Document:

Exhibit 10.8

 

EXECUTION VERSION

 

 

AGREEMENT

 

 

DATED 29TH
JANUARY, 2004

 

 

US$144,000,000

CREDIT
FACILITY

 

FOR

 

KARLITA
SHIPPING COMPANY LIMITED

And

RAMONA
MARINE COMPANY LIMITED

 

 

GUARANTEED
BY

 

DANAOS
HOLDINGS LIMITED

 

 

ARRANGED BY

 

THE
EXPORT-IMPORT BANK OF KOREA AND FORTIS CAPITAL CORP.

 

 

WITH

 

FORTIS
CAPITAL CORP.

as Facility
Agent

 

 

 

LONDON

 

 

CONTENTS

 

	
  Clause

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  1.

  	
  Interpretation

  	
  4

  
	
  2.

  	
  Facility

  	
  24

  
	
  3.

  	
  Conditions
  Precedent

  	
  25

  
	
  4.

  	
  Utilisation

  	
  26

  
	
  5.

  	
  Repayment

  	
  27

  
	
  6.

  	
  Prepayment
  and Cancellation

  	
  28

  
	
  7.

  	
  Interest

  	
  31

  
	
  8.

  	
  Terms

  	
  33

  
	
  9.

  	
  Market
  Disruption

  	
  34

  
	
  10.

  	
  Taxes

  	
  35

  
	
  11.

  	
  Increased
  Costs

  	
  36

  
	
  12.

  	
  Earnings,
  Retention and Operating Expenses Accounts

  	
  37

  
	
  13.

  	
  Payments

  	
  39

  
	
  14.

  	
  Guarantee
  and Indemnity

  	
  41

  
	
  15.

  	
  Representations

  	
  43

  
	
  16.

  	
  Information
  Covenants

  	
  48

  
	
  17.

  	
  General
  Covenants

  	
  50

  
	
  18.

  	
  Financial
  Covenants of the Guarantor

  	
  66

  
	
  19.

  	
  Valuation

  	
  69

  
	
  20.

  	
  Default

  	
  70

  
	
  21.

  	
  Security

  	
  74

  
	
  22.

  	
  The
  Administrative Parties

  	
  77

  
	
  23.

  	
  Evidence
  and Calculations

  	
  81

  
	
  24.

  	
  Fees

  	
  81

  
	
  25.

  	
  Indemnities
  and Break Costs

  	
  82

  
	
  26.

  	
  Expenses

  	
  84

  
	
  27.

  	
  Waiver
  of Consequential Damages

  	
  85

  
	
  28.

  	
  Amendments
  and Waivers

  	
  85

  
	
  29.

  	
  Changes
  to the Parties

  	
  86

  
	
  30.

  	
  Disclosure
  of Information

  	
  89

  
	
  31.

  	
  Set-Off

  	
  89

  
	
  32.

  	
  Pro
  Rata Sharing

  	
  90

  
	
  33.

  	
  Severability

  	
  91

  
	
  34.

  	
  Counterparts

  	
  91

  
	
  35.

  	
  Notices

  	
  91

  
	
  36.

  	
  Language

  	
  93

  
	
  37.

  	
  Governing
  Law

  	
  93

  
	
  38.

  	
  Enforcement

  	
  93

  

 

 

Schedules

 

	
  1.

  	
  Original
  Parties

  	
  95

  
	
  2.

  	
  Initial
  Conditions Precedent Documents

  	
  97

  
	
  3.

  	
  Delivery
  Date Conditions Precedent Documents

  	
  100

  
	
  4.

  	
  Form of
  Request

  	
  103

  
	
  5.

  	
  Form of
  Transfer Certificate

  	
  106

  
	
  6.

  	
  Repayment
  Schedule

  	
  108

  
	
  7.

  	
  Annual
  Compliance Certificate

  	
  110

  
	
  8.

  	
  Incidental
  Vessel Costs

  	
  112

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signatories

  	
  113

  

 

 

THIS AGREEMENT is dated
29th January, 2004

 

BETWEEN:

 

(1)           THE
COMPANIES listed in Part 1 of 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 Part 1 of Schedule 1 (each a Borrower and together the Borrowers);

 

(2)           DANAOS
HOLDINGS LIMITED which is incorporated according to the laws of
Liberia with its registered office at 80 Broad Street, Monrovia, Liberia (the Guarantor);

 

(3)           THE
EXPORT-IMPORT BANK OF KOREA and FORTIS
CAPITAL CORP. as joint arrangers (in this capacity the Arrangers);

 

(4)           THE
FINANCIAL INSTITUTIONS listed in Part 2 of Schedule 1
(Original Parties) as original lenders (the Original
Lenders); and

 

(5)           FORTIS
CAPITAL CORP. as facility agent (in this capacity the Facility Agent).

 

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
Fortis Bank (Nederland) N.V. whose registered office is situated at Coolsingel
93, 3012 AE Rotterdam, The Netherlands or any other bank or financial
institution with which, with the prior written consent of the Facility Agent
(acting in accordance with the instructions of the Majority Lenders), any of
the Accounts are at any time held.

 

Administrative Party means the
Arrangers or the Facility Agent.

 

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.

 

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 Facility Agent together with any and all notices and acknowledgments
entered into in connection therewith and AML
Time Charter  Assignment means
either of them.

 

Annual Compliance Certificate means the form of
certificate attached at Schedule 7.

 

4

 

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.

 

Approved Valuers means two
such independent reputable shipbrokers one of which shall be nominated by the
Borrowers and one of which shall be nominated by the Facility Agent (acting in
accordance with the instructions of the Majority Lenders) 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 a 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 25.3 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 135-080.

 

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,
Athens, Greece and Amsterdam, Holland.

 

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 17.25.

 

Commitment means:

 

(a)           for an Original
Lender, the amount set opposite its name in Part 2 of Schedule 1
(Original Parties) under the heading “Commitments”
and the amount of any other commitment to advance funds under this Agreement,
it acquires; and

 

(b)           for any other Lender,
the amount of any commitment to advance funds under this Agreement, it
acquires,

 

5

 

to the extent not cancelled, transferred or
reduced under this Agreement.

 

Confidentiality Undertaking means a
confidentiality undertaking in a form agreed between the relevant Borrower
and the Facility Agent.

 

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 Group means the
Guarantor 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;

 

(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.

 

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 Facility Agent and Deed of
Counter-Indemnity means either of them.

 

Default means:

 

(a)           an Event of Default;
or

 

6

 

(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.

 

Deposit Accounts means
together the Karlita Deposit Account and the Ramona 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
Lenders.

 

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 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

 

7

 

(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 Guarantor, the Bareboat Charterer 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, such
persons.

 

Environmental Approvals means any
permit, licence, approval, ruling, variance, exemption or other authorisation
required under applicable Environmental Laws.

 

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 each Vessel, an amount equal to US$18,000,000 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 20 of this Agreement.

 

Excess Risks means, in
respect of a Vessel:

 

8

 

(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 24.1.

 

Facility means the
credit facility made available under this Agreement.

 

Facility Office means in
respect of a Lender, the office through which that Lender will perform its
obligations under this Agreement from time to time, which at the date of this
Agreement is, in respect of each of the Original Lenders, the address set out
opposite its name in Part 2 of Schedule 1 or such other address as a
Lender may notify to the Facility Agent from time to time.

 

Fee Letter means any
letter entered into by reference to this Agreement between one or more
Administrative Parties and the Borrowers setting out the amount of certain fees
referred to in this Agreement.

 

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 Fee Letter;

 

(d)           the Manager’s
Undertaking;

 

(e)           the Supplemental
Agreement;

 

(f)            the Intercreditor
Deed;

 

(g)           the Multipartite
Deed;

 

(h)           the Second Deposit
Charge Side Letter;

 

(i)            a Transfer
Certificate; and

 

(j)            any other document
designated as such by the Facility Agent and the Borrowers.

 

Finance Party means a
Lender or an Administrative Party.

 

Financial Indebtedness means any
indebtedness for or in respect of:

 

(a)           moneys borrowed;

 

(b)           any acceptance
credit;

 

9

 

(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

 

(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 charges 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 third year after the Delivery Date of that Vessel is
110 per cent. of the aggregate of the outstanding Loan relating to that Vessel.

 

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
Facility Agent 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.

 

Half-Year Date means
each of 15th March and 15th September in each
year provided always that such date is a Business Day.

 

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).

 

10

 

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 24.1,
the commitment fee payable in accordance with Clause 24.2, the management fee
payable in accordance with Clause 24.3, the Arranger’s fee payable in
accordance with Clause 24.4 and interest calculated and payable in accordance
with Clause 7.1(a) and 7.1(b).

 

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, by the Borrower 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 Facility
Agent 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;

 

(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 a Finance
Party or any of its Affiliates but only to the extent attributable to that
Finance Party 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, the Guarantor and
the Facility Agent.

 

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.

 

11

 

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.

 

Karlita means
Karlita Shipping Company Limited.

 

Karlita Deposit Account means the
account held with the Deposit Bank, designated “Karlita Shipping Company
Limited” with account number 98091222 in the name of Karlita.

 

Karlita Second Priority
Deposit Account Charge means the second priority charge granted by
Karlita in favour of the Facility Agent in respect of the Karlita Deposit
Account in form and substance satisfactory to the Facility Agent (acting
on the instructions of the Majority Lenders).

 

KEXIM means The
Export-Import Bank of Korea.

 

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.

 

Lender means:

 

(a)           an Original Lender;
or

 

(b)           any person which
becomes a party to this Agreement after the date of this Agreement pursuant to
Clause 29.2;

 

and Lenders
means all of them.

 

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 Facility Agent at its request, quoted by the Reference Banks 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).

 

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 Lenders.

 

Majority Lenders means:

 

12

 

(a)           for the period
commencing on the date of this Agreement until the date which falls five years
from the date of the first Drawing, Lenders:

 

(i)            whose share in the
outstanding Loans and whose undrawn Commitments then aggregate not less than 80
per cent. of the aggregate of all the outstanding Loans and the undrawn
Commitments of all the Lenders;

 

(ii)           if there is no Loan
then outstanding, whose undrawn Commitments then aggregate not less than 80 per
cent. of the Total Commitments; or

 

(iii)          if there is no Loan
then outstanding and the Total Commitments have been reduced to zero, whose
Commitments aggregated not less than 80 per cent. of the Total Commitments
immediately before the reduction; and

 

(b)           for the period
commencing on the day falling after the fifth anniversary of the date of the
first Drawing, Lenders:

 

(i)            whose share in the
outstanding Loans and whose undrawn Commitments then aggregate not less than 67
per cent. of the aggregate of all the outstanding Loans and the undrawn
Commitments of all the Lenders;

 

(ii)           if there is no Loan
then outstanding, whose undrawn Commitments then aggregate not less than 67 per
cent. of the Total Commitments; or

 

(iii)          if there is no Loan
then outstanding and the Total Commitments have been reduced to zero, whose
Commitments aggregated not less than 67 per cent. of the Total Commitments
immediately before the reduction,

 

provided always that, in the case of each of paragraph
(a) and paragraph (b), at any time the Majority Lenders must include
KEXIM.

 

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 Facility Agent (acting in accordance with the instructions of
the Majority Lenders) from time to time.

 

Manager’s Undertaking means a
letter of undertaking to be issued by the Manager to the Facility Agent
confirming it shall not make a claim to security ranking ahead of the Lenders’
security in respect of a Vessel in form and substance satisfactory to the
Facility Agent.

 

Material Adverse Effect means a
material adverse effect on:

 

(a)           the business
condition (financial or otherwise) or operations of any of the Obligors;

 

(b)           the ability of any
Obligor 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, the lesser of 80% of the Vessel Cost and seventy two
million Dollars (US$72,000,000) being the total of the Maximum Available
Tranche A Loan Amount and the Maximum Available Tranche B Loan Amount.

 

13

 

Maximum Available Tranche A
Loan Amount means, in respect of a Vessel, the lesser of 75% of
the Vessel Cost and sixty seven million five hundred thousand Dollars
(US$67,500,000).

 

Maximum Available Tranche B
Loan Amount means, in respect of a Vessel, the lesser of 5% of the
Vessel Cost and four million five hundred thousand Dollars (US$4,500,000).

 

Maximum Facility Amount means one
hundred and forty four million Dollars (US$144,000,000) being the aggregate of
the Maximum Available Loan Amounts for each Loan.

 

Maximum Tranche A Facility
Amount means the lesser of 75% of the aggregate Vessel Cost
of the Vessels and one hundred and thirty five million (US$135,000,000).

 

Maximum Tranche B Facility
Amount means the lesser of 5% of the aggregate Vessel Cost of
the Vessels and nine million Dollars (US$9,000,000).

 

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 Facility Agent on the Delivery Date.

 

Multipartite Deeds means
together each of the deeds entered or to be entered between the Facility Agent,
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 November, 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.

 

Obligor means the
Guarantor or a Borrower.

 

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.

 

14

 

Original Financial Statements means the
audited financial statements of the Guarantor for the year ended 2003.

 

Owners means
each of Carpasso Shipping Company Limited, subsequently to be named Ocean
Container (No.3) Limited and Lucota Marine Company Limited, subsequently to be
named Ocean Container (No.4) 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 Facility Agent and Owners
Pledge of Shares means either of
them.

 

Partnerships means
together each of the Ocean Container (No.3) Partnership, and the Ocean
Container (No.4) 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.

 

Permitted Liens means, in
respect of a Vessel:

 

(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 any Finance Party.

 

15

 

Pledges of Shares means
together the two pledges each in respect of the issued share capital of a
Borrower to be granted by the Shareholders in favour of the Facility Agent and Pledge of Shares means either of them.

 

Post-Delivery Tranche A
Interest Rate means 4.75 per cent. per annum.

 

Post-Delivery Tranche B Margin
means 1.25 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
either the Pre-Delivery Tranche A Margin or the Pre-Delivery Tranche B Margin
as applicable.

 

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.

 

Pre-Delivery Tranche A Margin means 0.8
per cent. per annum.

 

Pre-Delivery Tranche B Margin means
1.07 per cent. per annum.

 

Pro Rata Share means:

 

(a)           for the purpose of
determining a Lender’s share in a utilisation of the Facility, the proportion
which its Commitment bears to the Total Commitments; and

 

(b)           for any other purpose
on a particular date:

 

(i)            the proportion which
a Lender’s share of the Loans (if any) bears to both the Loans;

 

(ii)           if there is no Loan
outstanding on that date, the proportion which its Commitment bears to the
Total Commitments on that date; or

 

(iii)          if the Total
Commitments have been cancelled, the proportion which its Commitment bore to
the Total Commitments immediately before being cancelled.

 

Proceeds means:

 

(i)            any Final Disposition
Proceeds;

 

(ii)           any Total Loss
Proceeds;

 

(iii)          any and all other
proceeds of enforcement of, or moneys otherwise payable to the Facility Agent
under the Security Documents;

 

(iv)          any moneys received
by the Facility Agent from any chartering of the Vessel by the Facility Agent
(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

 

16

 

to the Facility Agent 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.

 

Ramona means
Ramona Marine Company Limited.

 

Ramona Deposit Account means the
account held with the Deposit Bank, designated “Ramona Marine Company Limited”
with account number 98091133 in the name of Ramona.

 

Ramona Second Priority Deposit
Account Charge means the second priority charge granted by
Ramona in favour of the Facility Agent in respect of the Ramona Deposit Account
in form and substance satisfactory to the Facility Agent (acting on the
instructions of the Majority Lenders).

 

Reference Banks means the
Facility Agent, KEXIM Bank (UK) Limited and any other bank or financial
institution appointed as such by the Facility Agent (acting on the instructions
of the Majority Lenders) under this Agreement.

 

Refund Guarantee means, in
respect of a Vessel, the refund guarantee dated 21st November, 2003
and issued by the Refund Guarantor in favour of the relevant Borrower or such
other refund guarantee as may replace the same from time to time (with the
approval of the Facility Agent (acting on the instructions of the Majority
Lenders)).

 

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

 

(k)           the Vessel Management
Agreements.

 

17

 

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 date which is a Tranche A Repayment Date.

 

Repayment Instalment means, in
respect of a Loan, each instalment which is a Tranche A Repayment Instalment
payable 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, one granted or to be
granted by each of the Borrowers in favour of the Facility Agent 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 which is either (or both) a Tranche A Retention
Period and/or Tranche B Retention Period.

 

Screen Rate means,
for LIBOR, 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 is replaced or the service ceases to
be available, the Facility Agent may specify another page or service
displaying the appropriate rate.

 

Second Deposit Charges means
together the Karlita Second Priority Deposit Account Charge and the Ramona
Second Priority Deposit Account Charge.

 

Second Deposit Charge Side
Letter means the side letter provided by the General Partner
to the Facility Agent 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 fourth year
after the Delivery Date of that Vessel until the last day of the fifth year

 

18

 

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 Finance Parties or any of them under or in connection with any Finance
Document.

 

Security Agreements means:

 

(i)            the Mortgages;

 

(ii)           the General
Assignments;

 

(iii)          the Pledges of
Shares;

 

(iv)          the Owners Pledges of
Shares;

 

(v)           the Time Charter and
Earnings Assignments;

 

(vi)          the Second Priority
Deposit Account Charges;

 

(vii)         the Deeds of
Counter-Indemnity;

 

(viii)        the Earnings Account
Charges;

 

(ix)           the Retention Account
Charges;

 

(x)            the Operating
Expenses Account Charges;

 

(xi)           the AML Time Charter
Assignments; and

 

(xii)          any other document
designated as such in writing by the Obligors and the Facility Agent.

 

Security Assets means any
asset which is the subject of a Security Interest created by a Security
Document.

 

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 Finance Parties or any of them 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.

 

Shareholders means
together Sapfo Navigation Inc., whose registered office is Broad Street, 80,
Monrovia, Liberia (the sole shareholder of Ramona) and Tully Enterprises S.A.
whose registered office is 80 Broad Street, Monrovia, Liberia (the sole
shareholder of Karlita) and Shareholder means
either of them.

 

Shipbuilding Contract means, in
respect of a Vessel, the agreement between the Builder and the relevant
Borrower dated 18th November, 2003 pursuant to which the Builder agreed to

 

19

 

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.

 

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                 November,
2004 entered into between the parties hereto.

 

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.

 

Tax Payment means a
payment made by an Obligor to a Finance Party in any way relating to a Tax
Deduction or under any indemnity given by that Obligor 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 sixth 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 18th November, 2003 entered
into by the relevant Borrower and the Charterer or such other time charterparty
entered into from time to time by the Borrower in respect of a Vessel.

 

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 Facility Agent together with any and
all notices and acknowledgements entered into in connection therewith.

 

Total Commitments means the
aggregate of the Commitments of all the Lenders.

 

Total Loss means in
relation to a Vessel:

 

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

 

20

 

(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 60 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 Facility Agent (acting on the instructions of the
Majority Lenders).

 

Tranche A Lenders means the
lenders detailed in Part 2 of Schedule 1 as Tranche A Lenders
together with any New Lenders in respect of a Tranche A Loan.

 

Tranche A Loan means, in
respect of a Vessel, all monies advanced to the Borrowers by the Tranche A
Lenders.

 

Tranche A Repayment Date means, in
respect of a Tranche A Loan, each of the twenty five (25) dates specified , in
the case of Vessel 1, in Part 1 of the Repayment Schedule and in the case
of Vessel 2, in Part 2 of the Repayment Schedule, and in each such case
the first Repayment Date shall be the day which is the next Half-Year Date
falling after the Delivery Date of that Vessel. The final Tranche A Repayment
Date shall fall on the Final Maturity Date.

 

Tranche A Repayment Instalment
means in respect of a Tranche A Loan, each instalment which is payable
for repayment of that Loan in accordance with the relevant Repayment Schedule.

 

Tranche A Retention Period means, in
respect of a Tranche A Loan, each period commencing, in the case of the first
such period, on the Delivery Date of the Vessel to which that Tranche A Loan
relates and, in the case of each other such period, on a Tranche A Repayment
Date and ending on the next Tranche A Repayment Date or, in the case of the
final such period, the Final Maturity Date.

 

Tranche B Lenders means the
lenders detailed in Part 2 of Schedule 1 as Tranche B Lenders
together with any New Lenders in respect of a Tranche B Loan.

 

Tranche B Loan means, in
respect of a Vessel, all monies advanced to the Borrowers by the Tranche B
Lenders.

 

Tranche B Retention Period means, in
respect of a Tranche B Loan, each period commencing, in the case of the first
such period, on the Delivery Date of the Vessel to which that Tranche B Loan
relates and, in the case of each other such period, on a Tranche A Repayment
Date and ending on the next Tranche A Repayment Date or, in the case of the
final such period, the Final Maturity Date.

 

Transfer Certificate means a
certificate, substantially in the form of Schedule 5 (Form of
Transfer Certificate), with such amendments as the Facility Agent and the
Borrowers may approve or reasonably require or any other form agreed
between the Facility Agent and the Borrowers.

 

21

 

Utilisation Date means
each date on which the Facility or any part thereof is utilised.

 

Vessel 1 means the
9,600 TEU vessel to be constructed in accordance with the relevant Shipbuilding
Contract with Hull Number 1559.

 

Vessel 2 means the
9,600 TEU vessel to be constructed in accordance with the relevant Shipbuilding
Contract with Hull Number 1561.

 

Vessels means
together Vessel 1 and Vessel 2, being the vessels detailed in Part 1 of 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$90,000,000.

 

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, re-enactment or increases in the amount of the facilities granted
hereunder 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;

 

22

 

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 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;

 

(vii)         a time of day is a
reference to London time; and

 

(viii)        words importing the
plural shall include the singular and vice versa..

 

(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;

 

23

 

(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.

 

(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 Facility Agent pursuant to the Finance Documents
shall be exercised in such manner and on such terms as the Facility Agent 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 Facility Agent 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 any of the Finance Parties 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
Facility Agent 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
Lenders make 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.

 

24

 

2.3          No
obligation to monitor

 

No Finance Party is obliged to monitor or
verify the utilisation of any Loan.

 

2.4          Nature
of a Finance Party’s rights and obligations

 

Unless otherwise agreed by all the Finance
Parties:

 

(a)           the obligations of a
Finance Party under the Finance Documents are several;

 

(b)           failure by a Finance
Party to perform its obligations does not affect the obligations of any
other Party under the Finance Documents;

 

(c)           no Finance Party is
responsible for the obligations of any other Finance Party under the Finance
Documents;

 

(d)           the rights of a
Finance Party under the Finance Documents are separate and independent rights;

 

(e)           a Finance Party may,
except as otherwise stated in the Finance Documents, separately enforce those
rights; and

 

(f)            a debt arising under
the Finance Documents to a Finance Party is a separate and independent debt.

 

3.             CONDITIONS PRECEDENT

 

3.1          Conditions
precedent documents

 

(a)           A Request in respect
of a Drawing under a Loan may not be given until the Facility Agent has
notified the Borrowers and the Lenders that it has received all of the
documents and evidence set out in Schedule 2 (Initial Conditions Precedent
Documents) in form and substance satisfactory to the Facility Agent
(acting in accordance with the instructions of the Majority Lenders). The
Facility Agent must give this notification to the relevant Borrower and the
Lenders promptly upon receiving such instructions.

 

(b)           A Request
representing the amount of a Delivery Date Instalment may not be given
until the Facility Agent has notified the relevant Borrower and the Lenders
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
Facility Agent or that it expects to receive outstanding documents or evidence
on or before the relevant Delivery Date (in each case acting in accordance with
the instructions of the Majority Lenders). The Facility Agent must give this
notification to the relevant Borrower and the Lenders promptly upon receiving
such instructions.

 

3.2          Further
conditions precedent

 

The obligations of each Lender to advance
either 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 15 are correct in all material respects; and

 

(b)           no Default is
outstanding or would result from the Drawing.

 

25

 

4.             UTILISATION

 

4.1          Giving
of Requests

 

(a)           Each Borrower may borrow
its relevant Loan by giving to the Facility Agent a duly completed Request in
respect of a Drawing under that Loan.

 

(b)           Unless the Facility
Agent otherwise agrees, the latest time for receipt by the Facility Agent 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 and such request is
submitted with the relevant original invoices and/or receipts (or, in the case
of costs to be paid after the Delivery Date, pro-forma invoices) relating to
such costs;

 

(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 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 to the relevant Borrower 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 or Incidental Loan Costs,
when aggregated with any other amount in respect of Incidental Vessel Costs and
Incidental Loan Costs drawndown under the Loan and any amounts capitalised or
to be capitalised on the proposed Utilisation Date pursuant to Clause 4.3(a) in
respect of Incidental Loan Costs, does not exceed US$6,100,000 in aggregate;

 

26

 

(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(a) in respect of Incidental Loan Costs for that
Loan, the Maximum Available Loan Amount;

 

(c)           it requests that the
amount of the Drawing shall be drawn pro-rata between the Tranche A Loan and
the Tranche B Loan; and

 

(d)           the proposed Term
complies with this Agreement.

 

Only one Drawing may be requested in a
Request.

 

4.3          Capitalisation
of Incidental Loan Costs

 

(a)           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 then, during the Pre-Delivery
Period, in respect of a Vessel, the Exposure Fee payable in accordance with
Clause 24.1, the commitment fee payable in accordance with Clause 24.2 and
interest calculated and payable in accordance with Clause 7.1(a), relating to
that Vessel, shall, unless otherwise requested in writing by the Borrowers to
the Facility Agent (in which case the Borrowers shall immediately irrevocably
and unconditionally pay such fees and interest in cash to the Facility Agent),
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 on a pro-rata basis between Tranche A and
Tranche B. The Arranger’s fee payable in accordance with Clause 24.4 relating
to a Vessel shall accrue on the Loan relating to that Vessel and shall, on the
date of the first Drawing in respect of that Loan, be capitalised and added to
the principal amount of the Loan outstanding.

 

(b)           To the extent that
any amount of any relevant Incidental Loan Cost is not capitalised in
accordance with Clause 4.3(a) above but is instead paid by a Borrower in
cash, then that Borrower may, during the Availability Period, request an amount
for Drawing under the relevant Loan equal to the amount of such Incidental Loan
Cost, subject to compliance with the provisions of Clause 4.2(b)(iv) above.
The amount so drawn shall, on the relevant Utilisation Date, be capitalised and
added to the principal amount of the Loan outstanding.

 

5.             REPAYMENT

 

5.1          Repayment
of the Loans

 

(a)           The Borrowers must
repay Tranche A of each Loan by 25 consecutive Repayment Instalments to
the Facility Agent on each Repayment Date for that Loan in accordance with the
relevant Repayment Schedule.

 

(b)           The Facility Agent
shall notify the Borrowers and the Lenders 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
Facility Agent 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 and the Lenders. In any event, Tranche A of each Loan shall be repaid
in full on the Final Maturity Date for that Loan.

 

27

 

(c)           The Borrowers must
repay Tranche B of each Loan on the Final Maturity Date for that Loan.

 

6.             PREPAYMENT AND CANCELLATION

 

6.1          Mandatory
prepayment - illegality

 

(a)           If it becomes, or to
the knowledge of any Lender is to become, unlawful in any jurisdiction for a
Lender to perform any of its obligations as contemplated by this Agreement
or a Finance Document or to fund or maintain its share in one or both of the Loans
(the Event of Illegality), that
Lender shall notify the Facility Agent and the Borrowers.

 

(b)           After notification
under paragraph (a) above, the Owners and that 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.

 

(c)           If agreement cannot
be reached between the parties within the period specified in paragraph (b) above,
the Borrowers shall repay the share of that Lender in the relevant Loan or
Loans on the date specified in paragraph (d) below and the Commitment of
that Lender will be immediately cancelled.

 

(d)           The date for
repayment of a Lender’s share in a Loan or Loans will be:

 

(i)            the last day of the
current Term of that Loan; or

 

(ii)           if earlier the date
specified by that Lender in the notice delivered to the Borrowers (being no
earlier than the last day of any applicable grace period permitted by
Applicable Law).

 

6.2          Mandatory
prepayment – change of control of the Guarantor

 

(a)           The Obligors must
promptly notify the Facility Agent if any of them becomes aware of any person
or group of persons acting in concert gaining control of the Guarantor from Mr. John
Coustas and his immediate family, be it direct or indirect.

 

(b)           After notification
under paragraph (a) above or if the Facility Agent otherwise becomes
aware of the same, the Facility Agent may (acting on the instructions of
the Majority Lenders), by notice to the Lenders and 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:

 

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.

 

28

 

6.3          Mandatory
prepayment- Change of control of the Charterer

 

(a)           The Borrowers must
promptly notify the Facility Agent 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 Facility Agent otherwise becomes aware
of the same in respect of the Charterer, each of the Lenders may undertake
a credit review of the Charterer in the context of the terms of this Agreement.
In carrying out the credit review and reaching a conclusion, the Lenders shall
act in good faith but otherwise in their absolute discretion.

 

(c)           In order to reach a
conclusion that the credit of the Charterer under its new ownership is
acceptable, any Lender may require amendments to this Agreement. Any such
amendments required by any Lender shall apply in respect of all amounts
outstanding in respect of each Loan.

 

(d)           The Facility Agent
shall inform the Borrowers, once the Lenders have concluded their credit
review, of the result including details of any amendments required to this
Agreement which the Borrowers must comply with.

 

(e)           If the result of the
credit review is that one or more of the Lenders does not accept the credit of
the Charterer under its new ownership, the Borrowers shall be required, within
a period of 90 days from the date of the Facility Agent’s notification or
immediately upon the occurrence of an Event of Default which is continuing, to
prepay all outstanding Loans.

 

(f)            If the result of the
credit review is that each of the Lenders is prepared to accept the credit of
the Charterer under its new ownership, either with or without amendments to
this Agreement or compliance with further conditions by the Borrowers, the
Borrowers shall within a period of 90 days from the date of the Facility Agent’s
notification, (during which time no Event of Default may occur or be
continuing), either:

 

(i)            comply with the
requirements of the Lenders’ credit review, if any; or

 

(ii)           prepay the Loans if
the Borrowers do not accept the new requirements.

 

(g)           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 – Non-delivery, 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 (whether before or after the Delivery Date), on the earlier of the date
falling 90 days after the Date of Total Loss and the date of receipt by the
Facility Agent of the proceeds of insurance relating to such Total Loss;

 

29

 

(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; or

 

(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) for whatever
reason, the Facility Agent shall be entitled to procure immediate valuations of
the remaining Vessel in accordance with Clause 19, at the cost of the
Borrowers. In the event that such valuations show that the relevant 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 Facility Agent no later than 5 Business Days after receipt of
notification from the Facility Agent of details of the amount required to
satisfy the Required Amount.

 

6.5          Voluntary
prepayment

 

(a)           A Borrower may, by
giving not less than thirty days’ prior notice to the Facility Agent, prepay a
Loan in whole or from time to time in part on a Repayment Date.

 

(b)           A prepayment must (i) be
in a minimum amount of US$10,000,000, and (ii) be in integral multiples of
US$5,000,000.

 

(c)           Unless the Facility
Agent 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 and shall be applied pro-rata in respect of the amounts
outstanding to the Tranche A Lenders and the Tranche B Lenders.

 

6.6          Automatic
cancellation

 

The Commitment of each of the Lenders 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 Facility Agent,
cancel the unutilised amount of the Total Commitments in whole or in part.

 

(b)           Partial cancellation
of the Total Commitments must be in a minimum amount or multiple of
US$1,000,000.

 

(c)           Any cancellation in part will
be applied against the Commitment of each Lender pro rata.

 

6.8          Voluntary
prepayment and cancellation

 

(a)           If either or both of
the Borrowers is, or will be, required to pay to a Lender a Tax Payment or an
Increased Cost, the relevant Borrower(s) may, while the requirement continues,
give notice to the Facility Agent requesting prepayment and cancellation in
respect of that Lender.

 

30

 

(b)           After notification
under paragraph (a) above:

 

(i)            the relevant
Borrower(s) must repay or prepay that Lender’s share in each Loan made to it on
the date specified in paragraph (c) below; and

 

(ii)           the Commitment of
that Lender will be immediately cancelled.

 

(c)           The date for
repayment or prepayment of a Lender’s share in a 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 Facility Agent.

 

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 and shall be applied pro-rata in respect of
the amounts outstanding to the Tranche A Lenders and the Tranche B Lenders.

 

(b)           Upon any such partial
prepayment, the Facility Agent 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 of a Tranche A Loan made other than in accordance with Clause 6.1,
Clause 6.2, Clause 6.3 and Clause 6.4(a)(ii), to (iv) inclusive shall be
subject to a prepayment fee equal to 0.5% of the amount of principal of the
relevant Tranche A Loan 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 Tranche A 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 Tranche
A Margin;

 

(ii)           Exposure Fee; and

 

(iii)          LIBOR (together, the Pre-Delivery Tranche A Interest Rate).

 

(b)           The rate of interest
on each Tranche B Loan for each Term during the Pre-Delivery Period is the
percentage rate per annum equal to the aggregate of the applicable:

 

31

 

(i)            Pre-Delivery Tranche
B Margin; and

 

(ii)           LIBOR (together, the Pre-Delivery  Tranche B Interest Rate).

 

(c)           The rate of interest
on each Loan for each Term during the Post-Delivery Period shall be:

 

(i)            in respect of a
Tranche A Loan, 5.02 per cent. being the aggregate of:

 

(A)          Post-Delivery Tranche
A Interest Rate; and

 

(B)           Exposure Fee
(together, the Tranche A Interest Rate);
and

 

(ii)           in respect of a
Tranche B Loan, the percentage rate per annum equal to the aggregate of:

 

(A)          LIBOR; and

 

(B)           Post-Delivery Tranche B Margin (together, the Tranche B Interest Rate).

 

(d)           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, in respect of a
Tranche A Loan, the Exposure Fee on each Loan on the last day of each Term.
During the Pre-Delivery Period in respect of a Vessel, interest and, in respect
of a Tranche A Loan, 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.

 

7.3          Interest
on overdue amounts

 

(a)           If the Obligors fail
to pay any amount payable by them under the Finance Documents, they must
immediately on demand by the Facility Agent pay interest on the overdue amount
from its due date up to the date of actual payment, both before, on and after
judgment.

 

(b)           If the overdue amount
is a principal amount of a Tranche A Loan or is an amount accruing in respect
of interest or Exposure Fee on a Tranche 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 Pre-Delivery Tranche A Interest Rate or the Tranche A Interest Rate, as
applicable.

 

After the expiry of the first Term for that
overdue amount, the rate on the overdue amount will be calculated in accordance
with paragraph (d) below.

 

(c)           If the overdue amount
is a principal amount of a Tranche B Loan or is an amount accruing in respect
of interest on a Tranche B Loan and becomes due and payable prior to the last
day of its current Term, then:

 

32

 

(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 Pre-Delivery Tranche B Interest Rate or the Tranche B Interest Rate, as
applicable.

 

After the expiry of the first Term for that
overdue amount, the rate on the overdue amount will be calculated in accordance
with paragraph (d) below.

 

(d)           In respect of any
amounts outstanding other than in accordance with paragraph (b) and (c) above,
interest on such overdue amount is payable at a rate determined by the Facility
Agent to be two per cent. per annum above the Tranche A Interest Rate. For this
purpose, the Facility Agent may (acting reasonably) select successive
Terms of any duration of up to six months.

 

(e)           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, and in respect of Tranche B, during the Post-Delivery Period, the
Facility Agent must promptly notify each relevant Party 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
for a period of six months subject always to the provisions of Clauses 8.2, 8.3
and 8.4 below.

 

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 Drawing
during the Pre-Delivery Period will be of six months’ duration (subject to
Clause 8.3) provided always that:

 

(i)            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 on the last day of
the current Term for any existing Drawings under the other Loan;

 

(ii)           the first Term for
the first Drawing under the second Loan to be drawn will end on the last day of
the current Term for any existing Drawings under the other Loan; and

 

(iii)          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.

 

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

 

33

 

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 Facility Agent 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 Banks to supply a rate

 

If LIBOR is to be calculated by reference to
the Reference Banks but if the Reference Banks are 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)            no, or only one, Reference
Bank supplies a rate by 11:00 a.m. on the second Business Day before the
first day of the relevant Term; or

 

(ii)           the Facility Agent
receives by close of business on the second Business Day before the first day
of the relevant Term notification from any Lender or Lenders whose shares in
the relevant Loan (or, as the case may be, in the Post-Delivery Period,
the relevant Tranche B Loan) exceed 30% of that Loan that the cost to them of
obtaining matching deposits in the relevant interbank market is in excess of
LIBOR for the relevant Term.

 

(b)           The Facility Agent
must promptly notify the Borrowers and the Lenders 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, during the Pre-Delivery Period be the aggregate of the
applicable:

 

(i)            Pre-Delivery Margin;

 

(ii)           the rate notified to
the Facility Agent by that Lender 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 that Lender of funding the
Loan from whatever source it may reasonably select; and

 

(iii)          with respect to the
Tranche A Loan only, Exposure Fee.

 

(d)           After notification
under paragraph (b) above, the rate of interest on the affected Tranche B
Loan for the relevant Term will, during the Post-Delivery Period be the
aggregate of the applicable:

 

(i)            Post-Delivery Tranche
B Margin; and

 

34

 

(ii)           the rate notified to
the Facility Agent by that Lender 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 that Lender of funding the
Tranche B Loan from whatever source it may reasonably select.

 

9.3          Alternative
basis of interest or funding

 

(a)           If a market
disruption event occurs and the Facility Agent or the Borrowers so require, the
Borrowers and the Facility Agent must enter into negotiations for a period of
not more than 30 days with a view to agreeing an alternative basis for
determining the rate of interest and/or funding for the affected Loan and any
future Loan.

 

(b)           Any alternative basis
agreed will be, with the prior written consent of all the Lenders, binding on
all the Parties hereto.

 

10.          TAXES

 

10.1        Tax
gross-up

 

(a)           Each Obligor 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 an Obligor or, as the case may be
the Facility Agent, the amount of the payment due from the Obligor will be
increased or, as the case may be, the Obligor shall make an additional
payment, so that the amount (after making the Tax Deduction) received by the
recipient is equal to the payment which would have been due if no Tax Deduction
had been required.

 

(c)           If an Obligor is
required to make a Tax Deduction, that Obligor 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 Obligor
making that Tax Deduction or payment must deliver to the Facility Agent for the
relevant Finance Party, documents or other information (or certified copies
thereof) evidencing satisfactorily to that Finance Party (acting reasonably)
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 any Lender is required to make any payment on account of Tax
(not being a Tax imposed on the net income of a Lender or its Facility Office
by the jurisdiction in which it is incorporated, or the jurisdiction in which
its Facility Office is located or on the capital of that Lender employed in
such jurisdiction or jurisdictions) 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 a Lender, each Obligor shall, upon demand
of the Facility Agent promptly indemnify that Lender against such payment or
liability, together with any interest, penalties and expenses payable or
incurred in connection therewith.

 

35

 

10.3        Tax
Credit

 

If a Lender or, as the case may be, the
Facility Agent 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 an Obligor has made an
increased payment or paid a compensating sum under this Clause 10 that Lender
or, as the case may be, the Facility Agent shall, provided it has received
all amounts which are then due and payable by the Obligors under any of the
provisions of this Agreement and the other Finance Documents, pay to the
Obligors (to the extent that that Lender or, as the case may be, the
Facility Agent can do so without prejudicing the amount of that benefit and the
right of that Lender, or as the case may be, the Facility Agent to obtain
any other benefit, relief or allowance which may be available to it), such
amount, if any, as that Lender, or as the case may be, the Facility Agent
shall determine in its absolute discretion acting in good faith, will leave
that Lender, or as the case may be, the Facility Agent 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.

 

10.4        Confidentiality
of Tax Affairs

 

If a 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 that Lender to disclose any
confidential information relating to the organisation of its affairs.

 

10.5        Stamp
taxes

 

Each Borrower must pay and indemnify each
Finance Party against any stamp duty, registration or other similar Tax payable
by that Finance Party 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 an Obligor 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 Obligor must
pay to the relevant Finance Party (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 a Finance Party the amount of any Increased Cost
incurred by that Finance Party or its Affiliates 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.

 

36

 

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 relevant
Finance Party or any of its Affiliates; or

 

(c)           attributable to the
relevant Finance Party or any of its Affiliates wilfully failing to comply with
any law or regulation.

 

11.3        Claims

 

If a Finance Party 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)           Each Finance Party
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 that Finance Party;

 

(b)           Each Borrower must
indemnify that Finance Party for all costs and expenses reasonably incurred by
that Finance Party as a result of any step taken by it under Clause 11.4(a) above.

 

(c)           A Finance Party is
not obliged to take any step under this Subclause if, in the opinion of that
Finance Party (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 Facility Agent
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

 

37

 

where:

 

a=            the relevant amount
of the Earnings to be transferred to that Retention Account out of the relevant
Earnings Account;

 

A=          the amount required
to repay (i) in the case of the relevant Tranche A Loan, the principal,
interest and Exposure Fee and (ii) in the case of the relevant Tranche B
Loan, interest payable on the next Repayment Date in respect of the Loan to
which the Earnings Account relates or, in the final Retention Period, the
amount required to repay (x) in the case of the relevant Tranche A Loan, the
principal, interest and Exposure Fee and (y) in the case of the relevant
Tranche B Loan, principal and interest payable on 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

 

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 Earnings
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 (i) in the case of the relevant Tranche A Loan, the principal,
interest and Exposure Fee and (ii) in the case of the relevant Tranche B
Loan, interest payable in respect of that Loan on the next Repayment Date or, in
the final Retention Period, the amount required to repay (x) in the case of the
relevant Tranche A Loan, the principal, interest and Exposure Fee and (y) in
the case of the relevant Tranche B Loan, principal and interest payable on the
Final Maturity Date in respect of the Loan to which the Earnings Account
relates.

 

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 Facility Agent to instruct the Account Bank to transfer from the relevant
Retention Account) to the Facility Agent 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, in the case of the Final Maturity Date, the outstanding balance of the
relevant Tranche B Loan; and

 

(b)           on the last day of
each Term of that Loan, the amount of interest and, in respect of a Tranche A
Loan, Exposure Fee then due on that Loan.

 

38

 

12.6        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 or the Exposure Fee when due, the
Borrowers’ obligation to pay that Repayment Instalment or to make that payment
of interest or the Exposure Fee shall not be affected.

 

12.7        Release
of surplus

 

The Facility Agent 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 17.8 and (v) in or
towards a voluntary prepayment of the relevant Loan in accordance with Clause
6.5 (Voluntary prepayment).

 

12.8        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
Facility Agent (acting on the instructions of the Majority Lenders).

 

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 Party
(other than the Facility Agent) under the Finance Documents must be made to the
Facility Agent to its account no. 0011624418 with JP Morgan Chase, New
York, ABA No. 021 000 021 for the credit of Fortis Capital Corp. or such
other account in the United States of America as the Facility Agent may notify
to that Party for this purpose by not less than five Business Days’ prior
notice.

 

13.2        Funds

 

Payments under the Finance Documents to the
Facility Agent must be made for value on the due date at such times and in such
funds as the Facility Agent may specify to the Party concerned as being
customary at the time for the settlement of transactions in the relevant
currency in the place for payment.

 

13.3        Distribution

 

(a)           Each payment received
by the Facility Agent under the Finance Documents for another Party must,
except as provided below, be made available by the Facility Agent to that Party
by payment (as soon as practicable after receipt) to its account with such
office or bank as it may notify to the Facility Agent for this purpose by
not less than five Business Days’ prior notice.

 

39

 

(b)           The Facility Agent may apply
any amount received by it from any of the Obligors in or towards payment (on
the date and in the currency and funds of receipt) of any amount due from the
Obligors under the Finance Documents or in or towards the purchase of any amount
of any currency to be so applied.

 

(c)           Where a sum is paid
to the Facility Agent under this Agreement for another Party, the Facility
Agent is not obliged to pay that sum to that Party until it has established
that it has actually received it. However, the Facility Agent may assume
that the sum has been paid to it, and, in reliance on that assumption, make
available to that Party a corresponding amount. If it transpires that the sum
has not been received by the Facility Agent, that Party must immediately on
demand by the Facility Agent refund any corresponding amount made available to
it together with interest on that amount from the date of payment to the date
of receipt by the Facility Agent at a rate calculated by the Facility Agent to
reflect its cost of funds.

 

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 an Obligor 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

 

(a)           If any Administrative
Party receives a payment insufficient to discharge all the amounts then due and
payable by the Borrowers under the Finance Documents, then, except to the
extent otherwise provided in any Finance Document any and all Proceeds received
by the Facility Agent shall be applied in accordance with clause 10.8 of the
relevant Intercreditor Deed. Any amounts received by the Facility Agent 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 by the Administrative Party towards the obligations of the Borrowers
under the Finance Documents in the following order:

 

(i)            first, in or
towards payment pro-rata of all costs and expenses whatsoever, incurred or to
be incurred by the Finance Parties in connection with such enforcement;

 

(ii)           second, in or
towards payment pro-rata of any unpaid fees, costs and expenses of the Finance
Parties under the Finance Documents;

 

40

 

(iii)          third, in or
towards payment pro-rata of any accrued but unpaid interest under the Finance
Documents (including, in the case of Tranche A, any accrued but unpaid Exposure
Fee);

 

(iv)          fourth in or
towards payment pro-rata of any Break Costs due but unpaid under the Finance
Documents;

 

(v)           fifth, in or
towards payment pro-rata of any principal amount due but unpaid under the
Finance Documents;

 

(vi)          sixth, in or
towards payment pro-rata to the Finance Parties of any other amounts which are
or may become owing by any of the Borrowers to any of the Finance Parties
under the Finance Documents; and

 

(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.

 

(b)           The Facility Agent
must, if so directed by all the Lenders, vary the order set at subparagraphs
13.7(a)(ii) to 13.7(a)(vi) above.

 

(c)           This Subclause will
override any appropriation made by a Borrower.

 

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 relevant Finance Party.

 

14.          GUARANTEE
AND INDEMNITY

 

14.1        Guarantee
and indemnity

 

The Guarantor irrevocably and unconditionally:

 

(a)           guarantees to each
Finance Party punctual performance by each Borrower of all its obligations and
liabilities under the Finance Documents (including, without limitation, the
Forex Obligations);

 

(b)           undertakes with each
Finance Party that, whenever a Borrower does not pay any amount, or perform any
obligation, when due under any Finance Document, the Guarantor must immediately
on demand by the Facility Agent pay that amount, or perform that
obligation, as if it were the principal obligor; and

 

(c)           indemnifies each
Finance Party immediately on demand against any loss or liability suffered by
that Finance Party if any obligation or liability guaranteed by it is or
becomes unenforceable, invalid or illegal; the amount of the loss or liability
under this indemnity will be equal to the amount the Finance Party would
otherwise have been entitled to recover.

 

14.2        Continuing
guarantee

 

This guarantee is a continuing guarantee and
will extend to the ultimate balance of all sums payable, or any obligation or
liability to be performed, by any Borrower under the Finance

 

41

 

Documents, regardless of any intermediate
payment, performance or discharge in whole or in part.

 

14.3        Reinstatement

 

(a)           If any discharge
(whether in respect of the obligations of any Borrower or any security for
those obligations or otherwise) or arrangement is made in whole or in part on
the faith of any payment, security or other disposition which is avoided or
must be restored on insolvency, liquidation or otherwise without limitation,
the liability of the Guarantor under this Clause will continue as if the
discharge or arrangement had not occurred.

 

(b)           Each Finance Party may concede
or compromise any claim that any payment, security or other disposition is
liable to avoidance or restoration.

 

14.4        Waiver
of defences

 

The obligations of the Guarantor under this
Clause will not be affected by any act, omission or thing which, but for this
provision, would reduce, release or prejudice any of its obligations under this
Clause (whether or not known to it or any Finance Party). This includes:

 

(a)           any time or waiver
granted to, or composition with, any person;

 

(b)           any release of any
person under the terms of any composition or arrangement;

 

(c)           the taking,
variation, compromise, exchange, renewal or release of, or refusal or neglect
to perfect, take up or enforce, any rights against, or security over assets of,
any person;

 

(d)           any non-presentation
or non-observance of any formality or other requirement in respect of any
instrument or any failure to realise the full value of any security;

 

(e)           any incapacity or
lack of power, authority or legal personality of or dissolution or change in
the members or status of any person;

 

(f)            any amendment
(however fundamental) of a Finance Document or any other document or security;
or

 

(g)           any unenforceability,
illegality, invalidity or non-provability of any obligation of any person under
any Finance Document or any other document or security.

 

14.5        Immediate
recourse

 

The Guarantor waives any right it may have
of first requiring any Finance Party (or any trustee or agent on its behalf) to
proceed against or enforce any other right or security or claim payment from
any person before claiming from the Guarantor under this Clause.

 

14.6        Appropriations

 

Until all amounts which may be or become
payable by the Borrowers under the Finance Documents have been irrevocably paid
in full, each Finance Party (or any trustee or agent on its behalf) may without
affecting the liability of the Guarantor under this Clause:

 

(a)           refrain from applying
or enforcing any other moneys, security or rights held or received by that
Finance Party (or any trustee or agent on its behalf) in respect of those
amounts; or

 

42

 

(b)           apply and enforce
them in such manner and order as it sees fit (whether against those amounts or
otherwise); and

 

(c)           hold in an
interest-bearing suspense account any moneys received from the Guarantor or on
account of the Guarantor’s liability under this Clause.

 

14.7        Non-competition

 

Unless:

 

(a)           all amounts which may be
or become payable by the Borrowers under the Finance Documents have been
irrevocably paid in full; or

 

(b)           the Facility Agent
otherwise directs,

 

the Guarantor will not, after a claim has been
made or by virtue of any payment or performance by it under this Clause:

 

(i)            be subrogated to any
rights, security or moneys held, received or receivable by any Finance Party
(or any trustee or agent on its behalf);

 

(ii)           be entitled to any
right of contribution or indemnity in respect of any payment made or moneys
received on account of the Guarantor’s liability under this Clause;

 

(iii)          claim, rank, prove or
vote as a creditor of any Borrower or its estate in competition with any
Finance Party (or any trustee or agent on its behalf); or

 

(iv)          receive, claim or
have the benefit of any payment, distribution or security from or on account of
any Borrower, or exercise any right of set-off as against any Borrower.

 

The Guarantor must hold in trust for and immediately
pay or transfer to the Facility Agent for the Finance Parties any payment or
distribution or benefit of security received by it contrary to this Clause or
in accordance with any directions given by the Facility Agent under this
Clause.

 

14.8        Additional
security

 

This guarantee is in addition to and is not in
any way prejudiced by any other security now or subsequently held by any
Finance Party.

 

15.          REPRESENTATIONS

 

15.1        Representations

 

The representations set out in this Clause are
made, unless otherwise stated, by each of the Obligors to the Finance Parties.

 

15.2        Status

 

(a)           It is a limited
liability company, duly incorporated and validly existing under the laws of, in
the case of the Borrowers, the Republic of Cyprus and, in the case of the Guarantor,
Liberia.

 

(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.

 

43

 

(c)           Each of the Borrowers
is wholly owned by one of the Shareholders each of which are in turn wholly
owned by the Guarantor.

 

15.3        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.

 

15.4        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.

 

15.5        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.

 

15.6        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

 

(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.

 

15.7        Authorisations

 

Except for registration of the Mortgages at the
Cyprus Ships Registry, of 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.

 

15.8        Financial
statements

 

The audited financial statements of the
Obligors most recently delivered to the Facility Agent (which at the date of
this Agreement are the Original Financial Statements) together with any other
financial information supplied to the Facility Agent by the Obligors:

 

(a)           have been prepared in
accordance with accounting principles and practices generally accepted in its
jurisdiction of incorporation, consistently applied; and

 

44

 

(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.

 

15.9        No
material adverse change

 

There has been no material adverse change in
the business, condition (financial or otherwise) or operations of the Obligors,
or any 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 Facility Agent 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 Obligors it is given on the date of this Agreement and each
Utilisation Date only.

 

15.10      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 Obligors or
any of them, or any member of the Danaos Group. Insofar as this representation
relates to the members of the Danaos Group other than the Obligors it is given
on the date of this Agreement and each Utilisation Date only.

 

15.11      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.

 

15.12      Taxes
on payments

 

All amounts payable by it to the Facility Agent
under the Finance Documents and the Related Contracts may be made without
any Tax Deduction.

 

15.13      Stamp
duties

 

Except as notified in writing to and accepted
by the Facility Agent 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.

 

15.14      Environment

 

Except as may already have been disclosed
by a Borrower in writing to the Facility Agent:

 

(a)           each Borrower and its
Environmental Affiliates have without limitation complied with the provisions
of all applicable Environmental Laws in relation to each Vessel;

 

(b)           each Borrower and its
Environmental Affiliates have obtained all requisite Environmental Approvals in
relation to each Vessel and are in compliance with such Environmental
Approvals;

 

45

 

(c)           no Borrower nor any
of its 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.

 

15.15      Security
Interests

 

No Security Interest exists over its or any of
its Subsidiary’s assets which would cause a breach of Clause 17.5 (Security
Interests).

 

15.16      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.

 

15.17      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.

 

15.18      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.

 

15.19      No
amendments to Related Contracts

 

Other than as notified to and agreed by the
Facility Agent in writing, there have been no amendments to any of the Related
Contracts.

 

15.20      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.

 

15.21      Insolvency

 

(a)           No Obligor, 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.

 

46

 

(b)           No Obligor 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 Obligor, 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 Obligor or any member of the Danaos Group.

 

15.22      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.

 

15.23      No
adverse consequences

 

(a)           It is not necessary under the laws of its
jurisdiction of incorporation:

 

(i)            in order to enable
the Facility Agent 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,

 

that the Facility Agent should be licensed,
qualified or otherwise entitled to carry on business in its jurisdiction of
incorporation; and

 

(b)           The Facility Agent
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.

 

15.24      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.

 

47

 

15.25      Times
for making representations

 

(a)           The representations
set out in this Clause are made by each Obligor on the date of this Agreement.

 

(b)           Unless a
representation is expressed to be given at a specific date, each representation
given by each Obligor is deemed to be repeated by each Obligor 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 when the relevant Borrower and the Guarantor
shall provide to the Facility Agent an Annual Compliance Certificate.

 

(c)           When a representation
is repeated, it is applied to the circumstances existing at the time of
repetition.

 

16.          INFORMATION
COVENANTS

 

16.1        Financial
statements

 

(a)           Each Obligor must
supply to the Facility Agent in sufficient copies for all the Lenders:

 

(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
an Obligor is required by any Applicable Law to produce quarterly financial
statements, the quarterly financial statements for that Obligor as the case may be
for the first and third quarters of each of its financial years.

 

(b)           The Guarantor must
supply to the Facility Agent in sufficient copies for all the Lenders:

 

(i)            the audited
consolidated financial statements of the Danaos Group for each of the Danaos
Group’s financial years ending after the date hereof;

 

(ii)           the interim unaudited
consolidated financial statements of the Danaos Group for the first half year
of each of the Danaos Group’s financial; and

 

(iii)          if and to the extent
the Danaos Group is required by any Applicable Law to produce quarterly
consolidated financial statements, the quarterly consolidated financial
statements for the Danaos Group for the first and third quarters of each of its
financial years.

 

(c)           Each Borrower must
procure that the Charterer supplies to the Facility Agent its audited financial
statements for each of its financial years ending after the date hereof.

 

(d)           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 120 days; and

 

(iii)          in the case of
interim quarterly financial statements, within 60 days,

 

48

 

of the end of the relevant financial period.

 

16.2        Form of
financial statements

 

(a)           Each Obligor must
ensure that each set of financial statements supplied by it 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 Obligor must
notify the Facility Agent of any change to the basis on which the audited
financial statements supplied by it are prepared.

 

(c)           If requested by the
Facility Agent, each Obligor must supply or procure that the following are
supplied to the Facility Agent:

 

(i)            a full description of
any change notified under paragraph (b) above; and

 

(ii)           sufficient
information to enable the Facility Agent to make a proper comparison between
the financial position shown by the set of financial statements prepared on the
changed basis and the most recent audited consolidated financial statements
delivered by that Obligor to the Facility Agent under this Agreement.

 

(d)           If requested by the
Facility Agent, each Obligor 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 Facility Agent 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 Obligor 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.

 

16.3        Access
to Books and Records

 

Upon the request of the Facility Agent, each
Obligor shall provide the Facility Agent 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.

 

16.4        Information
- miscellaneous

 

Each Obligor must supply to the Facility Agent
in sufficient copies for all the Lenders:

 

(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, in sufficient copies for all the Lenders, regarding
the financial condition and operations of an Obligor as the Facility Agent may reasonably
request.

 

49

 

16.5        Notification
of Default

 

(a)           Unless the Facility
Agent has already been so notified, each Obligor must notify the Facility Agent
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 Facility Agent but not more often than once in each period of 12 months,
unless the Facility Agent, acting reasonably, believes an Event of Default has
occurred and is continuing (in which event the Facility Agent shall be entitled
to make such requests as and when it considers it appropriate to do so), each
Borrower must, and the Guarantor shall procure that each Borrower shall, supply
to the Facility Agent 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.

 

16.6        Year
end

 

The Obligors may not change their
financial year-end.

 

17.          GENERAL
COVENANTS

 

17.1        General

 

Each of the Obligors 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.

 

17.2        Authorisations

 

Each Obligor 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.

 

17.3        Compliance
with laws

 

Each Obligor 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.

 

17.4        Pari
passu ranking

 

Each Obligor 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.

 

17.5        Security
Interests

 

Each Borrower shall not (and the Guarantor
shall procure that each Borrower shall not), and the Obligors 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 Facility Agent (acting on the instructions of the
Majority Lenders).

 

50

 

17.6        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 unless (i) such assets are being replaced by that Borrower on a
like-for-like basis or are being sold by that Borrower on normal commercial
terms and on an arm’s length basis, and (iii) any such disposal is not, in
the reasonable opinion of the Majority Lenders, likely to have a Material
Adverse Effect.

 

(b)           Paragraph (a) does
not apply to any disposal made in the ordinary course of trading of the disposing
entity.

 

(c)           The Guarantor shall
not, without the prior written consent of the Facility Agent (acting on the
instructions of the Majority Lenders) 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 Shareholder or the whole
or, in the opinion of the Facility Agent, any substantial part of its
business, property, assets, whether by a single transaction or by a series of
transactions (related or not).

 

17.7        No
other business assets or Financial Indebtedness

 

No Borrower shall, and the Guarantor shall
procure that 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 (and the Guarantor shall
procure that no Borrower shall) own any asset other than any asset incidental
to the operation and chartering of the relevant Vessel, nor shall any Borrower
(and the Guarantor shall procure that no Borrower shall) 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.

 

17.8        Payment
of dividends

 

No Borrower shall, and the Guarantor shall
procure that 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:

 

(a)           its Retention Account
is fully funded in accordance with Clause 12.4; and

 

(b)           no Default has
occurred and is continuing.

 

17.9        Change
of business

 

(a)           Each Borrower must
(and the Guarantor shall procure that each Borrower shall) 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
(and the Guarantor shall procure that each Borrower shall) 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

 

51

 

result of which it would be deemed to have, a
place of business in any country other than the Republic of Cyprus.

 

(c)           The Guarantor shall
not, without the prior written consent of the Facility Agent (acting on the
instructions of the Majority Lenders), make any change in the nature of its
business which would, in the opinion of the Facility Agent, materially alter
the nature of its business from that existing at the date of this Agreement.

 

17.10      Mergers

 

None of the Obligors 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 Facility Agent.

 

17.11      Security

 

Each Borrower (and the Guarantor shall procure
that 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 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 any Finance Document with any court or
authority, pay any stamp, registration or similar tax payable in respect of any
Finance Document, give any notice or take any other step which, in the
reasonable opinion of the Facility Agent, 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.

 

17.12      Registration
of the Vessels

 

Each Borrower shall (and the Guarantor shall
procure that each Borrower shall) and 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 2 months
from the relevant Delivery Date, or such other flag of equivalent reputation as
is satisfactory to the Facility Agent (acting on the instructions of the
Majority Lenders) 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

 

(b)           not change the name
or port of registration of the Vessels without the prior written consent of the
Facility Agent (acting on the instructions of the Majority Lenders) (such
consent not to be unreasonably withheld).

 

52

 

17.13      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 third 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 19) shall be less than
the First Required Amount in respect of that Vessel, the Borrowers will (and
the Guarantor shall procure that the Borrowers will), within thirty days of the
request of the Facility Agent 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
Facility Agent such additional security as may be satisfactory to each of
the Lenders acting in good faith but otherwise in their absolute 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 of the Tranche A
Loan shall be payable. Any prepayment made in accordance with Clause 17.13(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 third year
after the Delivery Date of the first Vessel until the date falling on the last
day of the fifth year after the Delivery Date of the first Vessel, the market
value of either of the delivered Vessels (determined in accordance with Clause 19)
shall be less than the Second Required Amount in respect of that Vessel, the
Borrowers will (and the Guarantor shall procure that the Borrowers will),
within thirty days of the request of the Facility Agent 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 Facility Agent such additional security acceptable to each of
the Lenders acting in good faith but otherwise in their 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 of the Tranche A
Loan shall be payable. Any prepayment made in accordance with Clause 17.13(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 fifth 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 19) shall be less than the Third Required Amount in respect of that
Vessel , the Borrowers will (and the Guarantor shall procure that the Borrowers
will), within thirty days of the request of the Facility Agent 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 Facility Agent such additional security acceptable to each of
the Lenders acting in good faith but otherwise in their 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 of the Tranche A
Loan shall be payable Any such prepayment made in accordance with Clause
17.13(c)(i) shall be applied against the Repayment Instalments of that
Loan in the inverse order of their maturity.

 

17.14      Classification
and repair

 

Each Borrower will (and the Guarantor shall
procure that each Borrower will), and will procure that the Manager, the Owners
and the Bareboat Charterer will, at all times after the Delivery Date:

 

53

 

(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 100A1 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 Facility Agent
(acting on the instructions of the Majority Lenders)), 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 Facility Agent 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 Facility Agent (acting on the instructions of the
Majority Lenders)), (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 Facility Agent and furthermore provide confirmation to
the Facility Agent 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.

 

17.15      Lawful
and Safe Operation

 

Each Borrower will (and the Guarantor shall
procure that 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;

 

(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,

 

54

 

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 a 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.

 

17.16      Repair
of the Vessels

 

Each Borrower will not (and the Guarantor shall
procure that each of the Borrowers 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 Facility
Agent not to exercise any lien on that Vessel or Obligatory Insurances for the
cost of that work or otherwise.

 

17.17      Arrests
and Liabilities

 

Each Borrower will (and the Guarantor shall
procure that 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 Facility
Agent 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;

 

55

 

(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 the Vessel 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.

 

17.18      Related
Contracts

 

The Borrower shall not (and the Guarantor shall
procure that each Borrower shall not) and 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.

 

17.19      Environment

 

Each of the Borrower shall (and the Guarantor
shall procure that each Borrower 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 Facility Agent 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.

 

56

 

17.20      Information
regarding the Vessels

 

Each Borrower shall (and the Guarantor shall
procure that 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
Facility Agent 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
Facility Agent 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
Facility Agent of any intended dry docking of either of the Vessels;

 

(d)           promptly notify the
Facility Agent of any Environmental Claim being made in connection with either
of the Vessels or its operation;

 

(e)           promptly notify the
Facility Agent 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
Facility Agent 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 Facility
Agent from time to time on request such information, in sufficient copies for
all the Lenders, as the Facility Agent may reasonably require regarding
either of the Vessels, her employment, position and engagements;

 

(h)           provide the Facility
Agent with copies of the classification certificate of the Vessels and of all
periodic damage or survey reports on either of the Vessels which the Facility
Agent may reasonably request;

 

(i)            promptly furnish the
Facility Agent 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 Facility
Agent 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 Facility Agent 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 Facility Agent 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 Facility Agent
reasonably believes an Event of Default may have occurred, furnish to the
Facility Agent from time to time upon reasonable request certified copies of
the ship’s log in respect of either of the Vessels.

 

57

 

17.21                 Provision of further information

 

Each Obligor 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 Facility Agent, provide the Facility
Agent, with sufficient copies for all the Lenders, 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 Facility Agent may reasonably request.

 

17.22                 Management

 

Each Borrower shall (and the Guarantor shall
procure that each Borrower shall), and shall procure that the Manager, the
Owner 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 Facility Agent (acting
on the instructions of the Majority Lenders).

 

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 Facility Agent, 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 Facility Agent details of a
replacement manager, such manager to be satisfactory to the Facility Agent
(acting on the instructions of the Majority Lenders) .

 

17.23                 Proceeds from sale or Total Loss of a Vessel

 

(a)                                  Each
Borrower shall (and the Guarantor shall procure that 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
Facility Agent 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 Facility Agent.

 

17.24                 Charters

 

(a)                                  No
Borrower will (and the Guarantor shall procure that no Borrower will) 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 Facility Agent (acting on the instructions of the
Majority Lenders) such consent not to be unreasonably withheld other than the
AML Time 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;

 

58

 

(ii)                                  the
Facility Agent 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
Facility Agent 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 Facility Agent.

 

(c)                                  If so
required by the Facility Agent (acting in accordance with the instructions of
the Majority Lenders) 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 Facility Agent may require, all in accordance with the
provisions of Clause 32.1 of the AML Time Charters.

 

17.25                 Substitution of Charterer

 

(a)                                  At all
times during the Post-Delivery Period, the Borrowers shall (and the Guarantor
shall procure that each Borrower shall) advise the Facility Agent 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 20.6 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 20.7, 20.8 or 20.9 in respect of the Charterer.

 

Upon the occurrence of any such event the
Facility Agent shall be entitled (acting on the instructions of the Majority
Lenders) 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 17.25(a) or
otherwise, the relevant Borrower shall within 45 days of such termination:

 

(i)                                     propose by
written notice to the Facility Agent, 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 17.25 shall immediately cease and

 

59

 

the Facility Agent 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 17.25(b), each of the Lenders shall then be required to
undertake a credit review in good faith but in a manner which it considers
appropriate. The Lenders shall be entitled, as part of the credit review
process to ask for a valuation to be carried out in respect of the relevant
Vessel in accordance with Clause 19 (Valuation) except that the provisions of
Clause 19.1(b) shall not apply and the valuation shall be carried out
on both a with and without charter basis. Each of the Lender’s determination
pursuant to the credit review shall be made in the Lender’s absolute
discretion.

 

(d)                                 In order
to reach a conclusion that the credit of the substitute charterer is
acceptable, any Lender may require amendments to this Agreement . Any such
amendments required by any Lender shall apply in respect of all amounts
outstanding in respect of each Loan.

 

(e)                                  The
Facility Agent shall inform the Borrowers, once the Lenders have concluded
their credit review, of the result including details of any amendments required
to this Agreement which the Borrowers must comply with.

 

(f)                                    If the
result of the credit review is that one or more of the Tranche A Lenders does
not accept the credit of the substitute charterer, the Borrowers shall be
required, within a period of 60 days from the date of the Facility Agent’s
notification or immediately upon the occurrence of an Event of Default which is
continuing, to prepay all outstanding Tranche A Loans.

 

(g)                                 If the
result of the credit review is that one or more of the Tranche B Lenders does
not accept the credit of the substitute charterer, the Borrowers shall be
required, within a period of 60 days from the date of the Facility Agent’s
notification or immediately upon the occurrence of an Event of Default which is
continuing, prepay all outstanding Tranche B Loans.

 

(h)                                 If the
result of the credit review is that each of the Lenders is prepared to accept
the credit of the substitute charterer either with or without amendments to
this Agreement , the Borrowers shall within a period of 60 days from the date
of the Facility Agent’s notification or immediately upon the occurrence of an
Event of Default which is continuing, either:

 

(i)                                     comply
with the requirements of the Lenders’ credit review, if any; or

 

(ii)                                  prepay the
remaining outstanding Tranche A Loan or Tranche B Loan, or both, as applicable,
together with accrued interest and all other amounts accrued under the Finance
Documents in respect of that Loan, if the Borrowers do not accept the new
requirements, in the case of the Tranche A Loan, of any Tranche A Lender and,
in the case of the Tranche B Loan, of any Tranche B Lender.

 

(i)                                     In the
event that the relevant Borrower enters into a substitute charter in accordance
with Clause 17.25(c) or Clause 17.25(h), 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.

 

17.26                 Scope of Obligatory Insurances

 

Each Borrower will (and the Guarantor shall
procure that each Borrower will) and shall procure that the Owners or the
Bareboat Charterers will, in respect of each Vessel:

 

60

 

(a)                                  procure
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 that Vessel insured in the Required
Insurance Amount, in Dollars in the name of the relevant Owner and the Bareboat
Charterer or (if the Facility Agent so requires) in the joint names of the
relevant Owner, the Bareboat Charterer and the Facility Agent without the Facility
Agent being liable but having the right to pay premiums, through brokers
approved by the Facility Agent (acting on the instructions of the Majority
Lenders) against fire and usual marine risks (including hull and machinery and
Excess Risks) with approved underwriters or insurance companies approved by the
Facility Agent (acting on the instructions of the Majority Lenders) and by
policies in form and content approved by the Facility Agent (acting on the
instructions of the Majority Lenders);

 

(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 Facility Agent (acting on
the instructions of the Majority Lenders) and by policies in form and
content approved by the Facility Agent (acting on the instructions of the
Majority Lenders); 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;

 

(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 Facility Agent 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,

 

61

 

provided that, if either 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 Facility Agent (acting on the instructions
of the Majority Lenders) in form and content approved by the Facility
Agent (acting on the instructions of the Majority Lenders); and

 

(f)                                    at all
times after the Delivery Date, whenever either Vessel is trading to Japanese
territorial waters and when so required by the Facility Agent (acting on the
instructions of the Majority Lenders), maintain in full force and effect social
responsibility insurance in respect of the Vessel with underwriters or
insurance companies approved by the Facility Agent (acting on the instructions
of the Majority Lenders) and by policies in form and content approved by
the Facility Agent (acting on the instructions of the Majority Lenders),
provided always that a first class owner or operator of vessels such as
the Vessels would maintain such social responsibility insurance.

 

17.27                 Mortgagee’s interest and additional perils insurances

 

The Facility Agent 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 Facility Agent (acting on the instructions of the Majority
Lenders) may from time to time consider appropriate:

 

(a)                                  a
mortgagee’s interest marine insurance providing for the indemnification of the
Finance Parties 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 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 Manager or the Bareboat Charterer
or a Borrower, of any other operator or manager of any Vessel or of any
officer, employee or agent of an Owner or the Manager 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 Manager 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 Manager 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;

 

62

 

(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 Finance Parties 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 (and the Guarantor
shall procure that each Borrower shall) upon demand fully indemnify the
Facility Agent 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.

 

17.28                 Obligatory Insurances

 

Without prejudice to its obligations under
Clause 17.26 (Scope of Obligatory Insurances), each Borrower will (and the
Guarantor shall procure that each Borrower will) or procure that the Manager or
the Bareboat Charterer will:

 

(a)                                  not
without the prior consent of the Facility Agent (acting on the instructions of
the Majority Lenders) 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 Facility Agent (acting on the instructions of the Majority
Lenders) in Dollars or another approved currency with the 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;

 

(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 Facility Agent as and when each renewal is effected;

 

(e)                                  forthwith
upon the effecting of any Obligatory Insurance, give written notice of the
insurance to the Facility Agent 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 Facility Agent (acting on the instructions of the Majority Lenders)
is satisfied that such release, settlement compromise or abandonment will not
prejudice the interests of the Finance Parties 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;

 

63

 

(h)                                 procure
that the interest of the Facility Agent 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 17.29 (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 Facility Agent (acting in
accordance with the instructions of the Majority Lenders); 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 Facility Agent and until paid over such moneys shall be held in trust
for the Facility Agent by a Borrower, the Owner or the Bareboat Charterer, as
the case may be.

 

17.29                 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 Facility Agent and the Facility Agent
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 Facility Agent; and

 

(ii)           the insurance moneys
received by the Facility Agent in respect of any such major casualty shall be
paid:

 

(A)          to the person to whom
the relevant liability shall have been incurred; or

 

(B)           upon a Borrower
furnishing evidence satisfactory to the Facility Agent 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 Facility Agent, 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 Facility Agent.

 

(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.

 

64

 

(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
relevant provisions of the relevant Intercreditor Deed and thereafter in
accordance with Clause 12.

 

(f)            Notwithstanding any
other provision in this Clause 17.29, all sums receivable in respect of
Obligatory Insurances relating to a Total Loss shall be applied in accordance
with Clause 13.7 (Payments).

 

17.30      Power
of Facility Agent 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
Facility Agent (acting on the instructions of the Majority Lenders) 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 Facility Agent for the costs of so doing.

 

17.31      ISM
Code

 

Each Borrower shall (and the Guarantor will
procure that 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

 

(iii)          there is a valid
Document of Compliance for the Vessel, which is held on board the Vessel,

 

and shall deliver to the Facility Agent, 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
Facility Agent 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
Facility Agent 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 Facility Agent of the occurrence of any
accident or major non-conformity requiring action under the ISM Code.

 

65

 

17.32      No
amendment to Related Contracts

 

The Borrower shall not (and the Guarantor shall
procure that neither Borrower shall), 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 Facility Agent (acting in accordance
with the instructions of the Majority Lenders), subject always to the
provisions of clause 8.2 of the Multipartite Deed.

 

17.33      ISPS
Code

 

Each Borrower shall (and the Guarantor will
procure that each Borrower 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 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.

 

17.34      Financial
Covenants of the Guarantor

 

The Guarantor shall promptly notify in writing
the Facility Agent of the entry into by the Guarantor of any Bank Credit
Agreement (as such term is defined in Clause 18.2 below) which is entered into
on or after the date of this Agreement.

 

18.          FINANCIAL
COVENANTS OF THE GUARANTOR

 

18.1        Undertakings

 

The Guarantor undertakes that:

 

(a)           Net Worth will not be
less than US$100,000,000;

 

(b)           the ratio of Tangible
Fixed Assets to Net Consolidated Indebtedness will not be less than 1.45:1;

 

(c)           the ratio of Outstanding
Bank Debt to Ship Values will not be more than 0.75:1;

 

(d)           Net Worth will always
exceed 30% of Total Assets;

 

(e)           the Liquid Funds of
the Danaos Group would not be less than US$20,000,000; and

 

66

 

(f)            the ratio of EBITDA
to Net Interest Expenses would be at least 2.5:1 on a Pro Forma Basis for the
period immediately preceding the date thereof for which Financial Statements
are available.

 

18.2        Definitions

 

The calculation of ratios and percentages in
Clauses 18.1 and 18.2 shall be determined on a consolidated basis, in
accordance with the Applicable Accounting Principles and by reference to the
financial statements (the Financial
Statements) of the Danaos Group, which shall be the later of (i) the
audited combined financial statements of the Danaos Group for the period ending
31 December 2002 or (ii) the last set of annual audited consolidated
financial statements of the Guarantor, but so that:

 

Applicable Accounting
Principles means those accounting principles, standards and
practices on which the preparation of the audited combined financial statements
of the Danaos Group for the period ending 31st December, 2002 were based or
such other generally accepted accounting principles, standards and practices
adopted by the Guarantor after the date hereof and notified to the Facility
Agent (acting on the instructions of the Majority Lenders).

 

Bank Credit Agreement means any
bank credit agreement or similar facility entered into by a member of the
Danaos Group whether on, before or after the date of this Agreement.

 

Consolidated Indebtedness means, in
respect of the relevant period, the aggregate amount of Financial Indebtedness
(including current maturities) due by the members of the Danaos Group (other
than any such Financial Indebtedness owing by any member of the Danaos Group to
another member of the Danaos Group).

 

Current Assets means, in
respect of the relevant period, the aggregate amount of cash and cash
equivalents, receivables due to any member of the Danaos Group by a person who
is not a member of the Danaos Group with a maturity of less than one year and
inventories.

 

EBITDA means, in
respect of the relevant period, the aggregate amount of consolidated pre-tax
profits of the Danaos Group before extraordinary or exceptional items,
depreciation, interest, repayment of capital as rental under finance leases and
similar charges payable.

 

Liquid Funds means, in
respect of the relevant period, the aggregate of:

 

(i)            cash in hand or held
with banks or other financial institutions which is free of any Security
Interest; and

 

(ii)           any other short-term
financial investment which is free of any Security Interest.

 

Net Consolidated Indebtedness means, in
respect of the relevant period, Consolidated Indebtedness less Liquid Funds;

 

Net Interest Expenses means, in
respect of the relevant period:

 

(i)            the aggregate on a
consolidated basis of all interest incurred by any member of the Danaos Group
(excluding any amounts owing by one member of the Danaos Group to another
member of the Danaos Group)

 

less

 

67

 

(ii)           the aggregate of
interest receivable by any member of the Danaos Group on Liquid Funds,

 

in each case accrued (and whether or not
actually paid) during such period.

 

Net Worth means, in
respect of the relevant period, the aggregate of:

 

(i)            the amount paid up or
credited as paid up on the issued share capital of the Guarantor (other than
any redeemable share capital);

 

(ii)           the amount standing
to the credit of the consolidated capital and revenue reserves of the Danaos
Group; and

 

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

 

but adjusted by:

 

(i)            deducting any amount attributable to good will
or any other intangible asset; and

 

(ii)           reflecting any
variation in the interest of the Guarantor in any other member of the Danaos
Group since the date of the latest balance sheet.

 

Outstanding Bank Debt 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 investment of an equivalent liquidity and
risk-free nature as cash over which, in each case, a Bank Credit Agreement has
created a Security Interest.

 

Pro Forma Basis means,
for the purposes of Clause 18.1(f), giving pro forma effect to:

 

(i)            any acquisition or
sale of a person, business or asset and any related incurrence, repayment or
refinancing of a Financial Indebtedness or other related transactions, which
would otherwise be accounted for under the Applicable Accounting Principles; or

 

(ii)           any incurrence,
repayment or refinancing of any Financial Indebtedness and the application of
the proceeds therefrom,

 

as if the same was realised on the first day of
the immediately preceding period for which Financial Statements are available,
in accordance with the Applicable Accounting Principles.

 

For the purposes of this definition:

 

(a)           in the case of the
acquisition of a Ship by a member of the Danaos Group pursuant to a memorandum
of agreement (or similar agreement) or the delivery of a Ship to a member of
the Danaos Group pursuant to a shipbuilding contract during the relevant
period, if historical earnings (losses) of such Ship are not available to the
Guarantor, the Guarantor shall give pro forma effect to the earnings (losses)
of such Ship as if such Ship was acquired on the first day of the immediately
preceding period for which Financial Statements are available by basing such
earnings (losses) on:

 

(i)            the revenues to be
earned from any binding charter, lease or like arrangement which will be
applicable to any such Ship less a good faith estimate of the

 

68

 

operating costs of such Ship
(including, without limitation, management fees); or

 

(ii)           with respect to any
such Ship not subject to such arrangement, the earnings (losses) for the
applicable period of the most comparable Ship of any member of the Danaos Group
(as determined in the reasonable judgment of a responsible financial officer of
the Guarantor) or, in the absence of a comparable Ship, based on industry
average earnings (losses) for comparable vessels (as determined in the
reasonable judgment of a responsible financial officer of the Guarantor); and

 

(b)           in the case of an
acquisition of a person, business or asset, the Guarantor shall give pro forma
effect to the amount of income or earnings relating thereto, and the amount of
Net Interest Expenses associated with any Financial Indebtedness issued in
connection therewith (as determined in the reasonable judgment of a responsible
financial officer of the Guarantor).

 

Ship and Ships means the vessels owned by and
registered (or to be owned by and registered) in the name of the Guarantor or
any of its Subsidiaries or operated by the Guarantor or any of its Subsidiaries
pursuant to a lease or other operating agreement constituting a capital lease
obligation, in each case with all related equipment and any additions or improvements.

 

Ship Values means, in
respect of the relevant period, the aggregate book value of the Ships (which
shall consist of the contract price for each Ship, all material expense
incurred in the acquisition (including the costs of financing) and subsequent expenditures
which appreciably extend the life, increase the earning capacity or improve the
efficiency or safety of the Ship, less depreciation computed in accordance with
the Applicable Accounting Principles).

 

Tangible Fixed Assets means, in respect of the relevant
period, the aggregate of the Ship Values and the value on a consolidated basis
of all other tangible fixed assets of the Danaos Group (less depreciation
computed in accordance with the Applicable Accounting Principles).

 

Total Assets means the
aggregate of Current Assets and Tangible Fixed Assets.

 

19.          VALUATION

 

19.1        Valuation

 

For the purposes of this Clause 19:

 

(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 Facility Agent
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 charter-free basis; 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 Facility Agent to secure the
Secured Liabilities).

 

69

 

19.2        Delivery
of valuations

 

(a)           In respect of a
Vessel, the Borrower will from the Delivery Date of such Vessel procure in
favour of the Facility Agent one valuation per annum from two of the Approved
Valuers prepared in accordance with Clause 19.1 (Valuation).

 

(b)           The Borrowers will
procure in favour of the Facility Agent 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
19.2(e) below, all valuations shall be at the expense of the relevant
Borrower.

 

(d)           The Facility Agent shall
be entitled to require that the relevant Borrower provide 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 that Vessel does not reach the
relevant Required Amount as required under Clause 17.13 (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 Facility Agent pursuant to Clause 19.2(d) does
show that the value of that Vessel reaches the relevant Required Amount as
required under Clause 17.13 (a), (b) or, as the case may be, (c),
such valuation shall be at the expense of the Facility Agent.

 

(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 either Vessel (one from each of the
Approved Valuers) under Clause 19.2(a) in any one calendar year.

 

(g)           Any valuation under
this Clause 19 shall be binding and conclusive (save for manifest error).

 

20.          DEFAULT

 

20.1        Events
of Default

 

Each of the events set out in this Clause is an
Event of Default.

 

20.2        Non-payment

 

An Obligor 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.

 

20.3        Breach
of other obligations

 

(a)           An Obligor does not
comply with any term of Clause 17 (General Covenants) unless the non-compliance;

 

(i)            is capable of remedy;
and

 

(ii)           is remedied within 14
days of the earlier of the Facility Agent giving notice and the Obligor
becoming aware of the non-compliance.

 

70

 

The Obligor 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 17.11(a) and
17.11(b) (Security), but in respect of sub-paragraph (b) only insofar
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;

 

(ii)           Clause 17.12(a) (Registration
of the Vessels); and

 

(iii)          Clause 17.26(b), (c) and
(d) (Scope of Obligatory Insurances).

 

(b)           Subject to paragraph (c) below,
any Party (other than a Finance Party) 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 Facility Agent (acting on the instructions of the
Majority Lenders) 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 Facility Agent giving notice and the relevant Party
becoming aware of the non-compliance.

 

(c)           Any Party (other than
a Finance Party) does not comply with any other term of the Vessel Management
Agreements or the Bareboat Charter which the Facility Agent (acting on the
instructions of the Majority Lenders) 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 Facility Agent giving notice and the relevant Party
becoming aware of the non-compliance.

 

provided always that (i) in the opinion of
the Facility Agent, any delay in the enforcement by the Facility Agent of its
rights and privileges is not likely to adversely affect the rights of the
Lenders 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.

 

20.4        Breach
by Guarantor of its financial covenants

 

The Guarantor does not comply with any term of
Clause 18 (Financial Covenants of the Guarantor).

 

20.5        Misrepresentation

 

A representation made or repeated by an Obligor
(or by any other Party other than a Finance Party) in any Finance Document or
in any document delivered by or on behalf of any Obligor under any Finance
Document is incorrect in any respect which the Facility Agent (acting on

 

71

 

the instructions of the Majority Lenders)
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 Facility Agent giving notice and the
relevant Party becoming aware of the misrepresentation.

 

20.6        Cross-default

 

Any of the following occurs in respect of an
Obligor, 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 the Guarantor or any other member of the Danaos
Group).

 

20.7        Insolvency

 

Any of the following occurs in respect of an
Obligor 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 any
Obligor or any other member of the Danaos Group, the ending of the moratorium
will not remedy any Event of Default caused by the moratorium.

 

72

 

20.8        Insolvency
proceedings

 

(a)           Except as provided
below, any of the following occurs in respect of an Obligor 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) or 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.

 

(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.

 

20.9        Creditors’
process

 

Any attachment, sequestration, distress,
execution or analogous event affects any asset(s) of an Obligor, 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 the Guarantor or any other member of the
Danaos Group), and is not discharged within fourteen days.

 

20.10      Cessation
of business

 

An Obligor 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.

 

20.11      Failure
to pay final judgment

 

An Obligor 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.

 

73

 

20.12      Effectiveness
of Finance Documents

 

(a)           It is or becomes
unlawful for any Obligor or any other Party (other than a Finance Party) to perform any
of its obligations under the Finance Documents which the Facility Agent (acting
on the instructions of the Majority Lenders) considers material.

 

(b)           Any Finance Document
is not effective or is alleged by the relevant Obligor to be ineffective for
any reason.

 

(c)           Any Finance Document
is not effective or is alleged by any Party (other than a Finance Party) to be
ineffective for any reason and in any respect which the Facility Agent (acting
on the instructions of the Majority Lenders) considers to be material.

 

(d)           An Obligor repudiates
a Finance Document or evidences an intention to repudiate a Finance Document.

 

(e)           Any Party (other than
a Finance Party) repudiates any material provision of a Finance Document or
evidences an intention to repudiate any material provision of a Finance
Document.

 

20.13      Material
adverse change

 

Any event or series of events occurs in
respect of an Obligor which, in the reasonable opinion of the Majority Lenders,
is likely to have a Material Adverse Effect.

 

20.14      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 Facility Agent ceases to provide a perfected first priority security
interest in favour of the Facility Agent.

 

20.15      Acceleration

 

If an Event of Default is outstanding, the
Facility Agent may (and if the Majority Lenders so instruct it, shall), 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 Facility Agent.

 

Any notice given under this Subclause will take
effect in accordance with its terms.

 

21.          SECURITY

 

21.1        Facility
Agent as trustee

 

Unless expressly provided to the contrary herein
or in any Finance Document and except as otherwise required by Applicable Law,
the Facility Agent holds any security created by a Security Document on trust
for the Finance Parties.

 

74

 

21.2        Responsibility

 

The Facility Agent is not liable or responsible
to any other Finance Party for:

 

(a)           any failure in
perfecting or protecting the security created by any Security Document;

 

(b)           any other action
taken or not taken by it in connection with any Security Document,

 

unless directly caused by its gross negligence
or wilful misconduct.

 

21.3        Title

 

The Facility Agent may accept, without
enquiry, the title (if any) a Borrower may have to any asset over which
security is intended to be created by any Security Document.

 

21.4        Possession
of documents

 

The Facility Agent is not obliged to hold in
its own possession any Security Document, title deed or other document in
connection with any asset over which security is intended to be created by a
Security Document.

 

21.5        Investments

 

Except as otherwise provided in any Security
Document, all moneys received by the Facility Agent under a Security Document may be
invested in the name of, or under the control of, the Facility Agent in any
investments selected by the Facility Agent (acting on the instructions of the
Majority Lenders). Additionally, those moneys may be placed on deposit in
the name of, or under the control of, the Facility Agent at any bank or
institution (including itself) and upon such terms as it may think fit
(acting on the instructions of the Majority Lenders).

 

21.6        Approval

 

Each Finance Party confirms its approval of
each Security Document.

 

21.7        Release
of security

 

(a)           If a disposal of any
asset subject to security created by a Security Document is made to a person
(which is and will remain) outside the Danaos Group in the following
circumstances:

 

(i)            the disposal is
allowed by the terms of the Finance Documents and will not result or could not
reasonably be expected to result in any breach of any term of any Finance
Document;

 

(ii)           the disposal is being
made at the request of the Facility Agent in circumstances where any security
created by the Security Documents has become enforceable; or

 

(iii)          the disposal is being
effected by enforcement of a Security Document,

 

and, in any such case the Facility Agent is
satisfied that, the relevant Loan will be prepaid in full in accordance with
Clause 6.4(a)(i) at the time of the disposal, the asset being disposed of
will be released from any security over it created by a Security Document.
However, the proceeds of any disposal (or an amount corresponding to them) must
be applied in accordance with the requirements of the Finance Documents (if
any).

 

75

 

(b)           If the Facility Agent
is satisfied that a release is allowed under this Subclause, the Facility Agent
must execute (at the request and expense of the relevant Borrower) any document
which is reasonably required to achieve that release. Each other Finance Party
irrevocably authorises the Facility Agent to execute any such document.

 

21.8        Co-security
Agent

 

(a)           The Facility Agent may appoint
a separate security agent or a co-security agent in any jurisdiction outside
the United States of America:

 

(i)            if the Facility Agent
considers that without the appointment the interests of the Lenders under the
Finance Documents might be materially and adversely affected;

 

(ii)           for the purpose of
complying with any law, regulation or other condition in any jurisdiction; or

 

(iii)          for the purpose of
obtaining or enforcing a judgment or enforcing any Finance Document in any
jurisdiction.

 

(b)           Any appointment under
this Subclause will only be effective if the security agent or co-security
agent confirms to the Facility Agent and the Borrowers in form and
substance satisfactory to the Facility Agent that it is bound by the terms of
this Agreement as if it were the Facility Agent.

 

(c)           The Facility Agent may remove
any security agent or co-security agent appointed by it and may appoint a
new security agent or co-security agent in its place.

 

(d)           The Borrowers must
pay to the Facility Agent any reasonable remuneration paid by the Facility
Agent to any security agent or co-security agent appointed by it, together with
any related costs and expenses properly incurred by the security agent or
co-security agent.

 

21.9        Parallel
Debt

 

Each Obligor hereby irrevocably and
unconditionally undertakes to pay to the Facility Agent amounts equal to any
amounts owing by such Obligor (whether owed as borrower of a facility or as
joint and several obligor) to the relevant Finance Parties under the Finance
Documents as and when the same fall due for payment thereunder, so that the
Facility Agent shall be the obligee of such covenant to pay and shall be
entitled to claim performance thereof in its own name and not as agent acting
on behalf of the relevant Finance Parties. The Obligors and the Facility Agent
acknowledge that for this purpose such obligations of the Obligors are several
and are separate and independent from, and without prejudice to, the identical
obligations which the Obligors have to the Finance Parties under the relevant
Finance Documents, provided that this shall not, at the same time, result in
any Obligor incurring an aggregate obligation to any such Finance Parties under
the Finance Documents. To this end and without prejudice to the foregoing, it
is agreed that (i) the amounts due and payable by any Obligor under this
Clause 21.9 (the Parallel Debt)
shall be decreased to the extent that such Obligor paid any amounts to the
Finance Parties or any of them in respect of the Secured Liabilities and vice
versa and (ii) the Parallel Debt shall not exceed the aggregate of the
corresponding obligations which any Obligor has to the Finance Parties under
the Finance Documents.

 

Nothing in this Clause shall in any way negate,
affect or increase the obligations of any Obligor to any Finance Parties under
the Finance Documents in respect of the Secured Liabilities. For the purpose of
this Clause the Facility Agent acts in its own name and on behalf of itself and
not as agent or representative of any other party hereto and any security

 

76

 

granted to the Facility Agent to secure the
Parallel Debt is granted to the Facility Agent in its capacity as creditor of
the Parallel Debt and solely for the purpose referred to above.

 

21.10      Dutch
Security

 

The Facility Agent shall obtain any Security
Interest provided under or pursuant to a Security Document governed by Dutch
law (the Dutch Security) in its
own name.

 

The Facility Agent shall have full and
unrestricted entitlement to and authority in respect of the Dutch Security,
provided that it shall be under an obligation to exercise such rights (and perform such
obligations) in accordance with the contractual undertakings set out in any
Finance Document.

 

22.          THE
ADMINISTRATIVE PARTIES

 

22.1        Appointment
and duties of the Facility Agent

 

(a)           Save as provided in
Clause 21.10, each Finance Party (other than the Facility Agent) irrevocably
appoints the Facility Agent to act as its agent under the Finance Documents.

 

(b)           Each Finance Party
irrevocably authorises the Facility Agent to:

 

(i)            perform the
duties and to exercise the rights, powers and discretions that are specifically
given to it under the Finance Documents, together with any other incidental
rights, powers and discretions; and

 

(ii)           execute each Finance
Document expressed to be executed by the Facility Agent.

 

(c)           The Facility Agent
has only those duties which are expressly specified in the Finance Documents.
Those duties are solely of a mechanical and administrative nature.

 

22.2        Role
of the Arrangers

 

Except as specifically provided in the Finance
Documents, the Arrangers in their capacity as Arrangers have no obligations of
any kind to any other Party in connection with any Finance Document.

 

22.3        No
fiduciary duties

 

Except as specifically provided in a Finance
Document, nothing in the Finance Documents makes an Administrative Party a
trustee or fiduciary for any other Party or any other person. No Administrative
Party need hold in trust any moneys paid to it for a Party or be liable to
account for interest on those moneys.

 

22.4        Individual
position of an Administrative Party

 

(a)           If it is also a
Lender, each Administrative Party has the same rights and powers under the
Finance Documents as any other Lender and may exercise those rights and
powers as though it were not an Administrative Party.

 

(b)           Each Administrative
Party may:

 

(i)            carry on any business
with any Obligor or its related entities (including acting as an agent or a
trustee for any other financing); and

 

77

 

(ii)           retain any profits or
remuneration it receives under the Finance Documents or in relation to any
other business it carries on with any Obligor or its related entities.

 

22.5        Reliance

 

The Facility Agent may:

 

(a)           rely on any notice or
document believed by it to be genuine and correct and to have been signed by,
or with the authority of, the proper person;

 

(b)           rely on any statement
made by any person regarding any matters which may reasonably be assumed
to be within his knowledge or within his power to verify;

 

(c)           engage, pay for and
rely on professional advisers selected by it; and

 

(d)           act under the Finance
Documents through its personnel and agents.

 

22.6        Majority
Lenders’ instructions

 

(a)           The Facility Agent is
fully protected if it acts on the instructions of the Majority Lenders in the
exercise of any right, power or discretion or any matter not expressly provided
for in the Finance Documents. Any such instructions given by the Majority
Lenders will be binding on all the Lenders. In the absence of instructions,
then unless the Finance Documents expressly provide that the Facility Agent
acts on the instructions of the Majority Lenders in exercising the relevant
right, power or discretion, the Facility Agent may act as it considers to
be in the best interests of all the Lenders.

 

(b)           Each Lender
acknowledges and confirms it shall act in a reasonable manner when reaching any
decision as to the exercise or non-exercise of any right, power or discretion
by the Facility Agent.

 

(c)           The Facility Agent may assume
that unless it has received notice to the contrary, any right, power, authority
or discretion vested in any Party or the Majority Lenders has not been
exercised.

 

(d)           The Facility Agent is
not authorised to act on behalf of a Lender (without first obtaining that
Lender’s consent) in any legal or arbitration proceedings in connection with
any Finance Document.

 

(e)           The Facility Agent may require
the receipt of security satisfactory to it, whether by way of payment in
advance or otherwise, against any liability or loss which it may incur in
complying with the instructions of the Majority Lenders.

 

22.7        Responsibility

 

(a)           No Administrative
Party is responsible to any other Finance Party for the adequacy, accuracy or
completeness of:

 

(i)            any Finance Document
or any other document; or

 

(ii)           any statement or
information (whether written or oral) made in or supplied in connection with
any Finance Document.

 

(b)           Without affecting the
responsibility of any Obligor for information supplied by it or on its behalf
in connection with any Finance Document, each Lender confirms that it:

 

78

 

(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 Obligor and its related entities and the nature and extent of
any recourse against any Party or its assets); and

 

(ii)           has not relied
exclusively on any information provided to it by any Administrative Party in
connection with any Finance Document.

 

22.8        Exclusion
of liability

 

(a)           The Facility Agent is
not liable or responsible to any other Finance Party for any action taken or
not taken by it in connection with any Finance Document, unless directly caused
by its gross negligence or wilful misconduct.

 

(b)           No Party (other than
the Facility Agent) may take any proceedings against any officer, employee
or agent of the Facility Agent in respect of any claim it might have against
the Facility Agent or in respect of any act or omission of any kind by that
officer, employee or agent in connection with any Finance Document. Any
officer, employee or agent of the Facility Agent may rely on this
Subclause and enforce its terms under the Contracts (Rights of Third Parties)
Act 1999.

 

22.9        Default

 

(a)           The Facility Agent is
not obliged to monitor or enquire whether a Default has occurred. The Facility
Agent is not deemed to have knowledge of the occurrence of a Default.

 

(b)           If the Facility
Agent:

 

(i)            receives notice from
a Party referring to this Agreement, describing a Default and stating that the
event is a Default; or

 

(ii)           is aware of the
non-payment of any principal or interest or any fee payable to a Lender under
this Agreement,

 

it must promptly notify the Lenders.

 

22.10      Information

 

(a)           The Facility Agent
must promptly forward to the person concerned the original or a copy of any
document which is delivered to the Facility Agent by a Party for that person.

 

(b)           Except where a
Finance Document specifically provides otherwise, the Facility Agent is not
obliged to review or check the adequacy, accuracy or completeness of any
document it forwards to another Party.

 

(c)           Except as provided
above, the Facility Agent has no duty:

 

(i)            either initially or
on a continuing basis to provide any Lender with any credit or other
information concerning the risks arising under or in connection with the
Finance Documents (including any information relating to the financial
condition or affairs of any Obligor or its related entities or the nature or
extent of recourse against any Party or its assets) whether coming into its
possession before, on or after the date of this Agreement; or

 

79

 

(ii)           unless specifically
requested to do so by a Lender in accordance with a Finance Document, to
request any certificate or other document from any Obligor.

 

(d)           In acting as the
Facility Agent, the agency division of the Facility Agent is treated as a
separate entity from its other divisions and departments. Any information
acquired by the Facility Agent which, in its opinion, is acquired by it
otherwise than in its capacity as the Facility Agent may be treated as
confidential by the Facility Agent and will not be treated as information
possessed by the Facility Agent in its capacity as such.

 

(e)           Each Obligor
irrevocably authorises the Facility Agent to disclose to the other Finance
Parties any information which is received by it in its capacity as the Facility
Agent.

 

22.11      Indemnities

 

(a)           Without limiting the
liability of any Obligor under the Finance Documents, each Lender must
indemnify the Facility Agent for that Lender’s Pro Rata Share of any loss or
liability incurred by the Facility Agent in acting as the Facility Agent,
except to the extent that the loss or liability is caused by the Facility Agent’s
gross negligence or wilful misconduct.

 

(b)           The Facility Agent may deduct
from any amount received by it for a Lender any amount due to the Facility
Agent from that Lender under a Finance Document but unpaid.

 

22.12      Compliance

 

Each Administrative Party may refrain from
doing anything (including disclosing any information) which might, based on the
reasonable opinion of its legal counsel, constitute a breach of any law or
regulation or be otherwise actionable at the suit of any person, and may do
anything which, in its opinion, is necessary or desirable to comply with any
law or regulation.

 

22.13      Resignation
of the Facility Agent

 

(a)           The Facility Agent may resign
by giving written notice to the Lenders and the Obligors, in which case the
Majority Lenders shall appoint a successor facility agent of which the Obligors
approve, such approval not to be unreasonably withheld or delayed.

 

(b)           If no successor
Facility Agent has been appointed under paragraph (a) above within 30 days
after notice of resignation was given, the Facility Agent may appoint a
successor Facility Agent.

 

(c)           The resignation of
the Facility Agent and the appointment of any successor facility agent will
both become effective only when the successor facility agent notifies all the
Parties that it accepts its appointment. On giving the notification, the
successor facility agent will succeed to the position of the Facility Agent and
the term Facility Agent will mean
the successor facility agent.

 

(d)           The retiring Facility
Agent must, at its own cost, make available to the successor Facility Agent
such documents and records and provide such assistance as the successor
Facility Agent may reasonably request for the purposes of performing its
functions as the Facility Agent under the Finance Documents.

 

(e)           Upon its resignation
becoming effective, this Clause will continue to benefit the retiring Facility
Agent in respect of any action taken or not taken by it in connection with the
Finance

 

80

 

Documents while it was the Facility Agent, and,
subject to paragraph (d) above, it will have no further obligations in its
capacity as Facility Agent under any Finance Document.

 

(f)                                    The
Majority Lenders may, by notice to the Facility Agent, require it to resign
under paragraph (a) above.

 

22.14                 Relationship with Lenders

 

(a)                                  The
Facility Agent may treat each Lender as a Lender, entitled to payments
under this Agreement and as acting through its Facility Office(s) until it has
received not less than five Business Days’ prior notice from that Lender to the
contrary.

 

(b)                                 The
Facility Agent may at any time, and must if requested to do so by the
Majority Lenders, convene a meeting of the Lenders.

 

(c)                                  The
Facility Agent must keep a register of all the Parties and supply any other
Party with a copy of the register on request. The register will include each
Lender’s Facility Office(s) and contact details for the purposes of this
Agreement.

 

22.15                 Notice period

 

Where this Agreement specifies a minimum period
of notice to be given to the Facility Agent, the Facility Agent may, at its
discretion, accept a shorter notice period.

 

23.                               EVIDENCE AND CALCULATIONS

 

23.1                        Accounts

 

Accounts maintained by the Facility Agent 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.

 

23.2                        Certificates and determinations

 

Any certification or determination by the
Facility Agent 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.

 

23.3                        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 Facility Agent determines is market practice.

 

24.                               FEES

 

24.1                        Exposure fee

 

(a)                                  Each
Borrower must pay to the Facility Agent an exposure fee calculated at the rate
of 0.27 per cent. per annum in respect of all amounts drawn under each Tranche
A Loan.

 

(b)                                 The
Exposure Fee in respect of each Tranche A Loan shall accrue from the first
Drawing under that Tranche A Loan and shall be payable as part of the
interest payment in accordance with Clause 7.

 

81

 

24.2        Commitment
fee

 

(a)           Each Borrower must
pay to the Facility Agent for and on behalf of the Lenders a commitment fee
calculated at the rate of:

 

(i)            0.30% per annum on
the undrawn, uncancelled amount of each Maximum Available Tranche A Loan
Amount; and

 

(ii)           0.50% per annum on
the undrawn uncancelled amount of each Maximum Available Tranche B Loan Amount.

 

The commitment fee shall (i) in the case
of the Tranche A Loan Amount, accrue from the earlier of (A) the date
falling 60 days after the date of this Agreement, and (B) the date of the
first Drawing under the relevant Loan, and (ii) in the case of the Tranche
B Loan Amount, accrue from the date of this Agreement.

 

(b)           Accrued commitment
fee is payable semi-annually 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 Facility Agent for a Lender on the date that Lender’s
Commitment is cancelled in full.

 

24.3        Management
fee

 

The Borrowers must pay to the Facility Agent
for KEXIM a management fee in the manner agreed in the Fee Letter between the
Facility Agent and the Borrowers.

 

24.4        Arranger’s
fee

 

The Borrowers must pay to the Facility Agent an
Arranger’s fee in the manner agreed in the Fee Letter between the Facility
Agent and the Borrowers.

 

24.5        Refund
of fees

 

The fees referred to in this Clause 24 and the
Fee Letter shall not be refunded under any circumstances whatsoever once they
have been paid.

 

25.          INDEMNITIES
AND BREAK COSTS

 

25.1        Currency
indemnity

 

(a)           Each of the Borrowers
shall, as an independent obligation and within 3 Business Days of demand,
indemnify each Finance Party against any cost, loss or liability which that
Finance Party incurs as a consequence of:

 

(i)            that Finance Party
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.

 

82

 

25.2        Other
indemnities

 

(a)           Each of the Borrowers
shall, as an independent obligation and within 3 Business Days of demand,
indemnify each Finance Party against any cost, loss or liability which that
Finance Party 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 that Finance Party) a Loan not being made after a
Request has been delivered for that Loan; or

 

(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 any Finance Party as
a result of:

 

(i)            investigating any
event which that Finance Party reasonably believes to be a Default; or

 

(ii)           acting or relying on
any notice from any Party which that Finance Party reasonably believes to be
genuine, correct and appropriately authorised.

 

(c)           Each Borrower must
indemnify and hold each Finance Party 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;

 

83

 

(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.

 

25.3        Break
Costs

 

(a)           Each Borrower must
pay to each Lender its Break Costs in accordance with this Agreement.

 

(b)           In respect of a
Tranche B Lender, Break Costs are the amount (if any) determined by the
relevant Lender by which:

 

(i)            the interest which
that 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 that
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)           Each Lender must
supply to the Borrowers details of the amount of any Break Costs claimed by it
under this Clause.

 

26.          EXPENSES

 

26.1        Initial
costs

 

The Borrowers must pay to each Finance Party
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.

 

26.2        Subsequent
costs

 

The Borrowers must pay to each Finance Party
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 a Lender or
a New Lender (as that term is defined in Clause 29.2) in connection with any
voluntary transfer made by a Lender under this Agreement or any of the Security
Agreements. In the event that a Lender is required to undertake any such
transfers as

 

84

 

a result of the provisions of Clause 11.4
(Mitigation) any costs of that Lender or a New Lender arising out of such
transfer shall be payable by the Borrowers.

 

26.3        Enforcement
costs

 

The Borrowers must pay to each Finance Party
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.

 

27.          WAIVER
OF CONSEQUENTIAL DAMAGES

 

In no event shall any Finance Party be liable
on any theory of liability for any special, indirect, consequential or punitive
damages and each Obligor hereby waives, releases and agrees (for itself and on
behalf of its Subsidiaries) not to sue upon any such claim for any such
damages, unless caused by the fraud, wilful default or recklessness of the
relevant Finance Party in performance of any of its obligations under this
Agreement or any of the Finance Documents.

 

28.          AMENDMENTS
AND WAIVERS

 

28.1        Procedure

 

(a)           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 Majority Lenders. The Facility
Agent may effect, on behalf of any Finance Party, an amendment or waiver
allowed under this Clause.

 

(b)           The Facility Agent
must promptly notify the other Parties of any amendment or waiver effected by
it under paragraph (a) above. Any such amendment or waiver is binding on
all the Parties.

 

28.2        Exceptions

 

(a)           An amendment or
waiver which relates to:

 

(i)            the definition of Majority Lenders in Clause 1.1
(Definitions);

 

(ii)           an extension of the
date of payment of any amount to a Lender under the Finance Documents;

 

(iii)          a reduction in the
amount of any payment of principal, interest, fee or other amount payable to a
Lender under the Finance Documents;

 

(iv)          an increase in, or an
extension of, a Commitment or the Total Commitments;

 

(v)           a release of an
Obligor;

 

(vi)          a term of a Finance
Document which expressly requires the consent of each Lender;

 

(vii)         the right of a Lender
to assign or transfer its rights or obligations under the Finance Documents; or

 

(viii)        this Clause,

 

85

 

may only be made with the consent of all
the Lenders and the Borrowers such consent not to be unreasonably withheld or
delayed.

 

(b)           An amendment or
waiver which relates to a reduction in the Pre-Delivery Tranche A Margin,
Exposure Fee or the Tranche A Interest Rate may only be made with the
consent of all the Tranche A Lenders and the Borrowers.

 

(c)           An amendment or
waiver which relates to a reduction in the Pre-Delivery Tranche B Margin or
Post-Delivery Tranche B Margin may only be made with the consent of all
the Tranche B Lenders and the Borrowers.

 

(d)           An amendment or
waiver which relates to the rights or obligations of an Administrative Party may only
be made with the consent of that Administrative Party and the Borrowers.

 

28.3        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 Facility Agent (acting reasonably and on the
instructions of the Majority Lenders and after consultation with the Borrowers)
determines is necessary to reflect the change.

 

28.4        Waivers
and remedies cumulative

 

The rights of each Finance Party 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.

 

29.          CHANGES
TO THE PARTIES

 

29.1        Assignments
and transfers by Obligors

 

The Obligors may not assign or transfer
any of their respective rights and obligations under the Finance Documents
without the prior consent of all the Lenders.

 

29.2        Assignments
and transfers by Lenders

 

(a)           A Lender (the Existing 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 Subclause (i); or (ii) the
central bank of any country that is a member of the OECD; or (iii) any
Chinese bank having total assets in excess of US$300,000,000; or (iv) any
finance company, insurance company or other financial institution or fund
(whether a corporation, partnership, trust or

 

86

 

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; or (v) any
other person approved by the Lenders and the 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 Facility Agent
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
relevant Existing 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 Tranche A Lenders exceed 8;

 

(v)           at no time shall the
number of Tranche B Lenders exceed 2 unless the prior written consent of the
Borrowers is obtained (such consent not to be unreasonably withheld).

 

(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 29; or

 

(ii)           the New Lender
confirms to the Facility Agent and the Borrowers in form and substance
reasonably satisfactory to the Facility Agent and the Borrowers that it is
bound by the terms of this Agreement.

 

(c)           On the transfer
becoming effective in this manner the relevant Existing 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 a Lender includes a New Lender but excludes a Lender if no amount
is or may be owed to or by it under this Agreement.

 

29.3        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
Facility Agent executes that Transfer Certificate.

 

(b)           A novation is
effected if:

 

(i)            the Existing Lender
and the New Lender deliver to the Facility Agent a duly completed Transfer
Certificate; and

 

(ii)           the Facility Agent
executes it.

 

87

 

(c)           On the Transfer Date:

 

(i)            the New Lender will
assume the rights and obligations of the Existing Lender expressed to be the
subject of the novation in the Transfer Certificate in substitution for the
Existing Lender; and

 

(ii)           the Existing Lender
will be released from those obligations and cease to have those rights.

 

(d)           Each Party (other
than the Existing Lender and the New Lender) irrevocably authorises the
Facility Agent to execute any duly completed Transfer Certificate on its
behalf.

 

29.4        Limitation
of responsibility of Existing Lender

 

(a)           Unless expressly
agreed to the contrary, an Existing 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 Existing 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 Existing Lender in connection
with any Finance Document.

 

(c)           Nothing in any
Finance Document requires an Existing 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.

 

29.5        Costs
resulting from change of Lender or Facility Office

 

If:

 

(a)           a Lender assigns or
transfers any of its rights and obligations under the Finance Documents or
changes its Facility Office; and

 

88

 

(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,

 

then, unless the assignment, transfer or change
is made by a 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.

 

29.6        Changes
to the Reference Banks

 

If a Reference Bank (or, if a Reference Bank is
not a Lender, the Lender of which it is an Affiliate) ceases to be a Lender,
the Facility Agent must (in consultation with the Borrowers) appoint another
Lender or an Affiliate of a Lender to replace that Reference Bank.

 

30.          DISCLOSURE
OF INFORMATION

 

Each Finance Party may disclose to:

 

(a)           any of its
Affiliates; or

 

(b)           any other person who:

 

(i)            has not been objected
to by the Borrowers pursuant to Clause 29.2(a)(ii):

 

(ii)           to (or through) whom
an Existing Lender assigns or transfers (or may potentially assign or
transfer) all or any of its rights and obligations under this Agreement;

 

(iii)          with (or through)
whom a 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; or

 

(iv)          to whom, and to the
extent that, information is required to be disclosed by any Applicable Law; or

 

(c)           any other Finance
Party; or

 

(d)           its and the Obligors’
professional advisors,

 

any information about an Obligor, any other
member of the Danaos Group, or the Finance Documents as that Finance Party
shall consider appropriate if, in relation to paragraphs (i) to (iii) inclusive
above, the person to whom the information is to be given has entered into a
Confidentiality Undertaking. Except as provided in this Clause, a Lender may not
disclose any information about an Obligor, any other member of the Danaos
Group, or the Finance Documents to any person.

 

31.          SET-OFF

 

A Finance Party may set off any matured
obligation owed to it by any of the Obligors under the Finance Documents
against any obligation (whether or not matured) owed by that Finance Party to
that Obligor, regardless of the place of payment, booking branch or currency of
either obligation. If the obligations are in different currencies, that Finance
Party may convert either

 

89

 

obligation at a market rate of exchange in its
usual course of business for the purpose of the set-off.

 

32.          PRO
RATA SHARING

 

32.1        Redistribution

 

If any amount owing by a Borrower under this
Agreement to a Lender (the recovering Lender)
is discharged by payment, set-off or any other manner other than through the
Facility Agent under this Agreement (a recovery),
then:

 

(a)           the recovering Lender
must, within three Business Days, supply details of the recovery to the
Facility Agent;

 

(b)           the Facility Agent
must calculate whether the recovery is in excess of the amount which the
recovering Lender would have received if the recovery had been received by the
Facility Agent under this Agreement; and

 

(c)           the recovering Lender
must pay to the Facility Agent an amount equal to the excess (the redistribution).

 

32.2        Effect
of redistribution

 

(a)           The Facility Agent
must treat a redistribution as if it were a payment by the relevant Borrower
under this Agreement and distribute it among the Lenders, other than the
recovering Lender, accordingly.

 

(b)           When the Facility
Agent makes a distribution under paragraph (a) above, the recovering
Lender will be subrogated to the rights of the Finance Parties which have
shared in that redistribution.

 

(c)           If and to the extent
that the recovering Lender is not able to rely on any rights of subrogation
under paragraph (b) above, the relevant Borrower will owe the recovering
Lender a debt which is equal to the redistribution, immediately payable and of
the type originally discharged.

 

(d)           If:

 

(i)            a recovering Lender
must subsequently return a recovery, or an amount measured by reference to a
recovery, to a Borrower; and

 

(ii)           the recovering Lender
has paid a redistribution in relation to that recovery,

 

each Finance Party must reimburse to the
recovering Lender all or the appropriate portion of the redistribution paid to
that Finance Party, together with interest for the period while it held the
redistribution. In this event, the subrogation in paragraph (b) above will
operate in reverse to the extent of the reimbursement.

 

32.3        Exceptions

 

Notwithstanding any other term of this Clause,
a recovering Lender need not pay a redistribution to the extent that:

 

(a)           it would not, after
the payment, have a valid claim against the relevant Borrower in the amount of
the redistribution; or

 

90

 

(b)           it would be sharing
with another Finance Party any amount which the recovering Lender has received
or recovered as a result of legal or arbitration proceedings, where:

 

(i)            the recovering Lender
notified the Facility Agent of those proceedings; and

 

(ii)           the other Finance
Party had an opportunity to participate in those proceedings but did not do so
or did not take separate legal or arbitration proceedings as soon as reasonably
practicable after receiving notice of them.

 

33.          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.

 

34.          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.

 

35.          NOTICES

 

35.1        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 Facility Agent;

 

(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.

 

35.2        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 Facility Agent on or before the date it becomes a Party.

 

(b)           The contact details
of the Borrowers for this purpose are:

 

Address:                Kyriakou Matsi 11,

Nikis Centre, 8th Floor,

P.C. 1080 Nicosia, Cyprus

 

Fax number:           +357 227 61542

 

91

 

Attention:              Mr. S. Karydes

 

with a copy to:

 

Address:                Danaos Shipping Co.
Ltd

Akti Kondyli 14,

185 45 Piraeus

Greece

 

Fax number:           +30 210 4220855

Attention:               Mr. I.
Prokopakis

 

(c)           The contact details
of the Guarantor for this purpose are:

 

Address:                Danaos Shipping Co.
Ltd

Akti Kondyli 14,

185 45 Piraeus

Greece

 

Fax number:           +30 210 4220855

Attention:               Mr. I.
Prokopakis

 

(d)           The contact details
of the Facility Agent for this purpose are:

 

Address:                Fortis Capital Corp.

3 Stamford Plaza

301 Tresser Boulevard

Stamford CT 06901

USA

 

Fax number:           +1 203 705 5890

Attention:               Agency Department /
Loan Administration

 

(e)           A Party may change
its contact details by giving five Business Days’ notice to the Facility Agent
or (in the case of the Facility Agent) to the other Parties.

 

(f)            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.

 

35.3        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.

 

92

 

(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 Facility Agent will only be effective on actual receipt by it.

 

35.4        Obligor

 

All communications under the Finance Documents
to or from an Obligor must be sent through the Facility Agent.

 

35.5        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.

 

36.          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 Facility
Agent 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.

 

37.          GOVERNING
LAW

 

This Agreement is governed by English law.

 

38.          ENFORCEMENT

 

38.1        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 Facility Agent and the Lenders only. To the extent allowed
by law, the Facility Agent and/or the Lenders may take:

 

(i)            proceedings in any
other court; and

 

(ii)           concurrent
proceedings in any number of jurisdictions.

 

38.2        Service
of process

 

(a)           Each of the Obligors
irrevocably appoints SH Process Agents Limited of One, St Pauls Churchyard,
London EC4M 8SH as its agent under the Finance Documents for service of process
in any proceedings before the English courts.

 

93

 

(b)           If any person appointed
as process agent is unable for any reason to act as agent for service of
process, the relevant Obligor or Obligors must immediately appoint another
agent on terms acceptable to the Facility Agent. Failing this, the Facility
Agent may appoint another agent for this purpose.

 

(c)           Each of the Obligors
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.

 

38.3        Waiver
of immunity

 

The Obligors each irrevocably and
unconditionally:

 

(a)           agrees not to claim
any immunity from proceedings brought by a Finance Party 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.

 

94

 

SCHEDULE 1

 

ORIGINAL
PARTIES

 

PART 1

 

THE
BORROWERS AND THE VESSELS

 

	
  Name of

  Borrower

  	
   

  	
  Country of

  Incorporation

  	
   

  	
  Registered Office

  	
   

  	
  Hull Number

  	
   

  	
  Flag of Vessel

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Karlita Shipping

  Company Limited

  	
   

  	
  Republic of Cyprus

  	
   

  	
  Kyriakou Matsi 11,

  Nikis Centre, 8th

  Floor, 1080 Nicosia,

  Cyprus

  	
   

  	
  1559

  	
   

  	
  Republic of Cyprus

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Ramona Marine

  Company Limited

  	
   

  	
  Republic of Cyprus

  	
   

  	
  Kyriakou Matsi 11,

  Nikis Centre, 8th

  Floor, 1080 Nicosia,

  Cyprus

  	
   

  	
  1561

  	
   

  	
  Republic of Cyprus

  

 

95

 

PART 2

 

ORIGINAL
LENDERS

 

	
  Name of Original Lender

  	
   

  	
  Tranche A

  Commitments

  (US$)

  	
   

  	
  Tranche B

  Commitments

  (US$)

  	
   

  	
  Facility Office

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  The Export Import Bank of Korea

  	
   

  	
  135,000,000

  	
   

  	
   

  	
   

  	
  16-1 Yoido-dong,

  Youngdeungpo-gu, Seoul, 150-

  996, Korea

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Fortis Bank (Nederland) N.V.

  	
   

  	
   

  	
   

  	
  9,000,000

  	
   

  	
  Coolsingel 93, 3012 AE

  Rotterdam, The Netherlands

  

 

96

 

SCHEDULE 2

 

INITIAL
CONDITIONS PRECEDENT DOCUMENTS

 

1.             Obligors

 

(a)           A certified copy* of
the constitutional documents of each Obligor and each Shareholder 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 Obligor and each Shareholder:

 

(i)            approving the terms
of, and the transactions contemplated by, each Finance Document and each
Related Contract to which each Obligor or, as the case may be, each
Shareholder 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 Facility Agent 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 General Assignments.

 

(c)           A duly executed
original of each of the Time Charter and Earnings Assignments.

 

(d)           Duly executed
originals 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 Owners and all (if any) unissued share or stock certificates of
the Owners.

 

(e)           A duly executed
original of each Earnings Account Charge.

 

(f)            A duly executed
original of each Operating Expenses Account Charge.

 

(g)           A duly executed
original of each Retention Account Charge.

 

(h)           A duly executed
original of the Equity Contribution Side Letter.

 

(i)            A duly executed
original of the Fee Letter.

 

97

 

(j)            A certified copy* of
each of the Refund Guarantees.

 

(k)           A certified copy* of
each Shipbuilding Contract, duly executed.

 

(l)            A certified copy* of
each Time Charter, duly executed.

 

(m)          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 Facility Agent
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 Obligors 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 Facility Agent of receipt by the Builder from the Borrowers of the
Equity Contribution in respect of the relevant Loan.

 

(e)           The consolidated
audited financial statements of the Danaos Group for the year ending December 2002,
together with any other financial information requested by the Facility Agent
and/or KEXIM.

 

4.             Legal opinions

 

(a)           A legal opinion of
Allen & Overy, London office, English legal advisers to the Lenders,
addressed to the Facility Agent as agent for and on behalf of itself and the
Lenders.

 

(b)           A legal opinion of
Chrysses, Demetriades & Co, Cypriot legal advisors to the Lenders,
addressed to the Facility Agent as agent for and on behalf of itself and the
Lenders, in respect of the Borrowers.

 

(c)           A legal opinion of
King & Wood, Chinese legal advisors to the Lenders, addressed to the
Facility Agent as agent for and on behalf of itself and the Lenders, in respect
of the Charterer.

 

(d)           A legal opinion of
Seward & Kissel, New York, Liberian legal advisors to the Lenders,
addressed to the Facility Agent as agent for and on behalf of itself and the
Lenders, in respect of the Guarantor.

 

(e)           A legal opinion of
Allen & Overy, Amsterdam office, Dutch legal advisors to the Lenders,
addressed to the Facility Agent as agent for and on behalf of itself and the
Lenders in respect of the Security Documents referred to paragraph 2(e), (f) and
(g) above.

 

98

 

5.             Other Requirements

 

(a)           Receipt by the
Facility Agent for KEXIM of the management fee as detailed in Clause 24.3.

 

*              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.

 

99

 

SCHEDULE 3

 

DELIVERY
DATE CONDITIONS PRECEDENT DOCUMENTS

 

At the time of delivery of each Vessel, the
Facility Agent 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)(i) and (ii) above.

 

2.             Documents

 

(a)           A duly executed
original of the relevant Mortgage;

 

(b)           A duly executed
original of the Manager’s Undertaking;

 

(c)           A duly executed
original of the relevant Vessel Management Agreement Assignment;

 

(d)           A certified copy of
the Vessel Management Agreement, duly executed; and

 

(e)           A copy of any other
authorisation or other document, opinion or assurance which the Facility Agent
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;

 

(ii)           Confirmation
acceptable to the Facility Agent that the Owner has accepted the Vessel
pursuant to the terms of the relevant Shipbuilding Contract and executed a
protocol of delivery and acceptance.

 

100

 

(iii)          Confirmation
acceptable to the Facility Agent 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 Facility Agent 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 Facility Agent 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;

 

(viii)        evidence that the
Vessel is subject to a safety management system which complies with the ISM
Code; and

 

(ix)           evidence that the
Vessel is subject to a ship security plan which complies with the ISPS Code.

 

(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 International
Ship Security Certificate; and

 

(iv)          a valid Document of
Compliance.

 

(c)           A copy of the US
Customs Sea Carrier initiative agreement (as such an agreement is described in
each of the Time Charters) duly executed by each of the Owners.

 

(d)           A copy of the
commercial invoice in respect of the Vessel.

 

(e)           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.

 

101

 

(c)           Fax confirmation from
each broker, insurer and club concerned with the Obligatory Insurances of the
Vessel that:

 

(i)            the relevant cover is
in effect;

 

(ii)           they will accept
notice of assignment of the Obligatory Insurances in favour of the Facility
Agent and execute an acknowledgement of the notice in the form required by
the Facility Agent;

 

(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 Facility Agent 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 Facility Agent in writing).

 

(d)           Confirmation from the
Facility Agent 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 Lenders, addressed
to the Facility Agent as agent for and on behalf of itself and the Lenders.

 

(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 Lenders, addressed to the Facility
Agent as agent for and on behalf of itself and the Lenders.

 

*              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.

 

102

 

SCHEDULE 4

 

PART 1

 

FORM OF
REQUEST

 

To:          Fortis Capital Corp. as Facility Agent

 

From:      [The relevant Borrower]

 

Date:       [                         ]

 

US$144,000,000
Credit Agreement dated 29th January, 2004 (the Credit Agreement)

Hull No. 1559/1661

 

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) of the Credit
Agreement is satisfied on the date of this Request.

 

103

 

By:

 

	
   

  	
   

  
	
  BORROWER

  

 

Authorised Signatory

 

104

 

PART 2

 

PAYMENT
ADVICE

 

To:          [The
relevant Borrower]

 

From:      Fortis Capital Corp.
as Facility Agent

 

Date:       [               ]

 

US$144,000,000
Credit Agreement dated 29th January, 2004

 

Hull No. 1559/1661

 

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.

 

 

	
   

  	
   

  
	
   

  
	
  For and on behalf of Fortis Capital Corp. as
  Facility Agent

  

 

105

 

SCHEDULE 5

 

FORM OF
TRANSFER CERTIFICATE

 

To:          The Borrowers

 

From:      [THE EXISTING BANK] and [THE NEW BANK]

 

Date:
[               ]

 

US$144,000,000
Credit Agreement dated 29th January, 2004 (the Credit Agreement)

 

Hull No. 1559/1661

 

We refer to Clause 29.3 (Procedure for transfer
by way of novations) of the Credit Agreement.

 

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 29.3 (Procedure for transfer
by way of novations).

 

2.             The specified date
for the purposes of Clause 29.3(a) is [date
of novation].

 

3.             The Facility Office
and address for notices of the New Bank for the purposes of Clause 35.2
(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 all the rights and obligations attached to the same.

 

106

 

[New Bank]

 

[Facility
Office Address for notices]

 

 

	
  [Existing
  Bank]

  	
   

  	
  [New Bank]

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
  By:

  
	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
  Date:

  

 

The Transfer Date is confirmed by the Facility
Agent as [                              ].

 

FORTIS CAPITAL CORP.

 

By:

 

107

 

SCHEDULE 6

 

REPAYMENT
SCHEDULE

 

PART 1

 

	
  Vessel Hull No. 1559

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Interest rate :

  	
   

  	
  4.75%

  	
   

  
	
   

  	
   

  	
  Exposure Margin :

  	
   

  	
  0.2700%

  	
   

  

 

	
   

  	
   

  	
  Principal

  Repayment

  	
   

  	
  Interest

  	
   

  	
  Exposure

  Fee

  	
   

  	
  No.

  of

  Days

  	
   

  	
  Total

  Instalment

  	
   

  	
  Outstanding

  Balance

  	
   

  	
  Repayment

  Date

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  67,500,000.00

  	
   

  	
  2006-10-31

  	
   

  
	
  1

  	
   

  	
  2,097,720.99

  	
   

  	
  1,202,343.75

  	
   

  	
  68,343.75

  	
   

  	
  135

  	
   

  	
  3,368,408.49

  	
   

  	
  65,402,279.01

  	
   

  	
  2007-03-15

  	
   

  
	
  2

  	
   

  	
  2,812,500.00

  	
   

  	
  1,587,821.99

  	
   

  	
  90,255.14

  	
   

  	
  184

  	
   

  	
  4,490,577.13

  	
   

  	
  62,589,779.01

  	
   

  	
  2007-09-15

  	
   

  
	
  3

  	
   

  	
  2,812,500.00

  	
   

  	
  1,503,023.99

  	
   

  	
  85,435.04

  	
   

  	
  182

  	
   

  	
  4,400,959.03

  	
   

  	
  59,777,279.01

  	
   

  	
  2008-03-15

  	
   

  
	
  4

  	
   

  	
  2,812,500.00

  	
   

  	
  1,451,259.49

  	
   

  	
  82,492.64

  	
   

  	
  184

  	
   

  	
  4,346,252.13

  	
   

  	
  56,964,779.01

  	
   

  	
  15/09/08

  	
   

  
	
  5

  	
   

  	
  2,812,500.00

  	
   

  	
  1,360,429.68

  	
   

  	
  77,329.68

  	
   

  	
  181

  	
   

  	
  4,250,259.36

  	
   

  	
  54,152,279.01

  	
   

  	
  2009-03-15

  	
   

  
	
  6

  	
   

  	
  2,812,500.00

  	
   

  	
  1,314,696.99

  	
   

  	
  74,730.14

  	
   

  	
  184

  	
   

  	
  4,201,927.13

  	
   

  	
  51,339,779.01

  	
   

  	
  2009-09-15

  	
   

  
	
  7

  	
   

  	
  2,812,500.00

  	
   

  	
  1,226,093.75

  	
   

  	
  69,693.75

  	
   

  	
  181

  	
   

  	
  4,108,287.50

  	
   

  	
  48,527,279.01

  	
   

  	
  2010-03-15

  	
   

  
	
  8

  	
   

  	
  2,812,500.00

  	
   

  	
  1,178,134.49

  	
   

  	
  66,967.64

  	
   

  	
  184

  	
   

  	
  4,057,602.13

  	
   

  	
  45,714,779.01

  	
   

  	
  2010-09-15

  	
   

  
	
  9

  	
   

  	
  2,812,500.00

  	
   

  	
  1,091,757.81

  	
   

  	
  62,057.81

  	
   

  	
  181

  	
   

  	
  3,966,315.62

  	
   

  	
  42,902,279.01

  	
   

  	
  2011-03-15

  	
   

  
	
  10

  	
   

  	
  2,812,500.00

  	
   

  	
  1,041,571.99

  	
   

  	
  59,205.14

  	
   

  	
  184

  	
   

  	
  3,913,277.13

  	
   

  	
  40,089,779.01

  	
   

  	
  2011-09-15

  	
   

  
	
  11

  	
   

  	
  2,812,500.00

  	
   

  	
  962,711.49

  	
   

  	
  54,722.54

  	
   

  	
  182

  	
   

  	
  3,829,934.03

  	
   

  	
  37,277,279.01

  	
   

  	
  2012-03-15

  	
   

  
	
  12

  	
   

  	
  2,812,500.00

  	
   

  	
  905,009.49

  	
   

  	
  51,442.64

  	
   

  	
  184

  	
   

  	
  3,768,952.13

  	
   

  	
  34,464,779.01

  	
   

  	
  2012-09-15

  	
   

  
	
  13

  	
   

  	
  2,812,500.00

  	
   

  	
  823,085.93

  	
   

  	
  46,785.93

  	
   

  	
  181

  	
   

  	
  3,682,371.86

  	
   

  	
  31,652,279.01

  	
   

  	
  2013-03-15

  	
   

  
	
  14

  	
   

  	
  2,812,500.00

  	
   

  	
  768,446.99

  	
   

  	
  43,680.14

  	
   

  	
  184

  	
   

  	
  3,624,627.13

  	
   

  	
  28,839,779.01

  	
   

  	
  2013-09-15

  	
   

  
	
  15

  	
   

  	
  2,812,500.00

  	
   

  	
  688,750.00

  	
   

  	
  39,150.00

  	
   

  	
  181

  	
   

  	
  3,540,400.00

  	
   

  	
  26,027,279.01

  	
   

  	
  2014-03-15

  	
   

  
	
  16

  	
   

  	
  2,812,500.00

  	
   

  	
  631,884.49

  	
   

  	
  35,917.64

  	
   

  	
  184

  	
   

  	
  3,480,302.13

  	
   

  	
  23,214,779.01

  	
   

  	
  2014-09-15

  	
   

  
	
  17

  	
   

  	
  2,812,500.00

  	
   

  	
  554,414.06

  	
   

  	
  31,514.06

  	
   

  	
  181

  	
   

  	
  3,398,428.12

  	
   

  	
  20,402,279.01

  	
   

  	
  2015-03-15

  	
   

  
	
  18

  	
   

  	
  2,812,500.00

  	
   

  	
  495,321.99

  	
   

  	
  28,155.14

  	
   

  	
  184

  	
   

  	
  3,335,977.13

  	
   

  	
  17,589,779.01

  	
   

  	
  2015-09-15

  	
   

  
	
  19

  	
   

  	
  2,812,500.00

  	
   

  	
  422,398.99

  	
   

  	
  24,010.04

  	
   

  	
  182

  	
   

  	
  3,258,909.03

  	
   

  	
  14,777,279.01

  	
   

  	
  2016-03-15

  	
   

  
	
  20

  	
   

  	
  2,812,500.00

  	
   

  	
  358,759.49

  	
   

  	
  20,392.64

  	
   

  	
  184

  	
   

  	
  3,191,652.13

  	
   

  	
  11,964,779.01

  	
   

  	
  2016-09-15

  	
   

  
	
  21

  	
   

  	
  2,812,500.00

  	
   

  	
  285,742.18

  	
   

  	
  16,242.18

  	
   

  	
  181

  	
   

  	
  3,114,484.36

  	
   

  	
  9,152,279.01

  	
   

  	
  2017-03-15

  	
   

  
	
  22

  	
   

  	
  2,812,500.00

  	
   

  	
  222,196.99

  	
   

  	
  12,630.14

  	
   

  	
  184

  	
   

  	
  3,047,327.13

  	
   

  	
  6,339,779.01

  	
   

  	
  2017-09-15

  	
   

  
	
  23

  	
   

  	
  2,812,500.00

  	
   

  	
  151,406.25

  	
   

  	
  8,606.25

  	
   

  	
  181

  	
   

  	
  2,972,512.50

  	
   

  	
  3,527,279.01

  	
   

  	
  2018-03-15

  	
   

  
	
  24

  	
   

  	
  2,812,500.00

  	
   

  	
  85,634.49

  	
   

  	
  4,867.64

  	
   

  	
  184

  	
   

  	
  2,903,002.13

  	
   

  	
  714,779.01

  	
   

  	
  2018-09-15

  	
   

  
	
  25

  	
   

  	
  714,779.01

  	
   

  	
  21,408.62

  	
   

  	
  1,216.91

  	
   

  	
  46

  	
   

  	
  737,404.54

  	
   

  	
  0.00

  	
   

  	
  2018-10-31

  	
   

  
	
  Total

  	
   

  	
  67,500,000.00

  	
   

  	
  20,334,305.38

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  88,990,150.00

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

Note) Subject to actual
Delivery Date and Business Day convention.

 

108

 

PART 2

 

	
  Vessel Hull No. 1561

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Interest rate :

  	
   

  	
  4.75%

  	
   

  
	
   

  	
   

  	
  Exposure Margin :

  	
   

  	
  0.2700%

  	
   

  

 

	
   

  	
   

  	
  Principal

  Repayment

  	
   

  	
  Interest

  	
   

  	
  Exposure

  Fee

  	
   

  	
  No.

  of

  Days

  	
   

  	
  Total

  Instalment

  	
   

  	
  Outstanding

  Balance

  	
   

  	
  Repayment

  Date

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  67,500,000.00

  	
   

  	
  2007-01-31

  	
   

  
	
  1

  	
   

  	
  668,162.98

  	
   

  	
  382,968.75

  	
   

  	
  21,768.75

  	
   

  	
  43

  	
   

  	
  1,072,900.48

  	
   

  	
  66,831,837.02

  	
   

  	
  15/03/07

  	
   

  
	
  2

  	
   

  	
  2,812,500.00

  	
   

  	
  1,622,528.48

  	
   

  	
  92,227.93

  	
   

  	
  184

  	
   

  	
  4,527,256.41

  	
   

  	
  64,019,337.02

  	
   

  	
  2007-09-15

  	
   

  
	
  3

  	
   

  	
  2,812,500.00

  	
   

  	
  1,537,353.24

  	
   

  	
  87,386.39

  	
   

  	
  182

  	
   

  	
  4,437,239.63

  	
   

  	
  61,206,837.02

  	
   

  	
  2008-03-15

  	
   

  
	
  4

  	
   

  	
  2,812,500.00

  	
   

  	
  1,485,965.98

  	
   

  	
  84,465.43

  	
   

  	
  184

  	
   

  	
  4,382,931.41

  	
   

  	
  58,394,337.02

  	
   

  	
  2008-09-15

  	
   

  
	
  5

  	
   

  	
  2,812,500.00

  	
   

  	
  1,394,570.31

  	
   

  	
  79,270.31

  	
   

  	
  181

  	
   

  	
  4,286,340.62

  	
   

  	
  55,581,837.02

  	
   

  	
  2009-03-15

  	
   

  
	
  6

  	
   

  	
  2,812,500.00

  	
   

  	
  1,349,403.48

  	
   

  	
  76,702.93

  	
   

  	
  184

  	
   

  	
  4,238,606.41

  	
   

  	
  52,769,337.02

  	
   

  	
  2009-09-15

  	
   

  
	
  7

  	
   

  	
  2,812,500.00

  	
   

  	
  1,260,234.37

  	
   

  	
  71,634.37

  	
   

  	
  181

  	
   

  	
  4,144,368.74

  	
   

  	
  49,956,837.02

  	
   

  	
  2010-03-15

  	
   

  
	
  8

  	
   

  	
  2,812,500.00

  	
   

  	
  1,212,840.98

  	
   

  	
  68,940.43

  	
   

  	
  184

  	
   

  	
  4,094,281.41

  	
   

  	
  47,144,337.02

  	
   

  	
  2010-09-15

  	
   

  
	
  9

  	
   

  	
  2,812,500.00

  	
   

  	
  1,125,898.43

  	
   

  	
  63,998.43

  	
   

  	
  181

  	
   

  	
  4,002,396.86

  	
   

  	
  44,331,837.02

  	
   

  	
  2011-03-15

  	
   

  
	
  10

  	
   

  	
  2,812,500.00

  	
   

  	
  1,076,278.48

  	
   

  	
  61,177.93

  	
   

  	
  184

  	
   

  	
  3,949,956.41

  	
   

  	
  41,519,337.02

  	
   

  	
  2011-09-15

  	
   

  
	
  11

  	
   

  	
  2,812,500.00

  	
   

  	
  997,040.74

  	
   

  	
  56,673.89

  	
   

  	
  182

  	
   

  	
  3,866,214.63

  	
   

  	
  38,706,837.02

  	
   

  	
  2012-03-15

  	
   

  
	
  12

  	
   

  	
  2,812,500.00

  	
   

  	
  939,715.98

  	
   

  	
  53,415.43

  	
   

  	
  184

  	
   

  	
  3,805,631.41

  	
   

  	
  35,894,337.02

  	
   

  	
  2012-09-15

  	
   

  
	
  13

  	
   

  	
  2,812,500.00

  	
   

  	
  857,226.56

  	
   

  	
  48,726.56

  	
   

  	
  181

  	
   

  	
  3,718,453.12

  	
   

  	
  33,081,837.02

  	
   

  	
  2013-03-15

  	
   

  
	
  14

  	
   

  	
  2,812,500.00

  	
   

  	
  803,153.48

  	
   

  	
  45,652.93

  	
   

  	
  184

  	
   

  	
  3,661,306.41

  	
   

  	
  30,269,337.02

  	
   

  	
  2013-09-15

  	
   

  
	
  15

  	
   

  	
  2,812,500.00

  	
   

  	
  722,890.62

  	
   

  	
  41,090.62

  	
   

  	
  181

  	
   

  	
  3,576,481.24

  	
   

  	
  27,456,837.02

  	
   

  	
  2014-03-15

  	
   

  
	
  16

  	
   

  	
  2,812,500.00

  	
   

  	
  666,590.98

  	
   

  	
  37,890.43

  	
   

  	
  184

  	
   

  	
  3,516,981.41

  	
   

  	
  24,644,337.02

  	
   

  	
  2014-09-15

  	
   

  
	
  17

  	
   

  	
  2,812,500.00

  	
   

  	
  588,554.68

  	
   

  	
  33,454.68

  	
   

  	
  181

  	
   

  	
  3,434,509.36

  	
   

  	
  21,831,837.02

  	
   

  	
  2015-03-15

  	
   

  
	
  18

  	
   

  	
  2,812,500.00

  	
   

  	
  530,028.48

  	
   

  	
  30,127.93

  	
   

  	
  184

  	
   

  	
  3,372,656.41

  	
   

  	
  19,019,337.02

  	
   

  	
  2015-09-15

  	
   

  
	
  19

  	
   

  	
  2,812,500.00

  	
   

  	
  456,728.24

  	
   

  	
  25,961.39

  	
   

  	
  182

  	
   

  	
  3,295,189.63

  	
   

  	
  16,206,837.02

  	
   

  	
  2016-03-15

  	
   

  
	
  20

  	
   

  	
  2,812,500.00

  	
   

  	
  393,465.98

  	
   

  	
  22,365.43

  	
   

  	
  184

  	
   

  	
  3,228,331.41

  	
   

  	
  13,394,337.02

  	
   

  	
  2016-09-15

  	
   

  
	
  21

  	
   

  	
  2,812,500.00

  	
   

  	
  319,882.81

  	
   

  	
  18,182.81

  	
   

  	
  181

  	
   

  	
  3,150,565.62

  	
   

  	
  10,581,837.02

  	
   

  	
  2017-03-15

  	
   

  
	
  22

  	
   

  	
  2,812,500.00

  	
   

  	
  256,903.48

  	
   

  	
  14,602.93

  	
   

  	
  184

  	
   

  	
  3,084,006.41

  	
   

  	
  7,769,337.02

  	
   

  	
  2017-09-15

  	
   

  
	
  23

  	
   

  	
  2,812,500.00

  	
   

  	
  185,546.87

  	
   

  	
  10,546.87

  	
   

  	
  181

  	
   

  	
  3,008,593.74

  	
   

  	
  4,956,837.02

  	
   

  	
  2018-03-15

  	
   

  
	
  24

  	
   

  	
  2,812,500.00

  	
   

  	
  188,622.23

  	
   

  	
  10,721.68

  	
   

  	
  184

  	
   

  	
  3,011,843.91

  	
   

  	
  4,956,837.02

  	
   

  	
  2018-09-15

  	
   

  
	
  25

  	
   

  	
  2,144,337.02

  	
   

  	
  90,255.74

  	
   

  	
  5,130.32

  	
   

  	
  138

  	
   

  	
  2,239,723.08

  	
   

  	
  0.00

  	
   

  	
  2019-01-31

  	
   

  
	
  Total

  	
   

  	
  67,500,000.00

  	
   

  	
  20,444,649.37

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  89,106,766.17

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

Note) Subject to actual
Delivery Date and Business Day convention.

 

109

 

SCHEDULE 7

 

ANNUAL
COMPLIANCE CERTIFICATE

 

To:          The Export-Import Bank of Korea

 

From:      [Borrower and Guarantor]

 

US$144,000,000
Credit Agreement dated 29th January, 2004 (the Credit Agreement)

 

Hull No. 1559/1661

 

1.             Terms defined in the
Credit Agreement have the same meaning in this Certificate.

 

2.             The Borrower hereby
certifies 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 [               ].

 

3.             Except as set out
below, the representations set out in Clause 15 of the Credit Agreement are
deemed to be repeated as at the date hereof.

 

[           ].

 

4.             The Guarantor
confirms that as at [relevant testing date]:

 

(a)           Net Worth is not less
than US$100,000,000;

 

(b)           the ratio of Tangible
Fixed Assets to Net Consolidated Indebtedness is not less than 1.45:1;

 

(c)           the ratio of
Outstanding Bank Debt to Ship Values is not more than 0.75:1;

 

(d)           Net Worth exceeds 30%
of Total Assets;

 

(e)           the Liquid Funds of
the Group would not be less than $20,000,000; and

 

(f)            the ratio of EBITDA
to Net Interest Expenses would be at least 2.5:1 on a Pro Forma Basis for the
period immediately preceding the date thereof for which Financial Statements
are available.

 

5.             The Guarantor sets
out below calculations establishing the figures in paragraph 4 above:

 

[                        ].

 

Yours faithfully,

 

For and on behalf of [relevant Borrower]

 

 

[                                             ]

 

President

 

110

 

[or]

 

                                             

 

[Senior
Officer]

 

and

 

                                             

 

[Senior
Officer]

 

and

 

For and on behalf of Danaos
Holdings Limited

 

 

[                                             ]

 

President

 

[or]

 

                                             

 

[Senior
Officer]

 

and

 

                                             

 

[Senior
Officer]

 

111

 

SCHEDULE 8

 

INCIDENTAL
VESSEL COSTS

 

Per Vessel

 

	
   

  	
   

  	
   

  	
   

  	
  US$

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
   

  	
  Lashings

  	
   

  	
  1,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  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, HFO, Chemicals

  	
   

  	
  800,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
   

  	
  Legal fees

  	
   

  	
  90,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
   

  	
  Spares by Owners

  	
   

  	
  1,040,000

  	
   

  

 

112

Exh. 10.8

SIGNATORIES

 

	
  Owners

  
	
   

  
	
  KARLITA SHIPPING COMPANY
  LIMITED

  
	
   

  
	
  By:     /s/ Zoe Lappa - Papamattheou

  
	
   

  
	
   

  
	
  RAMONA MARINE COMPANY
  LIMITED

  
	
   

  
	
  By:     /s/ Zoe Lappa -
  Papamattheou

  
	
   

  
	
   

  
	
  Guarantor

  
	
   

  
	
  DANAOS HOLDINGS LIMITED

  
	
   

  
	
  By:     /s/ Zoe Lappa -
  Papamattheou

  
	
   

  
	
   

  
	
  Original Lenders

  
	
   

  
	
  THE EXPORT-IMPORT BANK OF
  KOREA

  
	
   

  
	
  By:

  
	
   

  
	
   

  
	
  FORTIS BANK (NEDERLAND) N.V.

  
	
   

  
	
  By:

  
	
   

  
	
   

  
	
  The Facility Agent

  
	
   

  
	
  FORTIS CAPITAL CORP.

  
	
   

  
	
  By:     /s/ David
  Smith

  
	
   

  
	
   

  

 

113Exhibit 10.9

 

48.001

 

DATED
18 MARCH 2005

 

 

LATO
SHIPPING (PRIVATE) LTD.

FERROUS
SHIPPING (PRIVATE) LTD.

COBALTIUM
SHIPPING (PRIVATE) LTD.

COMMODORE
MARINE INC.

(as
Borrowers)

-
and -

AEGEAN BALTIC BANK S.A.

HSH NORDBANK AG

CITIBANK INTERNATIONAL PLC

DRESDNER BANK AKTIENGESELLSCHAFT IN HAMBURG

ABN AMRO BANK N.V.

DVB BANK AG

CREDIT SUISSE

(as
Lenders)

-
and -

AEGEAN BALTIC BANK S.A.

(as
Agent)

-
and -

AEGEAN BALTIC BANK S.A.

 (as Security Agent)

-
and -

AEGEAN
BALTIC BANK S.A.

HSH
NORDBANK AG

(as
Joint Arrangers)

-
and -

AEGEAN
BALTIC BANK S.A.

HSH
NORDBANK AG

(as
Co-Underwriters)

-
and -

HSH
NORDBANK A.G.

(as
Swap Bank)

 

 

US$200,000,000
SECURED

LOAN
AGREEMENT

 

 

“APL
BELGIUM”

“APL
ENGLAND”

“APL
SCOTLAND”

“HYUNDAI
COMMODORE”

 

STEPHENSON
HARWOOD

One
St. Paul’s Churchyard

London
EC4M 8SH

Tel:
020 7329 4422

Fax:
020 7329 7100

Ref: 48.001

 

 

CONTENTS

 

	
   

  	
   

  	
   

  	
  Page

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1

  	
   

  	
  Definitions and Interpretation

  	
  4

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2

  	
   

  	
  The Loan and its Purpose

  	
  19

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3

  	
   

  	
  Conditions of Utilisation

  	
  19

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4

  	
   

  	
  Advance

  	
  21

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5

  	
   

  	
  Repayment

  	
  21

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6

  	
   

  	
  Prepayment

  	
  22

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7

  	
   

  	
  Interest

  	
  24

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8

  	
   

  	
  The Master Agreement

  	
  26

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9

  	
   

  	
  Alternative currency options

  	
  29

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10

  	
   

  	
  Indemnities

  	
  32

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11

  	
   

  	
  Fees

  	
  35

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12

  	
   

  	
  Security and Application of Moneys

  	
  35

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  13

  	
   

  	
  Representations

  	
  41

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  14

  	
   

  	
  Undertakings and Covenants

  	
  44

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  15

  	
   

  	
  Events of Default

  	
  55

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  16

  	
   

  	
  Assignment and Sub-Participation

  	
  60

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  17

  	
   

  	
  The Agent, the Security Agent and
  the other Creditor Parties

  	
  63

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  18

  	
   

  	
  Set-Off

  	
  71

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  19

  	
   

  	
  Payments

  	
  72

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  20

  	
   

  	
  Notices

  	
  74

  	
   

  

 

 

	
   

  	
   

  	
   

  	
   

  
	
  21

  	
   

  	
  Partial Invalidity

  	
  75

  
	
   

  	
   

  	
   

  	
   

  
	
  22

  	
   

  	
  Remedies and Waivers

  	
  75

  
	
   

  	
   

  	
   

  	
   

  
	
  23

  	
   

  	
  Joint and several liability

  	
  76

  
	
   

  	
   

  	
   

  	
   

  
	
  24

  	
   

  	
  Miscellaneous

  	
  77

  
	
   

  	
   

  	
   

  	
   

  
	
  25

  	
   

  	
  Law and Jurisdiction

  	
  79

  
	
   

  	
   

  	
   

  	
   

  
	
  SCHEDULE 1: The Lenders and
  the Commitments

  	
   

  	
   

  	
  81

  
	
   

  	
   

  	
   

  	
   

  
	
  SCHEDULE 2: Conditions
  Precedent and Subsequent

  	
   

  	
   

  	
  84

  
	
   

  	
   

  	
   

  	
   

  
	
  SCHEDULE 3: Form of
  Drawdown Notice

  	
   

  	
   

  	
  89

  
	
   

  	
   

  	
   

  	
   

  
	
  SCHEDULE 4: Form of
  Transfer Certificate

  	
   

  	
   

  	
  90

  
	
   

  	
   

  	
   

  	
   

  
	
  SCHEDULE 5: Form of
  Covenant Compliance Certificate

  	
   

  	
   

  	
  93

  
						

 

2

 

LOAN AGREEMENT

 

Dated: 18 March 2005

 

BETWEEN:

 

(1)           LATO SHIPPING (PRIVATE) LTD. (“Lato”), FERROUS
SHIPPING (PRIVATE) LTD. (“Ferrous”), and COBALTIUM SHIPPING (PRIVATE) LTD. (“Cobaltium”),
each a company incorporated under the laws of the
Republic of Singapore whose registered office is at 20 Raffles Place, #09-01,
Ocean Towers, Singapore (048620), and COMMODORE MARINE INC. (“Commodore”),
a company incorporated under the laws of the Republic of Liberia whose
registered office is at 80 Broad Street, Monrovia, Liberia (together the ”Borrowers” and
each a “Borrower”) jointly and severally; and

 

(2)           the banks listed in Schedule 1, each acting through its office
at the address indicated against its name in Schedule 1 (together the “Lenders” and
each a “Lender”);

 

(3)           AEGEAN BALTIC BANK S.A., acting as agent
through its office at 28 Diligianni Street, 145 62 Kifissia, Greece (in that
capacity the “Agent”);
and

 

(4)           AEGEAN BALTIC
BANK S.A., acting as security agent through its
office at 28 Diligianni Street, 145 62 Kifissia, Greece (in that capacity the “Security Agent”).

 

(5)           AEGEAN BALTIC
BANK S.A., acting through its office at 28
Diligianni Street, 145 62 Kifissia, Greece, and HSH NORDBANK
AG, acting through its office at Gerhart-Hauptmann-Platz 50, 20095
Hamburg, Federal Republic of Germany as joint arrangers (in that capacity, the “Joint Arrangers”); and

 

(6)           AEGEAN BALTIC
BANK S.A., acting through its office at 28
Diligianni Street, 145 62 Kifissia, Greece, and HSH NORDBANK
AG, acting through its office at Gerhart-Hauptmann-Platz 50, 20095
Hamburg, Federal Republic of Germany as co-underwriters (in that capacity, the “Co-Underwriters”); and

 

(7)           HSH NORDBANK
AG, acting through its office at
Gerhart-Hauptmann-Platz 50, 20095 Hamburg, Federal Republic of Germany, as swap
bank (in that capacity, the “Swap Bank”).

 

3

 

WHEREAS:

 

(A)          Each Borrower owns the Vessel which is registered in its ownership,
and registered under the flag, specified below in the definition of “Vessels”.

 

(B)           Each of the Lenders has agreed to advance to the Borrowers on a
joint and several basis its Commitment (aggregating, with all the other
Commitments), an amount equal to the lower of up to (i) two hundred
million Dollars ($200,000,000) and (ii) seventy five per centum (75%) of
the aggregate Market Value of all the Vessels to assist the Borrowers to
refinance certain existing indebtedness and to provide additional liquidity to
the Group for working capital purposes and shall be made available in up to
four Drawings (one per Vessel) each for an amount not exceeding seventy five
per centum (75%) of the Market Value of the Vessel to which the Drawing in
question relates.

 

IT IS AGREED as follows:

 

1              Definitions and Interpretation

 

1.1           In this Agreement:

 

“Accounts Charge”
means the deed of charge referred to in Clause 12.1.4.

 

“Administration” has the meaning given to it in paragraph
1.1.3 of the ISM Code.

 

“APL” means APL (Bermuda) Ltd. a company incorporated under
the laws of Bermuda.

 

“Applicable Accounting Principles” means, in the case of the
Group Statements, those accounting principles, standards and practices on which
the Original Group Statements were based, in accordance with IAS principles, or
such other generally accepted accounting principles, standards and practices
adopted by the Group from time to time and notified to the Agent, provided that
in the case of such notification to the Agent the auditors of the Group deliver
to the Agent sufficient information, in form and substance as may be
reasonably required by the Agent, to enable the Agent to make an accurate
comparison between the financial position indicated in the Group Statements in
question and that indicated in the Original Group Statements. If necessary,
upon any change of the Applicable Accounting Principles, the Borrowers shall
enter into good

 

4

 

faith
discussions with the Majority Lenders with the view to re-adjust the Financial
Covenants provided for in Clause 14.2

 

“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 Lenders in the London Interbank Eurocurrency Market;

 

“Assignments”
means the deeds of assignment from the Borrowers referred to in Clause 12.1.2.

 

“Availability Termination
Date” means 23 March 2005 or such later date as the Lenders may in
their discretion agree.

 

“Break Costs”
means all sums payable by the Borrowers from time to time under Clause 10.3.

 

“Business Day”
means a day (other than a Saturday or Sunday) on which banks are open for
general business in New York, London, Athens, Piraeus, Frankfurt, Hamburg and
Basel, and which is a day on which the Trans-European Automated Real Time Gross
Settlement Express Transfer Payment System (TARGET) is operating.

 

“Charters” means
the time charter dated 19 August 1999, in the case of “APL ENGLAND” and “APL
SCOTLAND” (as each is supplemented and amended by addenda numbered 1 to 7
(inclusive) thereto, and as the same may be further supplemented and
amended from time to time), and the time charter dated 30 November 1999,
in the case of “APL BELGIUM” (as supplemented and amended by addenda numbered 1
to 4 (inclusive) thereto, and as the same may be further supplemented and
amended from time to time), each made between (a) the relevant Borrower,
as owner of that Vessel, and whose obligations have been guaranteed by the
Managers, and (b) APL, as charterer, and whose obligations have been
guaranteed by NOL, and the time charter dated 14 April 2003, in the case
of “HYUNDAI COMMODORE” (as supplemented and amended by addenda numbered 1
thereto, and as the same may be further supplemented and amended from time
to time) made between the relevant Borrower, as owner, and HMM, as charterer
and “Charter” means any one of them.

 

5

 

“Charterer”
means, in the case of “APL BELGIUM”, “APL ENGLAND” and “APL SCOTLAND”, APL and,
in the case of “HYUNDAI COMMODORE”, means HMM.

 

“Commitment”
means, in relation to each Lender, the amount of the Loan which that Lender
agrees to advance to the Borrower as its several liability as indicated against
the name of that Lender in Schedule 1 and/or, where the context permits,
the amount of the Loan advanced by that Lender and remaining outstanding.

 

“Confirmation” means a Confirmation exchanged, or deemed
exchanged, between the Swap Bank and the Borrowers as contemplated by the
Master Agreement.

 

“converted”
means, for the purposes of Clause 9, actually or notionally (as the context may require)
converted by the Lenders at the Spot Rate of Exchange, and the words “convert” and “conversion”
shall be interpreted accordingly.

 

“Covenant Compliance
Certificate” means a certificate substantially in the form set
out in Schedule 5.

 

“Creditor Documents”
means the Finance Documents and the Master Agreement Documents and “Creditor Document” means any one of them.

 

“Creditor Parties” means the Finance Parties and the Swap Bank and “Creditor Party” means any one of them.

 

“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 Swap Bank.

 

“Currency of Account”
means, in relation to any payment to be made to a Creditor Party under a
Creditor Document, the currency in which that payment is required to be made by
the terms of that Creditor Document.

 

“Currency Equivalent” means, as at any date upon which any part of
the Loan is denominated in one Relevant Currency and is to be converted into
another Relevant Currency as provided in this Agreement, the amount of the
relevant

 

6

 

currency required for the purchase of the
Existing Currency with the New Currency converted at the Spot Rate of Exchange.

 

“Currency Tranches” means, in relation to the Loan, at any time
such part of the Loan which is denominated in Approved Currencies and, in
case such part of the Loan is denominated in two such Approved Currencies,
“Currency Tranche” means each part of
the Loan which is denominated into one Approved Currency.

 

“Deeds of Covenants”
means the deeds of covenants referred to in Clause 12.1.1.

 

“Default” means
an Event of Default or any event or circumstance specified in Clause 15.1 which
would (with the expiry of a grace period, the giving of notice, the making of
any determination under the Creditor Documents or any combination of any of the
foregoing) be an Event of Default.

 

“Default Rate” means interest calculated in accordance with Clause 7.8.

 

“Distribution Monies” means:

 

(a)            any monies received by any
of the Creditor Parties (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 Security Parties or distribution of its assets among
its creditors (however such liquidation or distribution may occur);

 

(b)           any monies received by the
Creditor Parties as named insured, loss payee, beneficiary or assignee of any
insurance policies of any of the Security Parties in consequence of or after
any Enforcement Action.

 

“DOC” means, in
relation to the ISM Company, a valid Document of Compliance issued for the ISM
Company by the Administration under paragraph 13.2 of the ISM Code.

 

“Dollars” and “$” each means available and freely transferable and
convertible funds in lawful currency of the United States of America.

 

“Dollar Reference Amount” means, when the whole or part of the Loan
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

 

7

 

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 9.6) under this Agreement if the same
had been made in Dollars.

 

“Drawdown Date”
means the date on which the relevant Drawing is advanced under Clause 4.

 

“Drawdown Notice”
means a notice substantially in the form set out in Schedule 3.

 

“Drawing” means
any part of the Loan advanced or to be advanced pursuant to a Drawdown
Notice and “Drawings” means more than one of
them.

 

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

 

“Earnings” means
all hires, freights (including, without limitation, under and pursuant to any
time charterparty or other contract of employment), pool income and other sums
payable to or for the account of a Borrower in respect of a Vessel including
(without limitation) all remuneration for salvage and towage services,
demurrage and detention moneys, contributions in general average, compensation
in respect of any requisition for hire, and damages and other payments (whether
awarded by any court or arbitral tribunal or by agreement or otherwise) for
breach, termination or variation of any contract for the operation, employment
or use of a Vessel.

 

“Earnings Account”
means the bank account with number 0100134-52-01-1 to be opened in the joint
names of the Borrowers with the Agent and to be maintained throughout the Facility
Period, such account to include any substitute account or revised designation
or number whatsoever.

 

“Encumbrance”
means a mortgage, charge, assignment, pledge, lien, or other security interest
securing any obligation of any person or any other agreement or arrangement
having a similar effect.

 

“Enforcement Action” means any of the following actions taken by any of the Creditor
Parties by means of an instruction to the Security Agent, by the Majority
Lenders or otherwise;

 

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

 

8

 

(b)           commencing to enforce or
enforcing any of the Creditor Documents;

 

(c)           commencing or instructing
the Security Agent or the Swap Bank to commence to enforce, or to enforce, the
Creditor Documents or any of them or exercising any power under any Creditor
Document;

 

(d)           taking any other action
against any of the Security Parties or their assets or threatening any other
action against any of the Security Parties or their assets the taking of which
could materially affect the common interests of the Creditor Parties.

 

“Event of Default” means any of the events or circumstances
set out in Clause 15.1.

 

“Existing
Currency” means, in
relation to any conversion between Relevant Currencies to be made under Clause
9, the Relevant Currency in which the relevant part of the Loan is
denominated before conversion.

 

“Facility Period”
means the period beginning on the date of this Agreement and ending on the date
when the whole of the Indebtedness has been paid in full and the Security
Parties have ceased to be under any further actual or contingent liability to
the Creditor Parties under or in connection with any of the Creditor Documents.

 

“Fee Letter”
means the letter dated 21 December 2004 between the Agent and the
Borrowers setting out the fees referred to in Clause 11.

 

“Finance Documents”
means this Agreement,  the Security Documents, the Fee Letter and any
other document designated as such by the Agent and the Borrowers and “Finance Document” means any one of them.

 

“Finance Parties”
means the Agent, the Security Agent, the Lenders, the Joint Arrangers and the
Co-Underwriters and “Finance Party”
means any one of them.

 

“Financial Indebtedness”
means any obligation for the payment or repayment of money, whether present or
future, actual or contingent, in respect of:

 

(a)           moneys borrowed;

 

(b)           any acceptance credit;

 

(c)           any bond, note, debenture, loan stock or similar instrument;

 

9

 

(d)           any finance or capital lease;

 

(e)           receivables sold or discounted (other than on a non-recourse basis);

 

(f)            deferred payments for assets or services;

 

(g)           any derivative transaction
protecting against or benefiting from fluctuations in any rate or price (and,
when calculating the value of any derivative transaction, only the marked to
market value shall be taken into account);

 

(h)           any amount raised under any
other transaction (including any forward sale or purchase agreement) having the
commercial effect of a borrowing;

 

(i)            any counter-indemnity
obligation in respect of a guarantee, indemnity, bond, standby or documentary
letter of credit or any other instrument issued by a bank or financial
institution; and

 

(j)            the amount of any
liability in respect of any guarantee or indemnity for any of the items
referred to in paragraphs (a) to (i) above.

 

“Group” means the Guarantor, the Borrowers, and all other Subsidiaries of
the Guarantor and “member of the Group” shall be construed accordingly.

 

“Group Statements”
means the annual audited consolidated financial statements of the Group
prepared in accordance with Applicable Accounting Principles.

 

“Guarantee”
means the guarantee and indemnity referred to in Clause 12.1.3.

 

“Guarantor”
means Danaos Holdings Limited of Liberia, a company incorporated under the laws
of the Republic of Liberia whose registered office is at 80 Broad Street,
Monrovia, Liberia, being a holding company having, inter alia, the Borrowers
under its full ownership and control, and/or (where the context permits) any
other company or person who shall at any time during the Facility Period give
to the Lenders or to the Security Agent on their behalf a guarantee and/or
indemnity for the repayment of all or part of the Indebtedness.

 

“Hedging Transaction” means a Transaction entered into between the Swap Bank and
the Borrowers pursuant to the Master Agreement for the express purpose of
hedging all or part of the Borrowers’ interest rate risk in respect of any
Interest

 

10

 

Period longer than twelve (12) months’
duration and/or any foreign exchange rate risk under this Agreement.

 

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

 

“IAS” means
generally accepted international accounting principles, standards and practices
currently adopted by the Group.

 

“Indebtedness”
means the aggregate from time to time of the amount of the Junior Indebtedness
and the amount of the Senior Indebtedness.

 

“Insurances”
means all policies and contracts of insurance (including all entries in
protection and indemnity or war risks associations) which are from time to time
taken out or entered into in respect of a Vessel or her increased value or her
Earnings and (where the context permits) all benefits thereof, including all
claims of any nature and returns of premium.

 

“Interest Payment Date”
means each date for the payment of interest in accordance with Clause 7.7.

 

“Interest Period”
means each period for the determination and payment of interest selected by the
Borrowers or agreed or selected by the Agent pursuant to Clause 7.

 

“ISM Code” means
the International Management Code for the Safe Operation of Ships and for
Pollution Prevention.

 

“ISM Company”
means, at any given time, the company responsible for a Vessel’s compliance
with the ISM Code under paragraph 1.1.2 of the ISM Code.

 

“ISPS  Code” means the International Ship and Port Facility Security
Code.

 

“ISPS Company”
means, at any given time, the company responsible for a Vessel’s compliance
with the ISPS Code.

 

“ISSC” means a
valid international ship security certificate for a Vessel issued under the
ISPS Code.

 

“Junior Indebtedness”
means the aggregate from time to time of the amount of the Master Agreement
Liabilities outstanding; all accrued and unpaid interest on the

 

11

 

Master Agreement Liabilities; all other
sums of any nature (together with all accrued and unpaid interest on any of
those sums) payable to the Swap Bank under the Master Agreement Documents; any
damages payable as a result of any breach by any of the Security Parties of any
of the Master Agreement Documents; and any damages or other sums payable as a
result of any of the obligations of any of the Security Parties under or
pursuant to any of the Master Agreement Documents being disclaimed by a
liquidator or any other person.

 

“LIBOR” means:

 

(a)           the applicable Screen Rate; or

 

(b)           (if no Screen Rate is
available for any Interest Period) the rate per annum determined by the Agent
to be the arithmetic mean (rounded upwards, if necessary, to the nearest
one-sixteenth of one per cent) of the rates per annum notified to the Agent by
each Lender as the rate at which deposits in the Relevant Currency are offered
to that Lender by leading banks in the London Interbank Eurocurrency Market at
that Lender’s request,

 

at 11.00 a.m. two (2) Business
Days before the first day of the relevant Interest Period for the offering of
deposits in the Relevant Currency in an amount comparable to the Loan (or any
relevant part of the Loan) and for a period comparable to the relevant
Interest Period.

 

“Loan” means the
aggregate amount from time to time advanced by the Lenders to the Borrowers
under Clause 4 or, where the context permits, the amount advanced and for the
time being outstanding.

 

“Majority Lenders”
means a Lender or Lenders whose aggregate Commitments comprise at least seventy
five per cent (75%) of the aggregate of all the Commitments.

 

“Management Agreements”
means the agreements for the commercial and/or technical management of the
Vessels each made between the relevant Borrower and the Managers and with the
following dates:

 

12

 

	
  Name
  of Vessel

  	
   

  	
  Date of Management Agreement

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  “APL
  BELGIUM”

  	
   

  	
  16 February 2001

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  “APL
  ENGLAND”

  	
   

  	
  7 September 1999

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  “APL
  SCOTLAND”

  	
   

  	
  7 September 1999

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  “HYUNDAI
  COMMODORE”

  	
   

  	
  14 April 2003

  	
   

  

 

and “Management Agreement”
means any one of them.

 

“Managers” means
Danaos Shipping Co. Ltd., a company incorporated under the laws of the Republic
of Cyprus whose registered office is at Libra House, P. Katelari Street,
Nicosia, Cyprus or such other commercial and/or technical managers of the
Vessels nominated by the Borrowers as the Agent may approve.

 

“Managers’ Undertaking”
means the managers’ confirmation for each Vessel specified in Part 1 of Schedule 2.

 

“Margin” means
zero point seven seven five per cent (0.775%) per annum.

 

“Market Value”
means, in respect of each Vessel, the market value of that Vessel determined in
accordance with Clause 12.13 on the basis of the two valuations for that Vessel
obtained pursuant to Part I of Schedule 2.

 

“Master Agreement”
means any ISDA Master Agreement (or any other form of master agreement
relating to interest or currency exchange transactions) entered into between
the Swap Bank and the Borrowers during the Facility Period, including each Schedule to
any Master Agreement and each Confirmation exchanged pursuant to any Master
Agreement.

 

“Master Agreement Documents” means the Master Agreement, and any Credit Support Documents.

 

“Master Agreement
Liabilities” means, at any relevant time, all liabilities of the
Borrowers to the Swap Bank under or pursuant to the Master Agreement and any
other Credit Support Documents, whether actual or contingent, present or
future.

 

13

 

“Maximum Drawing Amount”
means an amount of the Loan not exceeding seventy five per centum (75%) of the
Market Value of the Vessel to which the Drawing in question relates.

 

“Maximum Loan Amount”
means the lower of (i) two hundred million Dollars ($200,000,000) and (ii) seventy
five per centum (75%) of the aggregate of the Market Value of all the Vessels.

 

“Mortgages”
means the preferred and statutory mortgages referred to in Clause 12.1.1
together with the Deeds of Covenants  and “Mortgage”
means any one of them.

 

“New Currency” means, in relation to any conversion between
Relevant Currencies to be made under Clause 9, the Relevant Currency in which
the relevant part of the Loan is denominated after conversion.

 

“NOL” means Neptune Orient Lines Ltd., a company
incorporated under the laws of Singapore.

 

“Original Group Statements”
means the Group Statements for the financial year ending 31 December 2004.

 

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

 

“Permitted Encumbrance”
means any Encumbrance which has the prior written approval of the Agent, or any
liens for current crews’ wages and salvage and liens incurred in the ordinary
course of trading a Vessel up to an aggregate amount at any time not exceeding
ten per cent (10%) of the charter-free market value of that Vessel determined
in accordance with Clause 12.13 Provided that the aggregate amount of the
Permitted Encumbrance and the Indebtedness does not a any time exceed eighty
per centum (80%) of the charter-free market value of all the Vessels determined
in accordance with Clause 12.13.

 

“Proportionate Share”
means, in the case of a Lender, at any time, the proportion which a Lender’s
Commitment (whether or not advanced) then bears to the aggregate Commitments of
all the Lenders (whether or not advanced).

 

14

 

“Relevant Currency” means Dollars and/or the Approved Currency in
which the Loan or any part thereof is or will be denominated (as the case may be)
at the relevant time.

 

“Relevant Documents”
means the Creditor Documents and the Management Agreements.

 

“Repayment Date”
means the date for payment of any Repayment Instalment in accordance with
Clause 5.1.

 

“Repayment Instalment”
means any instalment of the Loan to be repaid by the Borrowers under
Clause 5.1.

 

“Requisition Compensation”
means all compensation or other money which may from time to time be
payable to a Borrower as a result of a Vessel being requisitioned for title or
in any other way compulsorily acquired (other than by way of requisition for
hire).

 

“Screen Rate”
means in relation to LIBOR, the British Bankers’ Association Interest
Settlement Rate for the relevant currency and period displayed on the
appropriate page of the Reuters screen. If the agreed page is
replaced or the service ceases to be available, the Agent may specify
another page or service displaying the appropriate rate after consultation
with the Borrowers and the Lenders.

 

“Security Documents”
means this Agreement, the Mortgages, the Deeds of Covenants, the Assignments,
the Guarantee, the Accounts Charge, the Managers’ Undertakings or (where the
context permits) any one or more of them and any other agreement or document
which may at any time be executed by any person as security for the
payment of all or any part of the Indebtedness and “Security
Document” means any one of them.

 

“Security Parties”
means the Borrowers, the Guarantor and any other person who may at any
time during the Facility Period be liable for, or provide security for, all or
any part of the Indebtedness, and “Security Party”
means any one of them.

 

“Senior Indebtedness”
means the aggregate from time to time of the amount of the Loan outstanding;
all accrued and unpaid interest on the Loan; all other sums of any nature
(together with all accrued and unpaid interest on any of those sums) payable to
any of the Finance Parties under the Finance Documents; any damages

 

15

 

payable as a result of any breach by any of
the Security Parties of any of the Finance Documents; and any damages or other
sums payable as a result of any of the obligations of any of the Security
Parties under or pursuant to any of the Finance Documents being disclaimed by a
liquidator or any other person.

 

“SMC” means a valid safety management certificate issued for
a Vessel by or on behalf of the Administration under paragraph 13.7 of the ISM
Code.

 

“SMS” means a safety management system for a Vessel developed
and implemented in accordance with the ISM Code.

 

“Spot Rate of Exchange” 
means the spot rate (based on the market rate prevailing in the London
Interbank Eurocurrency Market) quoted by the Agent at or about 11.00 a.m.
on the second Business Day before the date for purchase of one Relevant
Currency with another Relevant Currency.

 

“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).

 

“Subsidiaries” means the direct and indirect subsidiaries of the Guarantor;

 

“Tax” means any
tax, levy, impost, duty or other charge or withholding of a similar nature
(including any penalty or interest payable in connection with any failure to
pay or any delay in paying any of the same).

 

“Total Loss”
means:

 

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

 

(b)           the requisition for title or compulsory acquisition of a Vessel by
any government or other competent authority (other than by way of requisition
for hire); or

 

(c)           the capture, seizure, arrest, detention or confiscation of a Vessel
by any government or by persons acting or purporting to act on behalf of any

 

16

 

government, unless that Vessel is released and
returned to the possession of the relevant Borrower within one month after the
capture, seizure, arrest, detention or confiscation in question.

 

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

 

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

 

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

 

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

 

(ii)           the date of any compromise,arrangement or agreement made by or on behalf of the relevant Borrower
with such Vessel’s insurers in which the insurers agree to treat such Vessel as
a total loss.

 

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

 

“Transfer Certificate”
means a certificate substantially in the form set out in Schedule 4
or any other form agreed between the Agent, the Borrowers, the transferor
and the transferee.

 

“Transfer Date”,
in relation to any Transfer Certificate, the later of:

 

(a)           the proposed Transfer Date specified in the Transfer Certificate;
and

 

(b)           the date on which the Agent executes the Transfer Certificate.

 

“Trust Property” means:

 

(a)           all benefits derived by the Security Agent from Clause 17; and

 

(b)           all benefits arising under (including, without limitation, all
proceeds of the enforcement of) each of the Security Documents,

 

with the exception of any benefits arising solely for
the benefit of the Security Agent.

 

17

 

“Vessels” means
the following vessels, and everything now or in the future belonging to them on
board and ashore, currently registered under the respective flags set out below
in the ownership of the respective Borrower set out below and “Vessel” means any one of them:

 

	
  Name
  of Vessel

  	
   

  	
  Flag

  	
   

  	
  Borrower

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  “APL BELGIUM”

  	
   

  	
  Singapore

  	
   

  	
  Lato

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  “APL ENGLAND”

  	
   

  	
  Singapore

  	
   

  	
  Ferrous

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  “APL
  SCOTLAND”

  	
   

  	
  Singapore

  	
   

  	
  Cobaltium

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  “HYUNDAI
  COMMODORE”

  	
   

  	
  Greek

  	
   

  	
  Commodore

  	
   

  

 

1.2           In this Agreement:

 

1.2.1        words denoting the plural number include the singular and vice
versa;

 

1.2.2        words denoting persons include
corporations, partnerships, associations of persons (whether incorporated or
not) or governmental or quasi-governmental bodies or authorities and vice versa;

 

1.2.3        references to Recitals,
Clauses and Schedules are references to recitals, clauses and schedules to or
of this Agreement;

 

1.2.4        references to this Agreement
include the Recitals and the Schedules;

 

1.2.5        the headings and contents
page(s) are for the purpose of reference only, have no legal or other
significance, and shall be ignored in the interpretation of this Agreement;

 

1.2.6        references to any document
(including, without limitation, to all or any of the Relevant Documents) are,
unless the context otherwise requires, references to that document as amended,
supplemented, novated or replaced from time to time;

 

1.2.7        references to statutes or
provisions of statutes are references to those statutes, or those provisions,
as from time to time amended, replaced or re-enacted;

 

18

 

1.2.8        references to any
Creditor Party include its successors, transferees and assignees;

 

1.2.9        a time of day (unless
otherwise specified) is a reference to London time; and

 

1.2.10      words and expressions defined in
the Master Agreement, unless the context otherwise requires, have the same
meaning.

 

1.3           Offer letter

 

This
Agreement supersedes the terms and conditions contained in any correspondence
(except the Fee Letter) relating to the subject matter of this Agreement
exchanged between any Creditor Party and the Borrowers or their representatives
prior to the date of this Agreement.

 

2              The Loan and its Purpose

 

2.1           Amount   Subject to the terms of this Agreement, the
Lenders agree to make available to the Borrowers on a joint and several basis a
term loan not exceeding the Maximum Loan Amount.

 

2.2           Obligations of Creditor Parties  The obligations
of each Creditor Party under the Creditor Documents are several. Failure by a
Creditor Party to perform its respective obligations under the Creditor
Documents does not affect the obligations of any other party to the Creditor
Documents. The Creditor Parties are not responsible for each other’s
obligations under the Creditor Documents.

 

2.3           Purpose   The Borrowers shall apply the Loan for the purposes referred to in
Recital (B).

 

2.4           Monitoring   No Creditor Party is bound to monitor or
verify the application of any amount borrowed under this Agreement.

 

3              Conditions of Utilisation

 

3.1           Conditions precedent   The Borrowers
are not entitled to have any Drawing advanced, or to enter into any Hedging
Transactions, unless the Agent has received all of the documents and other
evidence listed in Part I of Schedule 2, save that references in Section 2
of that Part I to “the Vessel” or to any person or

 

19

 

document relating to a Vessel shall be deemed to
relate solely to any Vessel specified in the relevant Drawdown Notice or to any
person or document relating to that Vessel respectively.

 

3.2           Further conditions precedent   The Lenders will
only be obliged to advance a Drawing, if on the date of the Drawdown Notice and
on the proposed Drawdown Date:

 

3.2.1        no Default is continuing or would result from the advance of that
Drawing; and

 

3.2.2        the representations made by
the Borrowers under Clause 13 are true in all material respects.

 

3.3           Drawing limit   The Lenders will only be
obliged to advance a Drawing if that Drawing will not increase the Loan to a
sum in excess of the Maximum Loan Amount nor result in more than seventy five
per cent (75%) of the Market Value of the Vessel to which that Drawing relates
being advanced for that Vessel.

 

3.4           Conditions subsequent   The Borrowers undertake to deliver or to
cause to be delivered to the Agent on, or as soon as practicable after, the
relevant Drawdown Date the additional documents and other evidence listed in Part II
of Schedule 2, save that references in that Part II to “the Vessel”
or to any person or document relating to a Vessel shall be deemed to relate
solely to any Vessel specified in the relevant Drawdown Notice or to any person
or document relating to that Vessel respectively.

 

3.5           No Waiver   If the Lenders in their sole discretion
agree to advance a Drawing to the Borrowers before all of the documents and
evidence required by Clause 3.1 have been delivered to or to the order of the
Agent, the Borrowers undertake to deliver all outstanding documents and
evidence to or to the order of the Agent no later than thirty (30) days after
the relevant Drawdown Date or within such other reasonable period specified by
the Agent.

 

The advance of a Drawing under this Clause 3.5 shall
not be taken as a waiver of the Lenders’ right to require production of all the
documents and evidence required by Clause 3.1.

 

20

 

3.6           Form and
content   All
documents and evidence delivered to the Agent under this Clause 3 shall:

 

3.6.1        be in form and substance acceptable to the Agent; and

 

3.6.2        if required by the Agent, be certified, notarised, legalised or
attested in a manner acceptable to the Agent.

 

4              Advance

 

4.1           Drawdown Request   The Borrowers may request a Drawing to
be advanced in one amount on any Business Day prior to the Availability
Termination Date by delivering to the Agent a duly completed Drawdown Notice
not more than ten (10) and not fewer than three (3) Business Days
before the proposed Drawdown Date.

 

4.2           Lenders’ participation   Subject to
Clauses 2 and 3, the Agent shall promptly notify each Lender of the receipt of
a Drawdown Notice, following which each Lender shall advance its Proportionate
Share of the relevant Drawing to the Borrowers through the Agent on the
relevant Drawdown Date.

 

5              Repayment

 

5.1           Repayment of Loan   The Borrowers agree to repay the Loan to the
Agent for the account of the Lenders by thirty two consecutive quarterly
instalments each in the sum of four million one hundred and seventy five
thousand Dollars ($4,175,000) (or the equivalent converted at the Spot Rate of
Exchange into the Relevant Currency in which the Loan, or the relevant part thereof,
is then denominated) together with a balloon payment of sixty six million four
hundred thousand Dollars ($66,400,000) (or the equivalent converted at the Spot
Rate of Exchange into the Relevant Currency in which the Loan, or the relevant part thereof,
is then denominated) (the “Balloon”)
payable together with the thirty second and final Repayment Instalment, the
first instalment falling due on the date which is three calendar months after
the Availability Termination Date and subsequent instalments falling due at
consecutive intervals of three calendar months thereafter.

 

5.2           Reduction of Repayment Instalments   If the aggregate amount
advanced to the Borrowers is less than the Maximum Loan Amount, the amount of
each

 

21

 

Repayment Instalment, including the Balloon, shall be
reduced pro rata to the amount actually advanced.

 

5.3           Reborrowing  
The Borrowers may not reborrow any part of
the Loan which is repaid or prepaid.

 

6              Prepayment

 

6.1           Illegality  
If it becomes unlawful in any jurisdiction
for a Lender to perform any of its obligations as contemplated by this
Agreement or to fund or maintain the Loan:

 

6.1.1        that Lender shall promptly notify the Agent of that event;

 

6.1.2        upon the Agent notifying the Borrowers, the Commitment of that
Lender (to the extent not already advanced) will be immediately cancelled; and

 

6.1.3        the Borrowers shall repay that Lender’s Commitment (to the extent
already advanced) on the last day of the current Interest Period or, if
earlier, the date specified by that Lender in the notice delivered to the Agent
and notified by the Agent to the Borrowers (being no earlier than the last day
of any applicable grace period permitted by law) and the remaining Repayment
Instalments shall be reduced pro rata; and

 

without
prejudice to the liability of the Borrowers to prepay the Loan in accordance
with this Clause 6.1, the Borrowers and the Finance Parties shall negotiate in
good faith with a view to agreeing the terms for making the Loan available from
another jurisdiction, or funding the Loan from alternative sources, or
otherwise restructuring the Loan on a basis which is not unlawful. If the said
terms are not agreed within thirty (30) days then the negotiations shall
forthwith terminate and the Borrowers shall immediately prepay the Loan in
accordance with the foregoing provisions of this Clause 6.1.

 

6.2           Voluntary prepayment of Loan   The Borrowers may prepay the whole or any part of the Loan
(but, if in part, being an amount that reduces the Loan by a minimum amount of
two million Dollars ($2,000,000) (or the equivalent converted at the Spot Rate
of Exchange into the Relevant Currency in which the Loan, or the relevant part thereof,
is then denominated)) subject as follows:

 

22

 

6.2.1        they give the Agent not less
than thirty (30) Business Days’ (or such shorter period as the Agent may agree)
prior notice;

 

6.2.2        no prepayment may be made
until after the Availability Termination Date; and

 

6.2.3        prepayment is made on the last
day of any Interest Period for the Loan; and

 

6.2.4        any prepayment under this Clause 6.2 shall be applied pro rata in
prepayment of the remaining Repayment Instalments including the Balloon.

 

6.3           Mandatory prepayment on sale or Total Loss   If a Vessel is sold by a
Borrower or becomes a Total Loss, the Borrowers shall, simultaneously with any
such sale or on the earlier of the date falling one hundred and twenty (120)
days after the Total Loss Date and the date of receipt by the Security Trustee
of the proceeds of insurance relating to such Total Loss make a prepayment of
the Loan in an amount equivalent to the higher of:-

 

6.3.1        the same proportion of the Loan then outstanding as the market value
of that Vessel, determined in accordance with Clause 12.13, bears to the
aggregate of:-

 

(a)           the market values of all
the Vessels, determined in accordance with Clause 12.13; and

 

(b)            the value of any
additional security for the time being provided under Clause 12.14 (such values
to be determined in accordance with Clause 12.14); and

 

6.3.2        the amount necessary to ensure continuing compliance with Clause
12.14.

 

Any such prepayment shall be applied in accordance
with Clause 6.2.3.

 

6.4           Restrictions  
Any notice of prepayment given under this
Clause 6 shall be irrevocable and, unless a contrary indication appears in this
Agreement, shall specify the date or dates upon which the relevant prepayment
is to be made and the amount of that prepayment.

 

23

 

Any prepayment under this Agreement shall be made
together with accrued interest on the amount prepaid and, subject to any Break
Costs and without premium or penalty.

 

If the Agent receives a notice under this
Clause 6 it shall promptly forward a copy of that notice to the Borrowers
or the Lenders, as appropriate.

 

7              Interest

 

7.1           Interest Periods   The period during which the Loan shall be
outstanding under this Agreement shall be divided into consecutive Interest
Periods of one, three, six, nine or twelve months’ duration, as selected
by the Borrowers by written notice to the Agent not later than 11.00 a.m.
on the third Business Day before the beginning of the Interest Period in
question, or such other duration as may be agreed by the Agent (acting on
the instructions of all the Lenders and subject to availability).

 

7.2           Commencement of Interest Periods. The first Interest Period applicable to a Drawing shall
commence on the Drawdown Date applicable to it and each subsequent Interest
Period for it shall commence on the expiry of the preceding Interest Period but
provided that after the last Drawing the Interest Periods for all Drawings
shall be consolidated so that they start and terminate simultaneously with the
Interest Period for the first Drawing.

 

7.3           Interest Periods to meet Repayment Dates   If an Interest
Period would otherwise expire after the next Repayment Date, there shall be a
separate Interest Period for a part of the Loan equal to the relevant
Repayment Instalment which shall expire on the next Repayment Date and the
Interest Period determined shall apply only to the balance of the Loan.

 

7.4           Non-Business Days   If an Interest Period would otherwise end on
a day which is not a Business Day, that Interest Period will instead end on the
next Business Day in that calendar month (if there is one) or the preceding
Business Day (if there is not).

 

7.5           Interest rate   During each Interest Period interest shall
accrue on the Loan at the rate determined by the Agent to be the aggregate of (a) the
Margin and (b) LIBOR.

 

7.6           Failure to select Interest Period  
If the Borrowers at any time fail to select
or agree an Interest Period in accordance with Clause 7.1, the interest rate
applicable

 

24

 

after the expiry of the then current Interest Period
shall be the rate determined by the Agent in accordance with Clause 7.5 for an
Interest Period of such duration (not exceeding three months) as the Agent may select.

 

7.7           Accrual and payment of interest  
Interest shall accrue from day to day, shall
be calculated on the basis of a 360 day year and the actual number of days
elapsed (or, in any circumstance where market practice differs, in accordance
with the prevailing market practice) and shall be paid by the Borrowers to the
Agent for the account of the Lenders on the last day of each Interest Period
and, if the Interest Period is longer than three months, on the dates falling
at three monthly intervals after the first day of that Interest Period.

 

7.8            Default interest   If a Borrower fails to pay any amount payable by it under a Creditor
Document on its due date, interest shall accrue on the overdue amount from the
due date up to the date of actual payment (both before and after judgment) at a
rate which is two per cent (2%) higher than the rate which would have been
payable if the overdue amount had, during the period of non-payment,
constituted the Loan, or, as the context may require, the Master Agreement
Liabilities, in the currency of the overdue amount for successive Interest
Periods, each selected by the Agent, in the case of the Loan, or the Swap Bank,
in the case of the Master Agreement Liabilities (acting reasonably). Any
interest accruing under this Clause 7.8 shall be immediately payable by that
Borrower on demand by the Agent, in the case of the Loan, or on demand by the
Swap Bank, in the case of the Master Agreement Liabilities. If unpaid, any such
interest will be compounded with the overdue amount at the end of each Interest
Period applicable to that overdue amount, in the case of the Loan, or at such
periods as the Swap Bank may require, in the case of the Master Agreement
Liabilities, but will remain immediately due and payable.

 

7.9           Changes in market circumstances   If at any time
the Agent determines (which determination shall be final and conclusive and
binding on the Borrowers) that, by reason of changes affecting the London
Interbank Eurocurrency Market, adequate and fair means do not exist for
determining the rate of interest on the Loan for any Interest Period:

 

7.9.1        the Agent shall give notice to the Lenders and the Borrowers of the
occurrence of such event; and

 

25

 

7.9.2        the rate of interest on each Lender’s Commitment for that Interest
Period shall be the rate per annum which is the sum of:

 

(a)           the Margin; and

 

(b)           the rate notified to the Agent by that Lender as soon as practicable,
and in any event before interest is due to be paid in respect of that Interest
Period, to be that which expresses as a percentage rate per annum the cost to
that Lender of funding its Commitment from whatever source it may reasonably
select,

 

PROVIDED THAT if the resulting rate of interest on any
Commitment is not acceptable to the Borrowers:

 

7.9.3        the Agent on behalf of all the Lenders will negotiate with the
Borrowers in good faith with a view to modifying this Agreement to provide a
substitute basis, which is acceptable to all the Lenders, for determining the
rate of interest which is financially a substantial equivalent to the basis
provided for in this Agreement;

 

7.9.4        any substitute basis agreed pursuant to Clause 7.9.3 shall be
binding on all the parties to this Agreement and shall apply to all
Commitments; and

 

7.9.5        if, within thirty (30) days of the giving of the notice referred to
in Clause 7.9.1, the Borrowers and the Agent fail to agree in writing on a
substitute basis for determining the rate of interest, the Borrowers will
immediately prepay the relevant Commitment, together with any Break Costs, and
the remaining Repayment Instalments shall be reduced pro rata.

 

7.10         Determinations conclusive   The Agent shall promptly notify the Borrowers of the determination
of a rate of interest under this Clause 7 and each such determination shall
(save in the case of manifest error) be final and conclusive.

 

8              The Master Agreement

 

8.1           Applicability   The Borrowers may enter into Hedging Transactions Provided
that:-

 

8.1.1        Hedging Transactions may only be concluded in relation to the
Loan; and

 

8.1.2        Hedging Transactions are secured by the Creditor Documents.

 

26

 

8.2           Subordination – agreement of
Swap Bank  The Swap Bank agrees with the Finance Parties that,
at all times during the Facility Period, all rights and powers of the Swap Bank
in respect of the Junior Indebtedness and all rights and powers of the Swap
Bank against the Borrowers, the Vessels and any property secured and/or
assigned pursuant to the Finance Documents or otherwise shall be fully
subordinated to all rights and powers of the Finance Parties in respect of the
Senior Indebtedness and all rights, powers, discretions and remedies of any Finance
Party under or pursuant to the Finance Documents.

 

8.3           Subordination – agreement
of Borrowers  The Borrowers agree that their
obligations in respect of the Junior Indebtedness are, and shall throughout the
Facility Period be, subordinated to their obligations in respect of the Senior
Indebtedness.

 

8.4           No
amendments to Master Agreement Documents The Swap
Bank and the Borrowers each undertake not to vary or amend the terms of any of
the Master Agreement Documents during the Facility Period without the prior
written consent of the Agent.

 

8.5           Amount of
Senior Indebtedness Any certificate or statement
signed by an authorised signatory of the Agent or the Security Agent purporting
to show the amount of the Senior Indebtedness (or any part of the Senior
Indebtedness) or any other amount referred to in any of the Finance Documents
shall, save for manifest error or on any question of law, be conclusive
evidence as against the Borrowers and the Swap Bank of that amount.

 

8.6           Priority  The Swap Bank agrees that the Finance
Documents shall throughout the Facility Period constitute a continuing security
for the whole of the Senior Indebtedness, which security shall be senior in
priority to the Junior Indebtedness, notwithstanding that any of the Senior
Indebtedness may have arisen after the execution and/or registration of
any of the Master Agreement Documents and notwithstanding any fluctuations in
the amount of the Senior Indebtedness.

 

8.7           Covenants
of the Swap Bank  The Swap Bank covenants with the Finance
Parties that during the Facility Period:

 

8.7.1        it will
not take any steps to enforce any of its rights under or pursuant to the
Creditor Documents without having first obtained the prior written consent of
the Agent;

 

27

 

8.7.2        it will not take any
proceedings to place the Borrowers, or any of them, into liquidation,
administration or receivership nor take any analogous steps without having
obtained the prior written consent of the Agent;

 

8.7.3        it will not contest nor
attempt to contest the security constituted by, or any of the rights of any
Finance Party under or pursuant to, the Finance Documents.

 

8.8           No prejudice to
Finance Documents  The Swap Bank undertakes to the Finance Parties that the Swap Bank
has not entered into, and will not at any time during the Facility Period enter
into, any arrangement in respect of the Master Agreement Documents, or any
transactions related to or contemplated by the Master Agreement Documents, as a
result of which the Finance Documents or the security and other rights
constituted and conferred on any Finance Party by the Finance Documents are, or
may be, prejudiced.

 

8.9           Notice to third parties  The Swap Bank undertakes to the Finance
Parties that the Swap Bank will not at any time during the Facility Period give
any notice to any third party inconsistent with the rights and powers of any
Finance Party under or pursuant to the Finance Documents.

 

8.10         Finance Parties’ rights   The Finance Parties may at any time
and from time to time without prejudicing their rights under or pursuant to the
Finance Documents and subject to notifying the Swap Bank:

 

8.10.1      subject to the provisions of
Clause 17.4, amend, supplement, novate or replace any of the Finance Documents
or agree to do so; or

 

8.10.2      assign, novate, transfer or
grant participations in the Senior Indebtedness or their rights under or
pursuant to the Finance Documents.

 

8.11         Exercise of
Finance Parties’ rights  No failure to exercise, nor delay in
exercising, on the part of any Finance Party, any right or remedy under or
pursuant to any of the Finance Documents, nor any actual or alleged course of
dealing between any Finance Party and the Borrowers, shall operate as a waiver
of, or acquiescence in, any default on the part of the Borrowers unless
expressly agreed to do so in writing by the Agent, nor shall any single or
partial exercise by any Finance Party of any right or remedy preclude any other
or further exercise of

 

28

 

that right or remedy, or the exercise by
any Finance Party of any other right or remedy.

 

8.12         No assignment by Swap Bank  The Swap Bank shall not assign nor
transfer any of its right, title or interest in any of the Master Agreement
Documents, nor grant any participation in the Junior Indebtedness to any party
other than in accordance with Clause 16.

 

8.13         Consents and Approvals  Where any act requires the consent or
approval of the Agent under the terms of any of the Finance Documents and the
same or a similar act requires the consent or approval of the Swap Bank under
any of the Master Agreement Documents, the consent or approval of the Agent
shall be deemed also to constitute the consent or approval of the Swap Bank
under the Master Agreement Documents.

 

9              Alternative currency options

 

9.1           Request to
convert  At
the commencement of any Interest Period the Borrowers, by written notice to the
Agent given not later than 10.00 a.m. (Athens time) three (3) Business
Days before the commencement of such Interest Period, may request that,
from the time of commencement of such Interest Period, part of the Loan be
converted from one Relevant Currency to another Relevant Currency as specified
in such notice.              Upon
receipt of each such notice, the Agent shall immediately notify each of the
Lenders, giving each of them full details of the conversion request.

 

9.2           Restrictions to
conversion 
Subject only to:-

 

9.2.1        at all times thirty percent
(30%) of the Loan being denominated in Dollars;

 

9.2.2        the total Loan being denominated in not more than three Relevant
Currencies, one of which must be Dollars, and

 

9.2.3        any amount in any Approved Currency outstanding under the Loan being
not less than twenty percent (20%) of the total amount outstanding thereunder;

 

9.2.4        no Event of Default then having occurred and being continuing

 

29

 

the amount in respect of the Loan which the Borrowers
have requested to be converted from one Relevant Currency to another Relevant
Currency shall be converted by the Lenders in accordance with the Borrowers’
request with effect from the commencement of the relevant Interest Period.

 

9.3           Notional repayment  Each conversion under this Clause 9 shall made
by the Borrowers being deemed to make a notional repayment of the relevant part of
the Loan which is to be converted and the Lenders 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 5 and any mandatory
prepayment under Clauses 9.6 or 9.7.

 

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 Loan which is being converted. However, the Borrowers shall remain indebted
to the Lenders for the advance made in the New Currency, which shall continue
to form part of the Loan as more particularly described in Clause
9.8.

 

9.4           Notice  If the Agent does not receive a notice in accordance with Clause 9.1
the relevant part of the Loan shall remain denominated in the Relevant
Currency in which it was denominated during the then current Interest Period in
respect thereof.

 

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 9.2 would not then
be complied with, then such Currency Tranche shall be denominated in Dollars
for the next Interest Period.

 

9.5           Borrowers’ obligations  The Borrowers’ obligation
shall be to make all payments in respect of principal of all parts of the Loan
and interest thereon and other payments under this Agreement in the Relevant
Currency in which the Loan or part thereof is for the time being
denominated and at the Spot Rate of Exchange applicable at such time.

 

9.6           Mandatory prepayment  If on any
Repayment Date the Agent determines that:

 

30

 

(a)            the consolidated aggregate of the Currency Equivalent in Dollars of
all of the Currency Tranches, PLUS

 

(b)           the remaining part (if any) of the Loan in Dollars,

 

is more than 105% of the aggregate of:

 

(c)           the Dollar Reference Amount of the Loan at that time; and

 

(d)           the value of any additional security provided in accordance with
this Clause 9.6;

 

then, subject only as hereinafter provided, a
prepayment of the Loan shall be made on that Repayment Date of a sum sufficient
to reduce the aggregate amounts referred to in this Clause 9.6 (a) and (b) to
100% of the aggregate amounts referred to in this Clause 9.6 (c) and (d). However,
before such prepayment is made, at the Borrowers’ request the Agent shall give
the Borrowers the opportunity, within five (5) Business Days after being
requested to do so, to provide alternative additional security acceptable to
the Agent (to which the provisions of Clauses 12.13 and 12.14 shall apply) so
as to ensure that, after taking into account all such additional security, such
100% limit is not exceeded.

 

9.7             Conversion to Dollars  If the whole of the Loan is converted into Dollars and the Loan is more
than 100% of the Dollar Reference Amount of the Loan at that time then, at the
date of such conversion, a prepayment of the Loan shall be made of a sum
sufficient to reduce the amount of the Loan to 100% of the Dollar Reference
Amount of the Loan at that time. If the Loan, when converted in full to
Dollars, is less than 100% of the Dollar Reference Amount of the Loan at that
time, then the Borrowers will not be permitted to re-borrow any part of
the Loan.

 

9.8           Conversion as banking mechanism 
It is agreed that the conversion operations
contemplated by Clause 9 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 Loan or the grant of new loans. The Borrowers agree
that the security to be constituted by all the Finance Documents shall secure
both the initial amount of all parts of the Loan and all advances made by the
Lenders to effect such conversions.

 

31

 

Nothwithstanding 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.

 

9.9           Event of Default  After the occurrence of an Event of Default the Borrowers shall not
be permitted to exercise their rights under this Clause 9 and from the Interest
Period following the occurrence of an Event of Default the Loan may be
denominated only in Dollars if and when the Agent should so decide, in its sole
discretion and at the expense of the Borrowers.

 

10           Indemnities

 

10.1         Transaction expenses   The Borrowers
will, within fourteen (14) days of the Agent’s written demand, pay the Agent
(on behalf of the Creditor Parties) the amount of all costs and expenses
(including legal fees and Value Added Tax or any similar or replacement tax if
applicable) incurred by the Creditor Parties or any of them in connection with:

 

10.1.1      the negotiation, preparation, printing, execution and registration
of the Creditor Documents (whether or not any Creditor Document is actually
executed or registered and whether or not all or any part of the Loan is
advanced or any Hedging Transaction is made);

 

10.1.2      any amendment, addendum or supplement to any Creditor Document
(whether or not completed); and

 

10.1.3      any other document which may at any time be required by a
Creditor Party to give effect to any Creditor Document or which a Creditor
Party is entitled to call for or obtain under any Creditor Document.

 

10.2         Funding costs   The Borrowers shall indemnify each Creditor
Party on demand against all losses and costs incurred or sustained by that
Creditor Party if, for any reason, a Drawing is not advanced to the Borrower
after the relevant Drawdown Notice has been given to the Agent, or is advanced
on a date other than that requested in the Drawdown Notice (unless, in either
case, as a result of any default by a Creditor Party).

 

32

 

10.3         Break Costs   The Borrower shall indemnify each Creditor
Party on demand against all costs, losses, premiums or penalties incurred by
that Creditor Party as a result of its receiving any prepayment of all or any part of
the Loan (whether pursuant to Clause 6 or otherwise) on a day other than the
last day of an Interest Period for the Loan or relevant part of the Loan,
or any other payment under or in relation to the Creditor Documents on a day
other than the due date for payment of the sum in question, including (without
limitation) any losses or costs incurred by that Creditor Party in liquidating
or re-employing deposits from third parties acquired to effect or maintain all
or any part of the Loan, and any liabilities, expenses or losses incurred
by the Swap Bank in terminating or reversing, or otherwise in connection with,
any Hedging Transaction or any other interest rate and/or currency swap,
transaction or arrangement entered into by that Creditor Party to hedge any
exposure arising under this Agreement and/or the Master Agreement, or in
terminating or reversing, or otherwise in connection with, any open position
arising under this Agreement and/or the Master Agreement.

 

10.4         Currency indemnity   In the event of
a Creditor Party receiving or recovering any amount payable under a Creditor
Document in a currency other than the Currency of Account, and if the amount
received or recovered is insufficient when converted into the Currency of
Account at the date of receipt to satisfy in full the amount due, the Borrowers
shall, on the Agent’s written demand, pay to the Agent for the account of the
relevant Creditor Party such further amount in the Currency of Account as is
sufficient to satisfy in full the amount due and that further amount shall be
due to the Agent on behalf of the relevant Creditor Party as a separate debt
under this Agreement.

 

10.5         Increased costs  
If, by reason of the introduction of any law,
or any change in any law, or any change in the interpretation or administration
of any law, or compliance with any request or requirement from any central bank
or any fiscal, monetary or other authority occurring after the date of this
Agreement:

 

10.5.1      a Creditor Party (or the holding company of a Creditor Party) shall
be subject to any Tax with respect to payment of all or any part of the
Indebtedness; or

 

10.5.2      the basis of Taxation of payments to a Creditor Party in respect of
all or any part of the Indebtedness shall be changed; or

 

33

 

10.5.3      any reserve requirements shall be imposed, modified or deemed
applicable against assets held by or deposits in or for the account of or loans
by any branch of a Creditor Party; or

 

10.5.4      the manner in which a Creditor Party allocates capital resources to
its obligations under this Agreement and/or the Master Agreement or any ratio
(whether cash, capital adequacy, liquidity or otherwise) which a Creditor Party
is required or requested to maintain shall be affected; or

 

10.5.5      there is imposed on a Creditor Party (or on the holding company of a
Creditor Party) any other condition in relation to the Indebtedness or the
Creditor Documents;

 

and the result of any of the above shall be to
increase the cost to a Creditor Party (or to the holding company of a Creditor
Party) of that Creditor Party making or maintaining its Commitment, or its
obligations under the Master Agreement, or to cause a Creditor Party to suffer (in
its opinion) a material reduction in the rate of return on its overall capital
below the level which it reasonably anticipated at the date of this Agreement
and which it would have been able to achieve but for its entering into this
Agreement or the Master Agreement, and/or performing its obligations under this
Agreement or the Master Agreement, the Creditor Party affected shall notify the
Agent and the Borrowers shall from time to time pay to the Agent on demand for
the account of that Creditor Party the amount which shall compensate that
Creditor Party (or the relevant holding company) for such additional cost or
reduced return. A certificate signed by an authorised signatory of that
Creditor Party setting out the amount of that payment and the basis of its
calculation shall be submitted to the Borrowers and shall be conclusive
evidence of such amount save for manifest error or on any question of law.

 

10.6         Events of Default   The Borrowers shall indemnify each Creditor Party from time to time
on demand against all losses, costs and liabilities incurred or sustained by
that Creditor Party as a consequence of any Event of Default.

 

10.7         Enforcement costs   The Borrowers shall pay to each Creditor
Party on demand the amount of all costs and expenses (including legal fees)
incurred by that Creditor Party in connection with the enforcement of, or the
preservation of any rights under, any Creditor Document including (without
limitation) any losses, costs and expenses which that Creditor Party may from
time to time sustain, incur or become

 

34

 

liable for by reason of that Creditor Party being
mortgagee of a Vessel and/or a lender to the Borrowers, or by reason of that
Creditor Party being deemed by any court or authority to be an operator or
controller, or in any way concerned in the operation or control, of a Vessel.

 

10.8         Other costs   The Borrowers shall pay to each Creditor
Party on demand the amount of all sums which that Creditor Party may pay
or become actually or contingently liable for on account of a Borrower in
connection with a Vessel (whether alone or jointly or jointly and severally
with any other person) including (without limitation) all sums which that
Creditor Party may pay or guarantees which it may give in respect of
the Insurances, any expenses incurred by that Creditor Party in connection with
the maintenance or repair of a Vessel or in discharging any lien, bond or other
claim relating in any way to a Vessel, and any sums which that Creditor Party may pay
or guarantees which it may give to procure the release of a Vessel from
arrest or detention.

 

10.9         Taxes   The Borrowers shall pay all Taxes to which all or any part of
the Indebtedness or any Creditor Document may be at any time subject and
shall indemnify the Creditor Parties on demand against all liabilities, costs,
claims and expenses resulting from any omission to pay or delay in paying any
such Taxes.

 

11           Fees

 

The Borrowers shall pay to the Agent the
underwriting fee, the arrangement fee and the agency fee in the amount, at the
times and for distribution in the manner agreed in a Fee Letter.

 

12           Security and Application of Moneys

 

12.1         Security Documents   As security for the payment of the
Indebtedness, the Borrowers shall execute and deliver to the Security Agent or
cause to be executed and delivered to the Security Agent the following
documents in such forms and containing such terms and conditions as the
Security Agent shall require:

 

12.1.1      first preferred or, as the context may require, statutory
mortgages over the Vessels together with, in the case of each statutory
mortgage a collateral deed of covenants;

 

35

 

12.1.2      first priority deeds of assignment of the Insurances, Earnings and
Requisition Compensation of the Vessels;

 

12.1.3      a guarantee and indemnity from the Guarantor;

 

12.1.4      a first priority deed of charge over the Earnings Account and all
amounts from time to time standing to the credit of the Earnings Account; and

 

12.1.5      a manager’s confirmation in respect of each Vessel.

 

12.2         Earnings Account  
The Borrowers shall maintain the Earnings
Account with the Agent for the duration of the Facility Period free of
Encumbrances and rights of set off other than those created by or under the
Finance Documents. Interest shall accrue on a daily basis on any balance from
time to time on the Earnings Account at a rate of interest determined by the
Agent in its discretion as the rate of interest payable to its customers on
deposits in the same currency and of similar amount and maturity, and shall be
credited to the appropriate Earnings Account.

 

12.3         Earnings   The Borrowers shall procure that all Earnings and any Requisition
Compensation for all the Vessels are credited to the Earnings Account.

 

12.4         Application of Earnings Account   The Borrowers
shall procure that there is transferred from the Earnings Account, to the
Agent:

 

12.4.1      on each Repayment Date, the amount of the Repayment Instalment then
due; and

 

12.4.2      on each Interest Payment Date, the amount of interest then due,

 

and the Borrowers irrevocably authorise the Agent to
make those transfers.

 

12.5         Borrower’s obligations not affected   If for any
reason the amount standing to the credit of the Earnings Account is
insufficient to pay any Repayment Instalment or to make any payment of interest
when due, the Borrowers’ obligations to pay that Repayment Instalment, or to
make that payment of interest shall not be affected.

 

12.6         Release of surplus   Any amount
remaining to the credit of the Earnings Account following the making of any
transfer required by Clause 12.4 shall (unless an Event of Default shall have
occurred and be continuing) be released to or to the order of the Borrowers.

 

36

 

12.7         Restriction on withdrawal   During the Facility Period no sum may be withdrawn from the
Earnings Account (except in accordance with this Clause 12) without the prior
written consent of the Agent.

 

12.8         Relocation of Earnings Account   At any time during the
Facility Period, the Agent may without the consent of the Borrowers
relocate the Earnings Account to any other branch of the Agent without
prejudice to the continued application of this Clause 12 and the rights of the
Creditor Parties under the Finance Documents.

 

12.9         Application after acceleration   From and after
the giving of notice to the Borrowers by the Agent under Clause 15.2, the
Borrowers shall procure that all sums from time to time standing to the credit
of the Earnings Account are immediately transferred to the Agent for
application in accordance with Clause 12.10 and the Borrowers irrevocably
authorise the Agent to make those transfers.

 

12.10       General application of moneys – Security
Documents  After
an Event of Default has occurred each Borrower irrevocably authorises the
Creditor Parties to apply all sums which any of them may receive under or
in connection with the Finance Documents:

 

12.10.1    pursuant to a sale or other disposition of its Vessel or any right,
title or interest in its Vessel; or

 

12.10.2    by way of payment of any sum in respect of the Insurances, Earnings
or Requisition Compensation of its Vessel; or

 

12.10.3    by way of transfer of any sum from the Earnings Account; or

 

12.10.4    otherwise arising under or in connection with any Security Document,

 

in or towards satisfaction, or by way of retention on
account, of the Indebtedness, in the following manner:-

 

12.10.5      FIRST: in or towards satisfaction of any amounts then due and payable to
the Finance Parties under the Finance Documents, or any of them, in the
following order of application:-

 

(a)         in
satisfying claims which at law rank in priority to sums owing under or in
respect of any of the Finance Documents;

 

37

 

(b)         in
paying to the Finance Parties all proper costs, charges and expenses incurred
by the Finance Parties in the enforcement of the Finance Documents, or any part thereof,
or in respect of the dissolution or liquidation of the relevant Security Party
or otherwise in collecting the Distribution Monies;

 

(c)         in
paying to the Finance Parties interest, fees and other amounts, excluding
unpaid principal, due and payable in respect of the Senior Indebtedness
including but not limited to Break Costs;

 

(d)         in
paying to the Lenders the principal due in respect of the Senior Indebtedness
pro-rata in the proportion which the total principal amount outstanding in
respect of the Senior Indebtedness bears in relation to each of their
Commitments;

 

or, if the Agent (acting with the authorisation
of the Majority Lenders) may specify, in such other proportions and/or
such other rankings, as the Agent may require by notice to the Borrowers
and the other Security Parties;

 

12.10.6      SECONDLY: in retention of an amount equal to any amount not then due and
payable under Clause 12.10.5, but which the Agent, by notice to the Borrowers
and other Security Parties, states in its opinion will or may become due
and payable in the future and, upon those amounts becoming due and payable, in
or towards satisfaction of them in accordance with Clause 12.10.5;

 

12.10.7      THIRDLY: in or towards satisfaction of any amounts then due and payable
to the Swap Bank in respect of the Junior Indebtedness, or any part thereof,
in such order of application and/or such proportions as the Swap Bank may specify
by notice to the Agent, Borrowers and other Security Parties;

 

12.10.8      FOURTHLY: in retention of an amount equal to any amount not then due and
payable to the Swap Bank in respect of the Junior Indebtedness,  or any part thereof, but which the Swap
Bank, by notice to the Borrowers and other Security Parties, states in its
opinion will or may become due and

 

38

 

payable in the future and, upon those amounts
becoming due and payable, in or towards satisfaction of them in accordance with
Clause 12.10.7;

 

12.10.9      FIFTHLY: any surplus shall be paid to the Borrowers or other person
appearing to be entitled to it.

 

12.11       General
application of moneys – Master Agreement Documents  After an Event of
Default has occurred, each Borrower irrevocably authorises the Swap Bank to
apply all sums which it may receive in respect of any Hedging Transaction
(unless netted out, assigned or otherwise transferred to the Swap Bank in
accordance with the provisions of the Master Agreement) or under or in
connection with any Master Agreement Document in or towards satisfaction, or by
way of retention on account, of the Indebtedness, in the following manner:-

 

12.11.1    FIRST: in or towards satisfaction of any amounts then due and payable to
the Swap Bank in respect of the Junior Indebtedness, or any part thereof,
in such order of application and/or such proportions as the Swap Bank may specify
by notice to the Agent, the Borrowers and the other Security Parties;

 

12.11.2    SECONDLY: in retention of an amount equal to any amount not then due and
payable to the Swap Bank in respect of the Junior Indebtedness, or any part thereof,
but which the Swap Bank, by notice to the Agent, the Borrowers and other Security
Parties, states in its opinion will or may become due and payable in the
future and, upon those amounts becoming due and payable, in or towards
satisfaction of them in accordance with Clause 12.11.1;

 

12.11.3    THIRDLY: in or towards satisfaction of any amounts then due and payable
under Clause 12.10.5;

 

12.11.4    FOURTHLY: in retention of an amount necessary to satisfy the
requirements of Clause 12.10.6;

 

12.11.5    FIFTHLY: in accordance with Clause 12.10.9.

 

12.12       Application of moneys on sale or Total Loss   Each Borrower
irrevocably authorises the Agent and the Security Agent to apply all sums which
either of them may receive pursuant to a sale by that Borrower of its
Vessel or a Total Loss of its

 

39

 

Vessel in or towards satisfaction of the prepayment
due and payable by virtue of that sale or Total Loss under Clause 6.3, but the
Borrowers’ obligation to make that prepayment shall not be affected if those
sums are insufficient to satisfy that obligation.

 

12.13       Vessel valuations If
the Agent and/or the Security Agent reasonably require, at any time and from
time to time (but not more often than once during each consecutive period of
six (6) months during the Facility Period and not less than once during
each consecutive period of twelve (12) months during the Facility Period (in
each case at the expense of the Borrowers) and with the first such period
commencing on the first Drawdown Date or as many times as the Creditor Parties may reasonably
require (acting through the Agent) during such period (at their expense) or, in
the case of a Default or Event of Default which is continuing, at any time and
from time to time as the Agent may require in its discretion (in each case
at the expense of the Borrowers)), the Vessels shall be valued in Dollars by
taking the average of the valuations provided by two firms of shipbrokers
chosen by the Borrowers from Maersk Brokers K/S; Howe Robinson; Simpson, Spence &
Young; R.S. Platou; Arrow; and Clarkson’s or such other firm(s) of shipbrokers
nominated by the Borrowers and approved by the Agent from time to time (or, if
not nominated by the Borrowers within five (5) Business Days of the Agent’s
first request in writing, such firm(s) of shipbrokers nominated by the Agent in
its discretion from time to time) such valuations shall be addressed to the
Agent and shall 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 valuations and all other
costs arising in connection with the obtaining of any such valuations shall be
paid by the Borrowers.

 

12.14       Additional security   If at any time
the aggregate of the market value of the Vessels (such market value to be
determined in accordance with Clause 12.13) and the value of any additional
security (such value to be the face amount of the deposit in the case of cash),
determined conclusively by appropriate advisers appointed by the Agent (in the
case of other charged assets), and determined by the Agent in its discretion
(in all other cases)) for the time being provided to the Security Agent under
this Clause 12.14 is less than one hundred and twenty per cent (120%) of
the aggregate of (i) the consolidated aggregate of the Currency Equivalent
in Dollars of

 

40

 

all the Currency Tranches and (ii) the remaining part of
the Loan in Dollars and (iii) the Master Agreement Liabilities then the
Borrowers shall, within thirty (30) days of the Agent’s request, at the
Borrowers’ option:

 

12.14.1        pay to the Security Agent or to its nominee a cash deposit in the
amount of the shortfall to be secured in favour of the Security Agent as
additional security for the payment of the Indebtedness; or

 

12.14.2        give to the Security Agent other additional security in amount and form acceptable
to the Security Agent in its discretion; or

 

12.14.3        prepay the amount of the Indebtedness which will ensure that the
aggregate of the market value of the Vessels (determined as stated above) and
the value of any such additional security (valued as stated above) is not less
than one hundred and twenty per cent (120%) of the aggregate of (i) the
consolidated aggregate of the Currency Equivalent in Dollars of all the
Currency Tranches and (ii) the remaining part of the Loan in Dollars
and (iii) the Master Agreement Liabilities,

 

Clauses 5.3, 6.2.3 and 6.4 shall apply, mutatis mutandis, to any prepayment made under this Clause
12.14 and the value of any additional security provided shall be
determined as stated above.

 

13           Representations

 

13.1         Representations   The Borrowers make the representations and
warranties set out in this Clause 13.1 to each Creditor Party on the date of
this Agreement.

 

13.1.1      Status   Each Security Party (which is not an individual) is a corporation,
duly incorporated and validly existing under the law of its jurisdiction of
incorporation and has the power to own its assets and carry on its business as
it is being conducted.

 

13.1.2      Binding obligations   The obligations expressed to be assumed by each Security Party in
each Creditor Document to which it is a party are legal, valid, binding and enforceable
obligations.

 

41

 

13.1.3      Non-conflict with other obligations  
The entry into and performance by each
Security Party of, and the transactions contemplated by, the Creditor Documents
do not conflict with:

 

(a)           any law or regulation applicable to that Security Party;

 

(b)           the constitutional documents of that Security Party; or

 

(c)           any document binding on that Security Party or any of its assets,

 

and in borrowing the Loan and entering into
any Hedging Transactions, the Borrowers are acting for their own account.

 

13.1.4      Power and authority   Each Security Party has the power to enter into, perform and
deliver, and has taken all necessary action to authorise its entry into,
performance and delivery of, the Creditor Documents to which it is a party and
the transactions contemplated by those Creditor Documents.

 

13.1.5      Validity and admissibility in evidence   All consents,
licences, approvals, authorisations, filings and registrations required or
desirable:

 

(a)           to enable each Security Party lawfully to enter into, exercise its
rights and comply with its obligations in the Creditor Documents to which it is
a party or to enable each Creditor Party to enforce and exercise all its rights
under the Creditor Documents; and

 

(b)           to make the Creditor Documents to which any Security Party is a
party admissible in evidence in its jurisdiction of incorporation,

 

have been obtained or effected and are in full force
and effect, with the exception only of the registrations referred to in Part II
of Schedule 2.

 

13.1.6      Governing law and enforcement  
The choice of English law as the governing
law of any Creditor Document expressed to be governed by English law or, in the
case of the relevant Creditor Documents, Greek or Singapore law, will be
recognised and enforced in the jurisdiction of incorporation of each relevant
Security Party, and any judgment obtained in England or, in the case of the
relevant Creditor Documents, Greece or Singapore, in relation to any such Creditor
Document will be recognised

 

42

 

and enforced in the jurisdiction of incorporation of
each relevant Security Party.

 

13.1.7      Deduction of Tax   No Security Party is required under the law of its jurisdiction of
incorporation to make any deduction for or on account of Tax from any payment
it may make under any Creditor Document.

 

13.1.8      No filing or stamp taxes   Under the law of jurisdiction of incorporation of each relevant
Security Party it is not necessary that the Creditor Documents be filed,
recorded or enrolled with any court or other authority in that jurisdiction or
that any stamp, registration or similar tax be paid on or in relation to the
Creditor Documents or the transactions contemplated by the Creditor Documents.

 

13.1.9      No default   No Event of Default is continuing or might reasonably be expected to
result from the advance of any Drawing and/or the entering into of any Hedging
Transaction.

 

13.1.10    No misleading information   Any factual
information provided by any Security Party to any Creditor Party was true and
accurate in all material respects as at the date it was provided.

 

13.1.11    Pari passu ranking   The payment
obligations of each Security Party under the Creditor Documents to which it is
a party rank at least pari passu with the claims of all its other unsecured and
unsubordinated creditors, except for obligations mandatorily preferred by law
applying to companies generally.

 

13.1.12    No proceedings pending or threatened   No litigation, arbitration
or administrative proceedings of or before any court, arbitral body or agency
have been started or (to the best of the Borrowers’ knowledge threatened)
which, if adversely determined, might reasonably be expected to have a
materially adverse effect on the business, assets, financial condition or
credit worthiness of any Security Party.

 

13.1.13    Disclosure of material facts   The Borrowers
are not aware of any material facts or circumstances which have not been
disclosed to the Agent and which might, if disclosed, have adversely affected
the decision of a person considering whether or not to make loan and/or hedging

 

43

 

facilities of the nature contemplated by this
Agreement and the Master Agreement available to the Borrowers.

 

13.1.14    No established place of business in the UK or US   No Security Party has an
established place of business in the United Kingdom or the United States of
America.

 

13.1.15    Completeness of Relevant Documents   The copies of
any Relevant Documents provided or to be provided by the Borrowers to the Agent
in accordance with Clause 3 are, or will be, true and accurate copies of the
originals and represent, or will represent, the full agreement between the
parties to those Relevant Documents in relation to the subject matter of those
Relevant Documents and there are no commissions, rebates, premiums or other
payments due or to become due in connection with the subject matter of those
Relevant Documents other than in the ordinary course of business or as
disclosed to, and approved in writing by, the Agent.

 

13.2         Repetition   Each representation and warranty in Clause 13.1 is deemed to be
repeated by the Borrowers by reference to the facts and circumstances then
existing on the date of each Drawdown Notice and the first day of each Interest
Period.

 

13.3         German money laundering act. The Borrowers
confirm that they are the beneficiaries (within the meaning of section 8
of the German Money Laundering Act (Gesetz über das Aufspüren von Gewinnen aus
schweren Straftaten (Geldwäschegesetz)) of the Loan and any Hedging
Transactions, and that they will promptly inform the Agent in writing if
they are not or cease to be the beneficiary and will then set down in writing
the name and the address of the beneficiary.

 

14           Undertakings and Covenants

 

The undertakings and covenants in this Clause 14
remain in force for the duration of the Facility Period.

 

14.1         Information Undertakings

 

44

 

14.1.1      Financial statements   The Borrowers shall supply to the Agent, and shall procure that the
Managers supply to the Agent, as soon as the same become available, but in any
event within one hundred and eighty (180) days after the end of each financial
year of the Borrowers and the Managers, each Borrower’s and the Managers’
annual audited financial statements and the Group Statements for that financial
year, commencing with the financial statements for 2004.

 

14.1.2      Requirements as to financial statements   Each set of
financial statements delivered under Clause 14.1.1 shall be prepared using:-

 

(a)           generally accepted
accounting principles, in the case of the annual audited financial statements
for the Borrowers and the Managers; and

 

(b)           Applicable Accounting Principles,
in the case of the Group Statements.

 

14.1.3      Information:
miscellaneous   The Borrowers shall supply to the Agent:

 

(a)           all documents dispatched by any Borrower:-

 

(i)            to its creditors
generally; and

 

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

 

(iii)          if there is an Event of
Default which is continuing, all documents dispatched by that Borrower to its
shareholders (or any class of them);

 

in each case at the same time as they are
dispatched;

 

(b)           promptly upon becoming aware of them, details of any litigation,
arbitration or administrative proceedings which are current, threatened or
pending against any Security Party, and which might, if adversely determined,
have a materially adverse effect on the business, assets, financial condition
or credit worthiness of that Security Party; and

 

45

 

(c)           promptly, such further information regarding the financial
condition, business and operations of any Security Party as the Agent may reasonably
request including, without limitation, cash flow analyses and details of the
operating costs of any Vessel.

 

14.1.4      Notification of default

 

(a)           The Borrowers shall notify the Agent of any Default (and the steps,
if any, being taken to remedy it) promptly upon becoming aware of its
occurrence.

 

(b)           Promptly upon a request by the Agent, each Borrower shall supply to
the Agent a certificate signed by two of its directors or senior officers on
its behalf certifying that no Default is continuing (or if a Default is
continuing, specifying the Default and the steps, if any, being taken to remedy
it).

 

14.1.5      “Know your customer” checks   If:

 

(a)           the introduction of or any change in (or in the interpretation,
administration or application of) any law or regulation made after the date of
this Agreement;

 

(b)           any change in the status of a Borrower after the date of this
Agreement; or

 

(c)           a proposed assignment or transfer by a Creditor Party of any of its
rights and obligations under this Agreement to a party that is not a Lender
prior to such assignment or transfer,

 

obliges the Creditor Party (or, in the case of (c) above,
any prospective new Creditor Party) to comply with “know your customer” or
similar identification procedures in circumstances where the necessary
information is not already available to it, the Borrowers shall promptly upon
the request of the Agent supply, or procure the supply of, such documentation
and other evidence as is reasonably requested by the Agent (for itself or on
behalf of any Creditor Party or, in the case of (c) above, on behalf of
any prospective new

 

46

 

Creditor Party) in order for the Agent or that
Creditor Party (or, in the case of (c) above, any prospective new Creditor
Party) to carry out and be satisfied it has complied with all necessary “know
your customer” or other similar checks under all applicable laws and
regulations pursuant to the transactions contemplated in the Creditor
Documents.

 

14.2         Financial covenants

 

14.2.1      Undertaking  The Borrowers undertake that throughout the
Facility Period:

 

The
amount of total Net Worth will not be less than $250,000,000;

 

                The
ratio of Fixed Assets to Net Consolidated Indebtedness will not be less than
1.45:1;

 

                The
ratio of Outstanding Bank Debt to Vessel Values will not be more than 0.75:1;
and

 

Net
Worth will always exceed 30% of Total Assets;

 

14.2.2      Limitations on
Incurrence of Financial Indebtedness The Borrowers
will procure that, during the Facility Period, the Guarantor will not and will
not permit any Subsidiary to (i) incur additional Financial Indebtedness
or (ii) declare or pay any dividend or other distribution to shareholders
unless immediately after giving effect thereto:

 

(a)            the Liquid Funds of the
Group would not be less than $30,000,000; and

 

(b)           the ratio of EBITDA to Net
Interest Expenses would be at least 2.5:1 on a Pro Forma Basis for the period
immediately preceding the date thereof for which Group Statements are
available.

 

14.2.3      Definitions The calculation of ratios and percentages in Clauses 14.2.1 and
14.2.2 shall be determined on the basis of the latest Group Statements, but so
that:

 

(a)            “Bank Credit
Agreement” means any bank credit agreement or
similar facility entered into at any time by a member of the Group;

 

47

 

(b)           “Consolidated
Indebtedness” means, in respect of the relevant
period, the aggregate amount of Financial Indebtedness (including current
maturities) due by the members of the Group (other than any such Financial
Indebtedness owing by any member of the Group to another member of the Group);

 

(c)            “Current Assets”
means, in respect of the relevant period, the
aggregate amount of cash and cash equivalents, receivables due to any member of
the Group by a person who is not a member of the Group with a maturity of less
than one year and inventories;

 

(d)           “EBITDA” means,
in respect of the relevant period, the aggregate amount of consolidated pre-tax
profits of the Group before extraordinary or exceptional items, depreciation,
interest, rentals under finance leases and similar charges payable;

 

(e)            “Financial
Indebtedness” means, in relation to any member of
the Group, a liability of the debtor:

 

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

 

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

 

(iii)           under any acceptance credit, guarantee or letter of credit facility
made available to the debtor other than in the ordinary course of business;

 

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

 

(v)           under any interest or
currency swap or any other kind of derivative transaction entered into by the
debtor or, if the agreement under which any such transaction is entered into
requires netting of mutual liabilities, the liability of the debtor for the net
amount; and

 

48

 

 

(vi)          under a guarantee, indemnity
or similar obligation entered into by the debtor in respect of a liability of
another person which would fall within (i) to (v) if the references
to the debtor referred to the other person (unless such other person is a member
of the Group and the said liability of that other person was incurred in
conformity with Clause 14.2.2);

 

(f)            “Fixed Assets” means, in respect of the relevant period, the aggregate of the
Vessel Values and the value on a consolidated basis of all other fixed assets
of the Group (less depreciation computed in accordance with the Applicable
Accounting Principles);

 

(g)          “Liquid Funds” means, in respect of the relevant period, the aggregate of:

 

(i)             cash in hand or held with banks or other financial institutions
which is free of any Security Interest (other than a Security Interest created
under a Bank Credit Agreement); and

 

(ii)           any other short-term financial investments which is free of any
Security Interest (other than a Security Interest created under a Bank Credit
Agreement);

 

(h)          “Net
Consolidated Indebtedness” means, in respect of the
relevant period, Consolidated Indebtedness less Liquid Funds;

 

(i)           “Net Interest
Expenses” means, in respect of the relevant period:

 

(i)            the aggregate on a
consolidated basis of:

 

(A)         all interest incurred by any
member of the Group (excluding any amounts owing by one member of the Group to
another member of the Group); and

 

(B)          any net amounts payable
under interest rate hedge agreements

 

49

 

LESS

 

(ii)           the aggregate of:

 

(A)           interest receivable by any
member of the Group on Liquid Funds; and

 

(B)           any net amounts receivable
under interest rate hedge agreements, in each case accrued (and whether or not
actually paid) during such period;

 

(j)             “Net Worth” means, in respect of the relevant period, the Total Shareholders
Equity as defined by the Applicable Accounting Principles.

 

(k)            “Outstanding
Bank Debt” 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;

 

(l)           “Pro Forma
Basis” means, for the purposes of Clause 14.2.2(b),
giving pro forma effect to:

 

(i)             any acquisition or sale of a person, business or asset and any
related incurrence, repayment or refinancing of a Financial Indebtedness or
other related transactions, which would otherwise be accounted for under the
Applicable Accounting Principles; or

 

(ii)            any incurrence, repayment
or refinancing of any Financial Indebtedness and the application of the
proceeds therefrom;

 

as if the same was realised on the first
day of the immediately preceding period for which Financial Statements are
available, in accordance with the Applicable Accounting Principles.

 

50

 

For the purposes of this definition:

 

(A)          in the case of the
acquisition of a Vessel by a member of the Group pursuant to a memorandum of
agreement (or similar agreement) or the delivery of a Vessel to a member of the
Group pursuant to a shipbuilding contract during the relevant period, if
historical earnings (losses) of such Vessel are not available to the Guarantor,
the Guarantor shall give pro forma effect to the earnings (losses) of such
Vessel as if such Vessel was acquired on the first day of the immediately
preceding period for which Financial Statements are available by basing such
earnings (losses) on:

 

(1)          the revenues to be earned
from any binding charter, lease or like arrangement which will be applicable to
any such Vessel less a good faith estimate of the operating costs of such
Vessel (including, without limitation, management fees); or

 

(2)          with respect of any such
Vessel not subject to such arrangement, the earnings (losses) for the
applicable period of the most comparable Vessel of any member of the Group (as
determined in the reasonable judgment of a responsible financial officer of the
Guarantor) or, in the absence of a comparable Vessel, based on industry average
earning (losses) for comparable vessels (as determined in the reasonable
judgment of a responsible financial officer of the Guarantor); and

 

(B)           in the case of an acquisition of a person, business or asset, the
Guarantor shall give pro forma effect to the amount of income or earnings
relating thereto, and the amount of Net Interest Expenses associated with any
Financial Indebtedness issued in connection therewith (as determined in the
reasonable judgment of a responsible financial office of the Guarantor);

 

51

 

(m)           “Security
Interest” means:

 

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

 

(ii)           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

 

(iii)          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 (iii) 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;

 

(n)           “Total Assets” means the aggregate of Current Assets and Fixed Assets;

 

(o)           “Vessel” and “Vessels” means for the purposes
of this Clause 14.2 the vessels owned by and registered (or to be owned by and
registered) in the name of the Guarantor or any of the Subsidiaries or operated
by the Guarantor or any of the Subsidiaries pursuant to a lease or other
operating agreement constituting a capital lease obligation, in each case with
all related equipment and any additions or improvements; and

 

(p)           “Vessel
Values” means, in respect of the relevant period, the aggregate book
value of the Vessels determined in accordance with the Applicable Accounting
Principles

 

14.2.4      Currency  For the purposes
of this Clause 14.2 any amount expressed in a currency other than Dollars shall
(unless the Agent otherwise agrees) be converted into Dollars in accordance
with the Applicable Accounting Principles.

 

52

 

14.2.5      Covenant
Compliance Certificate  The Borrowers will provide the Agent with a Covenant Compliance
Certificate in respect of compliance by the Borrowers of Clauses 14.2.1 and
14.2.2 at such times as the Agent may reasonably require, in its discretion but at least once
during each calendar year.

 

14.3 General
undertakings

 

14.3.1      Authorisations   The Borrowers
shall promptly:

 

(a)           obtain, comply with and do all that is necessary to maintain in full
force and effect; and

 

(b)           supply certified copies to the Agent of,

 

any consent, licence, approval or authorisation
required under any law or regulation to enable each Security Party to perform its
obligations under the Creditor Documents to which it is a party and to ensure
the legality, validity, enforceability or admissibility in evidence in the
jurisdiction of incorporation of each relevant Security Party of any Creditor
Document.

 

14.3.2      Compliance with laws   Each Borrower shall comply in all respects with all laws to which it
may be subject, if failure so to comply would materially impair its
ability to perform its obligations under the Creditor Documents.

 

14.3.3      Conduct of business   Each Borrower
shall carry on and conduct its business in a proper and
efficient manner, file all requisite tax returns and pay all tax which becomes
due and payable (except where contested in good faith).

 

14.3.4      Evidence of good standing   The Borrowers will from
time to time if requested by the Agent provide the Agent with evidence in form and
substance satisfactory to the Agent that the Security Parties and all corporate
shareholders of any Security Party remain in good standing.

 

14.3.5      Negative pledge and no disposals  
No Borrower shall create nor permit to
subsist any Encumbrance or other third party rights (other than a Permitted
Encumbrance) over any of its present or future assets or

 

53

 

undertaking nor dispose of any those assets or of all
or part of that undertaking.

 

14.3.6      Merger   No Borrower shall enter into any amalgamation, demerger, merger or
corporate reconstruction.

 

14.3.7      Change of business   No Borrower shall make any substantial change to the general nature
of its business from that carried on at the date of this Agreement.

 

14.3.8      No change in ownership or control  No Borrower shall
permit any change in its beneficial ownership or control from that advised to
the Agent at the date of this Agreement and shall 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.

 

14.3.9      No other business   No Borrower shall engage in any business other than the ownership,
operation, chartering and management of its Vessel.

 

14.3.10    No place of business in UK or US   No Borrower
shall have an established place of business in the United Kingdom or the United
States of America at any time during the Facility Period.

 

14.3.11    No borrowings  
No Borrower shall without the prior written
consent of the Agent borrow any money (except for the Loan and unsecured
Financial Indebtedness subordinated to the Loan) nor incur any obligations
under leases.

 

14.3.12    No substantial liabilities   Except in the ordinary course of business, no Borrower shall without
the prior written consent of the Agent incur any liability to any third party
which is in the Agent’s opinion of a substantial nature.

 

14.3.13    No loans or other financial commitments   No Borrower
shall without the prior written consent of the Agent make any loan nor enter
into any guarantee or indemnity or otherwise voluntarily assume any actual or
contingent liability in respect of any obligation of any other person nor

 

54

 

encumber its Vessel with an Encumbrance except loans
made in the ordinary course of business in connection with the chartering,
operation or repair of its Vessel.

 

14.3.14    Inspection of records   Each Borrower
will permit the inspection of its financial records and accounts from time to
time by the Agent or its nominee.

 

14.3.15    No change in Relevant Documents   The Borrowers
shall procure that, without the prior written consent of the Agent, there shall
be no termination of, alteration to, or waiver of any term of, any of the
Relevant Documents which are not Creditor Documents.

 

15           Events of Default

 

15.1         Events of Default   Each of the events or circumstances set out
in this Clause 15.1 is an Event of Default.

 

15.1.1      Non-payment   The Borrowers do not pay on the due date any amount payable by them
under a Creditor Document at the place at and in the currency in which it is
expressed to be payable.

 

No Event of Default under this Clause 15.1.1 will
occur if non-payment is caused by technical and/or administrative error and the
payment is received within three (3) days of the due date of such payment
at the place and in the currency in which it is expressed to be payable.

 

15.1.2      Other obligations   A Security Party or any other person (except a Creditor Party) does
not comply with any provision of any of the Relevant Documents to which that
Security Party or person is a party (other than as referred to in Clause
15.1.1).

 

No Event of Default under this Clause 15.1.2 will
occur if the failure to comply, if capable of remedy, is remedied within ten (10) Business
Days of the Agent giving notice to the Borrowers or the Borrowers becoming
aware of the failure to comply.

 

15.1.3      Misrepresentation   Any representation, warranty or statement made or deemed to be
repeated by a Security Party in any Creditor Document or

 

55

 

any other document delivered by or on behalf of a
Security Party under or in connection with any Creditor Document is or proves
to have been incorrect or misleading in any material respect when made or
deemed to be repeated.

 

No Event of Default under this Clause 15.1.3 will
occur in respect of any innocent misrepresentation which, if capable of remedy,
is remedied within ten (10) Business Days of its occurrence, unless such
innocent misrepresentation takes place on a Drawdown Date.

 

15.1.4      Cross default   Any of the following occurs in respect of a Security Party:

 

(a)           any of its Financial Indebtedness is not paid when due; or

 

(b)           any of its Financial Indebtedness:

 

(i)           becomes prematurely due and
payable; or

 

(ii)          is placed on demand; or

 

(iii)          is capable of being declared
to be permanently due and payable or being placed on demand, in each case, as a
result of an event of default (howsoever described); or

 

(c)            any commitment for its
Financial Indebtedness is cancelled or suspended as a result of an event of
default (howsoever described).

 

No Event of Default will occur under (a), (b) or
(c) of this Clause 15.1.4 in respect of any Financial Indebtedness of the
Guarantor which at any time is for an amount, in aggregate, less than ten
million Dollars ($10,000,000).

 

15.1.5       Insolvency    A Security
Party is unable or admits inability to pay its debts as they fall due,  suspends 
making  payments  on any of its debts or, by reason of actual
or anticipated financial difficulties, commences negotiations with one or more
of its creditors with a view to rescheduling any of its Financial Indebtedness
or becomes otherwise insolvent.

 

56

 

15.1.6      Insolvency proceedings   Any corporate action, legal proceedings or other procedure or step
is taken for:

 

(a)           the winding-up,
dissolution, administration, bankruptcy or reorganisation (by way of voluntary
arrangement, scheme of arrangement or otherwise) of a Security Party;

 

(b)           the appointment of a
liquidator, receiver, administrative receiver, administrator, compulsory
manager, or trustee or other similar officer in respect of any Security Party
or any of its assets; or

 

(c)           enforcement of any Encumbrance over any assets of a Security Party,

 

or any analogous procedure or step is taken
in any jurisdiction.

 

15.1.7      Creditors’
process  Any
expropriation, attachment, sequestration, distress or execution affects any
asset or assets of a Security Party.

 

No Event of Default will
occur under this Clause 15.1.7 if the expropriation, attachment, sequestration,
distress or execution affects any asset of the Guarantor, and the aggregate
amount in respect thereof is, in the opinion of the Agent, for a value which is
less than ten million Dollars ($10,000,000).

 

15.1.8      Change in ownership or control of a Borrower   There is any
change in the beneficial ownership or control of a Borrower from that advised
to the Agent by the Borrowers at the date of this Agreement.

 

15.1.9      Repudiation   A Security Party or any other person 
repudiates any of the Relevant Documents to which that Security Party or
person is a party or evidences an intention to do so.

 

15.1.10      Impossibility or illegality   Any event occurs which would, or would with
the passage of time, render performance of any of the Relevant Documents by a Security
Party or any other party to any such document impossible, unlawful or
unenforceable by a Creditor Party or a Security Party.

 

15.1.11      Conditions subsequent   Any of the conditions referred to in Clause
3.4 is not satisfied within the time reasonably required by the Agent.

 

57

 

15.1.12      Revocation or modification of authorisation   Any consent,
licence, approval, authorisation, filing, registration or other requirement of
any governmental, judicial or other public body or authority which is now, or
which at any time during the Facility Period becomes, necessary to enable a
Security Party or any other person (except a Creditor Party) to comply with any
of its obligations under any of the Relevant Documents is not obtained, is
revoked, suspended, withdrawn or withheld, or is modified in a manner which the
Agent considers is, or may be, prejudicial to the interests of a Creditor
Party, or ceases to remain in full force and effect.

 

15.1.13    Curtailment of business   A Borrower ceases, or threatens to cease, to
carry on all or a substantial part of its business or, as a result of
intervention by or under the authority of any government, the business of a
Borrower is wholly or partially curtailed or suspended, or all or a substantial
part of the assets or undertaking of a Borrower is seized, nationalised,
expropriated or compulsorily acquired.

 

15.1.14    Reduction of capital   A Security Party reduces its authorised or
issued or subscribed capital and, in the opinion of the Agent, such reduction
has a material adverse effect on the Security Party in question.

 

15.1.15     Loss of Vessel 
 A
Vessel suffers a Total Loss and payment of all insurance proceeds in respect of
the Total Loss is not made in full to the Security Agent in accordance with
Clause 6.3.

 

15.1.16    Challenge to registration   The registration
of a Vessel or a Mortgage is contested or becomes void or voidable or liable to
cancellation or termination, or the validity or priority of a Mortgage is
contested.

 

No Event of Default under this Clause 15.1.16 will
occur if any contesting of the Vessel or Mortgage ceases within ten (10) Business
Days of its commencement or the voidability, or liability to cancellation or
termination of the Mortgage is remedied within ten (10) Business Days of
the date that such voidability or liability to cancellation or termination
arose or if the registration of a Vessel or Mortgage becomes void and the
relevant Borrower and the Security Agent have effected the re-registration of
the Vessel and its Mortgage under another register acceptable to the Agent in
its discretion  and the Borrowers have
provided the Agent with such

 

58

 

equivalent additional documents and evidence mutatis
mutandis to those specified at Part I, 1(a) to (h) inclusive,
and Part I, 2 (a) to (f) (inclusive), (g), (h) and 3 (a) 
of Schedule 2 as the Agent may require in its discretion.

 

15.1.17    War   The country of
registration of a Vessel becomes involved in war (whether or not declared) or
civil war or is occupied by any other power and the Agent in its discretion
considers that, as a result, the security conferred by any of the Security
Documents is materially prejudiced.

 

No Event of Default under this Clause
15.1.17 will occur if the country of 
registration of a Vessel ceases to be at war (whether or not declared)
or civil war or ceases to be occupied by another power within ten (10) Business
Days of the occurrence of the event in question, or the Borrower in question
has within ten (10) Business Days of the occurrence of the event in
question reflagged the Vessel with another country of registration acceptable
to the Agent in its discretion and the Borrowers have provided the Agent with
such equivalent additional documents and evidence to that specified at Part I,
1(a) to (h) inclusive, and Part I, 2 (a) to (f) (inclusive),
(h), (j) and 3 (a) of Schedule 2 as the Agent may require in its
discretion.

 

15.1.18    Master Agreement termination   A notice is given by the Swap Bank 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 for the
purpose of the Master Agreement, or the Master Agreement is for any other reason
terminated, cancelled, suspended, rescinded, revoked or otherwise ceases to
remain in full force and effect.

 

15.1.19    Notice of termination   The Guarantor
gives notice to the Security Agent to determine its obligations under the
Guarantee.

 

15.1.20    Material adverse change   Any event or series of
events occurs which, in the reasonable opinion of the Agent, is likely to have
a materially adverse effect on the business, assets, financial condition or
credit worthiness of a Security Party.

 

15.2         Acceleration   If an Event of Default is continuing the Agent may by notice to
the Borrowers:

 

59

 

15.2.1      declare that the Loan, together
with accrued interest, and all other amounts accrued or outstanding under the
Finance Documents are immediately due and payable, whereupon they shall become
immediately due and payable; and/or

 

15.2.2      declare that the Loan is payable on demand, whereupon it shall
immediately become payable on demand by the Agent; and

 

the security constituted by the Security Documents
shall become immediately enforceable and the Agent and the  Security Agent (on behalf of the other
Creditor Parties) in respect of the Finance Documents and the Swap Bank (in
respect of the Master Agreement Documents) shall be entitled to exercise all or
any of the rights, powers, discretions and remedies vested in them by the
Creditor Documents, or any of them, without any requirement for any court order
or declaration that an Event of Default has occurred, and the rights of the
Creditor Parties will be in addition to and without prejudice to all other
rights, powers, discretions and remedies to which they may be entitled,
whether by statute or otherwise.

 

16           Assignment and Sub-Participation

 

16.1         Creditor Parties’ rights

 

16.1.1     A Lender may grant
sub-participations in all or any part of its Commitment; and

 

16.1.2     Upon written notice from the
Agent to the Security Parties, a Creditor Party may assign any of its
rights under this Agreement (and the other Creditor Documents) or transfer by
novation any of its rights and obligations under this Agreement (and the other
Creditor Documents) to any other branch of that Creditor Party or to any of its
subsidiaries or to its holding company or to a subsidiary of its holding company
or, subject to the prior written agreement of all the Security Parties (such
agreement not to be unreasonably withheld by any of the Security Parties), to
any other bank or financial institution. If the Security Parties, (or any of
them) do not agree to such assignment or transfer, the Security Parties shall
notify the Agent of their objection to such proposed transfer or assignment
within five (5) days of receiving notice from the Agent and shall, by not
later than the date

 

60

 

falling fifteen (15) days after such notice
from the Agent, prepay the portion of the Loan that would have been subject to
such transfer or assignment. Clauses 5.3, 6.2.3 and 6.4, shall apply to such
prepayment.

 

16.1.3      The Swap Bank may not assign any of its rights under the Master
Agreement or transfer by novation any of its rights and obligations under the
Master Agreement to any other bank or financial institution, except to another
branch of the Swap Bank and/or to another Finance Party.

 

16.2         Borrowers’ co-operation   The Borrowers will co-operate fully with a Creditor Party in
connection with any assignment, transfer or sub-participation by that Creditor
Party, and which is permitted in accordance with Clause 16.1; will execute and
procure the execution of such documents as that Creditor Party may require
in that connection; and irrevocably authorise any Creditor Party to disclose to
any proposed assignee, transferee or sub-participant or any person or party who
may enter into contractual relations with that Creditor Party (whether
before or after any assignment, transfer or sub-participation and whether or
not any assignment, transfer or sub-participation shall take place) all
information relating to the Security Parties, the Loan, the Relevant Documents,
and the Vessels which any Creditor Party may in its discretion consider
necessary or desirable.

 

16.3         Rights of assignee   Any assignee of a Creditor Party shall (unless limited by the
express terms of the assignment) take the full benefit of every provision of
the Creditor Documents benefiting that Creditor Party PROVIDED THAT  an assignment will only be effective on
notification by the Agent to that Creditor Party and the assignee that the Agent
is satisfied it has complied with all necessary “Know your customer” or other
similar checks under all applicable laws and regulations in relation to the
assignment to the assignee.

 

16.4         Transfer Certificates   If a Creditor
Party wishes to transfer any of its rights and obligations under or pursuant to
this Agreement, it may do so by delivering to the Agent a duly completed
Transfer Certificate, in which event on the Transfer Date:

 

16.4.1      to the extent that that Creditor Party seeks to transfer its rights
and obligations, the Borrowers (on the one hand) and that Creditor Party (on
the other) shall be released from all further obligations towards the other;

 

61

 

16.4.2      the Borrowers (on the one hand) and the transferee (on the other)
shall assume obligations towards the other identical to those released pursuant
to Clause 16.4.1; and

 

16.4.3      the Creditor Parties and the transferee shall have the same rights
and obligations between themselves as they would have had if the transferee had
been an original party to this Agreement as a Lender

 

PROVIDED THAT the Agent
shall only be obliged to execute a Transfer Certificate once:

 

16.4.4      it is satisfied it has complied with all necessary “know your
customer” or other similar checks under all applicable laws and regulations in
relation to the transfer to the transferee; and

 

16.4.5      the transferee (if it is not another branch, subsidiary, holding
company or other subsidiary of the holding company of the Transferor) has paid
to the Agent for its own account a transfer fee of two thousand Dollars
($2,000).

 

The Agent shall, as soon as reasonably practicable
after it has executed a Transfer Certificate, send to the Borrowers a copy of
that Transfer Certificate.

 

16.5         Finance Documents  
Unless otherwise expressly provided in any
Finance Document or otherwise expressly agreed between a Creditor Party and any
proposed transferee and notified by that Creditor Party to the Agent on or
before the relevant Transfer Date, there shall automatically be assigned to the
transferee with any transfer of a Creditor Party’s rights and obligations under
or pursuant to this Agreement the rights of that Creditor Party under or
pursuant to the Finance Documents (other than this Agreement) which relate to
the portion of that Creditor Party’s rights and obligations transferred by the
relevant Transfer Certificate.

 

16.6         No assignment or transfer by the Borrowers   No Borrower may assign
any of its rights or transfer any of its rights or obligations under the
Creditor Documents.

 

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17           The Agent, the Security Agent and the other Creditor Parties

 

17.1         Appointment

 

17.1.1      Each Creditor Party appoints the
Agent to act as its agent under and in connection with the Finance Documents
and appoints the Security Agent to act as its security agent for the purpose of
the Security Documents.

 

17.1.2      Each Creditor Party authorises the Agent and the Security Agent to
exercise the rights, powers, authorities and discretions specifically given to
them under or in connection with the Finance Documents together with any other
incidental rights, powers, authorities and discretions.

 

17.1.3      Except where the context otherwise requires, references in this
Clause 17 to the “Agent” shall
mean the Agent and the Security Agent individually and collectively.

 

17.2         Authority   Each Creditor Party irrevocably authorises the Agent (subject to
Clauses 17.4 and 17.20):

 

17.2.1      to execute any Finance Document (other than this Agreement) on its
behalf;

 

17.2.2      to collect, receive, release or pay any money on its behalf;

 

17.2.3      acting on the instructions from time to time of the Majority Lenders
to give or withhold any waivers, consents or approvals under or pursuant to any
Finance Document or amend the terms of any Finance Document;

 

17.2.4      acting on the instructions from time to time of the Majority Lenders
to exercise, or refrain from exercising, any discretions under or pursuant to
any Finance Document; and

 

17.2.5      to enforce any Finance Document on its behalf.

 

The Agent shall have no duties or responsibilities as
agent or as security agent other than those expressly conferred on it by the
Finance Documents and shall not be obliged to act on any instructions from the
Creditor Parties or the Majority Lenders if to do so would, in the opinion of
the Agent, be contrary to any provision of the Finance Documents or to any law,
or would expose the Agent to any actual or potential liability to any third
party.

 

 

 

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17.3         Trust   The Security Agent
agrees and declares, and each of the other Creditor Parties acknowledges, that,
subject to the terms and conditions of this Clause 17.3, the Security Agent
holds the Trust Property on trust for the Creditor Parties absolutely. Each of
the other Creditor Parties agrees that the obligations, rights and benefits
vested in the Security Agent shall be performed and exercised in accordance
with this Clause 17.3. The Security Agent shall have the benefit of all of the
provisions of this Agreement benefiting it in its capacity as security agent
for the Creditor Parties, and all the powers and discretions conferred on
trustees by the Trustee Act 1925 (to the extent not inconsistent with this
Agreement). In addition:

 

17.3.1      the Security Agent and any attorney, agent or delegate of the
Security Agent may indemnify itself or himself out of the Trust Property
against all liabilities, costs, fees, damages, charges, losses and expenses
sustained or incurred by it or him in relation to the taking or holding of any
of the Trust Property or in connection with the exercise or purported exercise
of the rights, trusts, powers and discretions vested in the Security Agent or
any other such person by or pursuant to the Security Documents or in respect of
anything else done or omitted to be done in any way relating to the Security
Documents;

 

17.3.2      the Creditor Parties agree that the perpetuity period applicable to
the trusts declared by this Agreement shall be the period of eighty years from
the date of this Agreement.

 

17.4          Limitations on authority   Except with the
prior written consent of all the Creditor Parties, the Agent shall not be
entitled to:

 

17.4.1      release or vary any security given for the Borrowers’ obligations
under this Agreement; nor

 

17.4.2      waive the payment of any sum of money payable by any Security Party
under the Finance Documents; nor

 

17.4.3      change the meaning of the expressions “Majority
Lenders” or “Margin” or “Availability Termination Date”; nor

 

17.4.4      approve the identity of the Guarantor; nor

 

64

 

17.4.5      exercise, or refrain from exercising, any discretion, or give or
withhold any consent, the exercise or giving of which is, by the terms of this
Agreement, expressly reserved to the Lenders; nor

 

17.4.6      extend the due date for the payment of any sum of money payable by
any Security Party under any Finance Document; nor

 

17.4.7      take or refrain from taking any step if the effect of such action or
inaction may lead to the increase of the obligations of a Lender under any
Finance Document; nor

 

17.4.8      agree to change the currency in which any sum is payable under any
Finance Document (other than in accordance with the terms of the relevant
Finance Document); nor

 

17.4.9      agree to amend this Clause 17.4.

 

17.5         Liability   Neither the Agent nor any of its directors, officers, employees or
agents shall be liable to the Creditor Parties for anything done or omitted to
be done by the Agent under or in connection with any of the Relevant Documents
unless as a result of the Agent’s gross negligence or wilful misconduct.

 

17.6         Acknowledgement   Each Creditor Party acknowledges that:

 

17.6.1      it has not relied on any representation made by the Agent or any of
the Agent’s directors, officers, employees or agents or by any other person
acting or purporting to act on behalf of the Agent to induce it to enter into
any Creditor Document;

 

17.6.2      it has made and will continue to make without reliance on the Agent,
and based on such documents and other evidence as it considers appropriate, its
own independent investigation of the financial condition and affairs of the
Security Parties in connection with the making and continuation of the Loan and
any Master Agreement Liabilities;

 

17.6.3      it has made its own appraisal of the creditworthiness of the
Security Parties; and

 

17.6.4      the Agent shall not have any duty or responsibility at any time to
provide it with any credit or other information relating to any Security Party

 

65

 

unless that information is received by the Agent
pursuant to the express terms of a Finance Document.

 

Each Creditor Party agrees that it will not assert nor
seek to assert against any director, officer, employee or agent of the Agent or
against any other person acting or purporting to act on behalf of the Agent any
claim which it might have against them in respect of any of the matters
referred to in this Clause 17.6.

 

17.7         Limitations on responsibility  
The Agent shall have no responsibility to
any Security Party or to any Creditor Party on account of:

 

17.7.1      the failure of a Creditor Party or of any Security Party to perform any
of its obligations under a Creditor Document; nor

 

17.7.2      the financial condition of any Security Party; nor

 

17.7.3      the completeness or accuracy of any statements, representations or
warranties made in or pursuant to any Creditor Document, or in or pursuant to
any document delivered pursuant to or in connection with any Creditor Document;
nor

 

17.7.4      the negotiation, execution, effectiveness, genuineness, validity,
enforceability, admissibility in evidence or sufficiency of any Creditor
Document or of any document executed or delivered pursuant to or in connection
with any Creditor Document.

 

17.8         The Agent’s rights   The Agent may:

 

17.8.1      assume that all representations or warranties made or deemed
repeated by any Security Party in or pursuant to any Finance Document are true
and complete, unless, in its capacity as the Agent, it has acquired actual
knowledge to the contrary;

 

17.8.2      assume that no Default has occurred unless, in its capacity as the
Agent, it has acquired actual knowledge to the contrary;

 

17.8.3      rely on any document or notice believed by it to be genuine;

 

17.8.4      rely as to legal or other professional matters on opinions and
statements of any legal or other professional advisers selected or approved by
it;

 

66

 

17.8.5      rely as to any factual matters which might reasonably be expected to
be within the knowledge of any Security Party on a certificate signed by or on
behalf of that Security Party; and

 

17.8.6      refrain from exercising any right, power, discretion or remedy
unless and until instructed to exercise that right, power, discretion or remedy
and as to the manner of its exercise by the Creditor Parties (or, where
applicable, by the Majority Lenders) and unless and until the Agent has
received from the Creditor Parties any payment which the Agent may require
on account of, or any security which the Agent may require for, any costs,
claims, expenses (including legal and other professional fees) and liabilities
which it considers it may incur or sustain in complying with those
instructions.

 

17.9         The Agent’s duties   The Agent shall:

 

17.9.1      if requested in writing to do so by a Creditor Party, make enquiry
and advise the Creditor Parties as to the performance or observance of any of
the provisions of any Finance Document by any Security Party or as to the
existence of an Event of Default; and

 

17.9.2      inform the Creditor Parties promptly of any Event of Default of
which the Agent has actual knowledge; and

 

17.9.3      distribute to the Creditor Parties promptly any information supplied
to the Agent by the Borrowers under and pursuant to Clause 14.1.3.

 

17.10       No deemed knowledge   The Agent shall not be deemed to have actual knowledge of the
falsehood or incompleteness of any representation or warranty made or deemed
repeated by any Security Party or actual knowledge of the occurrence of any
Default unless a Creditor Party or a Security Party shall have given written
notice thereof to the Agent in its capacity as the Agent. Any information
acquired by the Agent other than specifically in its capacity as the Agent
shall not be deemed to be information acquired by the Agent in its capacity as
the Agent.

 

17.11       Other business   The Agent may, without any liability to account to the Creditor
Parties, generally engage in any kind of banking or trust business with a
Security Party or with a Security Party’s subsidiaries or associated companies
or with a Creditor Party as if it were not the Agent.

 

67

 

17.12       Indemnity   The Lenders shall, promptly on the Agent’s request, reimburse the
Agent in their respective Proportionate Shares, for, and keep the Agent fully
indemnified in respect of all liabilities, damages, costs and claims sustained
or incurred by the Agent in connection with the Finance Documents, or the
performance of its duties and obligations, or the exercise of its rights, powers,
discretions or remedies under or pursuant to any Finance Document, to the
extent not paid by the Security Parties and not arising solely from the Agent’s
gross negligence or wilful misconduct.

 

17.13       Employment of agents   In performing its duties and exercising its rights, powers,
discretions and remedies under or pursuant to the Finance Documents, the Agent
shall be entitled to employ and pay agents to do anything which the Agent is
empowered to do under or pursuant to the Finance Documents (including the
receipt of money and documents and the payment of money) and to act or refrain
from taking action in reliance on the opinion of, or advice or information
obtained from, any lawyer, banker, broker, accountant, valuer or any other
person believed by the Agent in good faith to be competent to give such
opinion, advice or information.

 

17.14       Distribution of payments   Without limitation to Clauses 12.10 and 12.11 and subject to Clause
17.15, the Agent shall pay promptly to the order of each Lender its Proportionate
Share of every sum of money received by the Agent pursuant to the Finance
Documents and shall pay promptly to the order of each Creditor Party every
other sum of money received by the Agent pursuant to the Finance Documents and
which may be due to that Creditor Party and until so paid each such amount
shall be held by the Agent on trust absolutely for that Lender or Creditor
Party, as the case may be.

 

17.15       Distribution of fees  Any amounts
payable pursuant to Clause 11 and/or any Fee Letter and any amounts which, by
the terms of the Finance Documents, shall be paid to the Agent for the account
of the Agent alone or, as the context may require, specifically for the
account of one or more of the Creditor Parties shall not be distributed in
accordance with Clause 17.14 but will be held by the Agent for its own benefit
or , as the context may require transferred by the Agent to the relevant
Creditor Party.

 

68

 

17.16       Reimbursement   The Agent shall have no liability to pay any sum to a Creditor Party
until it has itself received payment of that sum. If, however, the Agent does
pay any sum to a Creditor Party on account of any amount prospectively due to
that Creditor Party pursuant to Clause 17.14 before it has itself received
payment of that amount, and the Agent does not in fact receive payment within
five (5) Business Days after the date on which that payment was required
to be made by the terms of the Finance Documents, that Creditor Party will, on
demand by the Agent, refund to the Agent an amount equal to the amount received
by it, together with an amount sufficient to reimburse the Agent for any amount
which the Agent may certify that it has been required to pay by way of
interest on money borrowed to fund the amount in question during the period
beginning on the date on which that amount was required to be paid by the terms
of the Finance Documents and ending on the date on which the Agent receives
reimbursement.

 

17.17       Redistribution of payments   Unless otherwise agreed between the Agent and the other Creditor
Parties, if at any time a Creditor Party receives or recovers by way of set-off,
the exercise of any lien or otherwise from any Security Party, any sum due from
that Security Party to any of the Creditor Parties under the Finance Documents
(the amount received by such Creditor Party being referred to in this Clause
17.17 and in Clause 17.18 as the “Received Amount”)
then:

 

17.17.1    that Creditor Party shall promptly notify the Agent (which shall
promptly notify each other Creditor Party);

 

17.17.2    that Creditor Party shall pay to the Agent an amount equal to the
Received Amount within ten (10) days of its receipt or recovery of the
Received Amount; and

 

17.17.3    the Agent shall treat that payment as if it were a payment by the
Security Party in question on account of the sum due from that Security Party
to the Creditor Parties and shall account to the Creditor Parties in respect of
the Received Amount in accordance with the provisions of Clause 17.14.

 

However, if a Creditor Party has
commenced any legal proceedings to recover sums owing to it under the Finance
Documents and, as a result of, or in connection with, those proceedings has
received a Received Amount, the Agent
shall not distribute any of that Received Amount to
any other Creditor Party which had been
notified of the proceedings and had the legal right to, but did not, join those
proceedings or

 

69

 

commence and diligently prosecute separate proceedings to enforce its
rights in the same or another court.

 

17.18       Rescission of Received Amount  
If all or any part of any Received
Amount is rescinded or must otherwise be restored to any Security Party or to
any other third party, the relevant Creditor Parties which have received any part of
that Received Amount by way of distribution from the Agent pursuant to Clauses
17.14 and 17.17 shall repay to the Agent the full amount of that Received
Amount and the Agent shall return to the account of the Creditor Party which
originally received or recovered the Received Amount, such amount which has
been rescinded or must otherwise be restored to the Security Party in question,
and the balance of the Received Amount shall be redistributed by the Agent in accordance
with Clause 17.14.

 

17.19       Proceedings   Each of the Creditor Parties and the Agent shall notify one another
of the proposed commencement of any legal proceedings under any Finance
Document prior to their commencement.

 

17.20       Instructions   Where the Agent is authorised or directed to act or refrain from
acting in accordance with the instructions of the Creditor Parties, or any of
them, or of the Majority Lenders, each of the Creditor Parties or the Majority
Lenders, as the context may require, shall provide the Agent with
instructions within three (3) Business Days of the Agent’s request (which
request may be made orally or in writing). If a Creditor Party does not
provide the Agent with instructions within that period, that Creditor Party
shall be bound by the decision of the Agent. Nothing in this Clause 17.20 shall
limit the right of the Agent to take, or refrain from taking, any action
without obtaining the instructions of the Creditor Party, or the Majority
Lenders, as the context may require, if the Agent in its discretion
considers it necessary or appropriate to take, or refrain from taking, such
action in order to preserve the rights of the Creditor Parties under or in
connection with the Finance Documents. In that event, the Agent will notify the
Creditor Parties of the action taken by it as soon as reasonably practicable,
and the Creditor Parties agree to ratify any action taken by the Agent pursuant
to this Clause 17.20.

 

17.21       Payments   All amounts payable to a Creditor Party
under this Clause 17 shall be paid to such account at such bank as that
Creditor Party may from time to time direct in writing to the Agent.

 

70

 

17.22       “Know your customer” checks   Each Creditor
Party shall promptly upon the request of the Agent supply, or procure the
supply of, such documentation and other evidence as is reasonably requested by
the Agent (for itself) in order for the Agent to carry out and be satisfied it
has complied with all necessary “know your customer” or other similar checks
under all applicable laws and regulations pursuant to the transactions
contemplated in the Finance Documents.

 

17.23       Resignation   Subject to a successor being appointed in accordance with this
Clause 17.23, the Agent may resign as agent and/or security agent at any
time without assigning any reason by giving to the Borrowers and the Creditor
Parties notice of its intention to do so, in which event the following shall
apply:

 

17.23.1    the Creditor Parties may within thirty (30) days after the date
of the Agent’s notice appoint a successor to act as agent and/or security agent
or, if they fail to do so, the Agent may appoint any other bank or
financial institution as its successor;

 

17.23.2    the resignation of the Agent shall take effect simultaneously with
the appointment of its successor on written notice of that appointment being
given to the Borrowers, and the Creditor Parties;

 

17.23.3    the Agent shall thereupon be discharged from all further obligations
as agent and/or security agent but shall remain entitled to the benefit of the
provisions of this Clause 17; and

 

17.23.4    the Agent’s successor and each of the other parties to this
Agreement shall have the same rights and obligations amongst themselves as they
would have had if that successor had been a party to this Agreement.

 

17.24       No fiduciary relationship   Except as provided in Clauses 17.3 and 17.14, the Agent shall not
have any fiduciary relationship with or be deemed to be a trustee of or for a
Creditor Party and nothing contained in any Finance Document shall constitute a
partnership between any two or more Creditor Parties Bank or between the Agent
and any Creditor Party.

 

18           Set-Off

 

A Creditor Party may set off any matured
obligation due from the Borrowers under any Creditor Document (to the extent
beneficially owned by that Creditor Party) against any

 

71

 

matured obligation owed by that Creditor Party to any
Borrower, regardless of the place of payment, booking branch or currency of
either obligation. If the obligations are in different currencies, that
Creditor Party may convert either obligation at a market rate of exchange
in its usual course of business for the purpose of the set-off. Sums received
by a Creditor Party under and pursuant to this Clause 18 shall be applied in
accordance with  Clause 12.10 and/or
Clause 12.11 (as the context may require).

 

19           Payments

 

19.1         Payments   Each amount payable by a Borrower under a Creditor Document shall be
paid to such account at such bank as the Agent (in the case of a Finance
Document) or the Swap Bank (in the case of a Master Agreement Document) may from
time to time direct to the Borrowers in the Currency of Account and in such
funds as are customary at the time for settlement of transactions in the
relevant currency in the place of payment. Payment shall be deemed to have been
received by the Agent or the Swap Bank, as the context may require, on the
date on which the Agent or the Swap Bank receives authenticated advice of
receipt, unless that advice is received by the Agent or the Swap Bank on a day
other than a Business Day or at a time of day (whether on a Business Day or
not) when the Agent or the Swap Bank in its discretion considers that it is
impossible or impracticable for the Agent or the Swap Bank to utilise the
amount received for value that same day, in which event the payment in question
shall be deemed to have been received by the Agent or the Swap Bank on the
Business Day next following the date of receipt of advice by the Agent.

 

19.2         No deductions or withholdings   Each payment
(whether of principal or interest or otherwise) to be made by a Borrower under
a Creditor Document shall, subject only to Clause 19.3, be made free and clear
of and without deduction for or on account of any Taxes or other deductions,
withholdings, restrictions, conditions or counterclaims of any nature.

 

19.3         Grossing-up   If at any time any law requires (or is interpreted to require) a
Borrower to make any deduction or withholding from any payment, or to change
the rate or manner in which any required deduction or withholding is made, the
Borrowers will promptly notify the Agent (in the case of a Finance Document) or
the Swap Bank (in the case of a Master Agreement Document) and, simultaneously
with that payment, will pay to the Agent (in the case of a Finance Document) or
the

 

72

 

Swap Bank (in the case of a Master Agreement Document)
whatever additional amount (after taking into account any additional Taxes on,
or deductions or withholdings from, or restrictions or conditions on, that
additional amount) is necessary to ensure that, after the deduction or
withholding, the relevant Creditor Parties receive a net sum equal to the sum
which they would have received had no deduction or withholding been made.

 

19.4         Evidence of deductions   If at any time a Borrower is required by law to make any deduction
or withholding from any payment to be made by it under a Creditor Document,
that Borrower will pay the amount required to be deducted or withheld to the
relevant authority within the time allowed under the applicable law and will,
no later than thirty (30) days after making that payment, deliver to the Agent
(in the case of a Finance Document) or the Swap Bank (in the case of a Master
Agreement Document) an original receipt issued by the relevant authority, or
other evidence acceptable to the Agent (in the case of a Finance Document) or
the Swap Bank (in the case of a Master Agreement Document), evidencing the
payment to that authority of all amounts required to be deducted or withheld.

 

19.5         Adjustment of due dates   If any payment or transfer of funds to be made under a Creditor
Document, other than a payment of interest on the Loan, shall be due on a day
which is not a Business Day, that payment shall be made on the next succeeding
Business Day (unless the next succeeding Business Day falls in the next
calendar month in which event the payment shall be made on the next preceding
Business Day). Any such variation of time shall be taken into account in
computing any interest in respect of that payment.

 

19.6         Control Account   The Agent shall open and maintain on its
books a control account in the names of the Borrowers showing the advance of
the Loan and the computation and payment of interest and all other sums due
under this Agreement. The Borrowers’ obligations to repay the Loan and to pay
interest and all other sums due under this Agreement shall be evidenced by the
entries from time to time made in the control account opened and maintained
under this Clause 19.6 and those entries will, in the absence of manifest
error, be conclusive and binding.

 

73

 

20           Notices

 

20.1         Communications in writing   Any communication to be made under or in connection with this
Agreement shall be made in writing and, unless otherwise stated, may be
made by fax or letter.

 

20.2         Addresses   The address and
fax number (and the department or officer, if any, for whose attention the
communication is to be made) of each party to this Agreement for any
communication or document to be made or delivered under or in connection with
this Agreement are:

 

20.2.1      in the case of the Borrowers, c/o Danaos Shipping Co. Ltd., Akti
Kondyli 14, 185 45 Piraeus, Greece (fax no: +30 210 422 0855) marked for the
attention of Legal Department;

 

20.2.2      in the case of each Lender, those appearing opposite its name in Schedule 1;

 

20.2.3      in the case of the Agent, the Security Agent, and Aegean Baltic Bank
S.A., acting in its capacity as Joint Arranger and/or Co-underwriter, 28
Diligianni Street, 145 62 Kifissa, Greece (fax no: +30 210 623 4192-3) marked
for the attention of Business Development;

 

20.2.4      in the case of HSH Nordbank AG, acting in its capacity as Joint
Arranger, and/or Co-underwriter, and/or Swap Bank, Gerhart-Hauptmann-Platz 50,
20095 Hamburg, Federal Republic of Germany (fax no: +49 40 333 334 118) marked
for the attention [                        ];

 

or any substitute address, fax number, department or
officer as any party may notify to the Agent (or the Agent may notify
to the other parties, if a change is made by the Agent) by not less than five (5) Business
Days’ notice.

 

20.3         Delivery   Any communication or document made or delivered by one party to this
Agreement to another under or in connection this Agreement will only be
effective:

 

20.3.1      if by way of fax, when received in legible form; or

 

74

 

20.3.2      if by way of letter, when it has been left at the relevant address
or five (5) Business Days after being deposited in the post postage
prepaid in an envelope addressed to it at that address;

 

and, if a particular department or officer is
specified as part of its address details provided under Clause 20.2, if
addressed to that department or officer.

 

Any communication or document to be made or delivered
to a Creditor Party will be effective only when actually received by that
Creditor Party.

 

All notices from or to the Borrowers shall be sent
through the Agent.

 

20.4         Notification of address and fax number   Promptly upon
receipt of notification of an address, fax number or change of address,
pursuant to Clause 20.2 or changing its own address or fax number, the Agent
shall notify the other parties to this Agreement.

 

20.5         English
language   Any
notice given under or in connection with this Agreement must be in English. All
other documents provided under or in connection with this Agreement must be:

 

20.5.1      in English; or

 

20.5.2      if not in English, and if so required by the Agent, accompanied by a
certified English translation and, in this case, the English translation will
prevail unless the document is a constitutional, statutory or other official
document.

 

21           Partial Invalidity

 

If, at any time, any provision of a
Creditor Document is or becomes illegal, invalid or unenforceable in any
respect under any law of any jurisdiction, neither the legality, validity or
enforceability of the remaining provisions nor the legality, validity or enforceability
of such provision under the law of any other jurisdiction will in any way be
affected or impaired.

 

22           Remedies and Waivers

 

No failure to exercise, nor any delay in
exercising, on the part of any Creditor Party, any right or remedy under a
Creditor Document shall operate as a waiver, nor shall any single

 

75

 

or partial exercise of any right or remedy
prevent any further or other exercise or the exercise of any other right or
remedy. The rights and remedies provided in this Agreement and the Master
Agreement are cumulative and not exclusive of any rights or remedies provided
by law.

 

23           Joint and several liability

 

23.1         Nature of liability   The
representations, warranties, covenants, obligations and undertakings of the
Borrowers contained in this Agreement and the Master Agreement shall be joint
and several so that each Borrower shall be jointly and severally liable with
all the Borrowers for all of the same and such liability shall not in any way be
discharged, impaired or otherwise affected by:

 

23.1.1      any forbearance (whether as to payment or otherwise) or any time or
other indulgence granted to any other Borrower or any other Security Party
under or in connection with any Creditor Document;

 

23.1.2      any amendment, variation, novation or replacement of any other
Creditor Document;

 

23.1.3      any failure of any Creditor Document to be legal valid binding and
enforceable in relation to any other Borrower or any other Security Party for
any reason;

 

23.1.4      the winding-up or dissolution of any other Borrower or any other
Security Party;

 

23.1.5      the release (whether in whole or in part) of, or the entering into
of any compromise or composition with, any other Borrower or any other Security
Party; or

 

23.1.6      any other act, omission, thing or circumstance which would or might,
but for this provision, operate to discharge, impair or otherwise affect such
liability.

 

23.2         No rights as surety   Until the
Indebtedness has been unconditionally and irrevocably paid and discharged in
full, each Borrower agrees that it shall not, by virtue of any payment made
under this Agreement or the Master Agreement on account of the Indebtedness or
by virtue of any enforcement by a Creditor Party of

 

76

 

its rights under this Agreement or, in the case of the
Swap Bank, under the Master Agreement or by virtue of any relationship between,
or transaction involving, the relevant Borrower and any other Borrower or any
other Security Party:

 

23.2.1      exercise any rights of subrogation in relation to any rights,
security or moneys held or received or receivable by a Creditor Party or any
other person; or

 

23.2.2      exercise any right of contribution from any other Borrower or any
other Security Party under any Creditor Document; or

 

23.2.3      exercise any right of set-off or counterclaim against any other
Borrower or any other Security Party; or

 

23.2.4      receive, claim or have the benefit of any payment, distribution,
security or indemnity from any other Borrower or any other Security Party; or

 

23.2.5      unless so directed by the Agent or, in the case of the Master
Agreement, the Swap Bank (when the relevant Borrower will prove in accordance
with such directions), claim as a creditor of any other Borrower or any other
Security Party in competition with any Creditor Party;

 

and each Borrower shall hold in trust for the Creditor
Parties and forthwith pay or transfer (as appropriate) to the Agent or, in the
case of the Master Agreement, the Swap Bank any such payment (including an
amount equal to any such set-off), distribution or benefit of such security,
indemnity or claim in fact received by it.

 

24           Miscellaneous

 

24.1         No oral variations   No variation or amendment of a Creditor Document shall be valid
unless in writing and signed on behalf of all the Creditor Parties (in the case
of the Finance Documents) or the Swap Bank (in the case of the Master Agreement
Documents).

 

24.2         Further Assurance   If any provision of a Creditor Document shall be invalid or unenforceable
in whole or in part by reason of any present or future law or any decision
of any court, or if the documents at any time held by or on behalf of the
Creditor Parties or any of them are considered by the Creditor Parties, in the
case of the Finance Documents, or the Swap Bank, in the case of the Master
Agreement

 

77

 

Documents, for any reason insufficient to carry out
the terms of this Agreement and/or the Master Agreement,then from time to time
the Borrowers will promptly, on demand by the Agent or, in the case of the
Master Agreement, promptly on demand by the Swap Bank, execute or procure the
execution of such further documents as in the opinion of the Creditor Parties
and the Swap Bank are necessary to provide adequate security for the repayment
of the Indebtedness.

 

 

24.3         Rescission of payments etc.  Any discharge, release or reassignment by a Creditor Party of any of
the security constituted by, or any of the obligations of a Security Party
contained in, a Creditor Document shall be (and be deemed always to have been)
void if any act (including, without limitation, any payment) as a result of
which such discharge, release or reassignment was given or made is subsequently
wholly or partially rescinded or avoided by operation of any law.

 

24.4         Certificates   Any certificate or statement signed by an authorised signatory of
the Agent purporting to show the amount of the Indebtedness or the Senior
Indebtedness (or any part of the Indebtedness or the Senior Indebtedness)
or any other amount referred to in any Finance Document or any certificate or
statement signed by an authorised signatory of the Swap Bank purporting to show
the amount of the Junior Indebtedness (or any part of the Junior
Indebtedness) or any amount referred to in any Master Agreement Document shall,
save for manifest error or on any question of law, be conclusive evidence as
against the Borrowers of that amount.

 

24.5         Counterparts   This Agreement may be executed in any number of counterparts
each of which shall be original but which shall together constitute the same
instrument.

 

24.6         Contracts (Rights of Third Parties) Act 1999   A person who is
not a party to this Agreement has no right under the Contracts (Rights of Third
Parties) Act 1999 to enforce or to enjoy the benefit of any term of this
Agreement.

 

24.7         Disclaimer for unencoded e-mails  All information related or connected to this Agreement and the Master
Agreement and the Loan and any Hedging Transactions made by the Creditor Parties and
their respective credit decisions and all negotiations related or connected to
the drafting and drawing up of any of the Creditor Documents, any other security documents and any
transaction document may be made or given by any of the Creditor Parties, their
respective

 

78

 

lawyers and any other consultants inter se and
otherwise by e-mail. The Borrowers, the Creditor Parties and their respective
lawyers and agents confirm their awareness of, and accept, the material risks
generally related to communications by e-mail.

 

24.8         Conflict  In the event of there being any conflict
between this Agreement and any of the other Creditor Documents, the provisions
of this Agreement shall prevail.

 

25           Law and Jurisdiction

 

25.1         Governing law   This Agreement shall in all respects be governed by and interpreted
in accordance with English law.

 

25.2         Jurisdiction  
For the exclusive benefit of the Creditor
Parties, the parties to this Agreement irrevocably agree that the courts of
England are to have jurisdiction to settle any disputes which may arise
out of or in connection with this Agreement and that any proceedings may be
brought in those courts.

 

25.3         Alternative jurisdictions   Nothing contained in this Clause 25 shall limit the right of the
Creditor Parties to commence any proceedings against the Borrowers in any other
court of competent jurisdiction nor shall the commencement of any proceedings
against the Borrowers in one or more jurisdictions preclude the commencement of
any proceedings in any other jurisdiction, whether concurrently or not.

 

25.4         Waiver of objections   Each Borrower irrevocably waives any objection which it may now
or in the future have to the laying of the venue of any proceedings in any
court referred to in this Clause 25, and any claim that those proceedings have
been brought in an inconvenient or inappropriate forum, and irrevocably agrees
that a judgment in any proceedings commenced in any such court shall be
conclusive and binding on it and may be enforced in the courts of any
other jurisdiction.

 

25.5         Service of process   Without prejudice to any other mode of service allowed under any
relevant law, each Borrower:

 

25.5.1      irrevocably
appoints Danaos Management Consultants of 4 Staple Inn, Holborn, London WC1V
7QU, England as its agent for service of process in relation to any proceedings
before the English courts in connection with this Agreement; and

 

79

 

25.5.2      Irrevocably appoints Ms Zoe Lappa, Attorney-at-law, of c/o
Danaos Shipping Co. Ltd., 14 Akti Kondyli, Piraeus, Greece, Fax No. +30
210 42 20 855 Tel. No. +30 210 41 96 400 as agent to accept service in
Greece (hereinafter referred to as the “Greek Process Agent”)
upon whom any judicial process in Greece may be served and any notice,
request, demand or other communication under this Agreement or any of the other
Creditor Documents. In the event that the Greek Process Agent (or any
substitute process agent notified to the Agent and the Borrowers in accordance
with the foregoing) cannot be found at the address specified above (or, as the
case may be, notified to the Agent), which will be conclusively proved by
a deed of a process server that the Greek Process Agent cannot be found at such
address, any process notice, request, demand or other communication to be sent
to the Borrowers may be validly effected upon the District Attorney of the
First Instance Court of Piraeus.

 

25.5.3      agrees that failure by a process agent to notify any Borrower of the
process will not invalidate the proceedings concerned.

 

80

 

SCHEDULE 1: The Lenders and the
Commitments

 

	
  The
  Lenders

  	
   

  	
  The Commitments

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  AEGEAN
  BALTIC BANK S.A.

  	
   

  	
  $

  	
  4,000,000

  	
   

  
	
  28
  Diligianni Street

  	
   

  	
   

  	
   

  
	
  145
  62 Kifissia

  	
   

  	
   

  	
   

  
	
  Greece

  	
   

  	
   

  	
   

  
	
  Fax
  number: +30 210 623 4192

  	
   

  	
   

  	
   

  
	
  Attention:
  Business Development

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  HSH
  NORDBANK AG

  	
   

  	
  $

  	
  51,000,000

  	
   

  
	
  Gerhart-Hauptmann-Platz
  50

  	
   

  	
   

  	
   

  
	
  20095
  Hamburg

  	
   

  	
   

  	
   

  
	
  The
  Federal Republic of Germany

  	
   

  	
   

  	
   

  
	
  Fax
  number: +49 40 333 334 118

  	
   

  	
   

  	
   

  
	
  Attention:
  Greek Desk

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  CITIBANK
  INTERNATIONAL PLC, GREECE BRANCH

  	
   

  	
  $

  	
  45,000,000

  	
   

  
	
  47-49
  Akti Miaouli Str.

  	
   

  	
   

  	
   

  
	
  18536
  Piraeus

  	
   

  	
   

  	
   

  
	
  Greece

  	
   

  	
   

  	
   

  
	
  Fax
  number: +30 210 4292 806

  	
   

  	
   

  	
   

  
	
  Attention: George Kakoulidis

  	
   

  	
   

  	
   

  

 

81

 

	
  DRESDNER BANK AKTIENGESELLSCHAFT IN HAMBURG

  	
   

  	
  $

  	
  40,000,000

  	
   

  
	
  Jungfernstieg
  22

  	
   

  	
   

  	
   

  
	
  20349
  Hamburg

  	
   

  	
   

  	
   

  
	
  The
  Federal Republic of Germany

  	
   

  	
   

  	
   

  
	
  Fax
  number: +49 40 3501 4007

  	
   

  	
   

  	
   

  
	
  Attention:
  Thomas Witte, Dr. Christian Hennig

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ABN
  AMRO BANK N.V.

  	
   

  	
  $

  	
  20,000,000

  	
   

  
	
  330
  Thisseos Ave.

  	
   

  	
   

  	
   

  
	
  10110
  Athens

  	
   

  	
   

  	
   

  
	
  Greece

  	
   

  	
   

  	
   

  
	
  Fax
  number: +30 210 940 5327

  	
   

  	
   

  	
   

  
	
  Attention:
  Dimitris Sfakianakis

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  DVB BANK AG

  	
   

  	
  $

  	
  20,000,000

  	
   

  
	
  Friedrich-Ebert-Anlage 2-14

  	
   

  	
   

  	
   

  
	
  D-60325
  Frankfurt am Main

  	
   

  	
   

  	
   

  
	
  The
  Federal Republic of Germany

  	
   

  	
   

  	
   

  
	
  Fax
  number: +49 699 7504 444

  	
   

  	
   

  	
   

  
	
  Attention:
  Loans Administration Department

  	
   

  	
   

  	
   

  
	
  With
  a copy of the notices to:

  	
   

  	
   

  	
   

  
	
  DVB
  Bank AG, Representative Office, Greece

  	
   

  	
   

  	
   

  
	
  Fax
  number: +30 210 429 1284

  	
   

  	
   

  	
   

  
	
  Attention:
  Eri Tsironi

  	
   

  	
   

  	
   

  

 

82

 

	
  CREDIT
  SUISSE

  	
   

  	
  $

  	
  20,000,000

  	
   

  
	
  St.
  Alban-Graben 1-3

  	
   

  	
   

  	
   

  
	
  4002
  Basle

  	
   

  	
   

  	
   

  
	
  Switzerland

  	
   

  	
   

  	
   

  
	
  Fax
  number: +41 61 266 7939

  	
   

  	
   

  	
   

  
	
  Attention:
  Ship Finance / Meike Mättig

  	
   

  	
   

  	
   

  

 

83

 

SCHEDULE 2: Conditions Precedent and
Subsequent

 

Part I: Conditions precedent

 

1              Security
Parties

 

(a)           Constitutional Documents   Copies of the
constitutional documents of each Security Party together with such other evidence
as the Agent may reasonably require that each Security Party is duly
incorporated in its country of 
incorporation and remains in existence with power to enter into, and perform its
obligations under, the Relevant Documents to which it is or is to become a
party.

 

(b)           Certificates of good standing   A certificate of good
standing in respect of each Security Party (if such a certificate can be
obtained).

 

(c)           Board resolutions  
A copy of a resolution of the board of
directors of each Security Party:

 

(i)            approving the terms of, and the transactions contemplated by, the
Relevant Documents to which it is a party and resolving that it execute those
Relevant Documents; and

 

(ii)           authorising a specified person or persons to execute those Relevant
Documents (and all documents and notices to be signed and/or despatched under
those documents) on its behalf.

 

(d)           Specimen signatures   A specimen of
the signature of each person authorised by the resolutions referred to in
paragraph (c) above.

 

(e)           Shareholder resolutions   A copy of a
resolution signed by all the holders of the issued shares in each Security
Party, approving the terms of, and the transactions contemplated by, the
Relevant Documents to which that Security Party is a party.

 

(f)            Officer’s certificates   A certificate of
a duly authorised officer of each Security Party certifying that each copy
document relating to it specified in this Part I of Schedule 2 is
correct, complete and in full force and effect as at a date no earlier than the
date of this Agreement and setting out the names of the directors, officers

 

84

 

and shareholders of that Security Party and the
proportion of shares held by each shareholder.

 

(g)           Evidence of registration   Where such registration
is required or permitted under the laws of the relevant jurisdiction, evidence
that the names of the directors, officers and shareholders of each Security
Party are duly registered in the companies registry or other registry in the
country of incorporation of that Security Party.

 

(h)           Powers of attorney   The notarially
attested and legalised power of attorney of each Security Party under which any
documents are to be executed or transactions undertaken by that Security Party.

 

2              Security
and related documents

 

(a)           Vessel documents  
Photocopies, certified as true, accurate and
complete by  director or the secretary or
the legal advisers of the Borrower, of:

 

(i)            the Charter of the Vessel together with
evidence that it is in force on the Drawdown Date;

 

(ii)           the Management Agreement;

 

(iii)          the Vessel’s current Safety Construction,
Safety Equipment, Safety Radio and Load Line Certificates;

 

(iv)          the Vessel’s current Certificate of
Financial Responsibility issued pursuant to the United States Oil Pollution Act
1990;

 

(v)           the Vessel’s current SMC;

 

(vi)          the ISM Company’s current DOC;

 

(vii)         the Vessel’s current ISSC;

 

(viii)        the Vessel’s current Tonnage Certificate;

 

(ix)           the Borrower’s current Carrier Initiative
Agreement with the United States’ Customs Service;

 

in each case together with all addenda, amendments or supplements.

 

85

 

(b)           Evidence of Borrower’s title  
Evidence that on the Drawdown Date (i) the
Vessel will be permanently registered under the flag stated in Recital (A) in
the ownership of the Borrower and (ii) the Mortgage will be capable of
being registered against the Vessel with first priority.

 

(c)           Evidence of insurance   Evidence that the Vessel is insured in the manner required by the
Security Documents and that letters of undertaking will be issued in the manner
required by the Security Documents, together with (if required by the Agent)
the written approval of the Insurances by an insurance adviser appointed by the
Agent.

 

(d)           Confirmation of class   A Certificate of Confirmation of Class for hull and machinery
confirming that the Vessel is classed with the highest class applicable to
vessels of her type with Lloyd’s Register of Shipping or such other IACS
classification society as may be acceptable to the Agent free of overdue
recommendations and/or notations affecting class.

 

(e)           Valuation   Two valuations of the Vessel addressed to
the Agent from two brokers referred to in Clause 12.13 each certifying a value
for the Vessel, and assessed in accordance with Clause 12.13.

 

(f)            Security Documents   The Mortgage and the Assignments in respect of the Vessel, the
Guarantee and the Accounts Charge, together with all other documents required
by any of them, including, without limitation, all notices of assignment and/or
charge and evidence that those notices will be duly acknowledged by the
recipients.

 

(g)           Mandates   Such duly signed forms of mandate, and/or
other evidence of the opening of the 
Earnings Account, as the Agent and the Swap Bank may require.

 

(h)           Managers’ confirmation   The written
confirmation of the Managers that, throughout the Facility Period unless
otherwise agreed by the Agent, they will remain the commercial and technical
managers of the Vessel and that they will not, without the prior written
consent of the Agent, sub-contract or delegate the commercial or technical
management of the Vessel to any third party and confirming in terms acceptable
to the Agent that, following the occurrence of an Event of Default, all claims
of the Managers against the Borrower shall be subordinated to the claims of the
Creditor Parties under the Creditor Documents.

 

86

 

(i)            No disputes  
The written confirmation of the Borrower
that there is no dispute under any of the Relevant Documents as between the
parties to any such document.

 

(j)            Other Relevant Documents   Copies of each of the
Relevant Documents not otherwise comprised in the documents listed in this Part I
of Schedule 2.

 

3              Legal
opinions

 

(a)           If a Security Party is incorporated in a jurisdiction other than
England and Wales or if any Creditor Document is governed by the laws of a
jurisdiction other than England and Wales, a legal opinion of the legal
advisers to the Lenders in each relevant jurisdiction, substantially in the form or
forms provided to the Agent prior to signing this Agreement or confirmation
satisfactory to the Agent that such an opinion will be given.

 

4              Other
documents and evidence

 

(a)           Drawdown Notice  
A duly completed Drawdown Notice.

 

(b)           Process agent  
Evidence that any process agent referred to
in Clause 25.5 and any process agent appointed under any other Creditor
Document has accepted its appointment.

 

(c)           Other authorisations   A copy of any
other consent, licence, approval, authorisation or other document, opinion or
assurance which the Agent considers to be necessary or desirable (if it has
notified the Borrowers accordingly) in connection with the entry into and
performance of the transactions contemplated by any of the Relevant Documents
or for the validity and enforceability of any of the Relevant Documents.

 

(d)           Fees   Evidence that the fees, costs and expenses then due from the
Borrowers under Clause 10 and Clause 11 have been paid or will be paid by the
relevant Drawdown Date.

 

(e)           “Know your customer” documents   Such documentation and
other evidence as is reasonably requested by the Agent in order for the Lenders
to comply with all necessary “know your customer” or similar identification
procedures in relation to the transactions contemplated in the Creditor
Documents.

 

87

 

Part II: Conditions
subsequent

 

1              Evidence of
Borrower’s title   Certificate of ownership and encumbrance (or equivalent) issued by
the Registrar of Ships (or equivalent official) of the flag stated in Recital (A) confirming
that (a) the Vessel is permanently registered under that flag in the
ownership of the Borrower, (b) the Mortgage has been registered with first
priority against the Vessel and (c) there are no further Encumbrances
registered against the Vessel.

 

2              Letters of undertaking   Letters of
undertaking in respect of the Insurances as required by the Security Documents
together with copies of the relevant policies or cover notes or entry
certificates duly endorsed with the interest of the Security Agent.

 

3              Acknowledgements of notices   Acknowledgements of all
notices of assignment and/or charge given pursuant to any Security Documents
received by the Agent pursuant to Part I of this Schedule 2.

 

4              Legal opinions   Such of the legal opinions specified in Part I of this Schedule 2
as have not already been provided to the Agent.

 

5              Companies Act registrations   Evidence that the prescribed particulars of
any Security Documents received by the Agent pursuant to Part I of this Schedule 2
have been delivered to the Registrar of Companies of Singapore within the
statutory time limit.

 

6              Master’s receipt   The master’s receipt for any Mortgage in
respect of a Greek flag Vessel.

 

7              Re-execution of Greek Mortgage  Upon the
execution of a transfer certificate pursuant to Clause 16.1, a notarial deed of
assignment in respect of any Greek Mortgage will be  duly executed by all the Lenders, the Swap
Bank and the Transferee and recorded at the Greek Ships’ Registry and a
relevant Greek legal opinion shall be provided to the Agent, together with
equivalent documents and evidence to that specified at Part I 1 (a) to
(h) inclusive, and Part I, 2 (c).

 

88

 

SCHEDULE 3: Form of Drawdown
Notice

 

To:          AEGEAN BALTIC BANK S.A.

 

From:      LATO
SHIPPING (PRIVATE) LTD.

FERROUS SHIPPING (PRIVATE) LTD.

COBALTIUM SHIPPING (PRIVATE) LTD.

COMMODORE MARINE INC.

[Date]

 

Dear
Sirs,

 

Drawdown
Notice

 

We refer to the Loan Agreement dated                            200 
made between, amongst others, ourselves and yourselves (the “Agreement”).

 

Words and phrases defined in the Agreement have the
same meaning when used in this Drawdown Notice.

 

Pursuant to Clause 4.1 of the Agreement, we
irrevocably request that you advance a Drawing in the sum of [                     
                                                 ]
to us on
                                      
200  , which is a Business Day, by paying the amount of the Drawing
in respect of the Vessel named [                                            ]
in the following manner [         ].

 

We warrant that the representations and warranties
contained in Clause 13.1 of the Agreement are true and correct at the date of
this Drawdown Notice and will be true and correct on
             
200 , that no Default has occurred and is continuing, and that no Default will
result from the advance of the Drawing requested in this Drawdown Notice.

 

[We select the period of
[       ] months as the first Interest
Period.]

 

	
  Yours
  faithfully

  
	
   

  
	
   

  	
   

  	
   

  
	
   

  
	
  For
  and on behalf of

  

 

LATO SHIPPING (PRIVATE)
LTD.

FERROUS SHIPPING
(PRIVATE) LTD.

COBALTIUM SHIPPING
(PRIVATE) LTD.

COMMODORE
MARINE INC.

 

89

 

SCHEDULE 4: Form of Transfer
Certificate

 

To:          AEGEAN BALTIC
BANK S.A.

 

TRANSFER
CERTIFICATE

 

This
transfer certificate relates to a secured loan facility agreement (as from time
to time amended, varied, supplemented or novated  the “Loan Agreement”) dated                      200
, on the terms and subject to the conditions of which a secured loan facility
of up to $200,000,000 was made available to LATO
SHIPPING (PRIVATE) LTD., FERROUS SHIPPING (PRIVATE) LTD., COBALTIUM SHIPPING
(PRIVATE) LTD. and COMMODORE MARINE INC. on a joint and several
basis, by a syndicate of banks on whose behalf you act as agent and security
agent.

 

1              Terms defined in the
Loan Agreement shall, unless otherwise expressly indicated, have the same
meaning when used in this certificate. The terms “Transferor”
and “Transferee” are defined in the schedule to
this certificate.

 

2              The Transferor:

 

2.1           confirms that the details in the Schedule under the heading “Transferor’s Commitment” accurately summarise its
Commitment; and

 

2.2           requests the Transferee to accept by way of novation the transfer to
the Transferee of the amount of the Transferor’s Commitment specified in the Schedule by
counter-signing and delivering this certificate to the Agent at its address for
communications specified in the Loan Agreement.

 

3              The Transferee requests
the Agent to accept this certificate as being delivered to the Agent pursuant
to and for the purposes of clause 16.1 of the Loan Agreement so as to take
effect in accordance with the terms of that clause on the Transfer Date
specified in the Schedule.

 

4              The Agent confirms its
acceptance of this certificate for the purposes of clause 16.4 of the Loan
Agreement.

 

5              The Transferee confirms
that:

 

5.1           it has received a copy of
the Loan Agreement together with all other information which it has required in
connection with this transaction;

 

90

 

5.2           it has not relied and will
not in the future rely on the Transferor or any other party to the Loan
Agreement to check or enquire on its behalf into the legality, validity,
effectiveness, adequacy, accuracy or completeness of any such information; and

 

5.3           it has not relied and will
not in the future rely on the Transferor or any other party to the Loan
Agreement to keep under review on its behalf the financial condition,
creditworthiness, condition, affairs, status or nature of any Security Party.

 

6              Execution of this
certificate by the Transferee constitutes its representation and warranty to
the Transferor and to all other parties to the Loan Agreement that it has the
power to become a party to the Loan Agreement as a Lender on the terms of the
Loan Agreement and has taken all steps to authorise execution and delivery of
this certificate.

 

7              The Transferee
undertakes with the Transferor and each of the other parties to the Loan
Agreement that it will perform in accordance with their terms all those
obligations which by the terms of the Loan Agreement will be assumed by it
after delivery of this certificate to the Agent and the satisfaction of any
conditions subject to which this certificate is expressed to take effect.

 

8              The Transferor makes no
representation or warranty and assumes no responsibility with respect to the
legality, validity, effectiveness, adequacy or enforceability of any Creditor
Document or any document relating to any Creditor Document, and assumes no
responsibility for the financial condition of any Creditor Party or for the
performance and observance by any Security Party of any of its obligations
under any Creditor Document or any document relating to any Creditor Document
and any conditions and warranties implied by law are expressly excluded.

 

9              The Transferee
acknowledges that nothing in this certificate or in the Loan Agreement shall
oblige the Transferor to:

 

9.1           accept a re-transfer from the Transferee of the whole or any part of
the rights, benefits and/or obligations transferred pursuant to this
certificate; or

 

9.2           support any losses directly or indirectly sustained or incurred by
the Transferee for any reason including, without limitation, the
non-performance by any party to any Creditor Document of any obligations under
any Creditor Document.

 

10            The address and fax number of the Transferee for the purposes of
clause 20 of the Loan Agreement are set out in the Schedule.

 

91

 

11            This certificate may be
executed in any number of counterparts each of which shall be original but
which shall together constitute the same instrument.

 

12            This certificate shall be governed
by and interpreted in accordance with English law.

 

THE SCHEDULE

 

1              Transferor:

 

2              Transferee:

 

3              Transfer
Date (not earlier that the fifth Business Day
after the date of delivery of the Transfer Certificate to the Agent):

 

4              Transferor’s
Commitment:

 

5              Amount
transferred:

 

6              Transferee’s
address and fax number for the purposes of clause 20 of the Loan Agreement:

 

	
  [name of Transferor]

  	
   

  	
  [name of Transferee]

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
  By:

  
	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
  Date:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  [Agent] as Agent

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  

 

92

 

SCHEDULE 5: Form of Covenant
Compliance Certificate

 

COVENANT COMPLIANCE
CERTIFICATE

 

To:          AEGEAN BALTIC
BANK S.A.

 

This
covenant compliance certificate relates to a secured loan facility agreement
(as from time to time amended, varied, supplemented or novated  the “Loan Agreement”) dated
                                                       
2005 , on the terms and subject to the conditions of which a secured loan
facility of up to $200,000,000 was made available to LATO
SHIPPING (PRIVATE) LTD., FERROUS SHIPPING (PRIVATE) LTD., COBALTIUM SHIPPING
(PRIVATE) LTD. and COMMODORE MARINE INC. on a joint and several
basis, by a syndicate of banks on whose behalf you act as agent and security
agent.

 

We give this Covenant
Compliance Certificate as required under Clause 14.2 of the Agreement. Terms
used in this Covenant Compliance Certificate have the meanings given to them in
the Agreement..

 

The
covenant calculations below are made on the basis of the Group Statements, as
of, and in respect of the 12 months period ending on [   ]

 

Agreement            Covenant
determination / Minimum Compliance                              Actual as
of [    ]

 

Clause

 

14.2.1                      Net
Worth  > $250,000,000

14.2.1                      Fixed
Assets to Net Consolidated Indebtedness > 1.45:1

14.2.1                      Outstanding
Bank Debt to Vessel Values < 0.75:1

14.2.1                      Net Worth
to Total Assets > 1.30:1

14.2.2                      Liquid
Funds > 30,000,000

14.2.2                      EBITDA to
Net Interest Expenses > 2.5:1

 

It is hereby certified, by
the undersigned, that there are no known, Events of Default or Potential Events
of Default as of this date. Furthermore, it is hereby certified that the above
representations and undertakings contained in the Agreement are true and
correct and fulfilled at the time hereof with reference to the facts now
subsisting.

 

93

 

	
  Yours faithfully,

  	
   

  	
  Yours faithfully,

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  for and on behalf of

  	
   

  	
   

  	
  for and on behalf of

  	
   

  	
   

  
	
  LATO SHIPPING (PRIVATE) LTD.

  	
   

  	
  DANAOS HOLDINGS LIMITED

  	
   

  
	
  FERROUOS SHIPPING
  (PRIVATE) LTD.

  	
   

  	
   

  	
   

  
	
  COBALTIUM SHIPPING
  (PRIVATE) LTD.

  	
   

  	
   

  	
   

  
	
  COMMODORE MARINE INC.

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
  Date:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Enclosure:

  	
  Financial Statements as per
  [      ]

  	
   

  	
   

  	
   

  
							

 

94

Exh.
10.9

IN WITNESS 
of which
the parties to this Agreement have executed this Agreement the day and 

year
first before written.

 

 

	
  SIGNED by Iraklis Prokopakis

  	
  )

  	
  /s/
  Iraklis Prokopakis

  
	
  duly
  authorised for and on behalf

  	
  )

  	
   

  
	
  of LATO SHIPPING (PRIVATE) LTD.

  	
  )

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SIGNED by Iraklis Prokopakis

  	
  )

  	
  /s/
  Iraklis Prokopakis

  
	
  duly
  authorised for and on behalf

  	
  )

  	
   

  
	
  of FERROUS SHIPPING (PRIVATE) LTD.

  	
  )

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SIGNED by Iraklis Prokopakis

  	
  )

  	
  /s/
  Iraklis Prokopakis

  
	
  duly
  authorised for and on behalf

  	
  )

  	
   

  
	
  of COBALTIUM SHIPPING (PRIVATE)

  	
  )

  	
   

  
	
  LTD.

  	
  )

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SIGNED by Iraklis Prokopakis

  	
  )

  	
  /s/
  Iraklis Prokopakis

  
	
  duly
  authorised for and on behalf

  	
  )

  	
   

  
	
  of COMMODORE MARINE INC.

  	
  )

  	
   

  
	
   

  	
   

  	
   

  
	
   Theodore Afthonides

  	
   

  	
   

  
	
  SIGNED by Doerek Berkenbusch

  	
  )

  	
  /s/
  Theodore Afthonides

  
	
  duly
  authorised for and on behalf

  	
  )

  	
  /s/
  Doerek Berkenbusch

  
	
  of AEGEAN BALTIC BANK S.A. (as a Lender)

  	
  )

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SIGNED by Nigel Bowen - Morris

  	
  )

  	
  /s/
  Nigel Bowen - Morris

  
	
  duly
  authorised for and on behalf

  	
  )

  	
   

  
	
  of HSH NORDBANK AG (as a Lender)

  	
  )

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SIGNED by George Kakoulidis

  	
  )

  	
  /s/
  George Kakoulidis

  
	
  duly
  authorised for and on behalf

  	
  )

  	
   

  
	
  of CITIBANK INTERNATIONAL PLC

  	
  )

  	
   

  
	
  (as a Lender)

  	
  )

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SIGNED by Nigel Bowen - Morris

  	
  )

  	
  /s/
  Nigel Bowen - Morris

  
	
  duly
  authorised for and on behalf

  	
  )

  	
   

  
	
  of DRESDNER BANK
  AKTIENGESELLSCHAFT

  	
  )

  	
   

  
	
  IN HAMBURG

  	
   

  	
   

  
	
  (as a
  Lender)

  	
   

  	
   

  

 

95

Exh.
10.9

	
   Dimitris
  Sfakianakis

  	
   

  	
   

  
	
  SIGNED by Eva Athanassaki

  	
  )

  	
  /s/
  Dimitris Sfakianakis

  
	
  duly
  authorised for and on behalf

  	
  )

  	
  /s/
  Eva Athanassaki

  
	
  of ABN AMRO BANK N.V. (as a Lender)

  	
  )

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SIGNED
  by Nigel Bowen - Morris

  	
  )

  	
  /s/ Nigel Bowen - Morris

  
	
  duly authorised for and on behalf

  	
  )

  	
   

  
	
  of DVB BANK AG (as a Lender)

  	
  )

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SIGNED by Nigel Bowen - Morris

  	
  )

  	
  /s/ Nigel Bowen - Morris

  
	
  duly authorised for and on behalf

  	
  )

  	
   

  
	
  of CREDIT SUISSE (as a Lender)

  	
  )

  	
   

  
	
   

  	
   

  	
   

  
	
   Theodore Afthonides

  	
   

  	
   

  
	
  SIGNED by Doerek Berkenbusch

  	
  )

  	
  /s/ Theodore Afthonides

  
	
  duly authorised for and on behalf

  	
  )

  	
  /s/ Doerek Berkenbusch

  
	
  of AEGEAN
  BALTIC BANK S.A.(as the Agent)

  	
  )

  	
   

  
	
   

  	
   

  	
   

  
	
   Theodore Afthonides

  	
   

  	
   

  
	
  SIGNED by Doerek Berkenbusch

  	
  )

  	
  /s/ Theodore Afthonides

  
	
  duly authorised for and on behalf

  	
  )

  	
  /s/ Doerek Berkenbusch

  
	
  of AEGEAN
  BALTIC BANK S.A.

  	
  )

  	
   

  
	
  (as the Security Agent)

  	
  )

  	
   

  
	
   

  	
   

  	
   

  
	
   Theodore Afthonides

  	
   

  	
   

  
	
  SIGNED by Doerek Berkenbusch

  	
  )

  	
  /s/ Theodore Afthonides

  
	
  duly authorised for and on behalf

  	
  )

  	
  /s/ Doerek Berkenbusch

  
	
  of AEGEAN
  BALTIC BANK S.A.

  	
  )

  	
   

  
	
  (as Joint Arranger)

  	
  )

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SIGNED by Nigel Bowen - Morris

  	
  )

  	
  /s/ Nigel Bowen - Morris

  
	
  duly authorised for and on behalf

  	
  )

  	
   

  
	
  of HSH NORDBANK AG

  	
  )

  	
   

  
	
  (as Joint Arranger)

  	
  )

  	
   

  
	
   

  	
   

  	
   

  
	
   Theodore Afthonides

  	
   

  	
   

  
	
  SIGNED by Doerek Berkenbusch

  	
  )

  	
  /s/ Theodore Afthonides

  
	
  duly authorised for and on behalf

  	
  )

  	
  /s/ Doerek Berkenbusch

  
	
  of AEGEAN
  BALTIC BANK S.A.

  	
  )

  	
   

  
	
  (as Co-Underwriter)

  	
  )

  	
   

  

 

96

Exh. 10.9

	
  SIGNED by Nigel Bowen - Morris

  	
  )

  	
  /s/ Nigel Bowen - Morris

  
	
  duly authorised for and on behalf

  	
  )

  	
   

  
	
  of HSH NORDBANK AG

  	
  )

  	
   

  
	
  (as Co-Underwriter)

  	
  )

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SIGNED by Nigel Bowen - Morris

  	
  )

  	
  /s/ Nigel Bowen - Morris

  
	
  duly authorised for and on behalf

  	
  )

  	
   

  
	
  of HSH NORDBANK AG

  	
  )

  	
   

  
	
  (as Swap Bank)

  	
  )

  	
   

  

 

97

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