligations attached to the same-total principal amount
US$[      ].

 

(d)           the principal amount of
US$[      ] in respect of [each of] Vessel Loan
[    ] [and Vessel Loan [    ] and
[    ]] and all the rights and obligations attached to the
same.

 

82

 

	
  [New Bank]

  	
   

  
	
   

  	
   

  
	
  [Facility Office Address for notices]

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  [Existing Bank]

  	
  [New Bank]

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
  Date:

  	
  Date:

  	
   

  

 

83

 

SCHEDULE 6

 

REPAYMENT SCHEDULE

 

Hull No. 1489

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Interest Rate :

  	
   

  	
  5.0125%

  	
   

  
	
   

  	
   

  	
  Principal

  	
   

  	
  Interest

  	
   

  	
  Days

  	
   

  	
  Total

  	
   

  	
  Outstanding

  	
   

  	
  Repayment Date

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  63,928,000.00

  	
   

  	
  2004-09-20

  	
   

  
	
  1

  	
   

  	
  2,590,084.71

  	
   

  	
  1,566,591.15

  	
   

  	
  176

  	
   

  	
  4,156,675.86

  	
   

  	
  61,337,915.29

  	
   

  	
  2005-03-15

  	
   

  
	
  2

  	
   

  	
  1,331,833.33

  	
   

  	
  785,721.65

  	
   

  	
  92

  	
   

  	
  2,117,554.98

  	
   

  	
  60,006,081.95

  	
   

  	
  2005-06-15

  	
   

  
	
  3

  	
   

  	
  1,331,833.33

  	
   

  	
  768,661.24

  	
   

  	
  92

  	
   

  	
  2,100,494.57

  	
   

  	
  58,674,248.62

  	
   

  	
  2005-09-15

  	
   

  
	
  4

  	
   

  	
  1,331,833.33

  	
   

  	
  743,431.25

  	
   

  	
  91

  	
   

  	
  2,075,264.58

  	
   

  	
  57,342,415.29

  	
   

  	
  2005-12-15

  	
   

  
	
  5

  	
   

  	
  1,331,833.33

  	
   

  	
  718,572.14

  	
   

  	
  90

  	
   

  	
  2,050,405.47

  	
   

  	
  56,010,581.95

  	
   

  	
  2006-03-15

  	
   

  
	
  6

  	
   

  	
  1,331,833.33

  	
   

  	
  717,479.99

  	
   

  	
  92

  	
   

  	
  2,049,313.32

  	
   

  	
  54,678,748.62

  	
   

  	
  2006-06-15

  	
   

  
	
  7

  	
   

  	
  1,331,833.33

  	
   

  	
  700,419.58

  	
   

  	
  92

  	
   

  	
  2,032,252.91

  	
   

  	
  53,346,915.29

  	
   

  	
  2006-09-15

  	
   

  
	
  8

  	
   

  	
  1,331,833.33

  	
   

  	
  675,931.34

  	
   

  	
  91

  	
   

  	
  2,007,764.67

  	
   

  	
  52,015,081.95

  	
   

  	
  2006-12-15

  	
   

  
	
  9

  	
   

  	
  1,331,833.33

  	
   

  	
  651,813.99

  	
   

  	
  90

  	
   

  	
  1,983,647.32

  	
   

  	
  50,683,248.62

  	
   

  	
  2007-03-15

  	
   

  
	
  10

  	
   

  	
  1,331,833.33

  	
   

  	
  649,238.33

  	
   

  	
  92

  	
   

  	
  1,981,071.66

  	
   

  	
  49,351,415.29

  	
   

  	
  2007-06-15

  	
   

  
	
  11

  	
   

  	
  1,331,833.33

  	
   

  	
  632,177.92

  	
   

  	
  92

  	
   

  	
  1,964,011.25

  	
   

  	
  48,019,581.95

  	
   

  	
  2007-09-15

  	
   

  
	
  12

  	
   

  	
  1,331,833.33

  	
   

  	
  608,431.44

  	
   

  	
  91

  	
   

  	
  1,940,264.77

  	
   

  	
  46,687,748.62

  	
   

  	
  2007-12-15

  	
   

  
	
  13

  	
   

  	
  1,331,833.33

  	
   

  	
  591,556.47

  	
   

  	
  91

  	
   

  	
  1,923,389.80

  	
   

  	
  45,355,915.29

  	
   

  	
  2008-03-15

  	
   

  
	
  14

  	
   

  	
  1,331,833.33

  	
   

  	
  580,996.67

  	
   

  	
  92

  	
   

  	
  1,912,830.00

  	
   

  	
  44,024,081.95

  	
   

  	
  2008-06-15

  	
   

  
	
  15

  	
   

  	
  1,331,833.33

  	
   

  	
  563,936.26

  	
   

  	
  92

  	
   

  	
  1,895,769.59

  	
   

  	
  42,692,248.62

  	
   

  	
  2008-09-15

  	
   

  
	
  16

  	
   

  	
  1,331,833.33

  	
   

  	
  540,931.54

  	
   

  	
  91

  	
   

  	
  1,872,764.87

  	
   

  	
  41,360,415.29

  	
   

  	
  2008-12-15

  	
   

  
	
  17

  	
   

  	
  1,331,833.33

  	
   

  	
  518,297.70

  	
   

  	
  90

  	
   

  	
  1,850,131.03

  	
   

  	
  40,028,581.95

  	
   

  	
  2009-03-15

  	
   

  
	
  18

  	
   

  	
  1,331,833.33

  	
   

  	
  512,755.01

  	
   

  	
  92

  	
   

  	
  1,844,588.34

  	
   

  	
  38,696,748.62

  	
   

  	
  2009-06-15

  	
   

  
	
  19

  	
   

  	
  1,331,833.33

  	
   

  	
  495,694.60

  	
   

  	
  92

  	
   

  	
  1,827,527.93

  	
   

  	
  37,364,915.29

  	
   

  	
  2009-09-15

  	
   

  
	
  20

  	
   

  	
  1,331,833.33

  	
   

  	
  473,431.64

  	
   

  	
  91

  	
   

  	
  1,805,264.97

  	
   

  	
  36,033,081.95

  	
   

  	
  2009-12-15

  	
   

  
	
  21

  	
   

  	
  1,331,833.33

  	
   

  	
  451,539.55

  	
   

  	
  90

  	
   

  	
  1,783,372.88

  	
   

  	
  34,701,248.62

  	
   

  	
  2010-03-15

  	
   

  
	
  22

  	
   

  	
  1,331,833.33

  	
   

  	
  444,513.35

  	
   

  	
  92

  	
   

  	
  1,776,346.68

  	
   

  	
  33,369,415.29

  	
   

  	
  2010-06-15

  	
   

  
	
  23

  	
   

  	
  1,331,833.33

  	
   

  	
  427,452.94

  	
   

  	
  92

  	
   

  	
  1,759,286.27

  	
   

  	
  32,037,581.95

  	
   

  	
  2010-09-15

  	
   

  
	
  24

  	
   

  	
  1,331,833.33

  	
   

  	
  405,931.73

  	
   

  	
  91

  	
   

  	
  1,737,765.06

  	
   

  	
  30,705,748.62

  	
   

  	
  2010-12-15

  	
   

  
	
  25

  	
   

  	
  1,331,833.33

  	
   

  	
  384,781.41

  	
   

  	
  90

  	
   

  	
  1,716,614.74

  	
   

  	
  29,373,915.29

  	
   

  	
  2011-03-15

  	
   

  
	
  26

  	
   

  	
  1,331,833.33

  	
   

  	
  376,271.69

  	
   

  	
  92

  	
   

  	
  1,708,105.02

  	
   

  	
  28,042,081.95

  	
   

  	
  2011-06-15

  	
   

  
	
  27

  	
   

  	
  1,331,833.33

  	
   

  	
  359,211.28

  	
   

  	
  92

  	
   

  	
  1,691,044.61

  	
   

  	
  26,710,248.62

  	
   

  	
  2011-09-15

  	
   

  
	
  28

  	
   

  	
  1,331,833.33

  	
   

  	
  338,431.83

  	
   

  	
  91

  	
   

  	
  1,670,265.16

  	
   

  	
  25,378,415.29

  	
   

  	
  2011-12-15

  	
   

  
	
  29

  	
   

  	
  1,331,833.33

  	
   

  	
  321,556.85

  	
   

  	
  91

  	
   

  	
  1,653,390.18

  	
   

  	
  24,046,581.95

  	
   

  	
  2012-03-15

  	
   

  
	
  30

  	
   

  	
  1,331,833.33

  	
   

  	
  308,030.03

  	
   

  	
  92

  	
   

  	
  1,639,863.36

  	
   

  	
  22,714,748.62

  	
   

  	
  2012-06-15

  	
   

  
	
  31

  	
   

  	
  1,331,833.33

  	
   

  	
  290,969.62

  	
   

  	
  92

  	
   

  	
  1,622,802.95

  	
   

  	
  21,382,915.29

  	
   

  	
  2012-09-15

  	
   

  
	
  32

  	
   

  	
  1,331,833.33

  	
   

  	
  270,931.93

  	
   

  	
  91

  	
   

  	
  1,602,765.26

  	
   

  	
  20,051,081.95

  	
   

  	
  2012-12-15

  	
   

  
	
  33

  	
   

  	
  1,331,833.33

  	
   

  	
  251,265.12

  	
   

  	
  90

  	
   

  	
  1,583,098.45

  	
   

  	
  18,719,248.62

  	
   

  	
  2013-03-15

  	
   

  
	
  34

  	
   

  	
  1,331,833.33

  	
   

  	
  239,788.37

  	
   

  	
  92

  	
   

  	
  1,571,621.70

  	
   

  	
  17,387,415.29

  	
   

  	
  2013-06-15

  	
   

  
	
  35

  	
   

  	
  1,331,833.33

  	
   

  	
  222,727.95

  	
   

  	
  92

  	
   

  	
  1,554,561.28

  	
   

  	
  16,055,581.95

  	
   

  	
  2013-09-15

  	
   

  
	
  36

  	
   

  	
  1,331,833.33

  	
   

  	
  203,432.02

  	
   

  	
  91

  	
   

  	
  1,535,265.35

  	
   

  	
  14,723,748.62

  	
   

  	
  2013-12-15

  	
   

  
	
  37

  	
   

  	
  1,331,833.33

  	
   

  	
  184,506.97

  	
   

  	
  90

  	
   

  	
  1,516,340.30

  	
   

  	
  13,391,915.29

  	
   

  	
  2014-03-15

  	
   

  
	
  38

  	
   

  	
  1,331,833.33

  	
   

  	
  171,546.71

  	
   

  	
  92

  	
   

  	
  1,503,380.04

  	
   

  	
  12,060,081.95

  	
   

  	
  2014-06-15

  	
   

  
	
  39

  	
   

  	
  1,331,833.33

  	
   

  	
  154,486.29

  	
   

  	
  92

  	
   

  	
  1,486,319.62

  	
   

  	
  10,728,248.62

  	
   

  	
  2014-09-15

  	
   

  
	
  40

  	
   

  	
  1,331,833.33

  	
   

  	
  135,932.12

  	
   

  	
  91

  	
   

  	
  1,467,765.45

  	
   

  	
  9,396,415.29

  	
   

  	
  2014-12-15

  	
   

  
	
  41

  	
   

  	
  1,331,833.33

  	
   

  	
  117,748.82

  	
   

  	
  90

  	
   

  	
  1,449,582.15

  	
   

  	
  8,064,581.95

  	
   

  	
  2015-03-15

  	
   

  

 

84

 

	
  42

  	
   

  	
  1,331,833.33

  	
   

  	
  103,305.05

  	
   

  	
  92

  	
   

  	
  1,435,138.38

  	
   

  	
  6,732,748.62

  	
   

  	
  2015-06-15

  	
   

  
	
  43

  	
   

  	
  1,331,833.33

  	
   

  	
  86,244.63

  	
   

  	
  92

  	
   

  	
  1,418,077.96

  	
   

  	
  5,400,915.29

  	
   

  	
  2015-09-15

  	
   

  
	
  44

  	
   

  	
  1,331,833.33

  	
   

  	
  68,432.22

  	
   

  	
  91

  	
   

  	
  1,400,265.55

  	
   

  	
  4,069,081.95

  	
   

  	
  2015-12-15

  	
   

  
	
  45

  	
   

  	
  1,331,833.33

  	
   

  	
  51,557.24

  	
   

  	
  91

  	
   

  	
  1,383,390.57

  	
   

  	
  2,737,248.62

  	
   

  	
  2016-03-15

  	
   

  
	
  46

  	
   

  	
  1,331,833.33

  	
   

  	
  35,063.39

  	
   

  	
  92

  	
   

  	
  1,366,896.72

  	
   

  	
  1,405,415.29

  	
   

  	
  2016-06-15

  	
   

  
	
  47

  	
   

  	
  1,331,833.33

  	
   

  	
  18,002.97

  	
   

  	
  92

  	
   

  	
  1,349,836.30

  	
   

  	
  73,581.95

  	
   

  	
  2016-09-15

  	
   

  
	
  48

  	
   

  	
  73,581.95

  	
   

  	
  51.22

  	
   

  	
  5

  	
   

  	
  73,633.17

  	
   

  	
  - 0

  	
   

  	
  2016-09-20

  	
   

  
	
  Total

  	
   

  	
  63,928,000.00

  	
   

  	
  19,919,783.21

  	
   

  	
   

  	
   

  	
  83,847,783.21

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

Note) could be changed depending on the Delivery Date and Business Day

 

85

 

Hull
No. 1490

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Interest Rate :

  	
   

  	
  5.0125%

  	
   

  
	
   

  	
   

  	
  Principal

  	
   

  	
  Interest

  	
   

  	
  Days

  	
   

  	
  Total

  	
   

  	
  Outstanding

  	
   

  	
  Repayment Date

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  63,928,000.00

  	
   

  	
  2004-12-20

  	
   

  
	
  1

  	
   

  	
  2,590,489.01

  	
   

  	
  1,575,492.24

  	
   

  	
  177

  	
   

  	
  4,165,981.25

  	
   

  	
  61,337,510.99

  	
   

  	
  2005-06-15

  	
   

  
	
  2

  	
   

  	
  1,331,833.33

  	
   

  	
  785,716.47

  	
   

  	
  92

  	
   

  	
  2,117,549.80

  	
   

  	
  60,005,677.66

  	
   

  	
  2005-09-15

  	
   

  
	
  3

  	
   

  	
  1,331,833.33

  	
   

  	
  760,301.10

  	
   

  	
  91

  	
   

  	
  2,092,134.43

  	
   

  	
  58,673,844.32

  	
   

  	
  2005-12-15

  	
   

  
	
  4

  	
   

  	
  1,331,833.33

  	
   

  	
  735,256.61

  	
   

  	
  90

  	
   

  	
  2,067,089.94

  	
   

  	
  57,342,010.99

  	
   

  	
  2006-03-15

  	
   

  
	
  5

  	
   

  	
  1,331,833.33

  	
   

  	
  734,535.23

  	
   

  	
  92

  	
   

  	
  2,066,368.56

  	
   

  	
  56,010,177.66

  	
   

  	
  2006-06-15

  	
   

  
	
  6

  	
   

  	
  1,331,833.33

  	
   

  	
  717,474.81

  	
   

  	
  92

  	
   

  	
  2,049,308.14

  	
   

  	
  54,678,344.32

  	
   

  	
  2006-09-15

  	
   

  
	
  7

  	
   

  	
  1,331,833.33

  	
   

  	
  692,801.20

  	
   

  	
  91

  	
   

  	
  2,024,634.53

  	
   

  	
  53,346,510.99

  	
   

  	
  2006-12-15

  	
   

  
	
  8

  	
   

  	
  1,331,833.33

  	
   

  	
  668,498.46

  	
   

  	
  90

  	
   

  	
  2,000,331.79

  	
   

  	
  52,014,677.66

  	
   

  	
  2007-03-15

  	
   

  
	
  9

  	
   

  	
  1,331,833.33

  	
   

  	
  666,293.57

  	
   

  	
  92

  	
   

  	
  1,998,126.90

  	
   

  	
  50,682,844.32

  	
   

  	
  2007-06-15

  	
   

  
	
  10

  	
   

  	
  1,331,833.33

  	
   

  	
  649,233.15

  	
   

  	
  92

  	
   

  	
  1,981,066.48

  	
   

  	
  49,351,010.99

  	
   

  	
  2007-09-15

  	
   

  
	
  11

  	
   

  	
  1,331,833.33

  	
   

  	
  625,301.29

  	
   

  	
  91

  	
   

  	
  1,957,134.62

  	
   

  	
  48,019,177.66

  	
   

  	
  2007-12-15

  	
   

  
	
  12

  	
   

  	
  1,331,833.33

  	
   

  	
  608,426.32

  	
   

  	
  91

  	
   

  	
  1,940,259.65

  	
   

  	
  46,687,344.32

  	
   

  	
  2008-03-15

  	
   

  
	
  13

  	
   

  	
  1,331,833.33

  	
   

  	
  598,051.91

  	
   

  	
  92

  	
   

  	
  1,929,885.24

  	
   

  	
  45,355,510.99

  	
   

  	
  2008-06-15

  	
   

  
	
  14

  	
   

  	
  1,331,833.33

  	
   

  	
  580,991.49

  	
   

  	
  92

  	
   

  	
  1,912,824.82

  	
   

  	
  44,023,677.66

  	
   

  	
  2008-09-15

  	
   

  
	
  15

  	
   

  	
  1,331,833.33

  	
   

  	
  557,801.39

  	
   

  	
  91

  	
   

  	
  1,889,634.72

  	
   

  	
  42,691,844.32

  	
   

  	
  2008-12-15

  	
   

  
	
  16

  	
   

  	
  1,331,833.33

  	
   

  	
  534,982.17

  	
   

  	
  90

  	
   

  	
  1,866,815.50

  	
   

  	
  41,360,010.99

  	
   

  	
  2009-03-15

  	
   

  
	
  17

  	
   

  	
  1,331,833.33

  	
   

  	
  529,810.25

  	
   

  	
  92

  	
   

  	
  1,861,643.58

  	
   

  	
  40,028,177.66

  	
   

  	
  2009-06-15

  	
   

  
	
  18

  	
   

  	
  1,331,833.33

  	
   

  	
  512,749.83

  	
   

  	
  92

  	
   

  	
  1,844,583.16

  	
   

  	
  38,696,344.32

  	
   

  	
  2009-09-15

  	
   

  
	
  19

  	
   

  	
  1,331,833.33

  	
   

  	
  490,301.49

  	
   

  	
  91

  	
   

  	
  1,822,134.82

  	
   

  	
  37,364,510.99

  	
   

  	
  2009-12-15

  	
   

  
	
  20

  	
   

  	
  1,331,833.33

  	
   

  	
  468,224.02

  	
   

  	
  90

  	
   

  	
  1,800,057.35

  	
   

  	
  36,032,677.66

  	
   

  	
  2010-03-15

  	
   

  
	
  21

  	
   

  	
  1,331,833.33

  	
   

  	
  461,568.59

  	
   

  	
  92

  	
   

  	
  1,793,401.92

  	
   

  	
  34,700,844.32

  	
   

  	
  2010-06-15

  	
   

  
	
  22

  	
   

  	
  1,331,833.33

  	
   

  	
  444,508.17

  	
   

  	
  92

  	
   

  	
  1,776,341.50

  	
   

  	
  33,369,010.99

  	
   

  	
  2010-09-15

  	
   

  
	
  23

  	
   

  	
  1,331,833.33

  	
   

  	
  422,801.59

  	
   

  	
  91

  	
   

  	
  1,754,634.92

  	
   

  	
  32,037,177.66

  	
   

  	
  2010-12-15

  	
   

  
	
  24

  	
   

  	
  1,331,833.33

  	
   

  	
  401,465.88

  	
   

  	
  90

  	
   

  	
  1,733,299.21

  	
   

  	
  30,705,344.32

  	
   

  	
  2011-03-15

  	
   

  
	
  25

  	
   

  	
  1,331,833.33

  	
   

  	
  393,326.93

  	
   

  	
  92

  	
   

  	
  1,725,160.26

  	
   

  	
  29,373,510.99

  	
   

  	
  2011-06-15

  	
   

  
	
  26

  	
   

  	
  1,331,833.33

  	
   

  	
  376,266.51

  	
   

  	
  92

  	
   

  	
  1,708,099.84

  	
   

  	
  28,041,677.66

  	
   

  	
  2011-09-15

  	
   

  
	
  27

  	
   

  	
  1,331,833.33

  	
   

  	
  355,301.68

  	
   

  	
  91

  	
   

  	
  1,687,135.01

  	
   

  	
  26,709,844.32

  	
   

  	
  2011-12-15

  	
   

  
	
  28

  	
   

  	
  1,331,833.33

  	
   

  	
  338,426.71

  	
   

  	
  91

  	
   

  	
  1,670,260.04

  	
   

  	
  25,378,010.99

  	
   

  	
  2012-03-15

  	
   

  
	
  29

  	
   

  	
  1,331,833.33

  	
   

  	
  325,085.27

  	
   

  	
  92

  	
   

  	
  1,656,918.60

  	
   

  	
  24,046,177.66

  	
   

  	
  2012-06-15

  	
   

  
	
  30

  	
   

  	
  1,331,833.33

  	
   

  	
  308,024.85

  	
   

  	
  92

  	
   

  	
  1,639,858.18

  	
   

  	
  22,714,344.32

  	
   

  	
  2012-09-15

  	
   

  
	
  31

  	
   

  	
  1,331,833.33

  	
   

  	
  287,801.78

  	
   

  	
  91

  	
   

  	
  1,619,635.11

  	
   

  	
  21,382,510.99

  	
   

  	
  2012-12-15

  	
   

  
	
  32

  	
   

  	
  1,331,833.33

  	
   

  	
  267,949.59

  	
   

  	
  90

  	
   

  	
  1,599,782.92

  	
   

  	
  20,050,677.66

  	
   

  	
  2013-03-15

  	
   

  
	
  33

  	
   

  	
  1,331,833.33

  	
   

  	
  256,843.61

  	
   

  	
  92

  	
   

  	
  1,588,676.94

  	
   

  	
  18,718,844.32

  	
   

  	
  2013-06-15

  	
   

  
	
  34

  	
   

  	
  1,331,833.33

  	
   

  	
  239,783.19

  	
   

  	
  92

  	
   

  	
  1,571,616.52

  	
   

  	
  17,387,010.99

  	
   

  	
  2013-09-15

  	
   

  
	
  35

  	
   

  	
  1,331,833.33

  	
   

  	
  220,301.88

  	
   

  	
  91

  	
   

  	
  1,552,135.21

  	
   

  	
  16,055,177.66

  	
   

  	
  2013-12-15

  	
   

  
	
  36

  	
   

  	
  1,331,833.33

  	
   

  	
  201,191.44

  	
   

  	
  90

  	
   

  	
  1,533,024.77

  	
   

  	
  14,723,344.32

  	
   

  	
  2014-03-15

  	
   

  
	
  37

  	
   

  	
  1,331,833.33

  	
   

  	
  188,601.95

  	
   

  	
  92

  	
   

  	
  1,520,435.28

  	
   

  	
  13,391,510.99

  	
   

  	
  2014-06-15

  	
   

  
	
  38

  	
   

  	
  1,331,833.33

  	
   

  	
  171,541.53

  	
   

  	
  92

  	
   

  	
  1,503,374.86

  	
   

  	
  12,059,677.66

  	
   

  	
  2014-09-15

  	
   

  
	
  39

  	
   

  	
  1,331,833.33

  	
   

  	
  152,801.97

  	
   

  	
  91

  	
   

  	
  1,484,635.30

  	
   

  	
  10,727,844.32

  	
   

  	
  2014-12-15

  	
   

  
	
  40

  	
   

  	
  1,331,833.33

  	
   

  	
  134,433.29

  	
   

  	
  90

  	
   

  	
  1,466,266.62

  	
   

  	
  9,396,010.99

  	
   

  	
  2015-03-15

  	
   

  
	
  41

  	
   

  	
  1,331,833.33

  	
   

  	
  120,360.29

  	
   

  	
  92

  	
   

  	
  1,452,193.62

  	
   

  	
  8,064,177.66

  	
   

  	
  2015-06-15

  	
   

  
	
  42

  	
   

  	
  1,331,833.33

  	
   

  	
  103,299.87

  	
   

  	
  92

  	
   

  	
  1,435,133.20

  	
   

  	
  6,732,344.32

  	
   

  	
  2015-09-15

  	
   

  
	
  43

  	
   

  	
  1,331,833.33

  	
   

  	
  85,302.07

  	
   

  	
  91

  	
   

  	
  1,417,135.40

  	
   

  	
  5,400,510.99

  	
   

  	
  2015-12-15

  	
   

  
	
  44

  	
   

  	
  1,331,833.33

  	
   

  	
  68,427.09

  	
   

  	
  91

  	
   

  	
  1,400,260.42

  	
   

  	
  4,068,677.66

  	
   

  	
  2016-03-15

  	
   

  
	
  45

  	
   

  	
  1,331,833.33

  	
   

  	
  52,118.63

  	
   

  	
  92

  	
   

  	
  1,383,951.96

  	
   

  	
  2,736,844.32

  	
   

  	
  2016-06-15

  	
   

  
	
  46

  	
   

  	
  1,331,833.33

  	
   

  	
  35,058.21

  	
   

  	
  92

  	
   

  	
  1,366,891.54

  	
   

  	
  1,405,010.99

  	
   

  	
  2016-09-15

  	
   

  
	
  47

  	
   

  	
  1,331,833.33

  	
   

  	
  17,802.17

  	
   

  	
  91

  	
   

  	
  1,349,635.50

  	
   

  	
  73,177.66

  	
   

  	
  2016-12-15

  	
   

  
	
  48

  	
   

  	
  73,177.66

  	
   

  	
  50.94

  	
   

  	
  5

  	
   

  	
  73,228.60

  	
   

  	
  - 0

  	
   

  	
  2016-12-20

  	
   

  
	
  Total

  	
   

  	
  63,928,000.00

  	
   

  	
  19,922,688.68

  	
   

  	
   

  	
   

  	
  83,850,688.68

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

Note) could be changed depending
on the Delivery Date and Business Day

 

86

 

SCHEDULE 7

 

ANNUAL COMPLIANCE CERTIFICATE

 

	
  To:

  	
   

  	
  The Export-Import Bank of Korea

  
	
   

  	
   

  	
   

  
	
  From:

  	
   

  	
  [Borrower]

  

 

US$127,856,000 Credit Agreement
dated          , 2003

 

(the Credit Agreement) Hull No.
1489/1490

 

1.             Terms defined in the Credit Agreement have the same
meaning in this Certificate.

 

2.             I/We hereby certify that [no Default has occurred and
is continuing or is outstanding] [a Default under Clause [     ] of [specify document]
is outstanding and the following steps are being taken to remedy it [               ].

 

	
  Yours faithfully,

  
	
   

  
	
  [                                        ]

  
	
   

  
	
  President

  
	
   

  
	
  [or]

  
	
   

  
	
   

  	
   

  
	
   

  
	
  [Senior Officer]

  
	
   

  
	
  and

  
	
   

  
	
   

  	
   

  
	
   

  
	
  [Senior Officer]

  

 

 

Except as set out below, the representation
set out in Clause 14 of the Credit Agreement are deemed to be repeated as at
the date hereof.

 

87

 

SCHEDULE 8

 

INCIDENTAL VESSEL COSTS

 

(Per vessel)

 

	
   

  	
   

  	
  US$

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
  Lashings

  	
   

  	
  900,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  Supervision during Construction

  	
   

  	
  320,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  Delivery Ceremony

  	
   

  	
  50,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  Port fees on delivery

  	
   

  	
  30,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
  Pre-delivery stores/supplies

  	
   

  	
  600,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
  Lubricants

  	
   

  	
  800,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
  Legal fees

  	
   

  	
  150,000

  	
   

  

 

88

 

Exhibit 10.7

 

SIGNATORIES

 

	
  OCEANEW SHIPPING LIMITED

  
	
   

  
	
  By:

  
	
   

  
	
   

  
	
  OCEANPRIZE NAVIGATION LIMITED

  
	
   

  
	
  By:

  
	
   

  
	
   

  
	
  the Lender

  
	
   

  
	
  THE EXPORT-IMPORT BANK OF KOREA

  
	
   

  
	
  By:

  

 

89

 

SCHEDULE 2

 

CONDITIONS PRECEDENT
DOCUMENTS

 

 

SIGNATORIES

 

	
  Borrowers

  	
   

  
	
   

  	
   

  
	
  OCEANEW SHIPPING LIMITED

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Arlene Payne, Attorney-in-fact

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  and

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  OCEANPRIZE NAVIGATION UNITED

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Arlene Payne, Attorney-in-fact

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Lender

  	
   

  
	
   

  	
   

  
	
  THE EXPORT-IMPORT BANK OF KOREA

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Sunghwan Choi

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00110-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00110-of-00352.parquet"}]]