Document:

Exhibit 4.14

 

Date 9 May 2008

 

 

DANAOS CORPORATION

as Borrower

 

 

- and -

 

 

CREDIT SUISSE

as Lender

 

 

 

LOAN AGREEMENT

 

relating to a secured term loan facility
of US$221,600,000 to provide pre and post-delivery finance for the acquisition of
three container carrier newbuildings having Builder’s Hull Nos. 1699, S4003 and
N-214 from Samsung Heavy Industries Co. Ltd., Sungdong Shipbuilding &
Marine Engineering Co. Ltd. and Hanjin Heavy Industries & Construction
Co. Ltd. respectively

 

 

WATSON FARLEY & WILLIAMS

Piraeus

 

 

INDEX

 

	
  Clause

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  1

  	
  INTERPRETATION

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  
	
  2

  	
  FACILITY

  	
   

  	
  17

  
	
   

  	
   

  	
   

  	
   

  
	
  3

  	
  DRAWDOWN

  	
   

  	
  17

  
	
   

  	
   

  	
   

  	
   

  
	
  4

  	
  INTEREST

  	
   

  	
  18

  
	
   

  	
   

  	
   

  	
   

  
	
  5

  	
  INTEREST
  PERIODS

  	
   

  	
  19

  
	
   

  	
   

  	
   

  	
   

  
	
  6

  	
  DEFAULT
  INTEREST

  	
   

  	
  20

  
	
   

  	
   

  	
   

  	
   

  
	
  7

  	
  REPAYMENT
  AND PREPAYMENT

  	
   

  	
  21

  
	
   

  	
   

  	
   

  	
   

  
	
  8

  	
  CONDITIONS
  PRECEDENT

  	
   

  	
  23

  
	
   

  	
   

  	
   

  	
   

  
	
  9

  	
  REPRESENTATIONS
  AND WARRANTIES

  	
   

  	
  24

  
	
   

  	
   

  	
   

  	
   

  
	
  10

  	
  GENERAL
  UNDERTAKINGS

  	
   

  	
  26

  
	
   

  	
   

  	
   

  	
   

  
	
  11

  	
  CORPORATE
  UNDERTAKINGS

  	
   

  	
  30

  
	
   

  	
   

  	
   

  	
   

  
	
  12

  	
  INSURANCE

  	
   

  	
  31

  
	
   

  	
   

  	
   

  	
   

  
	
  13

  	
  SHIP
  COVENANTS

  	
   

  	
  36

  
	
   

  	
   

  	
   

  	
   

  
	
  14

  	
  SECURITY
  COVER

  	
   

  	
  40

  
	
   

  	
   

  	
   

  	
   

  
	
  15

  	
  PAYMENTS
  AND CALCULATIONS

  	
   

  	
  42

  
	
   

  	
   

  	
   

  	
   

  
	
  16

  	
  APPLICATION
  OF RECEIPTS

  	
   

  	
  43

  
	
   

  	
   

  	
   

  	
   

  
	
  17

  	
  APPLICATION
  OF EARNINGS

  	
   

  	
  43

  
	
   

  	
   

  	
   

  	
   

  
	
  18

  	
  EVENTS OF
  DEFAULT

  	
   

  	
  44

  
	
   

  	
   

  	
   

  	
   

  
	
  19

  	
  FEES AND
  EXPENSES

  	
   

  	
  48

  
	
   

  	
   

  	
   

  	
   

  
	
  20

  	
  INDEMNITIES

  	
   

  	
  49

  
	
   

  	
   

  	
   

  	
   

  
	
  21

  	
  NO
  SET-OFF OR TAX DEDUCTION

  	
   

  	
  51

  
	
   

  	
   

  	
   

  	
   

  
	
  22

  	
  ILLEGALITY,
  ETC

  	
   

  	
  51

  
	
   

  	
   

  	
   

  	
   

  
	
  23

  	
  INCREASED
  COSTS

  	
   

  	
  52

  
	
   

  	
   

  	
   

  	
   

  
	
  24

  	
  SET-OFF

  	
   

  	
  53

  
	
   

  	
   

  	
   

  	
   

  
	
  25

  	
  TRANSFERS
  AND CHANGES IN LENDING OFFICES

  	
   

  	
  53

  
	
   

  	
   

  	
   

  	
   

  
	
  26

  	
  VARIATIONS
  AND WAIVERS

  	
   

  	
  54

  

 

 

	
  27

  	
  NOTICES

  	
   

  	
  55

  
	
   

  	
   

  	
   

  	
   

  
	
  28

  	
  SUPPLEMENTAL

  	
   

  	
  56

  
	
   

  	
   

  	
   

  	
   

  
	
  29

  	
  LAW AND
  JURISDICTION

  	
   

  	
  56

  
	
   

  	
   

  	
   

  	
   

  
	
  SCHEDULE
  1  DRAWDOWN NOTICE

  	
   

  	
  58

  
	
   

  	
   

  	
   

  
	
  SCHEDULE
  2  CONDITION PRECEDENT DOCUMENTS

  	
   

  	
  59

  
	
   

  	
   

  	
   

  
	
  SCHEDULE
  3  AMOUNT OF ADVANCES

  	
   

  	
  62

  
	
   

  	
   

  	
   

  
	
  SCHEDULE
  4  FORM OF COMPLIANCE CERTIFICATE

  	
   

  	
  64

  
	
   

  	
   

  	
   

  
	
  SCHEDULE
  5  MANDATORY COST FORMULA

  	
   

  	
  65

  
	
   

  	
   

  	
   

  
	
  SCHEDULE
  6  DESIGNATION NOTICE

  	
   

  	
  67

  
	
   

  	
   

  	
   

  
	
  EXECUTION PAGE

  	
   

  	
  68

  

 

 

THIS LOAN AGREEMENT is made on          May 2008

 

BETWEEN:

 

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

 

(2)                                CREDIT
SUISSE
acting through its office at St. Alban-Graben 1-3, PO Box CH-4002 Basel,
Switzerland as Lender.

 

WHEREAS

 

The Lender has agreed to make available to the
Borrower a facility of up to the lesser of (a) US$221,600,000 and (b) 80
per cent of the aggregate Delivered Costs of the Ships, for the purpose of
part-financing the Delivered Cost of each Ship. The facility shall be divided
into three Tranches, Tranche A may be available in three Advances and each of
Tranche B and Tranche C may be made available in up to four Advances.

 

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

 

IT IS AGREED as follows:

 

1                                         INTERPRETATION

 

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

 

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

 

“Applicable  Accounts”
means, in relation to a Compliance Date or an accounting period, the
consolidated balance sheets and related consolidated statements of stockholders’
equity, income and cash flows, together with related notes, of the Borrower’s
Group set out in the annual financial statements or quarterly financial statements
of the Borrower’s Group prepared as of the Compliance Date or, as the case may
be, the last day of the accounting period in question (and which the Borrower
is obliged to deliver to the Lender pursuant to Clause 10.6 and which accounts
are to be prepared in accordance with Clause 10.7);

 

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

 

“Approved Flag”  means
such flag as the Lender may, in its absolute discretion, approve as the flag on
which a Ship shall be registered;

 

“Approved Flag State” 
means any country in which the Lender may, in its sole and absolute
discretion, approve that a Ship be registered;

 

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

 

“Approved Manager’s Undertaking”  means in relation to each Ship, a letter of
undertaking executed or to be executed by the Approved Manager in favour of the
Lender 

 

 

and
in the terms required by the Lender, agreeing certain matters in relation to
the Approved Manager serving as the manager of the Ship and subordinating its rights
against such Ship and the Owner thereof to the rights of the Lender under the
Finance Documents, in such form as the Lender may approve or require;

 

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

 

(a)                                in the case of Tranche A, 30 June 2009
or any later date allowed pursuant to Article VIII of Shipbuilding
Contract A (or such later date as the Lender may agree with the Borrower); or

 

(b)                               in the case of Tranche B, 31 August 2009
or any later date allowed pursuant to Article VIII of Shipbuilding
Contract B (or such later date as the Lender may agree with the Borrower); or

 

(c)                                in the case of Tranche C, 30 November 2009
or any later date allowed pursuant to Article VIII of Shipbuilding
Contract C (or such later date as the Lender may agree with the Borrower); or

 

(d)                               if earlier, the date on which
the relevant Tranche is fully borrowed, cancelled or terminated;

 

“Bareboat
Charter Security Agreement” 
means, in relation to Charterparty C, an agreement or agreements whereby
the Lender receives an assignment of the rights of Expresscarrier under the
Charterparty C and certain undertakings from Expresscarrier and YM and, if so
agreed by the Lender agrees to give certain undertakings to YM, in such form as
the Lender may agree or require;

 

“Bareboat
- equivalent Time Charter Income”  means,
in relation to each Ship, the aggregate charter hire due and payable to the
Owner of that Ship for the remaining unexpired term of the Charter or other
contract of employment relative to that Ship at the relevant time (excluding
any option periods (as that term is defined in Clause 14.5(a)) less the
aggregate operating expenses of that Ship as determined by the Borrower and
certified to the satisfaction of the Lender for the same period;

 

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

 

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

 

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

 

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

 

“Boxcarrier”  means Boxcarrier (No. 3) Corp., a
corporation incorporated and existing under the laws of Liberia and having its
registered office at 80 Broad Street, Monrovia, Liberia;

 

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

 

2

 

“Builder B”  means
Sungdong Shipbuilding & Marine Engineering Co. Ltd., a company
organised and existing under the laws of the Republic of Korea, with its
registered office at 1609-2 Hwang-li, Guangdo-myeon, Tongyoung-si, Gyeongnam,
650-827, Korea;

 

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

 

“Builders” 
means together Builder A, Builder B and Builder C, and in the singular
means any of them;

 

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

 

“Cash and
Cash Equivalents”  means the
aggregate of:

 

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

 

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

 

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

 

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

 

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

 

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

 

“Charterers”  means, together ZIM, CMA CGM and YM, and in
the singular means any of them;

 

“Charterparties”  means, together, Charterparty A,
Charterparty B and Charterparty C, and in the singular means any of them;

 

“Charterparty A”  means the time charterparty made or to be
made between Blacksea and ZIM as charterer in respect of Ship A for a duration
of at least 12 years at a net daily charter hire rate of at least $22,550 on
terms acceptable in all respects to the Lender;

 

“Charterparty B”  means the time charterparty made or to be
made between Boxcarrier and CMA CGM as charterer in respect of Ship B for a
duration of at least 12 years at a net daily charter hire rate of at least
$34,350 on terms acceptable in all respects to the Lender;

 

“Charterparty C”  means the bareboat charterparty made or to be
made between Expresscarrier and YM as charterer in respect of Ship C for a
duration of at least 18 years at a net daily charter hire rate of at least
$26,500 on terms acceptable in all respects to the Lender;

 

3

 

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

 

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

 

“Commitment”  means $221,600,000 as that amount may be
reduced, cancelled or terminated in accordance with this Agreement;

 

“Compliance Date”  means 31 March, 30 June, 30 September
and 31 December in each calendar year (or such other dates as of which the
Borrower prepares the consolidated financial statements which it is required to
deliver pursuant to Clause 10.6);

 

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

 

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

 

“Contractual Currency” 
has the meaning given in Clause 20.5;

 

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

 

“Danaos Earnings Account Pledge”  means the deed containing, inter alia, a
charge in respect of the Danaos Earnings Account executed or to be executed by
the Borrower in favour of the Lender in such form as the Lender may approve or
require;

 

“Deed of
Covenant” means, in relation to an Owner, a deed of covenant
collateral to the relevant Mortgage, in such form as the Lender may approve or
require, and in the plural means all of them;

 

“Delivered Cost”  means, in relation to:

 

(a)                                  Ship A, $70,000,000;

 

(b)                                 Ship B, $100,000,000; and

 

(c)                                  Ship C, $107,000,000,

 

Representing in respect of each Ship the aggregate of
the Contract Price and the Extra Pre-delivery Costs for that Ship;

 

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

 

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

 

(a)                                  it is entered into by the
Borrower pursuant to the Master Agreement with the Lender;

 

(b)                                 its purpose is the hedging of
the Borrower’s exposure under this Agreement to fluctuations in LIBOR for
periods of longer than 12 months arising from the funding of the Loan (or any
part thereof) for a period expiring no later than the final Repayment Date; and

 

4

 

(c)                                  it is designated by the
Borrower, by delivery by the Borrower to the Lender of a notice of designation
in the form set out in Schedule 6, as a Designated Transaction for the purposes
of the Finance Documents;

 

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

 

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

 

“Drawdown Notice” 
means a notice in the form set out in Schedule 1 (or in any other form
which the Lender approves or reasonably requires);

 

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

 

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

 

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

 

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

 

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

 

“Environmental Claim” 
means:

 

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

 

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

 

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

 

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

 

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

 

(b)                               any incident in which
Environmentally Sensitive Material is released from a vessel other than a Ship
and which involves a collision between that Ship and such other vessel or some
other incident of navigation or operation, in either case, in connection with
which that Ship is actually or potentially liable to be arrested, 

 

5

 

attached, detained or injuncted and/or
either that Ship or any Owner and/or any operator or manager is at fault or
allegedly at fault or otherwise liable to any legal or administrative action;
or

 

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

 

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

 

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

 

“Event of Default” 
means any of the events or circumstances described in Clause 18.1;

 

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

 

“Extra Pre-delivery Costs”  means, in relation to:

 

(a)           Ship
A, $6,200,000;

 

(b)           Ship
B, $8,500,000; and

 

(c)           Ship
C, $8,000,000,

 

representing the costs incurred or to be
incurred by the Owner of the relevant Ship during the construction of the same
(in addition to the Contract Price for that Ship) as outlined in the third
column of Schedule 3;

 

“Finance Documents” 
means:

 

(a)                                  this Agreement;

 

(b)                                 the Master Agreement;

 

(c)                                  the Guarantees;

 

(d)                                 the Master Agreement
Assignment;

 

(e)                                  the Predelivery Security
Assignments;

 

(f)                                    the General Assignments;

 

(g)                                 the Mortgages;

 

(h)                                 any Deeds of Covenants;

 

(i)                                     the Danaos Earnings Account
Pledge;

 

(j)                                     the Charterparty Assignments;

 

6

 

(k)                                the Bareboat Charter Security
Agreement;

 

(l)                                   the Approved Manager’s
Undertakings; and

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Insurances”  means, in
relation to a Ship:

 

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

 

7

 

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

 

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

 

“Interest Period”  means in relation to an Advance, a period
determined in accordance with Clause 5;

 

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

 

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

 

(b)                               if the Swap bank does not
consider the rate quoted by Rueters Monitor Money Rates Service to accurately
reflect the Interest Swap Rate or if no rate is quoted on the appropriate page of
the Reuters Monitor Money Rates Service, the rate per annum determined by the
Lender to be the Interest Rate Swap Rate for a period equal to, or as near as
possible equal to, the relevant applicable period;

 

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

 

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

 

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

 

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

 

“ISM Code Documentation”  includes:

 

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

 

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

 

(c)                                any other documents which are prepared
or which are otherwise relevant to establish and maintain the Ships’ or the
Owners’ compliance with the ISM Code which the Lender may require;

 

8

 

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

 

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

 

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

 

“Lender” 
means Credit Suisse, acting through its office at St. Alban-Graben 1-3,
PO Box CH-4002 Basel, Switzerland;

 

“LIBOR” 
means, for an Interest Period:

 

(a)                                  the rate per annum equal to
the offered quotation for deposits in Dollars for a period equal to, or as near
as possible equal to, the relevant Interest Period which appears on Reuters BBA
Page LIBOR 01 at or about 11.00 a.m. (London time) on the second
Business Day prior to the commencement of that Interest Period (and, for the
purposes of this Agreement, “Reuters BBA Page LIBOR 01” means the display
designated as “Reuters BBA Page LIBOR 01” on the Reuters Money News
Service or such other page as may replace Reuters BBA Page LIBOR 01
on that service for the purpose of displaying rates comparable to that rate or
on such other service as may be nominated by the British Bankers’ Association
as the information vendor for the purpose of displaying British Bankers’
Association Interest Settlement Rates for Dollars); or

 

(b)                                 if no rate is quoted on
Reuters BBA Page LIBOR 01 or the rate quoted on Reuters BBA Page LIBOR
01 does not represent the cost of funding of the Lender, the rate per annum
determined by the Lender 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 Lender as the rate at which deposits in Dollars are
offered to the Lender by leading banks in the London Interbank Market at the
Lender’s request at or about 11.00 a.m. (London time) on the second
Business Day prior to the commencement of that Interest Period for a period
equal to that Interest Period and for delivery on the first Business Day of it;

 

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

 

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

 

“Margin” 
means 0.675 per cent. per annum;

 

“Market Value” means, in respect of each Ship and each
Fleet Vessel, the market value thereof determined from time to time in
accordance with Clause 14.4 (or as the case may be Clause 14.5);

 

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

 

“Market Value Adjusted Total Assets”  means, at any time, the Total Assets adjusted
to reflect the Market Value of all Fleet Vessels (by substituting the value of
each Fleet Vessel 

 

9

 

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

 

“Master Agreement”  means the master agreement (on the 2002 ISDA
(Multicurrency - Crossborder) form) made or to be made between the Borrower and
the Lender and includes all Transactions from time to time entered into and
Confirmations from time to time exchanged thereunder;

 

“Master Agreement Assignment”  means the assignment of the Master Agreement
executed or to be executed by the Borrower, in such form as the Lender may
approve or require;

 

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

 

“Negotiation Period” 
has the meaning given in Clause 4.6;

 

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

 

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

 

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

 

(c)                                Net Interest Expenses;

 

(d)                               taxes; and

 

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

 

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

 

“Owners” 
means together Blacksea, Boxcarrier and Expresscarrier, and in the
singular means any of them;

 

“Payment Currency”  has
the meaning given in Clause 20.4;

 

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

 

(a)                                England and Wales;

 

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

 

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

 

10

 

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

 

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

 

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

 

“Potential Event of Default” 
means an event or circumstance which, with the giving of any notice, the
lapse of time, a determination of the Lender and/or the satisfaction of any
other condition, would constitute an Event of Default;

 

“Predelivery Security Assignment”  means, in relation to an Owner, an assignment
of the Shipbuilding Contract and of the Refund Guarantee relevant to that
Owner, to be given by that Owner in favour of the Lender, in such form as the
Lender may approve or require;

 

“Quotation Date”
means, in relation to any Interest Period (or any other period for which an
interest rate is to be determined under any provision of a Finance Document),
the day on which quotations would ordinarily be given by leading banks in the
London Interbank Market for deposits in the currency in relation to which such
rate is to be determined for delivery on the first day of that Interest Period
or other period;

 

“Refund Guarantee A” 
means the irrevocable and unconditional refund guarantee issued or to be
issued by the Refund Guarantor in favour of Blacksea in relation to each stage
payment made or to be made by Blacksea to the Builder pursuant to the
Shipbuilding Contract A prior to the relevant Delivery Date;

 

“Refund Guarantee B”  means the irrevocable and unconditional
refund guarantee issued or to be issued by the Refund Guarantor in favour of
Boxcarrier in relation to each stage payment made or to be made by Boxcarrier
to the Builder pursuant to the Shipbuilding Contract B prior to the relevant
Delivery Date;

 

“Refund Guarantee C”  means the irrevocable and unconditional
refund guarantee issued or to be issued by the Refund Guarantor in favour of
Expresscarrier in relation to each stage payment made or to be made by
Expresscarrier to the Builder pursuant to the Shipbuilding Contract C prior to
the relevant Delivery Date;

 

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

 

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

 

“Relevant Person”  has
the meaning given in Clause 18.7;

 

“Repayment Date”  means
a date on which a repayment is required to be made under Clause 7;

 

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

 

11

 

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

 

“Security Cover Ratio”  means the ratio (expressed as a percentage)
which is determined at any time by comparing (i) the aggregate of the
amounts referred to in paragraphs (a) and (b) of Clause 14.1 to (ii) the
aggregate of the Loan at the Swap Exposure;

 

“Security Interest” 
means:

 

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

 

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

 

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

 

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

 

“Security Period” 
means the period commencing on the date of this Agreement and ending on
the date on which the Lender notifies the Borrower and the Security Parties
that:

 

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

 

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

 

(c)                                neither the Borrower nor any
Security Party has any future or contingent liability under Clause 19, 20 or 21
below or any other provision of this Agreement or another Finance Document; and

 

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

 

“Ship  A”
means the 4,250 TEU class container carrier newbuilding currently being
constructed by Builder A and having Builder’s Hull No. 1699 to be
purchased by Blacksea pursuant to the Shipbuilding Contract A and registered in
the ownership of Blacksea under an Approved Flag;

 

“Ship B”
means the 6,500 TEU class container carrier newbuilding currently being
constructed by Builder B and having Builder’s Hull No. S4003 to be
purchased by Boxcarrier pursuant to the Shipbuilding Contract B and registered
in the ownership of Boxcarrier under an Approved Flag;

 

12

 

“Ship C”
means the 6,500 TEU class container carrier newbuilding currently being
constructed by Builder C and having Builder’s Hull No. N-214 to purchased
by Expresscarrier pursuant to the Shipbuilding Contract C and registered in the
ownership of Expresscarrier under an Approved Flag;

 

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

 

“Shipbuilding Contract B”  means the shipbuilding contract dated 26 July
2006 between Builder B and Boxcarrier, for the construction by Builder B of
Ship B and its purchase by Boxcarrier, as supplemented from time to time;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(c)                                any condemnation of the Ship
by any tribunal or by any person or person claiming to be a tribunal;

 

(d)                               any arrest, capture, seizure
or detention of the Ship (including any hijacking or theft) unless she is
within 30 days redelivered to the full control of the Owner owning the Ship;

 

13

 

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

 

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

 

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

 

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

 

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

 

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

 

“Tranche A”  means the
aggregate of the Advances to be made available by the Lender to the Borrower to
assist Blacksea in its acquisition of Ship A or, as the context may require,
the aggregate principal amount thereof outstanding at the relevant time under
this Agreement;

 

“Tranche B”  means the
aggregate of the Advances to be made available by the Lender to the Borrower to
assist Boxcarrier in its acquisition of Ship B or, as the context may require,
the aggregate principal amount thereof outstanding at the relevant time under
this Agreement;

 

“Tranche C”  means the
aggregate of the Advances to be made available by the Lender to the Borrower to
assist Expresscarrier in its acquisition of Ship C or, as the context may
require, the aggregate principal amount thereof outstanding at the relevant
time under this Agreement;

 

“Tranches”  means,
together, Tranche A, Tranche B and Tranche C, and in the singular means any of
them;

 

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

 

“YM” 
means Yang Ming Marine Transport Corp., a company having its principal
office at Keelung, Taiwan; and

 

“ZIM”  means Zim Israel Intergrated Shipping
Services Ltd., a company having its principal office at 7-9 Pal Yam Avenue, P.O. Box
1723, Haifa, 31016, Israel.

 

1.2                               Construction
of certain terms.  In this
Agreement:

 

“approved”  means, for
the purposes of Clause 13, approved in writing by the Lender;

 

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

 

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

 

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

 

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

 

14

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“obligatory insurances” 
means, in relation to a Ship, all insurances effected, or which the
Borrower owning the Ship is obliged to effect, under Clause 13 below or any
other provision of this Agreement or another Finance Document;

 

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

 

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

 

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

 

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

 

“regulation” includes any regulation, rule, official
directive, request or guideline (either having the force of law or compliance
with which is reasonable in the ordinary course of business of the party
concerned) of any governmental, intergovernmental or supranational body,
agency, department or regulatory, self-regulatory or other authority or
organisation;

 

“subsidiary”  has the
meaning given in Clause 1.4;

 

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

 

15

 

person
to whom those rights (or any interest in those rights) are transferred or pass
as a result of a merger, division, reconstruction or other reorganisation of it
or any other person;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

1.5                               General
Interpretation.

 

(a)                                  In this Agreement:

 

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

 

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

 

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

 

16

 

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

 

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

 

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

 

2                                       FACILITY

 

2.1                             Amount of
facility.  Subject to the other provisions of this
Agreement, the Lender shall make available to the Borrower a loan facility of
up to $221,660,000 in three Tranches as follows:

 

(a)                                Tranche A shall be in an
amount equal to the lesser of:

 

(i)                                     $56,000,000; and

 

(ii)                                  80 per cent. of the Delivered
Cost of Ship A;

 

(b)                               Tranche B shall be in an
amount equal to the lesser of:

 

(i)                                     $80,000,000; and

 

(ii)                                  80 per cent. of the Delivered
Cost of Ship B; and

 

(c)                                Tranche C shall be in an
amount equal to the lesser of:

 

(i)                                     $85,600,000; and

 

(ii)                                  80 per cent. of the Delivered
Cost of Ship C,

 

Tranche A may be drawn in up to three Advances and
each of Tranche B and Tranche C may be drawn in up to four Advances.

 

2.2                               Purpose
of Loan.  The Borrower undertakes with the Lender to
use each Advance only for the purpose stated in Clause 2.1.

 

2.3                               Designated Transactions
under the Master Agreement.  At any time
during the Security Period the Borrower may request the Lender to conclude
Designated Transactions for the purpose of hedging the Owners’ exposure to
interest rate fluctuations for a period of longer than 12 months in the context
of its interest payment obligations under this Agreement.  If the Borrower requests to conclude a
Designated Transaction prior to the delivery of all the Ships, the Lender may
request that the Borrower provides or procures the provisions of such security
as is acceptable to the Lender unless the notional principal amount of the
Designated Transactions does not exceed the amount of the Loan.  The entry by the Lender into the Master
Agreement does not commit the Lender to conclude Designated Transactions, or
even to offer terms for doing so, but does provide a contractual framework
within which Designated Transactions may be concluded and secured, assuming
that the Lender is willing to conclude any Designated Transaction at the
relevant time and that, if that is the case, mutually acceptable terms can be
agreed at the relevant time.

 

3                                         DRAWDOWN

 

3.1                               Request
for Advance.  Subject to the following
conditions, the Borrower may request an Advance to be made by ensuring that the
Lender receives a completed Drawdown Notice 

 

17

 

not later than 11.00 a.m. (Basel time)
3 Business Days prior to the intended Drawdown Date.

 

3.2                               Availability.  The conditions referred to in Clause 3.1 are
that:

 

(a)                                  a Drawdown Date has to be a
Business Day during the Availability Period;

 

(b)                                 each Advance shall:

 

(i)                                   subject to Clause 3.2(c), be
in an amount that does not exceed the maximum amount of that Advance specified
in Schedule 3; and

 

(ii)                                be used to part-finance the
relevant instalment payable to the Builder pursuant to the relevant
Shipbuilding Contract and the relevant Extra Pre-delivery Costs as are
specified in Schedule 3;

 

(c)                                  the aggregate amount of the
Advances in respect of a Tranche shall not exceed the maximum amount of that
Tranche as set out in Clause 2.1; and

 

(d)                                 the Borrower shall demonstrate
to the satisfaction of the Lender the availability to it of funds in an amount
equal to the amount by which the instalment due to the Builder pursuant to the
relevant Shipbuilding Contract and the relevant Extra Pre-delivery Costs on the
relevant Drawdown Date exceeds the Advance to be made available to the Borrower
on that Drawdown Date.

 

3.3                               Drawdown
Notice irrevocable.  A Drawdown
Notice must be signed by a duly authorised person on behalf of the Borrower;
and once served, a Drawdown Notice cannot be revoked without the prior consent
of the Lender.

 

3.4                               Disbursement
of Advance.  Subject to the provisions of
this Agreement, the Lender shall on each Drawdown Date make the relevant
Advance to the Borrower and that payment to the Borrower shall be made to the
account of the Builder which the Borrower specifies in the Drawdown Notice.

 

3.5                               Disbursement
of Advance to third party.   The payment
by the Lender under Clause 3.4 to the Builder shall constitute the making of
the Advance and the Borrower shall thereupon become indebted, as principal and
direct obligor, to the Lender in an amount equal to that Advance.

 

4                                         INTEREST

 

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

 

4.2                               Normal
rate of interest.  Subject to the
provisions of this Agreement, the rate of interest on each Advance in respect
of an Interest Period shall be the aggregate of (a) the Margin, (b) the
Mandatory Cost and (c) LIBOR for that Interest Period.

 

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

 

4.4                               Notification
of market disruption.  The Lender
shall promptly notify the Borrower if no rate is quoted on Reuters BBA Page LIBOR
01 or if for any reason the Lender is unable to obtain Dollars in the London
Interbank Market in order to fund an Advance (or any part of it) during any
Interest Period, stating the circumstances which have caused such notice to be
given.

 

18

 

4.5                               Suspension
of drawdown.  If the Lender’s notice under
Clause 4.4 is served before an Advance is made, the Lender’s obligation to
make the Advance shall be suspended while the circumstances referred to in the
Lender’s notice continue.

 

4.6                               Negotiation
of alternative rate of interest.  If
the Lender’s notice under Clause 4.4 is served after an Advance is made, the
Borrower and the Lender shall use reasonable endeavours to agree, within the 30
days after the date on which the Lender serves its notice under Clause 4.4 (the
“Negotiation Period”), an alternative
interest rate or (as the case may be) an alternative basis for the Lender to
fund or continue to fund the relevant Advance or Advances during the Interest
Period concerned.

 

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

 

4.8                               Alternative
rate of interest in absence of agreement.  If
an alternative interest rate or alternative basis is not agreed within the
Negotiation Period, and the relevant circumstances are continuing at the end of
the Negotiation Period, then the Lender shall set an interest period and
interest rate representing the cost of funding of the Lender in Dollars or in
any available currency of the relevant Advance or Advances plus the Mandatory
Cost (if any) and the Margin; and the procedure provided for by this Clause 4.8
shall be repeated if the relevant circumstances are continuing at the end of
the interest period so set by the Lender.

 

4.9                               Notice of
prepayment.  If the Borrower does not agree
with an interest rate set by the Lender under Clause 4.8, the Borrower may give
the Lender not less than 15 Business Days’ notice of its intention to prepay
the relevant Advance or Advances at the end of the interest period set by the
Lender.

 

4.10                        Prepayment,
termination of Commitments.  A notice under
Clause 4.9 shall be irrevocable if served 3 business days before prepayment; on
the last Business Day of the interest period set by the Lender, the Borrower
shall prepay (without premium or penalty) the Loan, together with accrued
interest thereon at the applicable rate plus the Margin and the Mandatory Cost
(if any).

 

4.11                        Application
of prepayment.  The provisions of Clause 7
shall apply in relation to the prepayment.

 

5                                         INTEREST
PERIODS

 

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

 

5.2                               Duration
of normal Interest Periods.  Subject to
Clauses 5.3 and 5.4, each Interest Period in respect of each Advance shall be:

 

(a)                                  1, 3, 6, 9 or 12 months as
notified by the Borrower to the Lender not later than 11.00 a.m. (Basel
time) 3 Business Days before the commencement of the Interest Period;

 

(b)                                 in the case of the first
Interest Period applicable to the second and any subsequent Advance of a
Tranche, a period ending on the last day of the then current Interest Period
applicable to such Tranche, whereupon all of the Advances in respect of such
Tranche shall be consolidated and treated as a single advance;

 

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

 

19

 

(d)                                 such other period as the Lender may agree
with the Borrower.

 

5.3                               Duration
of Interest Periods for repayment instalments.  In
respect of an amount due to be repaid under Clause 7 on a particular Repayment
Date, an Interest Period in relation to the relevant Tranche shall end on that
Repayment Date.

 

5.4                               Non-availability
of matching deposits for Interest Period selected.  If, after the Borrower has selected an
Interest Period longer than 3 months, the Lender notifies the Borrower by 11.00 a.m.
(Basel time) on the second Business Day before the commencement of the Interest
Period that it is not satisfied that deposits in Dollars for a period equal to
the Interest Period will be available to it in the London Interbank Market when
the Interest Period commences, the Interest Period shall be of 6 months.

 

6                                         DEFAULT
INTEREST

 

6.1                               Payment
of default interest on overdue amounts.  The
Borrower shall pay interest in accordance with the following provisions of this
Clause 6 on any amount payable by the Borrower under any Finance Document which
the Lender, does not receive on or before the relevant date, that is:

 

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

 

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

 

(c)                                  if such amount has become immediately due
and payable under Clause 18.4, the date on which it became immediately due and
payable.

 

6.2                               Default
rate of interest.  Interest shall
accrue on an overdue amount from (and including) the relevant date until the
date of actual payment (as well after as before judgment) at the rate per annum
determined by the Lender to be 1.0 per cent. above:

 

(a)                                  in the case of an overdue amount of
principal, the higher of the rates set out at paragraphs (a) and (b) of
Clause 6.3; or

 

(b)                                 in the case of any other overdue amount,
the rate set out at paragraph (b) of Clause 6.3.

 

6.3                               Calculation
of default rate of interest.  The rates
referred to in Clause 6.2 are:

 

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

 

(b)                                 the aggregate of the Mandatory Cost (if
any) and the Margin plus, in respect of successive periods of any duration
(including at call) up to 3 months which the Lender may select from time to
time:

 

(i)            LIBOR; or

 

(ii)           if the Lender determines that Dollar deposits for any
such period are not being made available to it by leading banks in the London
Interbank Market in the ordinary course of business, a rate from time to time
determined by the Lender by reference to the cost of funds to the Lender from
such other sources as the Lender may from time to time determine.

 

6.4                               Notification
of interest periods and default rates.  The
Lender shall promptly notify the Borrower of each interest rate determined by
the Lender under Clause 6.3 and of each period selected by the Lender for the
purposes of paragraph (b) of that Clause; but this 

 

20

 

shall not be taken to imply that the
Borrower is liable to pay such interest only with effect from the date of the
Lender’s notification.

 

6.5                               Payment
of accrued default interest.  Subject to the
other provisions of this Agreement, any interest due under this Clause shall be
paid on the last day of the period by reference to which it was determined.

 

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

 

6.7                               Application
to Master Agreement. For the avoidance of doubt this Clause 6 does not
apply to any amount payable under the Master Agreement in respect of any
continuing Designated Transaction as to which section 2(e) (Default
Interest, Other Amounts) of the Master Agreement shall apply.

 

7                                         REPAYMENT
AND PREPAYMENT

 

7.1                               Amount of
repayment instalments.  The Borrower
shall repay the Loan by 28 equal consecutive quarterly instalments of
$4,000,000 each and by a balloon instalment of $109,600,000 (the “Balloon Instalment”)

 

Provided  that if the amount of the Loan drawndown
hereunder is less than $221,600,000, each of the repayment instalments and the
Balloon Instalment shall be reduced pro rata by an amount in aggregate equal to
the undrawn balance.

 

7.2                               Repayment
Dates.  The first instalment shall be repaid on the
earlier of:

 

(a)                                  the date falling 39 months after the
Delivery Date of that last Ship to be delivered to its Owner [or any other later
date allowed pursuant to Article VIII of the relevant Shipbuilding
Contract]; and

 

(b)                                 31 March 2013; and

 

the last instalment together with the Balloon
Instalment shall be paid on the earlier of (i) the date falling on the
tenth anniversary of the final Drawdown Date and (ii) 31 December 2019.

 

7.3                               Final
Repayment Date.  On the final
Repayment Date, the Borrower shall additionally pay to the Lender all other
sums then accrued or owing under any Finance Document.

 

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

 

7.5                               Conditions
for voluntary prepayment.  The conditions
referred to in Clause 7.4 are that:

 

(a)                                  a partial prepayment shall be $4,000,000 or
a multiple thereof;

 

(b)                                 the Lender has received from the Borrower
at least 15 days’ prior written notice specifying the amount to be prepaid and
the date on which the prepayment is to be made; and

 

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

 

7.6                               Effect of
notice of prepayment.  A prepayment
notice may not be withdrawn or amended without the consent of the Lender, and
the amount specified in the prepayment 

 

21

 

notice shall become due and payable by the
Borrower on the date for prepayment specified in the prepayment notice.

 

7.7                               Mandatory
prepayment.  The Borrower shall be obliged
to prepay the Relevant Amount:

 

(a)                                  if a Ship is sold or becomes a Total Loss:

 

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

 

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

 

(b)                                 if any of the following occurs, on demand
by the Lender:

 

(i)            either a Shipbuilding Contract or a Refund Guarantee
is cancelled, terminated, rescinded or suspended or otherwise ceases to remain
in full force and effect for any reason; or

 

(ii)           a Shipbuilding Contract is materially amended or
varied without the prior written consent of the Lender (not to be unreasonably
withheld) except for any such amendment or variation as is permitted by this
Agreement or any other relevant Finance Document; or

 

(iii)          a Ship has not for any reason been delivered to, and
accepted by, the relevant Owner under the Shipbuilding Contract to which it is
a party by the last day of the relevant Availability Period applicable to the
Tranche which shall be used to part-finance that Ship.

 

In this Clause 7.7, “Relevant
Amount” means the higher of (i) an amount equal to the Relevant
Tranche and (ii) an amount which, after giving credit for the amount of
the prepayment made pursuant to this Clause 7.7, results in the Security Cover
Ratio being equal to the higher of (A) the Security Cover Ratio maintained
immediately prior to the event which triggered such prepayment and (B) the
Security Cover Ratio referred to in Clause 14.1.

 

In this Clause 7.7, “Relevant
Tranche” means the amount that has been made available to finance
the acquisition of the Ship which has been sold or becomes a Total Loss or is
the subject of the Shipbuilding Contract or Refund Guarantee in relation to
which any of the events referred to in clause 7.7(b) has occurred.

 

7.8                               Amounts
payable on prepayment.  A prepayment
shall be made together with accrued interest (and any other amount payable
under Clause 20 below or otherwise) in respect of the amount prepaid and, if
the prepayment is not made on the last day of an Interest Period together with
any sums payable under Clause 20.1(b) but without premium or penalty.

 

7.9                               Application
of partial prepayment.  Each partial
prepayment shall:

 

(a)                                  if made pursuant to Clause 7.4 be applied
in order of maturity first against the repayment instalments outstanding at
that time and thereafter the Balloon Instalment, unless otherwise agreed by the
Lender; and

 

(b)                                 if made pursuant to Clause 7.7 be applied
first in fully prepaying the Relevant Tranche (as defined in Clause 7.7) and
any balance shall be applied pro rata against the repayment instalments
referred to in Clause 7.1 for all other Tranches.

 

22

 

7.10                        No
reborrowing.  No amount prepaid may be
reborrowed.

 

7.11                        Unwinding of
Designated Transactions.  On or prior to
any repayment or prepayment under this Clause 7 (other than in the case of
prepayment made pursuant to Clause 7.5) or any other provision of this
Agreement, the Borrower shall either:

 

(a)                                  wholly or partially reverse, offset, unwind
or otherwise terminate one or more of the continuing Designated Transactions so
that the notional principal amount of the continuing Designated Transactions
thereafter remaining does not and will not in the future exceed the amount of
the Loan as reducing from time to time thereafter pursuant to Clause 7.1; or

 

(b)                                 provide the Lender with additional security
in all respects acceptable to the Lender to secure the amount determined by the
Lender to be equal to the difference between the notional principal amount of
the continuing Designated Transactions and the amount of the Loan as reducing
from time to time thereafter pursuant to Clause 7.1

 

8                                         CONDITIONS
PRECEDENT

 

8.1                               Documents,
fees and no default.  The Lender’s
obligation to make an Advance is subject to the following conditions precedent:

 

(a)                                  that on or before the date of this Agreement,
the Lender receives:

 

(i)            the documents described in Part A of Schedule 2
in a form and substance satisfactory to the Lender and its lawyers; and

 

(ii)           the arrangement fee referred to in Clause 19.1;

 

(b)                                 that, on or before the service of the first
Drawdown Notice in respect of each Tranche, the Lender receives the documents
described in Part B of Schedule 2 in form and substance satisfactory to it
and its lawyers;

 

(c)                                  that, on or before the service of the
second Drawdown Notice in respect of each Tranche, the Lender receives the
documents described in Part C of Schedule 2 in form and substance
satisfactory to it and its lawyers;

 

(d)                                 that, on or before the service of the third
Drawdown Notice in respect of each of Tranche B and C, the Lender receives the
documents described in Part D of Schedule 2 in form and substance
satisfactory to it and its lawyers;

 

(e)                                  that, on or before the service of the
Drawdown Notice in respect of the final Advance of each Tranche, the Lender
receives the documents described in Part E of Schedule 2 in form and
substance satisfactory to it and its lawyers;

 

(f)                                    that, on or before the service of the
Drawdown Notice in respect of the final Advance to be made pursuant to the
terms of this Agreement, the Lender receives any accrued (but unpaid)
commitment fee payable pursuant to Clause 19.1(b) and has received payment
of the expenses referred to in Clause 19.2;

 

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

 

(i)            no Event of Default or Potential Event of Default has
occurred and is continuing or would result from the borrowing of the relevant
Advance; and

 

(ii)           the representations and warranties in Clause 9 and
those of the Borrower or any Security Party which are set out in the other
Finance Documents would be true 

 

23

 

and not misleading if repeated on each of
those dates with reference to the circumstances then existing; and

 

(iii)          none of the circumstances contemplated by Clause 4.4
has occurred and is continuing;

 

(iv)          there has been no material adverse change in the
financial position, state of affairs or prospects of the Borrower or the Owners
in the light of which the Lender considers that there is a significant risk
that the Borrower or any Security Party is, or will later become, unable to
discharge its liabilities under the Finance Documents to which it is a party as
they fall due; and

 

(h)                                 that, if the ratio set out in Clause 14.1
were applied immediately following the making of an Advance which will be used
in financing (inter alia) the delivery instalment payable pursuant the
Shipbuilding Contract for a Ship, the Borrower would not be obliged to provide
additional security or prepay part of the Loan under that Clause; and

 

(i)                                     that the Lender has received, and found to
be acceptable to it, any further opinions, consents, agreements and documents
in connection with the Finance Documents which the Lender may request by notice
to the Borrower prior to the relevant Drawdown Date.

 

8.2                               Waiver of
conditions precedent.  If the Lender
at its discretion, permits an Advance to be borrowed before certain of the
conditions referred to in Clause 8.1 are satisfied, the Borrower shall ensure
that those conditions are satisfied within 5 Business Days after the relevant
Drawdown Date (or such longer period as the Lender may specify).

 

9                                         REPRESENTATIONS
AND WARRANTIES

 

9.1                               General.  The Borrower represents and warrants to the
Lender as follows.

 

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

 

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

 

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

 

(a)                                  to execute its Shipbuilding Contract, to
purchase and pay for its Ship under the relevant Shipbuilding Contract and
register its Ship in its name under an Approved Flag;

 

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

 

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

 

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

 

9.5                               Consents
in force.  All the consents referred to in Clause 9.4
remain in force and nothing has occurred which makes any of them liable to
revocation.

 

24

 

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

 

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

 

(b)                                 create legal, valid and binding Security
Interests enforceable in accordance with their respective terms over all the
assets to which they, by their terms, relate, subject to any relevant
insolvency laws affecting creditors’ rights generally.

 

9.7                               No third
party Security Interests.  Without
limiting the generality of Clause 9.6, at the time of the execution and
delivery of each Finance Document to which the Borrower is a party:

 

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

 

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

 

9.8                               No
conflicts.  The execution by the Borrower
of each Finance Document to which it is a party, and the borrowing by the
Borrower of the Loan, and its compliance with each Finance Document to which it
is a party will not involve or lead to a contravention of:

 

(a)                                  any law or regulation; or

 

(b)                                 the constitutional documents of the
Borrower; or

 

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

 

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

 

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

 

9.11                        Information.  All information which has been provided in
writing by or on behalf of the Borrower or any Security Party to the Lender in
connection with any Finance Document satisfied the requirements of Clause 10.5.

 

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

 

9.13                        Validity
and completeness of Shipbuilding Contracts.

 

(a)                                  The copies of the Shipbuilding Contracts
delivered to the Lender before the date of this Agreement are true and complete
copies;

 

(b)                                 each Shipbuilding Contract constitutes
valid, binding and enforceable obligations of the Builder and the relevant
Owner respectively in accordance with its terms; and

 

25

 

(c)                                  other than those amendments and additions
to any of the Shipbuilding Contracts disclosed to the Lender before the date of
this Agreement, no amendments or additions to any of the Shipbuilding Contracts
have been agreed nor has any Owner or the Builder waived any of their
respective rights under the Shipbuilding Contracts.

 

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

 

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

 

9.16                        Compliance
with certain undertakings.  At the date
of this Agreement, the Borrower is in compliance with Clauses 10.2, 10.4, 10.9
and 10.12.

 

9.17                        ISM Code
and ISPS Code compliance.  All
requirements of the ISM Code and the ISPS Code as they relate to the Borrower,
any Owner, the Approved Manager, Yang Ming and any Ship have been complied
with.

 

9.18                        No money
laundering.  Without prejudice to the
generality of Clause 2.2, in relation to the borrowing by the Borrower of the
Loan, the performance and discharge of its obligations and liabilities under
the Finance Documents, and the transactions and other arrangements effected or
contemplated by the Finance Documents to which the Borrower is a party, the
Borrower confirms that it is acting for its own account and that the foregoing
will not involve or lead to contravention of any law, official requirement or
other regulatory measure or procedure implemented to combat “money laundering”
(as defined in Article 1 of the Directive (91/308/EEC) of the Council of
the European Communities).

 

10                                  GENERAL
UNDERTAKINGS

 

10.1                        General.  The Borrower undertakes with the Lender to
comply with the following provisions of this Clause 10 at all times during the
Security Period except as the Lender may otherwise permit.

 

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

 

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

 

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

 

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

 

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

 

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

 

26

 

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

 

if such transfer, lease or disposal results
in a reduction of the Market Value Adjusted Total Assets by at least 50 per
cent. (in all other circumstances the Borrower shall be deemed to have complied
with its obligations under this Clause 10.3 by providing the Lender with prior
written notice of its decision to transfer, lease or otherwise dispose of its
assets as aforesaid).

 

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

 

(a)                                  under the Finance Documents and the
Shipbuilding Contract to which each is a party;

 

(b)                                 under the Master Agreement;

 

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

 

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

 

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

 

10.6                        Provision
of financial statements. The Borrower will send to the Lender:

 

(a)                                  as soon as possible, but in no event later
than 150 days after the end of each Financial Year of the Borrower (commencing
with the Financial Year ended 31 December 2007), the audited consolidated
accounts of the Borrower’s Group for that Financial Year and the audited
individual accounts of the Borrower for that Financial Year; and

 

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

 

The Lender will consider that the Borrower has
fulfilled its obligations under this Clause 10.6 if the Lender is provided with
evidence satisfactory to it that the Borrower has filed its accounts with the
Securities Exchange Commission (SEC) within the time periods specified in this
Clause 10.6.

 

10.7                        Form of
financial statements.  All accounts
(audited and unaudited) delivered under Clause 10.6 will:

 

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

 

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

 

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

 

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

 

27

 

(a)                                  to the Borrower’s creditors generally;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

10.10                 Maintenance
of Security Interests. The Borrower will:

 

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

 

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

 

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

 

10.12                 Principal
place of business.  The Borrower
will maintain its place of business, and keep its corporate documents and
records, at the address stated at Clause 27.2(a) and the Borrower will not
establish, nor do anything as a result of which it would be deemed to have, a
place of business in any other country.

 

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

 

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

 

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

 

28

 

The Lender may serve
requests under this Clause 10.13 from time to time;  this Clause 10.13 does not affect the
Borrower’s obligations under Clause 10.14.

 

10.14                 Notification
of default.  The Borrower will notify the
Lender as soon as the Borrower becomes aware of:

 

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

 

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

 

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

 

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

 

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

 

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

 

10.16                 No
amendment to the Shipbuilding Contracts.  The
Borrower will ensure that no Owner shall agree to any material amendment or
supplement to, or waive or fail to enforce, a Shipbuilding Contract to which
such Owner is a party to or any of its provisions.

 

10.17                 Purchase of
further tonnage.  The Borrower
shall procure that no Owner shall purchase any vessel other than the Ships.

 

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

 

10.19                 Provision
of copies and translation of documents.  If
the Lender so requires, the Borrower will supply the Lender with a certified
English translation in respect of any of those documents referred to above,
such translation to be prepared by a translator approved by the Lender.

 

10.20                 Tax Lease
Structure.  The Borrower may place any Ship
subject to a mortgage within a tax lease structure, with the prior written
consent of the Lender (such consent not to be unreasonably withheld) which
shall be subject to, without limitation:

 

(a)                                  the security position of the Lender in the
tax lease structure being no worse than that envisaged by this Agreement;

 

(b)                                 the Lender being able from a legal and
regulatory perspective to participate in the tax lease structure;

 

(c)                                  the profitability of the Lender not
decreasing or deteriorating as a result of the tax lease structure; and

 

(d)                                 a requirement that the Borrower pay an
administration fee to the Lender in a reasonable amount to be agreed between
the Borrower and the Lender to compensate the Lender for all additional work
which will be required to implement the tax lease structure.

 

29

 

11                                  CORPORATE
UNDERTAKINGS

 

11.1                        General.  The Borrower also undertakes with the Lender
to comply with the following provisions of this Clause 11 at all times during
the Security Period except as the Lender may otherwise permit (such permission
not to be unreasonably withheld in the case of Clause 11.3(e)).

 

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

 

11.3                        Negative
undertakings. The Borrower will not:

 

(a)                                  change the nature of its business; or

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

30

 

11.5                        Financial
Covenants.  The Borrower shall ensure that
at all times:

 

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

 

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

 

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

 

(d)                                 the Market Value Adjusted Net Worth of the
Borrower’s Group shall not be less than the higher of $400,000,000 and 30 per
cent. of the Market Value Adjusted Total Assets; and

 

(e)                                  the Book Net Worth of the Borrower’s Group
shall not be less than $250,000,000.

 

11.6                        Compliance
check.  Compliance with the undertakings contained in
Clause 11.5 shall be determined in each Financial Year:

 

(a)                                  at the time the Lender receives the
Applicable Accounts of the Borrower’s Group for the first 6-month period of the
Borrower’s Group in each Financial Year (pursuant to Clause 10.6(b)), by
reference to the unaudited Applicable Accounts for the first two financial
quarters in the relevant Financial Year and, in the case of the second 6-month
period, by reference to the audited Applicable Accounts of the Borrower’s Group
in each Financial Year;

 

(b)                                 at any other time as the Lender may
reasonably request by reference to such evidence as the Lender may require to
determine and calculate the financial covenants referred to in Clause 11.5.

 

At the same time as it delivers the
Applicable Accounts referred to in this Clause 11.6, the Borrower shall deliver
to the Lender a certificate in the form set out in Schedule 4 demonstrating its
compliance (or not, as the case may be) with the provisions of Clause 11.5
signed by the chief financial officer of the Borrower.

 

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

 

12                                  INSURANCE

 

12.1                        General.  The Borrower undertakes with the Lender to
procure that each Owner will comply with the following provisions of this
Clause 12 at all times during the Security Period (after the Ship which is
owned or to be owned by that Owner has been delivered to it under the relevant
Shipbuilding Contract) except as the Lender may otherwise permit.

 

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

 

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

 

(b)                                 war risks; and

 

(c)                                  protection and indemnity risks; and

 

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

 

31

 

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

 

(a)                                  in Dollars;

 

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

 

(i)            the Loan; less

 

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

 

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

 

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

 

(e)                                  on approved terms; and

 

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

 

12.4                        Further
protections for the Lender.  In addition to
the terms set out in Clause 12.3, the Borrower shall procure that the
obligatory insurances shall:

 

(a)                                  (except in relation to risks referred to in
Clause 12.2(c)) if the Lender so requires name (or be amended to name) the
Lender as additional named assured for its rights and interests, warranted no
operational interest and with full waiver of rights of subrogation against the
Lender, but without the Lender thereby being liable to pay (but having the
right to pay) premiums, calls or other assessments in respect of such
insurance;

 

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

 

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

 

(d)                                 provide that such obligatory insurances
shall be primary without right of contribution from other insurances which may
be carried by the Lender; and

 

(e)                                  provide that the Lender may make proof of
loss if the Owners fail to do so.

 

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

 

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

 

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

 

(ii)           obtain the Lender’s approval to the matters referred
to in paragraph (i) above;

 

32

 

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

 

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

 

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

 

(a)                                  they will have endorsed on each policy,
immediately upon issue, a loss payable clause and a notice of assignment
complying with the provisions of Clause 12.4;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

33

 

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

 

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

 

12.11                 Compliance
with terms of insurances.  The Borrower
shall procure that no Owner does or omits to do (or permits to be done or not
to be done) any act or thing which would or might render any obligatory
insurance invalid, void, voidable or unenforceable or render any sum payable
thereunder repayable in whole or in part; and in particular:

 

(a)                                  each Owner shall take all necessary action
and comply with all requirements which may from time to time be applicable to
the obligatory insurances, and (without limiting the obligation contained in
Clause 12.7(c) above) ensure that the obligatory insurances are not made
subject to any exclusions or qualifications to which the Lender has not given
its prior approval;

 

(b)                                 each Owner shall make any changes relating
to the classification or classification society or manager or operator of the
Ship owned by it unless approved where applicable by the underwriters of the
obligatory insurances;

 

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

 

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

 

12.12                 Alteration
to terms of insurances.  The Borrower
shall procure that no Owner shall either make or agree to any alteration to the
terms of any obligatory insurance or waive any right relating to any obligatory
insurance.

 

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

 

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

 

(a)                                  the approved brokers; and

 

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

 

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

 

which relates directly or indirectly to:

 

34

 

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

 

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

 

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

 

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

 

(b)                                 effecting, maintaining or renewing any such
insurances as are referred to in Clause 12.16 below or dealing with or
considering any matters relating to any such insurances,

 

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

 

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

 

(a)                                  a mortgagee’s interest marine insurance in
relation to each Ship in an amount of not less than 110 per cent. of the
Tranche applicable to that Ship, providing for the indemnification of the
Lender for any losses under or in connection with any Finance Document which
directly or indirectly result from loss of or damage to any Ship or a liability
of any Ship or of any Owner, being a loss or damage which is prima facie
covered by an obligatory insurance but in respect of which there is a
non-payment (or reduced payment) by the underwriters by reason of, or on the
basis of an allegation concerning:

 

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

 

(ii)           any act or omission, whether deliberate, negligent or
accidental, or any knowledge or privity of an Owner, any other person referred
to in paragraph (i) above, or of any officer, employee or agent of that
Owner or of such a person, including the casting away or damaging of the Ship
owned by it and/or the Ship owned by it being unseaworthy; and/or

 

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

 

(b)                                 a mortgagee’s interest additional perils
policy in relation to each Ship in an amount of not less than 110 per cent. of
the Tranche applicable to that Ship, providing for the indemnification of the
Lender against, among other things, any possible losses or other consequences
of any Environmental Claim, including the risk of expropriation, arrest or any
form of detention of a Ship, the imposition of any Security Interest over a
Ship and/or 

 

35

 

any other matter capable of being insured
against under a mortgagee’s interest additional perils policy,

 

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

 

12.17                 Review of
insurance requirements.  The Lender
shall be entitled to review after prior consultation with the Borrower the
requirements of this Clause 12 from time to time in order to take account of
any changes in circumstances after the date of this Agreement which are, in the
opinion of the Lender, significant and capable of affecting any Owner or any
Ship and its or their insurance (including, without limitation, changes in the
availability or the cost of insurance coverage or the risks to which the Owners
may be subject).

 

12.18                 Modification
of insurance requirements.  The Lender
shall promptly notify the Borrower and the Owners of any proposed modification
under Clause 12.17 to the requirements of this Clause 12 which the Lender
reasonably consider appropriate in the circumstances, and such modification
shall take effect on and from the date it is notified in writing to the
Borrower as an amendment to this Clause 12 and shall bind the Borrower
accordingly.

 

12.19                 Compliance
with mortgagee’s instructions.  The Lender
shall be entitled (without prejudice to or limitation of any other rights which
it may have or acquire under any Finance Document) to require a Ship to remain
at any safe port or to proceed to and remain at any safe port designated by the
Lender until the relevant Owner implements any amendments to the terms of the
obligatory insurances and any operational changes required as a result of a
notice served under Clause 12.18 and the Borrower shall procure that the Owners
comply with such requirement within a reasonable period or time in the context
of the then prevailing circumstances.

 

13                                  SHIP
COVENANTS

 

13.1                        General.  The Borrower also undertakes with the
Lender to procure that each Owner complies with the following provisions of
this Clause 13 at all times during the Security Period except as the Lender,
may otherwise permit (such permission not to be unreasonably withheld in the
case of a proposed change of port of registry under the same flag of a Ship).

 

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

 

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

 

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

 

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

 

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

 

36

 

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

 

13.5                        Removal
of parts.  The Borrower shall procure that no Owner
shall remove any material part of the Ship owned by it, or any item of
equipment installed on, that Ship unless the part or item so removed is
forthwith replaced by a suitable part or item which is in the same condition as
or better condition than the part or item removed, is free from any Security
Interest or any right in favour of any person other than the Lender and becomes
on installation on that Ship the property of the relevant Owner and subject to
the security constituted by the relevant Mortgage and, as the case may be, the
Deed of Covenant Provided that an Owner may install
equipment owned by a third party if the equipment can be removed without any
risk of damage to the Ship owned by it.

 

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

 

13.7                        Inspection.  The Borrower shall:

 

(a)                                  ensure that each Owner shall permit the
Lender (by surveyors or other persons appointed by it for that purpose) to
board the Ship (at the risk of the relevant Owner save where any loss is shown
to have been directly and mainly caused by the gross negligence or wilful
misconduct of such surveyor or other person) owned by it at all reasonable
times to inspect her condition or to satisfy themselves about proposed or
executed repairs or to prepare a survey report (at the reasonable cost of the
Borrower in respect of such Ship and shall afford all proper facilities for
such inspections Provided that:

 

(i)            such boarding and inspection does not materially
disrupt the relevant Ship’s reasonable operation, repairs or maintenance;

 

(ii)           if no Event of Default has occurred the Borrower shall
not be required to pay for the cost of a survey report in respect of each Ship
more than once every 24 months; and

 

(b)                                 ensure that each Ship shall, both at the
time of the survey referred to in this Clause 13.7 and at all other times
throughout the Security Period, be in a good and safe condition and state of
repair.

 

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

 

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

 

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

 

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

 

and, forthwith upon
receiving notice of the arrest of that Ship, or of her detention in exercise or
purported exercise of any lien or claim, the Borrower shall procure that the
relevant 

 

37

 

Owner of that Ship
shall procure her release within 5 Business Days of receiving such notice by providing
bail or otherwise as the circumstances may require.

 

13.9                        Compliance
with laws etc.  The Borrower shall procure that
each Owner and the Approved Manager shall:

 

(a)                                  comply, or procure compliance with the ISM
Code, the ISPS Code, all Environmental Laws, the ISPS Code and all other laws
or regulations relating to the Ship owned by it, its ownership, operation and
management or to the business of that Owner;

 

(b)                                 not employ the Ship owned by it nor allow
her employment in any manner contrary to any law or regulation in any relevant
jurisdiction including but not limited to the ISM Code and the ISPS Code; and

 

(c)                                  in the event of hostilities in any part of
the world (whether war is declared or not), not cause or permit the Ship owned
by it to enter or trade to any zone which is declared a war zone by any
government or by the Ship’s war risks insurers unless in the case of such zone
where an additional premium would be payable that Owner has (at its expense)
effected any special, additional or modified insurance cover required for it to
enter or trade to any war zone.

 

13.10                 Provision
of information.  The Borrower
shall procure that each Owner shall promptly provide the Lender with any
information which it reasonably requests regarding:

 

(a)                                  the Ship owned by it, her employment,
position, engagements and her Insurances;

 

(b)                                 the Earnings and payments and amounts due
to the master and crew of the Ship owned by it;

 

(c)                                  any expenses incurred, or likely to be
incurred, in connection with the operation, maintenance or repair of the Ship
owned by it and any payments made in respect of that Ship;

 

(d)                                 any towages and salvages; and

 

(e)                                  that Owners compliance or the compliance,
the Approved Manager’s compliance, or the compliance of the Ship owned by it
with the ISM Code and the ISPS Code,

 

and, upon the Lender’s
request, provide copies of any current charter relating to the Ship owned by it
and of any current charter guarantee, and of the ISM Code Documentation and the
ISPS Code Documentation.

 

13.11                 Notification
of certain events.  The Borrower
shall procure that each Owner shall as soon as it becomes aware of any of the
events referred to in this Clause 13.11 notify the Lender by fax, confirmed
forthwith by letter of:

 

(a)                                  any casualty which is or is likely to be or
to become a Major Casualty;

 

(b)                                 any occurrence as a result of which the
Ship owned by it has become or is, by the passing of time or otherwise, likely
to become a Total Loss;

 

(c)                                  any requirement or recommendation made by
any insurer or classification society or by any competent authority which is
not complied with in accordance with its terms (including without limitation,
any time limit specified by any insurer or classification society or any
competent authority);

 

(d)                                 any arrest or detention of the Ship owned
by it (if the arrest or detention has not been released within 3 Business Days
of its imposition or the Borrower or the relevant Owner 

 

38

 

considers that the arrest or detention will
not be released within 3 Business Day of its imposition), any exercise or
purported exercise of any lien on that Ship or her Earnings or her Insurances
or any requisition of that Ship for hire;

 

(e)                                  any intended dry docking of the Ship owned
by it which the Owner knows, or reasonably determines, will or may exceed (or
has exceeded) 10 days in total;

 

(f)                                    any Environmental Claim made against that
Owner or in connection with the Ship owned by it, or any Environmental
Incident;

 

(g)                                 any claim for breach of the ISM Code or the
ISPS Code being made against that Owner and, to the extent that that Owner is
aware of such claim, the Approved Manager or otherwise in connection with the
Ship owned by it; or

 

(h)                                 any other matter, event or incident, actual
or threatened, the effect of which will or could lead to the ISM Code or the
ISPS Code not being complied with, and that Owner shall keep the Lender advised
in writing on a regular basis and in such detail as the Lender shall require of
that Owner’s or any other person’s response to any of those events or matters.

 

13.12                 Restrictions
on chartering, appointment of managers etc.  The
Borrower shall procure that no Owner shall in relation to the Ship owned by it:

 

(a)                                  (other than pursuant to the Charterparty
C), let the Ship owned by it on demise charter for any period, without the
Lender’s written consent, such consent not to be unreasonably withheld;

 

(b)                                 (other than pursuant to the Charterparty
relative to its Ship (in the case of each of Ship A and Ship B), enter into any
time or consecutive voyage charter in respect of the Ship owned by it for a
term which exceeds, or which by virtue of any optional extensions may exceed,
12 months;

 

(c)                                  amend, vary or supplement the Charterparty
relative to that Ship if as a result of such amendment, variation or supplement
(whether alone or in combination with any previous amendments, variations or
supplements) the duration of the Charterparty is reduced by more than 1 year or
the charter hire is reduced by more than 5 per cent. from that specified in the
Charterparty;

 

(d)                                 charter the Ship owned by it otherwise than
on bona fide arm’s length terms at the time when the Ship is fixed;

 

(e)                                  appoint (or permit the appointment of) a
manager of the Ship owned by it other than the Approved Manager or agree to any
alteration to the terms of the Approved Manager’s appointment;

 

(f)                                    de-activate or lay up the Ship owned by it;
or

 

(g)                                 put the Ship owned by it into the
possession of any person for the purpose of work being done upon her in an
amount exceeding or likely to exceed $1,000,000 (or the equivalent in any other
currency) unless that person has first given to the Lender and in terms
satisfactory to it a written undertaking not to exercise any lien on that Ship
or her Earnings or her Insurances for the cost of such work or otherwise or
other arrangements satisfactory to the Lender are made to ensure that no such
lien will be excercised.

 

13.13                 Notice of
Mortgage.  The Borrower shall procure that each Owner
shall keep the Mortgage registered against the Ship owned by it as a valid
first priority mortgage or preferred (as the case may be), carry on board that
Ship a certified copy of the relevant 

 

39

 

Mortgage and place and maintain in a
conspicuous place in the navigation room and the Master’s cabin of that Ship a
framed printed notice stating that that Ship is mortgaged by that Owner to the
Lender.

 

13.14                 Sharing
of Earnings.   The Borrower shall procure
that no Owner shall:

 

(a)                                  enter into any agreement or arrangement for
the sharing of any Earnings;

 

(b)                                 enter into any agreement or arrangement for
the postponement of any date on which any Earnings are due; the reduction of
the amount of any Earnings or otherwise for the release or adverse alteration
of any right of that Owner to any Earnings; or

 

(c)                                  enter into any agreement or arrangement for
the release of, or adverse alteration to, any guarantee or Security Interest
relating to any Earnings.

 

14                                  SECURITY
COVER

 

14.1                        Provision
of additional security cover; prepayment of Loan.  The Borrower undertakes with the Lender that,
if at any time the Lender notifies the Borrower that:

 

(a)                                  the aggregate Market Value of the Ships
subject to a Mortgage; plus

 

(b)                                 the net realisable value of any additional
security previously provided under this Clause 14,

 

is below 125 per cent. of the aggregate of
the Loan and the Swap Exposure, the Borrower will, within 14 Business Days
after the date on which the Lender’s notice is served, either:

 

(i)            provide, or ensure that a third party provides,
additional security acceptable to the Lender which, in the reasonable opinion
of the Lender, has a net realisable value at least equal to the shortfall and
which consists of either (a) cash pledged to the Lender or (b) a
Security Interest (including, but not limited to, a first or second priority or
preferred (as the case may be) mortgage over another vessel), covering such
asset or assets and documented in such terms as the Lender may, approve or
require or (c) assignment of the refund guarantees of newbuildings Fleet
Vessels;

 

(ii)           prepay in accordance with Clause 7 such part (at
least) of the Loan as will eliminate the shortfall.

 

14.2                        Meaning
of additional security.  In Clause 14.1
“security” means a Security
Interest over an asset or assets acceptable to the Lender (whether securing the
Borrower’s liabilities under the Finance Documents or a guarantee in respect of
those liabilities), or a guarantee, letter of credit or other security in
respect of the Borrower’s liabilities under the Finance Documents.

 

14.3                        Requirement
for additional documents.  The Borrower
shall not be deemed to have complied with paragraph (i) of Clause 14.1
until the Lender has received in connection with the additional security
certified copies of documents of the kinds referred to in paragraphs 3, 4 and 5
of Schedule 2, Part A and such legal opinions in terms acceptable to the
Lender from such lawyers as they may select.

 

14.4                        Valuation
of Fleet Vessel not subject to a long-term charter.  The Market Value of a Fleet Vessel which at
the relevant time is not subject to a charter or other contract of employment
having an unexpired term of at least 9 months with a first class acceptable
charterer (in the absolute discretion of the Lender) is that shown by taking
the average of two valuations prepared:

 

(a)                                  as at a date not more than 4 weeks
previously;

 

40

 

(b)                                 by 2 Approved Brokers appointed by the
Borrower, with both reporting to the Lender;

 

(c)                                  with or without physical inspection of that
Fleet Vessel (as the Lender may require);

 

(d)                                 on the basis of a sale for prompt delivery
for cash on normal arm’s length commercial terms as between a willing seller
and a willing buyer, free of any existing charter or other contract of
employment; and

 

(e)                                  after deducting the estimated amount of the
usual and reasonable expenses which would be incurred in connection with the
sale.

 

Provided that if the difference between the
2 valuations obtained at any one time pursuant to this Clause 14.4 is greater
than 10 per cent. a valuation shall be commissioned from a third Approved
Broker appointed by the Lender.  Such
valuation shall be conducted in accordance with this Clause 14.4 and the Market
Value of the Fleet Vessel in such circumstances shall be the average of the
initial 2 valuations and the valuation provided by the third Approved Broker.

 

14.5                        Valuation of
Ship subject to long-term charter.  The Market Value of a Fleet
Vessel subject to a Mortgage which at the relevant time is subject to a charter
or other contract of employment having an unexpired term of at least 9 months
with a first class charterer acceptable to the Lender (which acceptance shall
not be unreasonably withheld) shall be the aggregate of the present values (as
may be conclusively determined by the Lender) of:

 

(a)                                  the Bareboat-equivalent Time Charter Income
of the Fleet Vessel in respect of the remaining unexpired term of the relevant
charter or other contract of employment excluding any periods for which the
relevant charter or contract of employment may be renewed at the option of any
party (for the purposes of this Clause 14.5, an “option period”); and

 

(b)                                 the current charter-free market value
(determined in accordance with Clause 14.4 but subject to the adjustments
referred to in this Clause 14.5) of a vessel with identical characteristics to
the Fleet Vessel other than its age which shall, for the purposes of this
Clause 14.5, be considered to be the age of the Fleet Vessel at the expiration
of the charter or other contract of employment to which the Fleet Vessel is
subject at the relevant time (excluding any option periods), as such value may
be adjusted to take into account the terms of any commitments undertaken by the
Owner of the Fleet Vessel which may affect its value.

 

For the purposes of this Clause 14.5, the
discount rate which will apply in calculating the present value of the amounts
referred to in paragraphs (a) and (b) will be the applicable Interest
Rate Swap Rate for a period equal to the unexpired term of the Fleet Vessel’s
time charter or other contract of employment (excluding any option periods
(rounded up to the nearest integral year)) unless the unexpired term of the
Fleet Vessel’s charter or other contract of employment (excluding any option
periods) is less than 12 months in which the Interest Rate Swap Rate for a
period of 12 months will apply.

 

14.6                        Value of
additional security.  The net
realisable value of any additional security which is provided under Clause 14.1
and which consists of a Security Interest over a vessel shall be that shown by
a valuation complying with the requirements of Clause 14.4.

 

14.7                        Valuations
binding.  Any valuation under paragraph (i) of
Clause 14.1, Clauses 14.4, 14.5 or 14.6 shall, in the absence of manifest
error, be binding and conclusive as regards the Borrower, as shall be any
valuation which the Lender makes of a security which does not consist of or
include a Security Interest.

 

14.8                        Provision
of information.  The Borrower
shall promptly provide the Lender and any Approved Broker or expert acting
under Clause 14.4, 14.5 or 14.6 with any information 

 

41

 

which the Lender or the Approved Broker or
expert may reasonably request for the purposes of the valuation; and, if the
Borrower fails to provide the information by the date specified in the request,
the valuation may be made on any basis and assumptions which the Approved
Broker or the Lender (or the expert appointed by them) consider prudent.

 

14.9                        Payment
of valuation expenses.  Without
prejudice to the generality of the Borrower’s obligations under Clauses 19.2,
19.3 and 19.3, the Borrower shall, on demand, pay the Lender the amount of the
fees and expenses of any Approved Broker or expert instructed or approved by
the Lender under this Clause and all legal and other expenses incurred by the
Lender in connection with any matter arising out of this Clause.

 

14.10                 Frequency
of Valuations.  The Borrower acknowledges and
agrees that the Lender may commission valuations of the Ships at such times as
the Lender shall deem necessary and, in any event, not less often than once
during each 3-month period of the Security Period Provided that in each calendar year one set of valuations of
each Ship may be obtained from the electronic services provided by an Approved
Broker subject to such electronic services having been previously approved by
the Lender in writing.

 

15                                  PAYMENTS
AND CALCULATIONS

 

15.1                        Currency
and method of payments.  All payments
to be made by the Borrower to the Lender under a Finance Document shall be
made:

 

(a)                                  by not later than 11.00 a.m. (New York
City time) on the due date;

 

(b)                                 in same day Dollar funds settled through
the New York Clearing House Interbank Payments System (or in such other Dollar
funds and/or settled in such other manner as the Lender shall specify as being
customary at the time for the settlement of international transactions of the
type contemplated by this Agreement); and

 

(c)                                  to such account of the Lender with a bank
in New York as the Lender may from time to time notify the Borrower.

 

15.2                        Payment
on non-Business Day.  If any payment
by the Borrower under a Finance Document would otherwise fall due on a day
which is not a Business Day:

 

(a)                                  the due date shall be extended to the next
succeeding Business Day; or

 

(b)                                 if the next succeeding Business Day falls
in the next calendar month, the due date shall be brought forward to the
immediately preceding Business Day,

 

and interest shall be
payable during any extension under paragraph (a) at the rate payable on
the original due date.

 

15.3                        Basis for
calculation of periodic payments.  All
interest and commitment fee and any other payments under any Finance Document
which are of an annual or periodic nature shall accrue from day to day and
shall be calculated on the basis of the actual number of days elapsed and a 360
day year.

 

15.4                        Lender
accounts.  The Lender shall maintain accounts showing
the amounts owing to it by the Borrower and each Security Party under the
Finance Documents and all payments in respect of those amounts made by the
Borrower and any Security Party.

 

15.5                        Accounts
prima facie evidence.  If any
accounts maintained under Clause 15.4 show an amount to be owing by the
Borrower or a Security Party to the Lender, those accounts shall, be prima
facie evidence that that amount is owing to the Lender.

 

42

 

16                                  APPLICATION
OF RECEIPTS

 

16.1                        Normal
order of application.  Except as any
Finance Document may otherwise provide, any sums which are received or
recovered by the Lender under or by virtue of any Finance Document and the
Master Agreement shall be applied:

 

FIRST: in or towards satisfaction of any
amounts then due and payable under the Finance Documents in the following order
and proportions:

 

(i)            first, in or towards satisfaction pro rata of all
amounts then due and payable to the Lender under the Finance Documents and the
Master Agreement other than those amounts referred to at paragraphs (ii) and
(iii) (including, but without limitation, all amounts payable by the
Borrower under Clauses 19, 20 and 21 of this Agreement or by the Borrower or
any Security Party under any corresponding or similar provision in any other
Finance Document or in the Master Agreement;

 

(ii)           secondly, in or towards satisfaction pro rata of any
and all amounts of interest or default interest payable to the Lender under the
Finance Documents and the Master Agreement (and, for this purpose, the
expression “interest” shall include any net amount which the Borrower shall
have become liable to pay or deliver under section 2(e) (Obligations) of
the Master Agreement but shall have failed to pay or deliver to the Lender at
the time of application or distribution under this Clause 16); and

 

(iii)          thirdly, in or towards satisfaction pro rata of the
Loan and the Swap Exposure calculated as at the actual Early Termination Date
applying to each particular Transaction, or if no such Early Termination Date
shall have occurred, calculated as if an Early Termination Date occurred on the
date of application or distribution hereunder);

 

SECONDLY: in retention
of an amount equal to any amount not then due and payable under any Finance
Document or the Master Agreement but which the Lender, by notice to the
Borrower and the 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 the foregoing provisions of
this Clause;

 

THIRDLY: any surplus
shall be paid to the Borrower or to any other person appearing to be entitled
to it.

 

16.2                        Variation
of order of application.  The Lender may
by notice to the Borrower and the Security Parties provide for a different
manner of application from that set out in Clause 16.1 either as regards a
specified sum or sums or as regards sums in a specified category or categories.

 

16.3                        Notice of
variation of order of application.  The
Lender may give notices under Clause 16.2 from time to time in respect of sums
which may be received or recovered in the future.

 

16.4                        Appropriation
rights overriden.  This Clause 16
and any notice which the Lender gives under Clause 16.2 shall override any
right of appropriation possessed, and any appropriation made, by the Borrower
or any Security Party.

 

17                                  APPLICATION
OF EARNINGS

 

17.1                        Payment
of Earnings.  The Borrower undertakes with
the Lender to ensure that, throughout the Security Period (subject only to the
provisions of the General Assignments), all the Earnings of a Ship are paid to
the Danaos Earnings Account.

 

43

 

17.2                        Application
of Earnings.  The Borrower undertakes with
the Lender to procure that money from time to time credited to, or for the time
being standing to the credit of, the Danaos Earnings Account shall, unless and
until an Event of Default or Potential Event of Default shall have occurred
(whereupon the provisions of Clause 16.1 shall be and become applicable), be
available for application in the following manner:

 

(a)                                  in or towards meeting the costs and
expenses from time to time incurred by or on behalf of the relevant Owner in
connection with the operation of the Ship owned by it;

 

(b)                                 in or towards making payments of all
amounts due and payable by the Borrower under this Agreement other than the
payments of principal and interest pursuant to Clauses 7.1 and 4.1; and

 

(c)                                  as to any surplus from time to time arising
on the Danaos Earnings Account following application as aforesaid, to be paid
to the relevant Owner or, as the case may be, the Borrower or to whomsoever the
Borrower may direct.

 

17.3                        Location
of accounts.  The Borrower shall promptly:

 

(a)                                  comply with any requirement of the Lender
as to the location or re-location of the Danaos Earnings Account; and

 

(b)                                 execute of, any documents which the Lender
specifies to create or maintain in favour of the Lender a Security Interest
over the Danaos Earnings Account.

 

18                                  EVENTS OF
DEFAULT

 

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

 

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

 

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

 

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

 

(b)                                 any breach occurs of Clause 8, 10.3, 11.2,
11.3, 11.4, 11.5, 12.2 or 14.1; or

 

(c)                                  any breach by the Borrower or any Security
Party occurs of any provision of a Finance Document (other than a breach
covered by paragraphs (a) or (b) above) if, in the reasonable opinion
of the Lender, such default is capable of remedy, and such default is not
remedied within 14 Business Days after written notice from the Lender
requesting action to remedy the same; or

 

(d)                                 (subject to any applicable grace period
specified in the Finance Document) any breach (which the Lender considers, in
its discretion, to be material) by the Borrower or any Security Party occurs of
any provision of a Finance Document (other than a breach covered by paragraphs
(a), (b) or (c) above); or

 

(e)                                  any representation, warranty or statement
(which the Lender considers, in its discretion, to be material) made by, or by
an officer of, the Borrower or a Security Party in a Finance Document or in a
Drawdown Notice or any other notice or document relating to a Finance Document
is untrue or misleading when it is made such failure shall not constitute an
Event of Default if an innocent misrepresentation has been made and which, if
capable of remedy, is remedied within 10 Business Days of its occurrence unless
such innocent misrepresentation is made on a Drawdown Date; or

 

44

 

(f)                                    any of the following occurs in relation to
any Financial Indebtedness of a Relevant Person (other than the Borrower) or
any Financial Indebtedness of the Borrower of at least $1,000,000 (or the
equivalent in another currency) in aggregate in the case of any Financial
Indebtedness falling within paragraph (a) of the definition of that term
or any Financial Indebtedness falling within all other paragraphs of the
definition of that term (or, when aggregated with any Financial Indebtedness
falling within paragraph (a) of that term) of at least $10,000,000 in
aggregate (or the equivalent in another currency):

 

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

 

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

 

(iii)          a lease, hire purchase agreement or charter creating
any Financial Indebtedness of a Relevant Person is lawfully terminated by the
lessor or owner or becomes capable of being lawfully terminated as a consequence
of any termination event; or

 

(iv)          any overdraft, loan, note issuance, acceptance credit,
letter of credit, guarantee, foreign exchange or other facility, or any swap or
other derivative contract or transaction, relating to any Financial Indebtedness
of a Relevant Person ceases to be available or becomes capable of being
terminated as a result of any event of default, or cash cover is required, or
becomes capable of being required, in respect of such a facility as a result of
any event of default; or

 

(v)           any Security Interest securing any Financial
Indebtedness of a Relevant Person becomes enforceable; or

 

(g)                                 any of the following occurs in relation to
a Relevant Person:

 

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

 

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

 

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

 

(iv)          a Relevant Person makes any formal declaration of
bankruptcy or any formal statement to the effect that it is insolvent or likely
to become insolvent, or a winding up or administration order is made in
relation to a Relevant Person, or the members or directors of a Relevant Person
pass a resolution to the effect that it should be wound up, placed in
administration or cease to carry on business, save that this paragraph does not
apply to a fully solvent winding up of a Relevant Person other than the
Borrower or an Owner which is, or is to be, effected for the purposes of an
amalgamation or reconstruction previously approved by the Lender and effected
not later than 3 months after the commencement of the winding up; or

 

(v)           a petition is presented in any Pertinent Jurisdiction
for the winding up or administration, or the appointment of a provisional
liquidator, of a Relevant Person unless, in the case of an involuntary
petition, the petition is being contested in good faith and on substantial
grounds and is dismissed or withdrawn within 30 days of the presentation of the
petition; or

 

45

 

(vi)          a Relevant Person petitions a court, or presents any
proposal for, any form of judicial or non-judicial suspension or deferral of
payments, reorganisation of its debt (or certain of its debt) or arrangement
with all or a substantial proportion (by number or value) of its creditors or
of any class of them or any such suspension or deferral of payments,
reorganisation or arrangement is effected by court order, contract or
otherwise; or

 

(vii)         any meeting of the members or directors of a Relevant
Person is summoned for the purpose of considering a resolution or proposal to
authorise or take any action of a type described in paragraphs (iii), (iv), (v) or
(vi); or

 

(viii)        in a Pertinent Jurisdiction other than England, any event occurs or any
procedure is commenced which, in the reasonable opinion of the Lender, is
similar to any of the foregoing; or

 

(h)                                 the Borrower ceases, or threatens to cease,
to carry on all or a substantial part of its business or, as a result of
intervention by or under the authority of any government, the business of the
Borrower is wholly or partially curtailed or suspended, or all or a substantial
part of the assets or undertaking of the Borrower is seized, nationalised,
expropriate of compulsorily acquired; or

 

(i)                                     it becomes unlawful in any Pertinent
Jurisdiction or impossible:

 

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

 

(ii)           for the Lender to exercise or enforce any right under,
or to enforce any Security Interest created by, a Finance Document; or

 

(j)                                     any consent necessary to enable any Owner
or YM to own, operate or charter the Ship owned by it or to enable the
Borrower, any Owner or any Security Party to comply with any provision which
the Lender considers material of a Finance Document, any Charterparty or a
Shipbuilding Contract is not granted, expires without being renewed, is revoked
or becomes liable to revocation or any condition of such a consent is not
fulfilled if this materially affects the security position of the Lender (or
any of them) or the ability of the Borrower or a Security Party to timely
discharge and/or perform its or their liabilities and obligations (or any of
them) under any Finance Document; or

 

(k)                                  if, without the prior consent of the
Lender, members of Dr John Coustas’ family (either directly and/or through
companies beneficially owned by members of the Dr John Coustas’ family and/or
trusts or foundations of which members of the Dr John Coustas’ family are
beneficiaries) own and control less than 51 per cent. of the issued voting
share capital of the Borrower; or

 

(l)                                     if, without the prior consent of the
Lender, the shares of the Borrower cease to be listed on the New York Stock
Exchange; or

 

(m)                               it appears to the Lender that, without its
prior consent, a change has occurred or probably has occurred after the date of
this Agreement in the ultimate beneficial ownership of any of the shares in any
Owner or in the ultimate control of the voting rights attaching to any of those
shares; or

 

(n)                                 any provision which the Lender considers
material of a Finance Document proves to have been or becomes invalid or
unenforceable, or a Security Interest created by a Finance Document proves to
have been or becomes invalid or unenforceable or such a Security Interest
proves to have ranked after, or loses its priority to, another Security
Interest or any other third party claim or interest; or

 

46

 

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

 

(p)                                 any of the Charterparties is terminated or
becomes invalid or unenforceable or otherwise ceases to be in full force and
effect for any reason prior to its stated termination date and the relevant
Charterparty is not replaced within 30 days (or 60 days if the relevant Ship
may not be chartered due to a defect or is drydocked for repairs) by another
charter having similar characteristics to that Charterparty and with a
charterer, in a form and on terms acceptable to the Lender; or

 

(q)                                 any of the Charterers ceases to be a party
to the Charterparty entered into by it unless the obligations of any
replacement charterer are guaranteed by the original Charterer (on terms
satisfactory to the Lender);

 

(r)                                    the Master Agreement is terminated,
cancelled, suspended, rescinded or revoked or otherwise ceases to remain in
full force and effect for any reason except with the consent of the Lender; or

 

(s)                                  for any reason whatsoever, any Ship ceases
to be managed by the Approved Manager on terms in all respects approved by the
Lender; or

 

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

 

(u)                                 any other event occurs or any other
circumstances arise or develop including, without limitation:

 

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

 

(ii)           any accident or other event involving any Ship or
another vessel owned, chartered or operated by a Relevant Person;

 

in the light of which the Lender considers that there
is a material risk that the Borrower is, or will later become, unable to
discharge its liabilities under the Finance Documents as they fall due.

 

18.2                        Actions
following an Event of Default.  On, or at any
time after, the occurrence of an Event of Default which is continuing, the
Lender may:

 

(a)                                  serve on the Borrower a notice stating that
all obligations of the Lender to the Borrower under this Agreement are
terminated; and/or

 

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

 

(c)                                  take any other action which, as a result of
the Event of Default or any notice served under paragraph (a) or (b) above,
the Lender is entitled to take under any Finance Document or any applicable
law.

 

18.3                        Termination
of Commitment.  On the service of a notice
under paragraph (a) of Clause 18.2, the Commitment and all other
obligations of the Lender to the Borrower under this Agreement shall terminate.

 

47

 

18.4                        Acceleration
of Loan.  On the service of a notice under paragraph (b) of
Clause 18.2, the Loan, all accrued interest and all other amounts accrued or
owing from the Borrower or any Security Party under this Agreement and every
other Finance Document shall become immediately due and payable or, as the case
may be, payable on demand.

 

18.5                        Multiple
notices; action without notice.  The Lender may
serve notices under paragraphs (a) and (b) of Clause 18.2 simultaneously
or on different dates and the Lender may take any action referred to in that
Clause if no such notice is served or simultaneously with or at any time after
the service of both or either of such notices.

 

18.6                        Exclusion
of Lender liability.  Neither the
Lender, nor any receiver or manager appointed by the Lender, shall have any
liability to the Borrower or a Security Party:

 

(a)                                  for any loss caused by an exercise of
rights under, or enforcement of a Security Interest created by, a Finance Document
or by any failure or delay to exercise such a right or to enforce such a
Security Interest; or

 

(b)                                 as mortgagee in possession or otherwise,
for any income or principal amount which might have been produced by or
realised from any asset comprised in such a Security Interest or for any
reduction (however caused) in the value of such an asset,

 

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

 

18.7                        Relevant
Persons.  In this Clause 18 “a Relevant
Person” means the Borrower, Security Party and any company which is
a subsidiary of the Borrower or a Security Party or of which a Security Party
is a subsidiary but excluding any company which is dormant and the value of
whose gross assets is $50,000 or less.

 

18.8                        Interpretation.  In Clause 18.1(f) references to an event
of default or a termination event include any event, howsoever described, which
is similar to an event of default in a facility agreement or a termination
event in a finance lease; and in Clause 18.1(g) “petition” includes an application.

 

19                                  FEES AND
EXPENSES

 

19.1                        Arrangement
and commitment fees.  The Borrower
shall pay to the Lender:

 

(a)                                  a non-refundable arrangement fee of
$775,600 on 28 March 2008; and

 

(b)                                 a commitment fee at the rate of 0.25 per
cent. per annum on the undrawn balance of the Loan during the period from (and
including) the earlier of (i) the date of this Agreement and (ii) 1 June 2008
up to and including the earlier of (i) the final Drawdown Date and (ii) the
last day of the Availability Period for Tranche C, such commitment fee to be
payable every 3 months in arrears and on the last day of such period.

 

19.2                        Costs of
negotiation, preparation etc.  The Borrower
shall pay to the Lender on its demand the amount of all expenses reasonably
incurred by the Lender in connection with the negotiation, preparation,
execution or registration of any Finance Document or any related document or
with any transaction contemplated by a Finance Document or a related document.

 

19.3                        Costs of
variations, amendments, enforcement etc.  The
Borrower shall pay to the Lender, on the Lender’s demand, the amount of all
expenses incurred by the Lender in connection with:

 

48

 

(a)                                  any amendment or supplement to a Finance
Document, or any proposal for such an amendment to be made;

 

(b)                                 any consent or waiver by the Lender under
or in connection with a Finance Document, or any request for such a consent or
waiver;

 

(c)                                  the valuation of any security provided or
offered under Clause 14 or any other matter relating to such security; or

 

(d)                                 any step taken by the Lender with a view to
the protection, exercise or enforcement of any right or Security Interest
created by a Finance Document or for any similar purpose.

 

There shall be
recoverable under paragraph (d) the full amount of all legal expenses,
whether or not such as would be allowed under rules of court or any
taxation or other procedure carried out under such rules.

 

19.4                        Documentary
taxes.  The Borrower shall promptly pay any tax
payable on or by reference to any Finance Document, and shall, on the Lender’s
demand, fully indemnify the Lender against any liabilities and expenses
resulting from any failure or delay by the Borrower to pay such a tax.

 

19.5                        Certification
of amounts.  A notice which is signed by an
officer of the Lender, which states that a specified amount, or aggregate
amount, is due to the Lender under this Clause 19 and which indicates (without
necessarily specifying a detailed breakdown) the matters in respect of which
the amount, or aggregate amount, is due shall be prima facie evidence that the
amount, or aggregate amount, is due save in the case of manifest error.

 

20                                  INDEMNITIES

 

20.1                        Indemnities
regarding borrowing and repayment of Loan.  The
Borrower shall fully indemnify the Lender on the Lender’s demand in respect of
all expenses, liabilities and losses (including, without limitation, any loss
of Margin) which are incurred by the Lender, or which the Lender reasonably and
with due diligence estimates that it will incur, as a result of or in
connection with:

 

(a)                                  an Advance not being borrowed on the date
specified in the Drawdown Notice for any reason other than a default by the
Lender;

 

(b)                                 the receipt or recovery of all or any part
of the Loan or an overdue sum otherwise than on the last day of an Interest
Period or other relevant period;

 

(c)                                  any failure (for whatever reason) by the
Borrower to make payment of any amount due under a Finance Document on the due
date or, if so payable, on demand (after giving credit for any default interest
paid by the Borrower on the amount concerned under Clause 6); and

 

(d)                                 the occurrence and/or continuance of an
Event of Default or a Potential Event of Default and/or the acceleration of
repayment of the Loan under Clause 18,

 

and in respect of any
tax (other than tax on its overall net income) for which the Lender is liable
in connection with any amount paid or payable to the Lender (whether for its
own account or otherwise) under any Finance Document.

 

20.2                        Breakage
costs.  Without limiting its generality, Clause 20.1 covers
any liability, expense or loss, including a loss of a prospective profit,
incurred by the Lender:

 

49

 

(a)                                  in liquidating or employing deposits from
third parties acquired or arranged to fund or maintain all or any part of the
Loan and/or any overdue amount (or an aggregate amount which includes the Loan
or any overdue amount); and

 

(b)                                 in terminating, or otherwise in connection
with, any interest and/or currency swap or any other transaction entered into
(whether with another legal entity or with another office or department of the
Lender) to hedge any exposure arising under this Agreement or that part which
the Lender determines is fairly attributable to this Agreement of the amount of
the liabilities, expenses or losses (including losses of prospective profits)
incurred by it in terminating, or otherwise in connection with, a number of
transactions of which this Agreement is one.

 

20.3                        Miscellaneous
indemnities.  The Borrower shall fully
indemnify the Lender on its demand in respect of all claims, demands,
proceedings, liabilities, taxes, losses and expenses of every kind (“liability items”) which may be made or brought against, or
incurred by, the Lender in any country, in relation to:

 

(a)                                  any action taken, or omitted or neglected
to be taken, under or in connection with any Finance Document by the Lender or
by any receiver appointed under a Finance Document; and

 

(b)                                 any other event, matter or question which
occurs or arises at any time during the Security Period and which has any
connection with, or any bearing on, any Finance Document, any payment or other
transaction relating to a Finance Document or any asset covered (or previously
covered) by a Security Interest created (or intended to be created) by a
Finance Document,

 

other than liability
items which are shown to have been caused by the gross negligence or the wilful
misconduct of the Lender’s own officers or employees.

 

20.4                        Environmental
Indemnity.  Without prejudice to its
generality, Clause 20.3 covers any claims, demands, proceedings, liabilities,
taxes, losses or expenses of every kind which arise, or are asserted, under or
in connection with any law relating to safety at sea, pollution or the
protection of the environment, the ISM Code or the ISPS Code.

 

20.5                        Currency
indemnity.  If any sum due from the
Borrower or any Security Party to the Lender under a Finance Document or under
any order or judgment relating to a Finance Document has to be converted from
the currency in which the Finance Document provided for the sum to be paid (the
“Contractual Currency”) into another
currency (the “Payment Currency”) for the purpose
of:

 

(a)                                  making or lodging any claim or proof
against the Borrower or any Security Party, whether in its liquidation, any arrangement
involving it or otherwise; or

 

(b)                                 obtaining an order or judgment from any
court or other tribunal; or

 

(c)                                  enforcing any such order or judgment,

 

the Borrower shall
indemnify the Lender against the loss arising when the amount of the payment actually
received by the Lender is converted at the available rate of exchange into the
Contractual Currency.

 

In this Clause 20.5,
the “available rate of exchange” means the
rate at which the Lender concerned is able at the opening of business (London
time) on the Business Day after it receives the sum concerned to purchase the
Contractual Currency with the Payment Currency.

 

50

 

This Clause 20.5
creates a separate liability of the Borrower which is distinct from its other
liabilities under the Finance Documents and which shall not be merged in any
judgment or order relating to those other liabilities.

 

20.6                        Application
of Master Agreement.   For the
avoidance of doubt, Clause 20.5 does not apply in respect of sums due from the
Borrower to the Lender under or in connection with the Master Agreement as to
which sums the provisions of Section 8 (Contractual Currency) of the
Master Agreement shall apply.

 

20.7                        Certification
of amounts.  A notice which is signed by 2
officers of the Lender, which states that a specified amount, or aggregate
amount, is due to the Lender under this Clause 20 and which indicates (without
necessarily specifying a detailed breakdown) the matters in respect of which
the amount, or aggregate amount, is due shall be prima facie evidence that the
amount, or aggregate amount, is due.

 

21                                  NO SET-OFF
OR TAX DEDUCTION

 

21.1                        No
deductions.  All amounts due from the
Borrower under a Finance Document shall be paid:

 

(a)                                  without any form of set-off, cross-claim or
condition; and

 

(b)                                 free and clear of any tax deduction except
a tax deduction which the Borrower is required by law to make.

 

21.2                        Grossing-up
for taxes.  If the Borrower is required by
law to make a tax deduction from any payment:

 

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

 

(b)                                 the Borrower shall pay the tax deducted to
the appropriate taxation authority promptly, and in any event before any fine
or penalty arises; and

 

(c)                                  the amount due in respect of the payment
shall be increased by the amount necessary to ensure that the Lender receives
and retains (free from any liability relating to the tax deduction) a net
amount which, after the tax deduction, is equal to the full amount which it
would otherwise have received.

 

21.3                        Evidence
of payment of taxes.  Within 1 month
after making any tax deduction, the Borrower shall deliver to the Lender
documentary evidence satisfactory to the Lender that the tax had been paid to
the appropriate taxation authority.

 

21.4                        Exclusion
of tax on overall net income.  In this Clause
21 “tax deduction” means any deduction or
withholding for or on account of any present or future tax except tax on the
Lender’s overall net income.

 

21.5                        Application
of Master Agreement.  For the
avoidance of doubt, Clause 21 does not apply in respect of sums due from the
Borrower under or in connection with the Master Agreement as to which sums the
provisions of Section 2(d) (Deduction or Withholding for Tax) of the
Master Agreement shall apply.

 

22                                  ILLEGALITY,
ETC

 

22.1                        Illegality.  This Clause 22 applies if the Lender notifies
the Borrower that it has become, or will with effect from a specified date,
become:

 

51

 

(a)                                  unlawful or prohibited as a result of the
introduction of a new law, an amendment to an existing law or a change in the
manner in which an existing law is or will be interpreted or applied; or

 

(b)                                 contrary to, or inconsistent with, any
regulation,

 

for the Lender to
maintain or give effect to any of its obligations under this Agreement in the
manner contemplated by this Agreement.

 

22.2                        Notification
and effect of illegality.  On the Lender
notifying the Borrower under Clause 22.1, the Commitment shall terminate; and
thereupon or, if later, on the date specified in the Lender’s notice under
Clause 22.1 as the date on which the notified event would become effective, the
Borrower shall prepay the Loan in full in accordance with Clause 7.

 

23                                  INCREASED
COSTS

 

23.1                        Increased
costs.  This Clause 23 applies if the Lender notifies
the Borrower that the Lender considers that as a result of:

 

(a)                                  the introduction or alteration after the
date of this Agreement of a law or a regulation, or an alteration after the date
of this Agreement in the manner in which a law or regulation is interpreted or
applied (disregarding any effect which relates to the application to payments
under this Agreement of a tax on the Lender’s overall net income); or

 

(b)                                 the effect of complying with any law or
regulation (including any which relates to capital adequacy or liquidity
controls or which affects the manner in which the Notifying Lender allocates
capital resources to its obligations under this Agreement including, without
limitation, the implementation of any regulations which may replace, amend
and/or supplement those set out in the statement of the Basel Committee on
Banking Regulations and Supervisory Practices dated July 1988 and entitled
“International Convergence of Capital Measurement and Capital Structures”)
which is introduced, or altered, or the interpretation or application of which
is altered, after the date of this Agreement,

 

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

 

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

 

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

 

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

 

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

 

but not an item
attributable to a change in the rate of tax on the overall net income of the
Notifying Lender (or a parent company of it) or an item covered by the
indemnity for tax in Clause 20.1 or by Clause 21.

 

52

 

For the purposes of
this Clause 23.1 the Lender may in good faith allocate or spread costs and/or
losses among its assets and liabilities (or any class thereof) on such basis as
it considers appropriate.

 

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

 

23.3                        Notice of
prepayment.  If the Borrower is not willing
to continue to compensate the Lender for the increased cost under Clause 23.2,
the Borrower may give the Lender not less than 15 days’ notice of its intention
to prepay the Loan at the end of an Interest Period.

 

23.4                        Prepayment;
termination of Commitment.  A notice under
Clause 23.3 shall be irrevocable; and on the date specified in the Borrower’s
notice of intended prepayment, the Borrower shall prepay (without premium or
penalty) the Loan together with accrued interest thereon at the applicable rate
plus the Margin.

 

23.5                        Application
of prepayment.  Clause 7 shall apply in
relation to the prepayment.

 

24                                  SET-OFF

 

24.1                        Application
of credit balances.  The Lender may
without prior notice but following the occurrence of an Event of Default which
is continuing:

 

(a)                                  apply any balance (whether or not then due)
which at any time stands to the credit of any account in the name of the
Borrower at any office in any country of the Lender in or towards satisfaction
of any sum then due from the Borrower to the Lender under any of the Finance
Documents; and

 

(b)                                 for that purpose:

 

(i)            break, or alter the maturity of, all or any part of a
deposit of the Borrower;

 

(ii)           convert or translate all or any part of a deposit or
other credit balance into Dollars; and

 

(iii)          enter into any other transaction or make any entry
with regard to the credit balance which the Lender considers appropriate.

 

24.2                        Existing
rights unaffected.  The Lender
shall not be obliged to exercise any of its rights under Clause 24.1; and those
rights shall be without prejudice and in addition to any right of set-off,
combination of accounts, charge, lien or other right or remedy to which the
Lender is entitled (whether under the general law or any document).

 

25                                  TRANSFERS
AND CHANGES IN LENDING OFFICES

 

25.1                        Transfer
by Borrower.  The Borrower may not, without
the prior consent of the Lender:

 

(a)                                  transfer any of its rights or obligations
under any Finance Document; or

 

(b)                                 enter into any merger, de-merger or other
reorganisation, or carry out any other act, as a result of which any of its
rights or liabilities would vest in, or pass to, another person.

 

25.2                        Assignment
by Lender.  The Lender may assign all or
any of the rights and interests which it has under or by virtue of the Finance
Documents without the consent of the Borrower.

 

53

 

25.3                        Rights of
assignee.  In respect of any breach of a warranty,
undertaking, condition or other provision of a Finance Document, or any
misrepresentation made in or in connection with a Finance Document, a direct or
indirect assignee of any of the Lender’s rights or interests under or by virtue
of the Finance Documents shall be entitled to recover damages by reference to
the loss incurred by that assignee as a result of the breach or
misrepresentation irrespective of whether the Lender would have incurred a loss
of that kind or amount.

 

25.4                        Sub-participation;
subrogation assignment.  The Lender may
sub-participate all or any part of its rights and/or obligations under or in
connection with the Finance Documents without the consent of, or any notice to,
the Borrower or any Security Party and the Lender may assign, all or any part
of those rights to an insurer or surety who has become subrogated to them.

 

25.5                        Disclosure
of information.  The Lender may
provide or disclose to an actual or potential assignee or sub-participant or
any person who may otherwise enter into or propose to enter into contractual
relations with that Lender in connection with this Agreement or to any other
person as required by any applicable law or regulation, a copy of this
Agreement, copies of all information provided by the Borrower or any of the
Security Parties under or in connection with each Finance Document, details of
drawings made by the Borrower under this Agreement and information regarding
the performance by the Borrower and the Security Parties of their obligations
under this Agreement and the other Finance Documents.

 

25.6                        Change of
lending office.  The Lender may
change its lending office by giving notice to the Borrower and the change shall
become effective on the later of:

 

(a)                                  the date on which the Borrower receives the
notice; and

 

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

 

26                                  VARIATIONS
AND WAIVERS

 

26.1                        Variations,
waivers etc. by Lender.  Subject to
Clause 26.2, a document shall be effective to vary, waive, suspend or limit any
provision of a Finance Document, or the Lender’s rights or remedies under such
a provision or the general law, only if the document is signed, or specifically
agreed to by fax, by the Borrower and by the Lender and, if the document
relates to a Finance Document to which a Security Party is party, by that
Security Party.

 

26.2                        Exclusion
of other or implied variations.  Except for a
document which satisfies the requirements of Clauses 26.1 no document, and no
act, course of conduct, failure or neglect to act, delay or acquiescence on the
part of the Lender (or any person acting on its behalf) shall result in the
Lender (or any person acting on its behalf) being taken to have varied, waived,
suspended or limited, or being precluded (permanently or temporarily) from
enforcing, relying on or exercising:

 

(a)                                  a provision of this Agreement or another
Finance Document; or

 

(b)                                 an Event of Default; or

 

(c)                                  a breach by the Borrower or a Security
Party of an obligation under a Finance Document or the general law; or

 

(d)                                 any right or remedy conferred by any
Finance Document or by the general law,

 

54

 

and there shall not be
implied into any Finance Document any term or condition requiring any such
provision to be enforced, or such right or remedy to be exercised, within a
certain or reasonable time.

 

27                                  NOTICES

 

27.1                        General.  Unless otherwise specifically provided, any
notice under or in connection with any Finance Document shall be given by
letter or fax; and references in the Finance Documents to written notices,
notices in writing and notices signed by particular persons shall be construed
accordingly.

 

27.2                        Addresses
for communications.  A notice shall
be sent:

 

	
  (a)         to
  the Borrower:

  	
   

  	
  c/o
  Approved Manager

  	
   

  	
   

  
	
   

  	
   

  	
  Akti
  Kondyli 14

  	
   

  	
   

  
	
   

  	
   

  	
  185
  45 Piraeus

  	
   

  	
   

  
	
   

  	
   

  	
  Greece

  	
   

  	
   

  
	
   

  	
   

  	
  Fax No: +30
  210 422 0853

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (b)         to
  the Lender:

  	
   

  	
  Credit
  Suisse

  	
   

  	
   

  
	
   

  	
   

  	
  St.
  Alban-Graben 1-3

  	
   

  	
   

  
	
   

  	
   

  	
  PO
  Box CH-4002

  	
   

  	
   

  
	
   

  	
   

  	
  Basel

  	
   

  	
   

  
	
   

  	
   

  	
  Switzerland

  	
   

  	
   

  
	
   

  	
   

  	
  Fax No: +41 61 266 7939

  	
   

  	
   

  

 

or to such other
address as the relevant party may notify the other.

 

27.3                        Effective
date of notices.  Subject to
Clauses 27.4 and 27.5:

 

(a)                                  a notice which is delivered personally or
posted shall be deemed to be served, and shall take effect, at the time when it
is delivered; and

 

(b)                                 a notice which is sent by fax shall be
deemed to be served, and shall take effect, 2 hours after its transmission is
completed.

 

27.4                        Service
outside business hours.  However, if
under Clause 27.3 a notice would be deemed to be served:

 

(a)                                  on a day which is not a business day in the
place of receipt; or

 

(b)                                 on such a business day, but after 5 p.m.
local time,

 

the notice shall
(subject to Clause 27.5) be deemed to be served, and shall take effect, at 9 a.m.
on the next day which is such a business day.

 

27.5                        Illegible
notices.  Clauses 27.3 and 27.4 do not apply if the
recipient of a notice notifies the sender within one hour after the time at
which the notice would otherwise be deemed to be served that the notice has
been received in a form which is illegible in a material respect.

 

27.6                        Valid
notices.  A notice under or in connection with a
Finance Document shall not be invalid by reason that its contents or the manner
of serving it does not comply with the requirements of this Agreement or, where
appropriate, any other Finance Document under which it is served if the failure
to serve it in accordance with the requirements of this Agreement or other
Finance Document, as the case may be, has not caused any party to suffer any
significant loss or prejudice.

 

55

 

27.7                        English
language.  Any notice under or in connection with a
Finance Document shall be in English.

 

27.8                        Meaning
of “notice”.  In this Clause “notice” includes
any demand, consent, authorisation, approval, instruction, waiver or other
communication.

 

28                                  SUPPLEMENTAL

 

28.1                        Rights
cumulative, non-exclusive.  The rights and
remedies which the Finance Documents give to the Lender are:

 

(a)                                  cumulative;

 

(b)                                 may be exercised as often as appears
expedient; and

 

(c)                                  shall not, unless a Finance Document
explicitly and specifically states so, be taken to exclude or limit any right
or remedy conferred by any law.

 

28.2                        Severability
of provisions.  If any provision of a Finance
Document is or subsequently becomes void, unenforceable or illegal, that shall
not affect the validity, enforceability or legality of the other provisions of
that Finance Document or of the provisions of any other Finance Document.

 

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

 

28.4                        Benefit and
binding effect.  The terms of this Agreement
shall be binding upon, and shall enure to the benefit of, the parties hereto
and their respective (including subsequent) successors and permitted assigns
and transferees.

 

28.5                        Third
party rights.  A person who is not a party to
this Agreement has no right under the Contracts (Rights of Third Parties) Act
1999 to enforce or to enjoy the benefit of any term of this Agreement.

 

29                                  LAW AND
JURISDICTION

 

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

 

29.2                        Exclusive
English jurisdiction.  Subject to
Clause 29.3, the courts of England shall have exclusive jurisdiction to settle
any disputes which may arise out of or in connection with this Agreement.

 

29.3                        Choice of
forum for the exclusive benefit of the Lender. 
Clause 29.2 is for the exclusive benefit of the Lender, which reserves
the right:

 

(a)                                  to commence proceedings in relation to any
matter which arises out of or in connection with this Agreement in the courts
of any country other than England and which have or claim jurisdiction to that
matter; and

 

(b)                                 to commence such proceedings in the courts
of any such country or countries concurrently with or in addition to
proceedings in England or without commencing proceedings in England.

 

The Borrower shall not
commence any proceedings in any country other than England in relation to a
matter which arises out of or in connection with this Agreement.

 

29.4                        Process
agent.  The Borrower irrevocably appoints Danaos
Management Consultants at their office for the time being, presently at 4
Staple Inn, Holborrn, London WC1V 7QU, 

 

56

 

England to act as its process agent to
receive and accept on its behalf any process or other document relating to any
proceedings in the English courts which are connected with this Agreement.

 

29.5                        Lender
rights unaffected.  Nothing in
this Clause 29 shall exclude or limit any right which the Lender may have
(whether under the law of any country, an international convention or
otherwise) with regard to the bringing of proceedings, the service of process,
the recognition or enforcement of a judgment or any similar or related matter
in any jurisdiction.

 

29.6                        Meaning
of “proceedings”.  In this Clause
29, “proceedings” means proceedings of any
kind, including an application for a provisional or protective measure.

 

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

 

57

 

SCHEDULE 1

DRAWDOWN NOTICE

 

To:                              Credit Suisse

St. Alban-Graben 1-3

PO Box CH-4002

Basel

Switzerland

Fax No: +41 61 266 7939

 

2008

 

DRAWDOWN NOTICE

 

1                                         We refer to the loan agreement
(the “Loan Agreement”) dated              2008
and made between us, the Borrower and you, the Lender, in connection with a
facility of up to US$221,600,000. Terms defined in the Loan Agreement have
their defined meanings when used in this Drawdown Notice.

 

2                                         We request to borrow the [       ]
Advance of Tranche [              ]
as follows:

 

(a)                                  Amount: US$[              ];

 

(b)                                 Drawdown Date:  [              ];

 

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

 

(d)                                 Payment instructions : account of [                         ]
and numbered [                                    ]
with [                ]
of [                 ].

 

3                                         We represent and warrant that:

 

(a)                                  the representations and warranties in
Clause 9 of the Loan Agreement would remain true and not misleading if repeated
on the date of this notice with reference to the circumstances now existing;
and

 

(b)                                 no Event of Default or Potential Event of
Default has occurred or will result from the borrowing of the Loan.

 

4                                         This notice cannot be revoked
without your prior consent.

 

5                                         We authorise you to deduct any
fees including the arrangement fee and any accrued commitment fee referred to
in Clause 19 from the amount of the Advance.

 

 

Attorney-in-Fact

for and on behalf of

DANAOS CORPORATION

 

58

 

SCHEDULE 2

CONDITION PRECEDENT DOCUMENTS

 

In this Schedule 2 “Relevant Ship” means, in relation to a
Tranche of an Advance to be made under such Tranche, the Ship which is to be
part-financed by that Tranche.

 

PART A

 

The following are the documents referred to in
Clause 8.1(a).

 

1                                         A duly executed original of
each Guarantee, the Master Agreement, the Master Agreement Assignment and the
Danaos Earnings Account Pledge.

 

2                                         Certified copies of the
certificate of incorporation and constitutional documents of the Borrower and
each Owner.

 

3                                         Copies of resolutions of the
shareholders and directors of each Owner authorising the execution of each of
the Finance Documents to which that Owner is a party and, in the case of each
Owner ratifying the execution of the Shipbuilding Contracts.

 

4                                         Evidence that the Danaos
Earnings Account has been duly opened with the Lender by the Borrower.

 

5                                         The original of any power of
attorney under which any Finance Document is executed on behalf of the Borrower
or each Owner.

 

6                                         Copies of all consents which
the Borrower or any Security Party requires to enter into, or make any payment
under, any Finance Document or any Shipbuilding Contract.

 

7                                         Original Refund Guarantees.

 

8                                         Documentary evidence that the
agent for service of process named in Clause 29 has accepted its appointment.

 

9                                         Favourable legal opinions
from lawyers appointed by the Lender on such matters concerning the laws of the
Marshall Islands, Liberia and Korea and such other relevant jurisdictions as
the Lender may require.

 

10                                  Copies of each Charterparty
duly executed by the parties thereto.

 

11                                  If the Lender so requires, in
respect of any of the documents referred to above, a certified English translation
prepared by a translator approved by the Lender.

 

PART B

 

The following are the
documents referred to in Clause 8.1(b).

 

1                                         A duly executed original of
the Predelivery Security Assignment for the Relevant Ship (and of each document
required to be delivered pursuant thereto).

 

2                                         Documentary evidence that the
steel-cutting of the Relevant Ship has commenced in accordance with the
relevant Shipbuilding Contract.

 

3                                         A duly issued invoice from the
relevant Builder showing all sums due and payable to that Builder pursuant to Article II.4(b) of
Shipbuilding Contract A, Article X.2(b) of 

 

59

 

Shipbuilding
Contract B or, as the case may be, Article X.1(b) of Shipbuilding
Contract C upon steel-cutting of the Relevant Ship.

 

4                                         Written confirmation from the
relevant Owner and the Approved Manager that they have irrevocably accepted and
approved the building works which have been completed on the Relevant Ship up
to the date of her steel cutting.

 

PART C

 

The following are the documents referred to in Clause 8.1(c).

 

1                                         Documentary evidence that the
keel of the Relevant Ship has been laid in accordance with the relevant
Shipbuilding Contract.

 

2                                         A duly issued invoice from the
relevant Builder showing all sums due and payable to that Builder pursuant to Article II.4(c) of
Shipbuilding Contract A, Article X.2(c) of Shipbuilding Contract B
or, as the case may be, Article X.1(c) of Shipbuilding Contract C
upon keel-laying of the Relevant Ship.

 

3                                         Written confirmation from the
relevant Owner and the Approved Manager that they have irrevocably accepted and
approved the building works which have been completed on the Relevant Ship up
to the date of her keel-laying.

 

PART D

 

The following are the documents referred to in Clause 8.1(d).

 

1                                         Documentary evidence that the
Relevant Ship has been launched accordance with the relevant Shipbuilding
Contract.

 

2                                         A duly issued invoice from the
relevant Builder showing all sums due and payable to that Builder pursuant to Article X.2(d) of
the Shipbuilding Contract B or, as the case may be, Article X.1(d) of
the Shipbuilding Contract C upon launching of the Relevant Ship.

 

3                                         Written confirmation from the
relevant Owner and the Approved Manager that they have irrevocably accepted and
approved the building works which have been completed on the Relevant Ship up
to the date of her launching.

 

PART E

 

The following are the
documents referred to in Clause 8.1(e).

 

1                                         A duly executed original of
the Mortgage, the Deed of Covenant (if applicable), the General Assignment and
the Charterparty Security Assignment (and of each document to be delivered
under each of them) in respect of the Relevant Ship.

 

2                                         A duly executed certified true
copy of the Bareboat Charter Security Agreement (and of each document to be
delivered thereunder) if the Relevant Ship is Ship C.

 

3                                         Documentary evidence that:

 

(a)                                  the Relevant Ship has been unconditionally
delivered by the relevant Builder to, and accepted by, the relevant Owner under
the relevant Shipbuilding Contract, and the full purchase price payable under
the relevant Shipbuilding Contract (in addition to the part being financed by
the relevant Tranche) has been duly paid;

 

60

 

(b)                                 the Relevant Ship has been unconditionally
delivered by its Owner to, and accepted by, its Charterer for operation under
the Charterparty relative to that Ship;

 

(c)                                  the Relevant Ship is definitively and
permanently registered in the name of the relevant Owner under an Approved
Flag;

 

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

 

(e)                                  the Relevant Ship maintains the highest
available class with a classification society which is a member of the
International Association of Classification Societies and which his acceptable
to the Lender free of all overdue recommendations and conditions affecting the
class;

 

(f)                                    the Mortgage and (if applicable) the Deed
of Covenant in respect of the Relevant Ship have been duly registered against
the Relevant Ship as a valid first preferred or priority ship mortgage and (if
applicable) collateral deed of covenant in accordance with the laws of the
applicable Approved Flag State; and

 

(g)                                 the Relevant Ship is insured in accordance
with the provisions of this Agreement and all requirements therein in respect
of insurances have been complied with.

 

4                                         Documents establishing that
the Relevant Ship will, as from its Delivery Date, be managed by the Approved
Manager on terms acceptable to the Lender, together with:

 

(a)                                  the Approved Manager’s Undertaking in
respect of the Relevant Ship; and

 

(b)                                 copies of the document of compliance (DOC),
and the safety management certificate (SMC) pursuant to the ISM Code and
International Ship Security Certificate issued pursuant to the ISPS Code in
relation to the Ship, the relevant Owner and/or the Approved Manager and/or YM.

 

5                                         A valuation of the Relevant
Ship addressed to the Lender and dated no earlier than 30 days prior to the
relevant Delivery Date, stated to be for the purposes of this Agreement and
prepared in accordance with Clause 14 which shows the value of the Relevant
Ship in an amount acceptable to the Lender.

 

6                                         A favourable opinion (at the
cost of the Borrower) from an independent insurance consultant acceptable to
the Lender on such matters relating to the insurances for the Relevant Ship as
the Lender may require.

 

7                                         A written statement,
satisfactory to the Lender, evidencing the calculation of the Delivered Cost of
each Ship (with a detailed breakdown of the Extra Pre-Delivery Costs for each
Ship) signed by the chief financial officer of the Borrower.

 

8                                         Favourable legal opinions from
lawyers appointed by the Lender on such matters concerning the laws of the
Marshall Islands, Liberia and the Approved Flag State and such other relevant
jurisdictions as the Lender may require

 

Every copy document delivered
under this Schedule shall be certified as a true and up to date copy by a
director or the secretary (or equivalent officer) of the relevant Owner.

 

61

 

SCHEDULE 3

AMOUNT OF ADVANCES

 

Ship A

 

	
  Stage
  of Construction

  	
   

  	
  Amount
  due

  to Yard

  under

  Shipbuilding

  Contract

  	
   

  	
  Extra
  Pre-

  Delivery

  Costs

  	
   

  	
  Maximum

  amount of

  Advance

  	
   

  
	
   

  	
   

  	
  ($)

  	
   

  	
  ($)

  	
   

  	
  ($)

  	
   

  
	
  Steel-cutting

  	
   

  	
  6,380,000

  	
   

  	
  0.00

  	
   

  	
  6,380,000

  	
   

  
	
  Keel-laying

  	
   

  	
  6,380,000

  	
   

  	
  0.00

  	
   

  	
  6,380,000

  	
   

  
	
  Delivery

  	
   

  	
  38,280,000

  	
   

  	
  4,960,000

  	
   

  	
  43,240,000

  	
   

  
	
  Total

  	
   

  	
   

  	
   

  	
  4,960,000

  	
   

  	
  56,000,000

  	
   

  

 

Ship B

 

	
  Stage of Construction

  	
   

  	
  Amount due

  to Yard

  under

  Shipbuilding

  Contract

  	
   

  	
  Extra Pre-

  Delivery

  Costs

  	
   

  	
  Maximum

  amount of

  Advance

  	
   

  
	
   

  	
   

  	
  ($)

  	
   

  	
  ($)

  	
   

  	
  ($)

  	
   

  
	
  Steel-cutting

  	
   

  	
  18,300,000

  	
   

  	
  0.00

  	
   

  	
  18,300,000

  	
   

  
	
  Keel-laying

  	
   

  	
  9,150,000

  	
   

  	
  0.00

  	
   

  	
  9,150,000

  	
   

  
	
  Launching

  	
   

  	
  9,150,000

  	
   

  	
  0.00

  	
   

  	
  9,150,000

  	
   

  
	
  Delivery

  	
   

  	
  36,600,000

  	
   

  	
  6,800,000

  	
   

  	
  43,400,000

  	
   

  
	
  Total

  	
   

  	
   

  	
   

  	
  6,800,000

  	
   

  	
  80,000,000

  	
   

  

 

62

 

Ship C

 

	
  Stage of Construction

  	
   

  	
  Amount due

  to Yard

  under

  Shipbuilding

  Contract

  	
   

  	
  Extra Pre-

  Delivery

  Costs

  	
   

  	
  Maximum

  amount of

  Advance

  	
   

  
	
   

  	
   

  	
  ($)

  	
   

  	
  ($)

  	
   

  	
  ($)

  	
   

  
	
  Steel-cutting

  	
   

  	
  9,900,000

  	
   

  	
  0.00

  	
   

  	
  9,900,000

  	
   

  
	
  Keel-laying

  	
   

  	
  9,900,000

  	
   

  	
  0.00

  	
   

  	
  9,900,000

  	
   

  
	
  Launching

  	
   

  	
  9,900,000

  	
   

  	
  0.00

  	
   

  	
  9,900,000

  	
   

  
	
  Delivery

  	
   

  	
  49,500,000

  	
   

  	
  6,400,000

  	
   

  	
  55,900,000

  	
   

  
	
  Total

  	
   

  	
   

  	
   

  	
  6,400,000

  	
   

  	
  85,600,000

  	
   

  

 

63

 

SCHEDULE 4

FORM OF COMPLIANCE CERTIFICATE

 

To:          Credit Suisse

St. Alban-Graben 1-3

PO Box CH-4002 Basel

Switzerland

 

Attn:

 

2008

 

 

Dear Sirs,

 

We refer to a loan agreement                2008
(the “Loan Agreement”) made
between yourselves as lender and ourselves as borrower in relation to a loan
facility of up to $221,600,000 in aggregate.

 

Words and expressions defined in the Loan Agreement
shall have the same meaning when used in this compliance certificate.

 

We enclose with this certificate a copy of the
[audited]/[unaudited] consolidated accounts for the Borrower’s Group for the
[Financial Year] [6-month period] ended [·]. 
The accounts (i) have been prepared in accordance with all
applicable laws and USGAAP all consistently applied, (ii) give a true and
fair view of the state of affairs of the Borrower’s Group at the date of the
accounts and of its profit for the period to which the accounts relate and (iii) fully
disclose or provide for all significant liabilities of the Borrower’s Group.

 

We also enclose copies of the valuations of all the
Fleet Vessels which were used in calculating the Market Value Adjusted Total
Assets of the Borrower’s Group as at [·].

 

The Borrower represents that no Event of Default or
Potential Event of Default has occurred as at the date of this certificate
[except for the following matter or event [set
out all material details of matter or event]].  In addition as of [·], the Borrower confirms compliance with
the financial covenants set out in Clause 11.5 of the Loan Agreement for the
[12][6] months ending as of the date to which the enclosed accounts are
prepared.

 

We now certify that, as at [·]:

 

(a)                                  the ratio of Total Liabilities
(after deducting all Cash and Cash Equivalents) to Market Value Adjusted Total
Assets (after deducting all Cash and Cash Equivalents) is [·]:[·];

 

(b)                                 the aggregate of all Cash and
Cash Equivalents is $[·];

 

(c)                                  the Interest Coverage Ratio is
[·]:[·];

 

(d)                                 the Market Value Adjusted Net
Worth of the Borrower’s Group is $[·]; and

 

(e)                                  the Book Net Worth of the
Borrower’s Group is $[·].

 

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

 

	
   

  	
   

  
	
  [·]

  	
   

  
	
  Chief Financial Officer of

  	
   

  
	
  Danaos Corporation

  	
   

  

 

64

 

SCHEDULE 5

MANDATORY COST FORMULA

 

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

 

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

 

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

 

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

 

Where:

 

E                                         is designed to
compensate Lenders for amounts payable under the Fees Rules and is
calculated by the Facility Agent as being the average of the most recent rates
of charge supplied by the Lenders to the Facility Agent pursuant to paragraph 6
below and expressed in pounds per £1,000,000.

 

5                                         For the purposes of this
Schedule:

 

(a)                                  “Special Deposits” has the meaning given to it from time to
time under or pursuant to the Bank of England Act 1998 or (as may be
appropriate) by the Bank of England;

 

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

 

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

 

(b)                                 “Participating Member State” means any member state of the
European Union that adopts or has adopted the euro as its lawful currency in
accordance with legislation of the European Union relating to European Monetary
Union; and

 

65

 

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

 

6                                         If requested by the Facility
Agent, each Lender lending from a lending office in the United Kingdom shall,
as soon as practicable after publication by the Financial Services Authority,
supply to the Facility Agent, the rate of charge payable by that Lender to the
Financial Services Authority pursuant to the Fees Rules in respect of the
relevant financial year of the Financial Services Authority (calculated for
this purpose by that Lender as being the average of the Fee Tariffs applicable
to that Lender for that financial year) and expressed in pounds per £1,000,000
of the Tariff Base of that Lender.

 

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

 

(a)                                  the jurisdiction of its
lending office; and

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

66

 

SCHEDULE 6

DESIGNATION NOTICE

 

To:          Credit Suisse

St.
Alban - Graben 1-3

P.O. Box,
CH-4002

Basel

Switzerland

 

[date]

 

Dear Sirs

 

Loan Agreement dated          January 2005
made between (i) ourselves as Borrower and (ii) yourselves as Lender
(the “Loan Agreement”)

 

We refer to:

 

1.                                       the Loan Agreement;

 

2.                                       the Master Agreement; and

 

3.                                       a Confirmation delivered
pursuant to the said Master Agreement dated [·].

 

In accordance with the terms of the Loan Agreement, we
hereby give you notice of the said Confirmation and hereby confirm that the
Transaction evidenced by it will be designated as a “Designated Transaction”
for the purposes of the Loan Agreement and the Finance Documents.

 

Yours faithfully,

 

 

	
   

  	
   

  
	
   

  	
   

  
	
  for
  and on behalf of

  	
   

  
	
  DANAOS CORPORATION

  

 

67

 

EXECUTION PAGE

 

BORROWER

 

	
  SIGNED by Mr. Iraklis Prokopakis

  	
  )

  	
   

  
	
  for and on
  behalf of

  	
  )

  	
   

  
	
  DANAOS
  CORPORATION

  	
  )

  	
  /s/ Iraklis
  Prokopakis

  
	
  in
  the presence of:

  	
  )

  	
   

  
	
   

  	
   

  	
   

  
	
  LENDER

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SIGNED by

  	
  )

  	
   

  
	
  for and on
  behalf of

  	
  )

  	
   

  
	
  CREDIT
  SUISSE

  	
  )

  	
  /s/ Credit Suisse

  
	
  in
  the presence of:

  	
  )

  	
   

  

 

68Exhibit
4.15

 

Date 30 May 2008

 

 

DANAOS CORPORATION

as Borrower

 

 

- and -

 

 

THE BANKS AND FINANCIAL INSTITUTIONS

listed in Schedule 1

as Lenders

 

 

- and -

 

 

DEUTSCHE BANK AG FILIALE DEUTSCHLANDGESCHÄFT

as Agent and

Security Trustee

 

 

- and -

 

 

DEUTSCHE BANK AG

as Swap Bank

 

 

LOAN AGREEMENT

 

 

relating to a senior secured term loan
facility of up to US$180,000,000 to provide pre and post-delivery finance for
the acquisition of three container carrier newbuildings having Builder’s Hull
Nos. HN 1670, HN 1671 and HN 1672 currently under construction at Samsung Heavy
Industries Co. Ltd.

 

 

WATSON FARLEY &
WILLIAMS

Piraeus

 

 

INDEX

 

	
  Clause

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  1

  	
  INTERPRETATION

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  
	
  2

  	
  FACILITY

  	
   

  	
  17

  
	
   

  	
   

  	
   

  	
   

  
	
  3

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

  	
   

  	
  17

  
	
   

  	
   

  	
   

  	
   

  
	
  4

  	
  DRAWDOWN

  	
   

  	
  18

  
	
   

  	
   

  	
   

  	
   

  
	
  5

  	
  INTEREST

  	
   

  	
  19

  
	
   

  	
   

  	
   

  	
   

  
	
  6

  	
  INTEREST PERIODS

  	
   

  	
  21

  
	
   

  	
   

  	
   

  	
   

  
	
  7

  	
  DEFAULT INTEREST

  	
   

  	
  22

  
	
   

  	
   

  	
   

  	
   

  
	
  8

  	
  REPAYMENT AND PREPAYMENT

  	
   

  	
  23

  
	
   

  	
   

  	
   

  	
   

  
	
  9

  	
  CONDITIONS PRECEDENT

  	
   

  	
  25

  
	
   

  	
   

  	
   

  	
   

  
	
  10

  	
  REPRESENTATIONS AND WARRANTIES

  	
   

  	
  26

  
	
   

  	
   

  	
   

  	
   

  
	
  11

  	
  GENERAL UNDERTAKINGS

  	
   

  	
  28

  
	
   

  	
   

  	
   

  	
   

  
	
  12

  	
  CORPORATE UNDERTAKINGS

  	
   

  	
  31

  
	
   

  	
   

  	
   

  	
   

  
	
  13

  	
  INSURANCE

  	
   

  	
  33

  
	
   

  	
   

  	
   

  	
   

  
	
  14

  	
  SHIP COVENANTS

  	
   

  	
  38

  
	
   

  	
   

  	
   

  	
   

  
	
  15

  	
  SECURITY COVER

  	
   

  	
  42

  
	
   

  	
   

  	
   

  	
   

  
	
  16

  	
  PAYMENTS AND CALCULATIONS

  	
   

  	
  43

  
	
   

  	
   

  	
   

  	
   

  
	
  17

  	
  APPLICATION OF RECEIPTS

  	
   

  	
  45

  
	
   

  	
   

  	
   

  	
   

  
	
  18

  	
  APPLICATION OF EARNINGS

  	
   

  	
  46

  
	
   

  	
   

  	
   

  	
   

  
	
  19

  	
  EVENTS OF DEFAULT

  	
   

  	
  47

  
	
   

  	
   

  	
   

  	
   

  
	
  20

  	
  FEES AND EXPENSES

  	
   

  	
  51

  
	
   

  	
   

  	
   

  	
   

  
	
  21

  	
  INDEMNITIES

  	
   

  	
  52

  
	
   

  	
   

  	
   

  	
   

  
	
  22

  	
  NO SET-OFF OR TAX DEDUCTION

  	
   

  	
  54

  
	
   

  	
   

  	
   

  	
   

  
	
  23

  	
  ILLEGALITY, ETC

  	
   

  	
  54

  
	
   

  	
   

  	
   

  	
   

  
	
  24

  	
  INCREASED COSTS

  	
   

  	
  54

  
	
   

  	
   

  	
   

  	
   

  
	
  25

  	
  SET-OFF

  	
   

  	
  56

  
	
   

  	
   

  	
   

  	
   

  
	
  26

  	
  TRANSFERS AND CHANGES IN LENDING
  OFFICES

  	
   

  	
  57

  

 

 

	
  27

  	
  VARIATIONS AND WAIVERS

  	
  59

  
	
   

  	
   

  	
   

  
	
  28

  	
  NOTICES

  	
  60

  
	
   

  	
   

  	
   

  
	
  29

  	
  SUPPLEMENTAL

  	
  62

  
	
   

  	
   

  	
   

  
	
  30

  	
  LAW AND JURISDICTION

  	
  62

  
	
   

  	
   

  	
   

  
	
  SCHEDULE 1 LENDERS AND
  COMMITMENTS

  	
  64

  
	
   

  	
   

  	
   

  
	
  SCHEDULE 2 DRAWDOWN NOTICE

  	
  65

  
	
   

  	
   

  	
   

  
	
  SCHEDULE 3 CONDITION PRECEDENT
  DOCUMENTS

  	
  66

  
	
   

  	
   

  	
   

  
	
  SCHEDULE 4 AMOUNT OF ADVANCES

  	
  69

  
	
   

  	
   

  	
   

  
	
  SCHEDULE 5 TRANSFER CERTIFICATE

  	
  74

  
	
   

  	
   

  	
   

  
	
  SCHEDULE 6 FORM OF
  COMPLIANCE CERTIFICATE

  	
  75

  
	
   

  	
   

  	
   

  
	
  EXECUTION
  PAGE

  	
  76

  

 

 

THIS LOAN AGREEMENT is made on                                2008

 

BETWEEN:

 

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

 

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

 

(3)                                  DEUTSCHE BANK
AG FILIALE DEUTSCHLANDGESCHÄFT acting through its office at Ludwig-Erhard-Straße 1,
D-20459, Hamburg, Germany as Agent and
Security Trustee.

 

(4)                                  DEUTSCHE BANK
AG acting
through its office at Theodor-Heuss-Allee 70, 60486 Frankfurt am Main, Germany
as Swap Bank.

 

WHEREAS

 

The Lenders have agreed to make available to the
Borrower a senior secured term loan facility of up to US$180,000,000 for the
purpose of part-financing the Contract Price of each Ship. The facility shall
be divided into three Tranches, Tranche A may be made available in up to two
Advances and each of Tranche B and Tranche C may be made available in up to
three Advances.

 

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

 

IT IS AGREED as follows:

 

1                                         INTERPRETATION

 

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

 

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

 

“Affected Lender”
has the meaning given in Clause 5.7;

 

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

 

“Agent”  means Deutsche Bank AG Filiale
Deutschlandgeschäft, in its capacity as agent for the Lenders under the Finance
Documents, or any successor of it in such capacity appointed under clause 5 of
the Agency and Trust Agreement;

 

“Applicable  Accounts”
means, in relation to a Compliance Date or an accounting period, the
consolidated balance sheets and related consolidated statements of stockholders’
equity, income and cash flows, together with related notes, of the Borrower’s
Group set out in the annual financial statements or quarterly financial
statements of the Borrower’s Group prepared as of the Compliance Date or, as
the case may be, the last day of the accounting period in question (and which
the Borrower is obliged to deliver to the Agent pursuant to Clause 11.6 and
which accounts are to be prepared in accordance with Clause 11.7);

 

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

 

 

other independent sale and purchase shipbroker as may be approved by the
Agent from time to time;

 

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

 

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

 

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

 

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

 

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

 

(a)                                  31 December 2008; or

 

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

 

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

 

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

 

“Bareboat
- equivalent Time Charter Income”  means,
in relation to each Ship, the aggregate charter hire due and payable to the
Owner of that Ship for the remaining unexpired term of the Charter or other
contract of employment relative to that Ship at the relevant time (excluding
any option periods (as that term is defined in Clause 15.4(a)) less the
aggregate operating expenses of that Ship as determined by the Borrower and
certified to the satisfaction of the Agent for the same period;

 

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

 

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

 

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

 

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

 

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

 

2

 

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

 

“Cash and
Cash Equivalents”  means the
aggregate of:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Charterparties”  means, together, Charterparty A,
Charterparty B and Charterparty C, and in the singular means any of them;

 

“Charterparty A”  means the time charterparty dated 17 May 2006
made or to be made between Bayview and ZIM as charterer in respect of Ship A
for a duration of at least 12 years at a net daily charter hire rate of at
least $22,785 on terms acceptable in all respects to the Lenders;

 

“Charterparty B”  means the time charterparty dated 17 May 2006
made or to be made between Channelview and ZIM as charterer in respect of Ship
B for a duration of at least 12 years at a net daily charter hire rate of at
least $22,785 on terms acceptable in all respects to the Lenders;

 

“Charterparty C” means the
time charterparty dated 17 May 2006 made or to be made between Balticsea
and ZIM as charterer in respect of Ship C for a duration of at least 12 years
at a net daily charter hire rate of at least $22,785 on terms acceptable in all
respects to the Lenders;

 

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

 

“Commitment”  means, in relation to a Lender, the amount
set opposite its name in Schedule 1, or, as the case may require, the amount
specified in the relevant Transfer Certificate, as that amount may be reduced,
cancelled or terminated in accordance with this 

 

3

 

Agreement (and “Total Commitments”
means the aggregate of the Commitments of all the Lenders);

 

“Compliance Date”  means 31 March, 30 June, 30 September and
31 December in each calendar year (or such other dates as of which the
Borrower prepares the consolidated financial statements which it is required to
deliver pursuant to Clause 11.6);

 

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

 

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

 

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

 

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

 

“Contribution”  means, in relation to a Lender, the part of
the Loan which is owing to that Lender;

 

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

 

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

 

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

 

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

 

(a)                        Financial Indebtedness of the debtor;

 

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

 

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

 

(d)                       deferred tax of the debtor; and

 

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

 

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

 

4

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Environmental Claim” 
means:

 

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

 

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

 

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

 

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

 

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

 

(b)                                 any incident in which Environmentally Sensitive
Material is released from a vessel other than a Ship and which involves a
collision between that Ship and such other vessel or some other incident of
navigation or operation, in either case, in connection with which that Ship is
actually or potentially liable to be arrested, 

 

5

 

attached, detained or injuncted and/or that
Ship or any Owner and/or any operator or manager is at fault or allegedly at
fault or otherwise liable to any legal or administrative action; or

 

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

 

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

 

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

 

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

 

“Finance Documents” 
means:

 

(a)                                  this Agreement;

 

(b)                                 the Master Agreement;

 

(c)                                  the Guarantees;

 

(d)                                 the Agency and Trust Agreement;

 

(e)                                  the Master Agreement Assignment;

 

(f)                                    the Predelivery Security Assignments;

 

(g)                                 the General Assignments;

 

(h)                                 the Mortgages;

 

(i)                                     any Deeds of Covenants;

 

(j)                                     the Danaos Earnings Account Pledge;

 

(k)                                  the Charterparty Assignments;

 

(l)                                     the Approved Manager’s Undertakings; and

 

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

 

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

 

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

 

6

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Insurances”  means, in
relation to a Ship:

 

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

 

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

 

“Interest Coverage Ratio”  means, in relation to a Compliance Date or an
accounting period, the ratio of (a) EBITDA of the Borrower’s Group to (b) the
Net Interest Expenses (on a trailing 12-month basis);

 

“Interest Period”  means in relation to an Advance, a period
determined in accordance with Clause 6;

 

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

 

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

 

7

 

Service on the
second Business Day prior to the commencement of the applicable period; or

 

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

 

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

 

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

 

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

 

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

 

“ISM Code Documentation”  includes:

 

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

 

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

 

(c)                                  any other documents which are prepared or
which are otherwise relevant to establish and maintain the Ships’ or the Owners’
compliance with the ISM Code which the Agent may require;

 

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

 

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

 

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

 

“Lender”  means, subject to Clause 26.6:

 

(a)                                  a bank or financial institution listed in
Schedule 1 and acting through its branch indicated in Schedule 1 (or through
another branch notified to the Agent under Clause 26.14) unless it has
delivered a Transfer Certificate or Certificates covering the entire amounts of
its Commitment and its Contribution; and

 

8

 

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

 

(and includes their respective
successors);

 

“LIBOR” 
means, for an Interest Period:

 

(a)                                  the rate per annum equal to
the offered quotation for deposits in Dollars for a period equal to, or as near
as possible equal to, the relevant Interest Period which appears on Reuters BBA
Page LIBOR 01 at or about 11.00 a.m. (London time) on the second
Business Day prior to the commencement of that Interest Period (and, for the
purposes of this Agreement, “Reuters BBA Page LIBOR 01” means the display
designated as “Reuters BBA Page LIBOR 01” on the Reuters Money News
Service or such other page as may replace Reuters BBA Page LIBOR 01
on that service for the purpose of displaying rates comparable to that rate or
on such other service as may be nominated by the British Bankers’ Association
as the information vendor for the purpose of displaying British Bankers’
Association Interest Settlement Rates for Dollars); or

 

(b)                                 if no rate is quoted on
Reuters BBA Page LIBOR 01 or the rate quoted on Reuters BBA Page LIBOR
01 does not represent the cost of funding of any Lender, the rate per annum
determined by the Agent to be the arithmetic mean (rounded upwards, if
necessary, to the nearest one-sixteenth of one per cent.) of the rates per
annum notified to the Agent by each Lender as the rate at which deposits in
Dollars are offered to the Lender by leading banks in the London Interbank
Market at the Lender’s request at or about 11.00 a.m. (London time) on the
second Business Day prior to the commencement of that Interest Period for a
period equal to that Interest Period and for delivery on the first Business Day
of it;

 

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

 

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

 

“Majority Lenders”  means:

 

(a)                                  at any time when no Advances
are outstanding, Lenders whose Commitments total 67 per cent. of the Total
Commitments; and

 

(b)                                 at any other time, Lenders
whose Contributions total 67 per cent. of the Loan;

 

“Margin” 
means 0.685 per cent. per annum;

 

“Market Value” means, in respect of each Ship and each
Fleet Vessel, the market value thereof determined from time to time in
accordance with Clause 15.3 (or as the case may be Clause 15.4);

 

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

 

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

 

9

 

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

 

“Master Agreement
Assignment”  means the
assignment of the Master Agreement executed or to be executed by the Borrower,
in such form as the Lenders may approve or require;

 

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

 

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

 

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

 

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

 

“Owners” 
means together Balticsea, Bayview and Channelview, and in the singular
means any of them;

 

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

 

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

 

(a)                                  England and Wales;

 

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

 

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

 

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

 

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

 

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

 

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

 

10

 

to the determination of the Majority Lenders) and/or the satisfaction of
any other condition, would constitute an Event of Default;

 

“Predelivery Security Assignment”  means, in relation to an Owner, an assignment
of the Shipbuilding Contract and of the Refund Guarantee relevant to that
Owner, to be given by that Owner in favour of the Security Trustee, in such
form as the Lenders may approve or require;

 

“Quotation Date”
means, in relation to any Interest Period (or any other period for which an
interest rate is to be determined under any provision of a Finance Document),
the day on which quotations would ordinarily be given by leading banks in the
London Interbank Market for deposits in the currency in relation to which such
rate is to be determined for delivery on the first day of that Interest Period
or other period;

 

“Refund Guarantee A”  means the irrevocable and unconditional
refund guarantee issued or to be issued by the Refund Guarantor in favour of
Bayview in relation to each stage payment made or to be made by Bayview to the
Builder pursuant to the Shipbuilding Contract A prior to the relevant Delivery
Date;

 

“Refund Guarantee B”  means the irrevocable and unconditional
refund guarantee issued or to be issued by the Refund Guarantor in favour of
Channelview in relation to each stage payment made or to be made by Channelview
to the Builder pursuant to the Shipbuilding Contract B prior to the relevant Delivery
Date;

 

“Refund Guarantee C”  means the irrevocable and unconditional
refund guarantee issued or to be issued by the Refund Guarantor in favour of
Balticsea in relation to each stage payment made or to be made by Balticsea to
the Builder pursuant to the Shipbuilding Contract C prior to the relevant
Delivery Date;

 

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

 

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

 

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

 

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

 

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

 

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

 

“Security Cover Ratio”  means the ratio (expressed as a percentage)
which is determined at any time by comparing (i) the aggregate of the
amounts referred to in paragraphs (a) and (b) of Clause 15.1 to (ii) the
aggregate of the Loan and the Swap Exposure;

 

“Security Interest”  means:

 

11

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(c)                                  neither the Borrower nor any
Security Party has any future or contingent liability under Clause 20, 21 or 22
below or any other provision of this Agreement or another Finance Document; and

 

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

 

“Security Trustee”  means Deutsche Bank AG Filiale
Deutschlandgeschäft, in its capacity as security trustee for the Lenders and
the Swap Bank under the Finance Documents, or any successor of it in such
capacity appointed under clause 5 of the Agency and Trust Agreement;

 

“Ship  A”
means the 4,250 TEU container carrier newbuilding currently being constructed
by the Builder and having Builder’s Hull No. 1670 to be purchased by
Bayview pursuant to Shipbuilding Contract A and registered in the ownership of
Bayview under an Approved Flag with the name “ZIM RIO GRANDE”;

 

“Ship B”
means the 4,250 TEU container carrier newbuilding currently being constructed
by the Builder and having Builder’s Hull No. 1671 to be purchased by
Channelview pursuant to Shipbuilding Contract B and registered in the ownership
of Channelview under an Approved Flag with the name “ZIM SAO PAOLO”;

 

“Ship C”
means the 4,250 TEU container carrier newbuilding currently being constructed
by the Builder and having Builder’s Hull No. 1672 to be purchased by
Balticsea pursuant to Shipbuilding Contract C and registered in the ownership
of Balticsea under an Approved Flag with the name “ZIM KINGSTON”;

 

12

 

“Shipbuilding Contract A”  means the shipbuilding contract dated 28 March 2006
and made between the Builder and Bayview for the construction by the Builder of
Ship A and its purchase by Bayview, as supplemented from time to time;

 

“Shipbuilding Contract B”  means the shipbuilding contract dated 28 March 2006
and made between the Builder and Channelview, for the construction by the
Builder of Ship B and its purchase by Channelview, as supplemented from time to
time;

 

“Shipbuilding Contract C”  means the shipbuilding contract dated 28 March 2006
and made between the Builder and Balticsea, for the construction by the Builder
of Ship C and its purchase by Balticsea, as supplemented from time to time;

 

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

 

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

 

“Swap
Bank” means Deutsche Bank AG, acting through its office at
Theodor-Heuss-Allee 70, 60486 Frankfurt am Main, Germany;

 

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

 

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

 

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

 

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

 

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

 

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

 

(c)                                  any condemnation of the Ship
by any tribunal or by any person or person claiming to be a tribunal;

 

(d)                                 any arrest, capture, seizure
or detention of the Ship (including any hijacking or theft) unless she is
within 30 days redelivered to the full control of the Owner owning the Ship;

 

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

 

13

 

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

 

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

 

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

 

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

 

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

 

“Tranche A”  means the
aggregate of the Advances to be made available by the Lenders to the Borrower
to assist Bayview in its acquisition of Ship A or, as the context may require,
the aggregate principal amount thereof outstanding at the relevant time under
this Agreement;

 

“Tranche B”  means the
aggregate of the Advances to be made available by the Lenders to the Borrower
to assist Channelview in its acquisition of Ship B or, as the context may
require, the aggregate principal amount thereof outstanding at the relevant
time under this Agreement;

 

“Tranche C”  means the
aggregate of the Advances to be made available by the Lenders to the Borrower
to assist Balticsea in its acquisition of Ship C or, as the context may
require, the aggregate principal amount thereof outstanding at the relevant
time under this Agreement;

 

“Tranches”  means,
together, Tranche A, Tranche B and Tranche C, and in the singular means any of
them;

 

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

 

“Transfer Certificate”  has the meaning given in Clause 26.2;

 

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

 

“ZIM”  means Zim Israel Intergrated Shipping
Services Ltd., a company having its principal office at 7-9 Pal Yam Avenue, P.O. Box
1723, Haifa, 31016, Israel.

 

1.2                               Construction
of certain terms.  In this
Agreement:

 

“approved”  means, for
the purpose of Clause 13, approved in writing by the Agent, with the
authorisation of the Majority Lenders;

 

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

 

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

 

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

 

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

 

14

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“obligatory insurances” 
means, in relation to a Ship, all insurances effected, or which the
Owner owning the Ship is obliged to effect, under Clause 13 below or any other
provision of this Agreement or another Finance Document;

 

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

 

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

 

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

 

“protection and indemnity
risks” means the usual risks and legal liabilities to third parties
covered under the terms and conditions of club rules as updated and/or
amended from time to time by a protection and indemnity club, which is a member
of the international group of protection and indemnity associations (IGA)
including, but not limited to, pollution, passenger and crew claims, freight,
demurrage and detention risks and the proportion (if any) of any sums payable
to any other person or persons in case of collision which are not recoverable
under the hull and machinery policies;

 

“regulation” includes any regulation, rule, official
directive, request or guideline (either having the force of law or compliance
with which is reasonable in the ordinary course of business of the party
concerned) of any governmental, intergovernmental or supranational body,
agency, department or regulatory, self-regulatory or other authority or
organisation;

 

“subsidiary”  has the
meaning given in Clause 1.4;

 

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

 

15

 

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

 

“war risks”
means the insurances of all risks according to Institute War and Strikes
Clauses (Hulls-Time) (1/10/83) or (1/11/95), or equivalent conditions as any of
the aforesaid is updated and/or amended from time to time including, but not
limited to, mines, war risks P&I, terrorism, blocking and trapping, missing
vessels, confiscation, deprivation, political risks and all risks excluded from
the standard form of English or other marine policies by the free of capture
and seizure (F.C. & S.) clause.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

1.5                               General
Interpretation.

 

(a)                                  In this Agreement:

 

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

 

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

 

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

 

16

 

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

 

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

 

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

 

2                                         FACILITY

 

2.1                               Amount of
facility.  Subject to the other provisions of this
Agreement, the Lenders shall make available to the Borrower a senior secured
term loan facility of up to $180,000,000 in three Tranches.  Each Tranche shall be in the amount of up to
$60,000,000.

 

Tranche A may be drawn in up to two Advances and each
of Tranche B and Tranche C may be drawn in up to three Advances, each in the
maximum amount specified in Schedule 4 of this Agreement.

 

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

 

2.3                               Transactions
under the Master Agreement.  The Borrower shall provide the
Swap Bank with a right of first refusal at any time to conclude Transactions
for the purpose of hedging the Borrower’s interest payment obligations under
this Agreement.  The Borrower agrees that
signature of a Master Agreement does not commit either the Swap Bank to
conclude Transactions, or even to offer terms for doing so, but does provide a
contractual framework within which Transactions may be concluded and secured,
assuming that, in relation to each proposed Transaction, mutually acceptable
terms can then be agreed at the relevant time.

 

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

 

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

 

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

 

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

 

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

 

3.2                               Proceedings
by individual Lender or Swap Bank. 
However, without the prior consent of the Majority Lenders, no Lender
and the Swap Bank may bring proceedings in respect of:

 

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

 

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

 

17

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

4                                         DRAWDOWN

 

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

 

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

 

(a)                                  a Drawdown Date has to be a
Business Day during the Availability Period;

 

(b)                                 each Advance shall:

 

(i)                                     subject to Clause 4.2(c), be
in an amount that does not exceed the maximum amount of that Advance specified
in Schedule 4; and

 

18

 

(ii)                                  be used to part-finance the
relevant instalment payable to the Builder pursuant to the relevant
Shipbuilding Contract as are specified in Schedule 4;

 

(c)                                  the aggregate amount of the
Advances in respect of a Tranche shall not exceed the maximum amount of that
Tranche as set out in Clause 2.1; and

 

(d)                                 the Borrower shall demonstrate
to the satisfaction of the Lenders the availability to it of funds in an amount
equal to the amount by which the instalment due to the Builder pursuant to the
relevant Shipbuilding Contract on the relevant Drawdown Date exceeds the
Advance to be made available to the Borrower on that Drawdown Date.

 

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

 

4.4                               Notification
to Lenders of receipt of Drawdown Notice.  The
Agent shall promptly notify the Lenders it has received a Drawdown Notice and
the Agent shall inform each Lender of:

 

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

 

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

 

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

 

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

 

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

 

4.7                               Disbursement
of Advance.  Subject to the provisions of
this Agreement, the Agent shall, on and with value on each Drawdown Date, pay
to the Borrower the amounts which the Agent receives from the Lenders under
Clause 4.6 and that payment to the Borrower shall be made to the account of the
Builder which the Borrower specifies in the Drawdown Notice.

 

4.8                               Disbursement
of Advance to third party.   The payment
by the Agent under Clause 4.7 to the Builder shall constitute the making of the
Advance and the Borrower shall thereupon become indebted, as principal and
direct obligor, to the Lenders in an amount equal to that Advance.

 

4.9                               Consolidation
of Tranches.   On the date falling 3 months after the Drawdown
Date of the final Tranche, all Tranches shall be consolidated into a single
Tranche.

 

5                                         INTEREST

 

5.1                               Payment
of normal interest.  Subject to the
provisions of this Agreement, interest on each Advance or (following the
consolidation of the Tranches pursuant to Clause 4.9) the Loan in respect of
each Interest Period shall be paid by the Borrower on the last day of that
Interest Period.

 

5.2                               Normal
rate of interest.  Subject to the
provisions of this Agreement, the rate of interest on each Advance or, as the
case may be, the Loan in respect of an Interest Period shall be the aggregate
of (a) the Margin and (b) LIBOR for that Interest Period.

 

19

 

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

 

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

 

(a)                                  each rate of interest; and

 

(b)                                 the duration of each Interest
Period;

 

as soon as reasonably practicable after
each is determined.

 

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

 

5.6                               Absence
of quotations by Lenders.  If any Lender
fails to supply a quotation when required, the Agent shall determine LIBOR on
the basis of the quotations supplied by the other Lender or Lenders; but if at
least half of the total number of Lenders at any time fail to provide a
quotation, the relevant rate of interest shall be set in accordance with the
following provisions of this Clause 5.

 

5.7                               Market
disruption.  The following provisions of
this Clause 5 apply if:

 

(a)                                  no rate is quoted on the
appropriate page of the Reuters BBA Page LIBOR 01 and at least half
of the total number of Lenders at any time do not, before 1.00 p.m.
(London time) on the Quotation Date for an Interest Period, provide quotations
to the Agent in order to fix LIBOR; or

 

(b)                                 at least 1 Business Day before
the start of an Interest Period, any Lender notifies the Agent that LIBOR fixed
by the Agent would not accurately reflect the cost to that Lender of funding
its respective Contributions (or any part of them) during the Interest Period in
the London Interbank Market at or about 11.00 a.m. (London time) on the
Quotation Date for an Interest Period; or

 

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

 

5.8                               Notification
of market disruption.  The Agent
shall promptly notify the Borrower and each of the Lenders stating the
circumstances falling within Clause 5.7 which have caused its notice to be
given.

 

5.9                               Suspension
of drawdown.  If the Agent’s notice under
Clause 5.8 is served on the Borrower before an Advance is made:

 

(a)                                  in a case falling within
paragraphs (a) or (b) of Clause 5.7, the Lenders’ obligations to
make, and the Borrower’s obligation to borrow, that Advance; and

 

(b)                                 in a case falling within
paragraph (c) of Clause 5.7, the Affected Lender’s obligation to
participate in the Advance;

 

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

 

20

 

5.10                        Negotiation
of alternative rate of interest. If the Agent’s notice under Clause 5.8 is
served on the Borrower after an Advance is made, the Borrower, the Agent and
the Lenders or (as the case may be) the Affected Lender shall use reasonable
endeavours to agree, within the 30 days after the date on which the Agent
serves its notice under Clause 5.8 (the “Negotiation Period”),
an alternative interest rate or (as the case may be) an alternative basis for
the Lenders or (as the case may be) the Affected Lender to fund or continue to
fund their or its Contribution during the Interest Period concerned.

 

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

 

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

 

5.13                        Notice of
prepayment.  If the Borrower does not agree
with an interest rate set by the Agent under Clause 5.12, the Borrower may give
the Agent not less than 15 Business Days’ notice of its intention to prepay.

 

5.14                        Prepayment;
termination of Commitments.  A notice
under Clause 5.13 shall be irrevocable if served 3 Business Days before
payment; the Agent shall promptly notify the Lenders or (as the case may
require) the Affected Lender of the Borrower’s notice of intended prepayment;
and:

 

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

 

(b)                                 on the date specified in its
notice of intended prepayment, the Borrower shall prepay (without premium or
penalty) the Loan or, as the case may be, the Affected Lender’s Contribution,
together with accrued interest thereon at the applicable rate plus the Margin
and, if the prepayment or repayment is not made on the last Business Day of the
interest period set by the Agent, any sums payable under Clause 21.1(b).

 

5.15                        Application
of prepayment.  The provisions of Clause 8
shall apply in relation to the prepayment.

 

6                                         INTEREST
PERIODS

 

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

 

6.2                               Duration
of normal Interest Periods.  Subject to
Clauses 6.3 and 6.4, each Interest Period in respect of each Advance shall be:

 

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

 

(b)                                 in the case of the first
Interest Period applicable to the second and any subsequent Advance of a
Tranche, a period ending on the last day of the then current Interest Period 

 

21

 

applicable to such Tranche, whereupon all
of the Advances in respect of such Tranche shall be consolidated and treated as
a single advance;

 

(c)                                  in the case of the first
Interest Period applicable to the second and subsequent Tranche, a period
ending on the last day of the then current Interest Period applicable to the
first Tranche, whereupon all of the Tranches shall be consolidated and treated
as a single tranche;

 

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

 

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

 

6.3                               Duration
of Interest Periods for repayment instalments.  In
respect of an amount due to be repaid under Clause 8 on a particular Repayment
Date, an Interest Period in relation to the relevant Tranche shall end on that
Repayment Date.

 

6.4                               Non-availability
of matching deposits for Interest Period selected.  If, after the Borrower has selected (and the
Lenders have agreed) an Interest Period longer than 3 months, any Lender
notifies the Agent by 11.00 a.m. (Hamburg time) on the second Business Day
before the commencement of the Interest Period that it is not satisfied that
deposits in Dollars for a period equal to the Interest Period will be available
to it in the London Interbank Market when the Interest Period commences, the
Interest Period shall be of 6 months.

 

7                                         DEFAULT
INTEREST

 

7.1                               Payment
of default interest on overdue amounts.  The
Borrower shall pay interest in accordance with the following provisions of this
Clause 7 on any amount payable by the Borrower under any Finance Document which
the Agent, the Security Trustee or any other designated payee, does not receive
on or before the relevant date, that is:

 

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

 

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

 

(c)                                  if such amount has become
immediately due and payable under Clause 19.4, the date on which it became
immediately due and payable.

 

7.2                               Default
rate of interest.  Interest shall
accrue on an overdue amount from (and including) the relevant date until the
date of actual payment (as well after as before judgment) at the rate per annum
determined by the Agent to be 2 per cent. above:

 

(a)                                  in the case of an overdue
amount of principal, the higher of the rates set out at paragraphs (a) and
(b) of Clause 7.3; or

 

(b)                                 in the case of any other
overdue amount, the rate set out at paragraph (b) of Clause 7.3.

 

7.3                               Calculation
of default rate of interest.  The rates
referred to in Clause 7.2 are:

 

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

 

(b)                                 the Margin plus, in respect of
successive periods of any duration (including at call) up to 3 months which the
Agent may select from time to time:

 

22

 

(i)                                     LIBOR; or

 

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

 

7.4                               Notification
of interest periods and default rates.  The
Agent shall promptly notify the Lenders and the Borrower of each interest rate
determined by the Agent under Clause 7.3 and of each period selected by the
Agent for the purposes of paragraph (b) of that Clause; but this shall not
be taken to imply that the Borrower is liable to pay such interest only with
effect from the date of the Agent’s notification.

 

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

 

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

 

7.7                               Application
to Master Agreement. For the avoidance of doubt this Clause 7 does not
apply to any amount payable under the Master Agreement in respect of any
continuing Transaction as to which section 9(h)(i)(1) (Interest on
Defaulted Payments) of the Master Agreement shall apply.

 

8                                         REPAYMENT
AND PREPAYMENT

 

8.1                               Amount of
repayment instalments.  The Borrower
shall repay the Loan by 32 equal consecutive quarterly instalments of
$2,500,000 each and by a balloon instalment of $100,000,000 (the “Balloon Instalment”)  Provided  that if the
amount of the Loan drawndown hereunder is less than $180,000,000, each of the
repayment instalments and the Balloon Instalment shall be reduced pro rata by
an amount in aggregate equal to the undrawn balance.

 

8.2                               Repayment
Dates.  The first instalment shall be repaid on 31 December 2010
and the last instalment together with the Balloon Instalment shall be paid on
the earlier of (i) the date falling on the tenth anniversary of the final
Drawdown Date and (ii) 31 May 2019.

 

8.3                               Final
Repayment Date.  On the final
Repayment Date, the Borrower shall additionally pay to the Agent for the
account of the Creditor Parties all other sums then accrued or owing under any
Finance Document.

 

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

 

8.5                               Conditions
for voluntary prepayment.  The conditions
referred to in Clause 8.4 are that:

 

(a)                                  a partial prepayment shall be
$5,000,000 or a multiple thereof;

 

(b)                                 the Agent has received from
the Borrower at least 3 Business Days’ prior written notice specifying the
amount to be prepaid and the date on which the prepayment is to be made; and

 

23

 

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

 

8.6                               Effect of
notice of prepayment.  A prepayment
notice may not be withdrawn or amended without the consent of the Agent, given
with the authorisation of the Majority Lenders, and the amount specified in the
prepayment notice shall become due and payable by the Borrower on the date for
prepayment specified in the prepayment notice.

 

8.7                               Mandatory
prepayment.  The Borrower shall be obliged
to prepay the Relevant Tranche:

 

(a)                                  if a Ship is sold or becomes a
Total Loss:

 

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

 

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

 

(b)                                 if any of the following
occurs, on demand by the Agent:

 

(i)                                     either a Shipbuilding Contract
or a Refund Guarantee is cancelled, terminated, rescinded or suspended or
otherwise ceases to remain in full force and effect for any reason; or

 

(ii)                                  a Shipbuilding Contract is
materially amended or varied without the prior written consent of the Agent except
for any such amendment or variation as is permitted by this Agreement or any
other relevant Finance Document; or

 

(iii)                               a Ship has not for any reason
been delivered to, and accepted by, the relevant Owner under the Shipbuilding
Contract to which it is a party 210 days after the scheduled delivery date
specified in Article VII of the relevant Shipbuilding Contract.

 

In this Clause 8.7, “Relevant
Tranche” means, in relation to a Ship, the Tranche which has been
made available hereunder to finance that Ship.

 

8.8                               Amounts
payable on prepayment.  A prepayment
shall be made together with accrued interest (and any other amount payable
under Clause 21 below or otherwise) in respect of the amount prepaid and, if
the prepayment is not made on the last day of an Interest Period together with
any sums payable under Clause 21.1(b) but without premium or penalty.

 

8.9                               Application
of partial prepayment.  Each partial
prepayment shall if made pursuant to Clause 8.4 be applied in order of maturity
first against the repayment instalments outstanding at that time and thereafter
the Balloon Instalment, unless otherwise agreed by the Lenders.

 

8.10                        No
reborrowing.  No amount prepaid may be
reborrowed.

 

8.11                        Unwinding of
Transactions.  On or prior to any repayment or
prepayment under this Clause 8 or any other provision of this Agreement, the
Borrower shall, unless otherwise agreed by the Lenders, wholly or partially
reverse, offset, unwind or otherwise terminate one or more of the continuing
Transactions so that the notional principal amount of the continuing
Transactions thereafter remaining does not and will not in the future exceed
the amount of the Loan as reducing from time to time thereafter pursuant to
Clause 8.1.

 

24

 

9                                         CONDITIONS
PRECEDENT

 

9.1                               Documents,
fees and no default.  Each Lender’s
obligation to make an Advance is subject to the following conditions precedent:

 

(a)                                  that on or before the date of
this Agreement, the Agent receives:

 

(i)                                     the documents described in Part A
of Schedule 3 in a form and substance satisfactory to the Agent and its
lawyers; and

 

(ii)                                  the arrangement fee referred
to in Clause 20.1;

 

(b)                                 that, on or before the service
of the Drawdown Notice in respect of the first Advance of Tranche A, the Agent
receives the documents described in Part B of Schedule 3 in form and
substance satisfactory to it and its lawyers;

 

(c)                                  that, on or before the service
of the Drawdown Notice in respect of the first Advance of Tranches B and C, the
Agent receives the documents described in Part C of Schedule 3 in form and
substance satisfactory to it and its lawyers;

 

(d)                                 that, on or before the service
of the Drawdown Notice in respect of the second Advance of Tranche B and C, the
Agent receives the documents described in Part D of Schedule 3 in form and
substance satisfactory to it and its lawyers;

 

(e)                                  that, on or before the service
of the Drawdown Notice in respect of the final Advance of each Tranche, the
Agent receives the documents described in Part E of Schedule 3 in form and
substance satisfactory to it and its lawyers;

 

(f)                                    that, on or before the service
of the Drawdown Notice in respect of the final Advance to be made pursuant to
the terms of this Agreement, the Agent receives any accrued (but unpaid)
commitment fee payable pursuant to Clause 20.1(b) and has received payment
of the expenses referred to in Clause 20.2;

 

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

 

(i)                                     no Event of Default or
Potential Event of Default has occurred and is continuing or would result from
the borrowing of the relevant Advance; and

 

(ii)                                  the representations and
warranties in Clause 10 and those of the Borrower or any Security Party which
are set out in the other Finance Documents would be true and not misleading if
repeated on each of those dates with reference to the circumstances then
existing; and

 

(iii)                               none of the circumstances
contemplated by Clause 5.7 has occurred and is continuing;

 

(iv)                              there has been no material
adverse change in the financial position, state of affairs or prospects of the
Borrower or the Owners in the light of which the Agent considers that there is
a significant risk that the Borrower or any Security Party is, or will later
become, unable to discharge its liabilities under the Finance Documents to
which it is a party as they fall due; and

 

(h)                                 that, if the ratio set out in
Clause 15.1 were applied immediately following the making of an Advance which
will be used in financing (inter alia) the delivery instalment payable pursuant
the Shipbuilding Contract for a Ship, the Borrower would not be obliged to
provide additional security or prepay part of the Loan under that Clause; and

 

25

 

(i)                                     that the Agent has received,
and found to be acceptable to it, any further opinions, consents, agreements
and documents in connection with the Finance Documents which the Agent may,
with the authorisation of the Majority Lenders, may request by notice to the
Borrower prior to the relevant Drawdown Date.

 

9.2                               Waiver of
conditions precedent.  If the
Majority Lenders at their discretion, permit an Advance to be borrowed before
certain of the conditions referred to in Clause 9.1 are satisfied, the Borrower
shall ensure that those conditions are satisfied within 5 Business Days after
the relevant Drawdown Date (or such longer period as the Agent, with the
authorisation of the Majority Lenders specifies).

 

10                                  REPRESENTATIONS
AND WARRANTIES

 

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

 

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

 

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

 

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

 

(a)                                  to execute its Shipbuilding
Contract, to purchase and pay for its Ship under the relevant Shipbuilding
Contract and register its Ship in its name under an Approved Flag;

 

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

 

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

 

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

 

10.5                        Consents
in force.  All the consents referred to in Clause 10.4
remain in force and nothing has occurred which makes any of them liable to
revocation.

 

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

 

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

 

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

 

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

 

10.7                        No third
party Security Interests.  Without
limiting the generality of Clause 10.6, at the time of the execution and
delivery of each Finance Document to which the Borrower is a party:

 

26

 

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

 

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

 

10.8                        No
conflicts.  The execution by the Borrower
of each Finance Document to which it is a party, the borrowing by the Borrower
of the Loan, and its compliance with each Finance Document to which it is a
party will not involve or lead to a contravention of:

 

(a)                                  any law or regulation; or

 

(b)                                 the constitutional documents
of the Borrower; or

 

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

 

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

 

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

 

10.11                 Information.  All information which has been provided in
writing by or on behalf of the Borrower or any Security Party to any Creditor
Party in connection with any Finance Document satisfied the requirements of
Clause 11.5.

 

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

 

10.13                 Validity
and completeness of Shipbuilding Contracts.

 

(a)                                  The copies of the Shipbuilding
Contracts delivered to the Agent before the date of this Agreement are true and
complete copies;

 

(b)                                 each Shipbuilding Contract
constitutes valid, binding and enforceable obligations of the Builder and the
relevant Owner respectively in accordance with its terms; and

 

(c)                                  other than those amendments
and additions to any of the Shipbuilding Contracts disclosed to the Agent
before the date of this Agreement, no amendments or additions to any of the
Shipbuilding Contracts have been agreed nor has any Owner or the Builder waived
any of their respective rights under the Shipbuilding Contracts.

 

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

 

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

 

27

 

10.16                 Compliance
with certain undertakings.  At the date
of this Agreement, the Borrower is in compliance with Clauses 11.2, 11.4, 11.9
and 11.12.

 

10.17                 ISM Code
and ISPS Code compliance.  All
requirements of the ISM Code and the ISPS Code as they relate to the Borrower,
any Owner, the Approved Manager, ZIM and any Ship have been complied with.

 

10.18                 No money
laundering.  Without prejudice to the
generality of Clause 4.3, in relation to the borrowing by the Borrower of the
Loan, the performance and discharge of its obligations and liabilities under
the Finance Documents, and the transactions and other arrangements effected or
contemplated by the Finance Documents to which the Borrower is a party, the
Borrower confirms that it is acting for its own account and that the foregoing will
not involve or lead to contravention of any law, official requirement or other
regulatory measure or procedure implemented to combat “money laundering” (as
defined in Article 1 of the Directive (91/308/EEC) of the Council of the
European Communities).

 

11                                  GENERAL
UNDERTAKINGS

 

11.1                        General.  The Borrower undertakes with each Creditor
Party to comply with the following provisions of this Clause 11 at all times
during the Security Period except as the Agent may, with the authorisation of
the Majority Lenders, otherwise permit.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

if such transfer, lease or disposal results
in a reduction of the Market Value Adjusted Total Assets by at least 50 per
cent. (in all other circumstances the Borrower shall be deemed to have complied
with its obligations under this Clause 11.3 by providing the Agent with prior
written notice of its decision to transfer, lease or otherwise dispose of its
assets as aforesaid).

 

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

 

28

 

(a)                                  under the Finance Documents
and the Shipbuilding Contract to which each is a party;

 

(b)                                 under the Master Agreement;

 

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

 

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

 

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

 

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

 

(a)                                  as soon as possible, but in no
event later than 180 days after the end of each Financial Year of the Borrower
(commencing with the Financial Year ended 31 December 2007), the audited
consolidated accounts of the Borrower’s Group for that Financial Year and the
audited individual accounts of the Borrower for that Financial Year; and

 

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

 

The Agent will consider that the Borrower has
fulfilled its obligations under this Clause 11.6 if the Borrower has filed its
accounts with the Securities Exchange Commission (SEC) within the time periods
specified in this Clause 11.6.

 

11.7                        Form of
financial statements.  All accounts
(audited and unaudited) delivered under Clause 11.6 will:

 

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

 

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

 

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

 

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

 

(a)                                  to the Borrower’s creditors
generally;

 

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

 

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

 

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

 

29

 

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

 

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

 

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

 

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

 

11.10                 Maintenance
of Security Interests. The Borrower will:

 

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

 

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

 

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

 

11.12                 Principal
place of business.  The Borrower
will maintain its place of business, and keep its corporate documents and
records, at the address stated at Clause 28.2(a) and the Borrower will not
establish, nor do anything as a result of which it would be deemed to have, a
place of business in any other country.

 

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

 

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

 

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

 

The
Agent may serve requests under this Clause 11.13 from time to time;  this Clause 11.13 does not affect the Borrower’s
obligations under Clause 11.14.

 

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

 

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

 

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

 

30

 

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

 

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

 

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

 

(b)                                 any other matter relevant to,
or to any provision of, a Finance Document, which in each case may be requested
by the Agent or the Security Trustee (through the Agent) by any Lender at any
time.

 

11.16                 No
amendment to the Shipbuilding Contracts.  The
Borrower will ensure that no Owner shall agree to any material amendment or
supplement to, or waive or fail to enforce, a Shipbuilding Contract to which
such Owner is a party to or any of its provisions.

 

11.17                 Purchase of
further tonnage.  The Borrower
shall procure that no Owner shall purchase any vessel other than the Ships.

 

11.18                 “Know your
customer” requirements.  The Borrower
shall provide to the Agent such documentation and evidence as may be required
by any Lender from time to time to comply with applicable law and regulations
and its own internal guidelines in relation to the opening of bank accounts and
the identification of its customers.

 

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

 

11.20                 Charterparties.  If any of the Charterparties is terminated
or becomes invalid or unenforceable or otherwise ceases to be in full force and
effect for any reason prior to its stated termination date, the Borrower shall
procure that the relevant Charterparty is replaced within 30 days (or 60 days
if the relevant Ship may not be chartered due to a defect or is drydocked or is
being repaired) by another charter having similar characteristics to the
relevant Charterparty with a charterer and in a form and on terms in all
respects acceptable to the Lenders.

 

12                                  CORPORATE
UNDERTAKINGS

 

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

 

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

 

12.3                        Negative
undertakings. The Borrower will not:

 

(a)                                  change the nature of its
business; or

 

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

 

31

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

12.5                        Financial
Covenants.  The Borrower shall ensure that
at all times:

 

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

 

(b)                                 the aggregate of all Cash and
Cash Equivalents shall be not less than the higher of $500,000 per Fleet Vessel
and 3 per cent. of the Consolidated Debt;

 

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

 

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

 

12.6                        Compliance
check.  Compliance with the undertakings contained in
Clause 12.5 shall be determined in each Financial Year:

 

(a)                                  at the time the Agent receives
the Applicable Accounts of the Borrower’s Group for the first 6-month period of
the Borrower’s Group in each Financial Year (pursuant to Clause 11.6(b)), by
reference to the unaudited Applicable Accounts for the first two financial 

 

32

 

quarters in the relevant Financial Year
and, in the case of the second 6-month period, by reference to the audited
Applicable Accounts of the Borrower’s Group in each Financial Year;

 

(b)                                 at any other time as the Agent
may reasonably request by reference to such evidence as the Lenders may require
to determine and calculate the financial covenants referred to in Clause 12.5.

 

At the same time as it delivers the
Applicable Accounts referred to in this Clause 12.6, the Borrower shall deliver
to the Agent a certificate in the form set out in Schedule 6 demonstrating its
compliance (or not, as the case may be) with the provisions of Clause 12.5
signed by the chief financial officer of the Borrower.

 

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

 

13                                  INSURANCE

 

13.1                        General.  The Borrower undertakes with each Creditor
Party to procure that each Owner will comply with the following provisions of
this Clause 13 at all times during the Security Period (after the Ship which is
owned or to be owned by that Owner has been delivered to it under the relevant
Shipbuilding Contract) except as the Agent may, with the authorisation of the
Majority Lenders, otherwise permit.

 

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

 

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

 

(b)                                 war risks (including war
risks, P&I and terrorism); and

 

(c)                                  protection and indemnity
risks; and

 

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

 

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

 

(a)                                  in Dollars;

 

(b)                                 in the case of fire and usual
marine risks and war risks, in an amount on an agreed value basis being at
least the greater of (i) the Market Value of the Ship owned by it and (ii) together
with any other Ship then subject to a Mortgage 120 per cent. of the Loan;

 

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

 

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

 

(e)                                  on approved terms; and

 

33

 

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

 

13.4                        Further
protections for the Creditor Parties.  In
addition to the terms set out in Clause 13.3, the Borrower shall procure that the
obligatory insurances shall:

 

(a)                                  (except in relation to risks
referred to in Clause 13.2(c)) if the Security Trustee so requires name (or be
amended to name) the Security Trustee as additional named assured for its
rights and interests, warranted no operational interest and with full waiver of
rights of subrogation against the Security Trustee, but without the Security
Trustee thereby being liable to pay (but having the right to pay) premiums,
calls or other assessments in respect of such insurance;

 

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

 

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

 

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

 

(e)                                  provide that the Security
Trustee may make proof of loss if the Owners fail to do so.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(a)                                  they will have endorsed on
each policy, immediately upon issue, a loss payable clause and a notice of
assignment complying with the provisions of Clause 13.4;

 

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

 

34

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

13.11                 Compliance
with terms of insurances.  The Borrower
shall procure that no Owner does or omits to do (or permits to be done or not
to be done) any act or thing which would or might render any obligatory
insurance invalid, void, voidable or unenforceable or render any sum payable
thereunder repayable in whole or in part; and in particular:

 

(a)                                  each Owner shall take all necessary
action and comply with all requirements which may from time to time be
applicable to the obligatory insurances, and (without limiting the obligation
contained in Clause 13.7(c) above) ensure that the obligatory insurances
are 

 

35

 

not made subject to any exclusions or
qualifications to which the Security Trustee has not given its prior approval;

 

(b)                                 each Owner shall make any
changes relating to the classification or classification society or manager or
operator of the Ship owned by it unless approved where applicable by the
underwriters of the obligatory insurances;

 

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

 

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

 

13.12                 Alteration
to terms of insurances.  The Borrower
shall procure that no Owner shall either make or agree to any alteration to the
terms of any obligatory insurance or waive any right relating to any obligatory
insurance.

 

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

 

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

 

(a)                                  the approved brokers; and

 

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

 

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

 

which relates directly or indirectly to:

 

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

 

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

 

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

 

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

 

36

 

(b)                                 effecting, maintaining or
renewing any such insurances as are referred to in Clause 13.16 below or
dealing with or considering any matters relating to any such insurances,

 

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

 

13.16                 Mortgagees
interest insurance and mortgagees interest insurance additional perils
(pollution).  The Security Trustee shall
effect, maintain and renew all or any of the following insurances, on such
terms, conditions, through such insurers and generally in such manner as the
Security Trustee may from time to time consider appropriate:

 

(a)                                  a mortgagees interest
insurance in relation to each Ship in an amount of not less than 110 per cent.
of the Tranche applicable to that Ship, providing for the indemnification of
the Creditor Parties for any losses under or in connection with any Finance
Document which directly or indirectly result from loss of or damage to any Ship
or a liability of any Ship or of any Owner, being a loss or damage which is
prima facie covered by an obligatory insurance but in respect of which there is
a non-payment (or reduced payment) by the underwriters by reason of, or on the
basis of an allegation concerning:

 

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

 

(ii)                                  any act or omission, whether
deliberate, negligent or accidental, or any knowledge or privity of an Owner,
any other person referred to in paragraph (i) above, or of any officer,
employee or agent of that Owner or of such a person, including the casting away
or damaging of the Ship owned by it and/or the Ship owned by it being
unseaworthy; and/or

 

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

 

(b)                                 a mortgagees interest
insurance additional perils (pollution) policy in relation to each Ship in an
amount of not less than 100 per cent. of the Tranche applicable to that Ship,
providing for the indemnification of the Creditor Parties against, among other
things, any possible losses or other consequences of any Environmental Claim,
including the risk of expropriation, arrest or any form of detention of a Ship,
the imposition of any Security Interest over a Ship and/or any other matter
capable of being insured against under a mortgagees interest insurance
additional perils (pollution),

 

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

 

13.17                 Review of
insurance requirements.  The Security
Trustee shall be entitled to review after prior consultation with the Borrower
the requirements of this Clause 13 from time to time in order to take account
of any changes in circumstances after the date of this Agreement which are, in
the opinion of the Security Trustee, significant and capable of affecting any
Owner or any Ship and its or their insurance (including, without limitation,
changes in the availability or the cost of insurance coverage or the risks to
which the Owners may be subject).

 

13.18                 Modification
of insurance requirements.  The Security
Trustee shall promptly notify the Borrower and the Owners of any proposed
modification under Clause 13.17 to the requirements of this Clause 13 which the
Security Trustee reasonably considers 

 

37

 

appropriate in the circumstances, and such
modification shall take effect on and from the date it is notified in writing
to the Borrower as an amendment to this Clause 13 and shall bind the Borrower
accordingly.

 

13.19                 Compliance
with mortgagee’s instructions.  The Security
Trustee shall be entitled (without prejudice to or limitation of any other
rights which it may have or acquire under any Finance Document) to require a
Ship to remain at any safe port or to proceed to and remain at any safe port
designated by the Security Trustee until the relevant Owner implements any
amendments to the terms of the obligatory insurances and any operational
changes required as a result of a notice served under Clause 13.18 and the
Borrower shall procure that the Owners comply with such requirement within a
reasonable period or time in the context of the then prevailing circumstances.

 

14                                  SHIP
COVENANTS

 

14.1                        General.  The Borrower also undertakes with each
Creditor Party to procure that each Owner complies with the following
provisions of this Clause 14 at all times during the Security Period except as
the Agent may, with the authorisation of the Majority Lenders, otherwise permit
(such permission not to be unreasonably withheld in the case of a proposed
change of port of registry under the same flag of a Ship).

 

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

 

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

 

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

 

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

 

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

 

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

 

14.5                        Removal
of parts.  The Borrower shall procure that no Owner
shall remove any material part of the Ship owned by it, or any item of
equipment installed on, that Ship unless the part or item so removed is
forthwith replaced by a suitable part or item which is in the same condition as
or better condition than the part or item removed, is free from any Security
Interest or any right in favour of any person other than the Security Trustee
and becomes on installation on that Ship the property of the relevant Owner and
subject to the security constituted by the relevant Mortgage and, as the case
may be, the Deed of Covenant Provided that
an Owner may install equipment owned by a third party if the equipment can be
removed without any risk of damage to the Ship owned by it.

 

14.6                        Surveys.  The Borrower shall procure that each Owner
shall submit the Ship owned by it regularly to all periodical or other surveys
which may be required for classification

 

38

 

purposes and, if so required by the
Security Trustee, provide the Security Trustee with copies of all survey
reports.

 

14.7                        Inspection.  The Borrower shall:

 

(a)                                  ensure that each Owner shall
permit the Security Trustee (by surveyors or other persons appointed by it for
that purpose) to board the Ship (at the risk of the relevant Owner save where
any loss is shown to have been directly and mainly caused by the gross
negligence or wilful misconduct of such surveyor or other person) owned by it
at all reasonable times to inspect her condition or to satisfy themselves about
proposed or executed repairs or to prepare a survey report (at the reasonable
cost of the Borrower) in respect of such Ship and shall afford all proper
facilities for such inspections Provided that:

 

(i)                                     such boarding and inspection
does not materially disrupt the relevant Ship’s reasonable operation, repairs
or maintenance;

 

(ii)                                  if no Event of Default has
occurred the Borrower shall not be required to pay for the cost of a survey
report in respect of each Ship more than once every 24 months; and

 

(b)                                 ensure that each Ship shall,
both at the time of the survey referred to in this Clause 14.7 and at all other
times throughout the Security Period, be in a good and safe condition and state
of repair.

 

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

 

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

 

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

 

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

 

and,
forthwith upon receiving notice of the arrest of that Ship, or of her detention
in exercise or purported exercise of any lien or claim, the Borrower shall
procure that the relevant Owner of that Ship shall procure her release within 5
Business Days of receiving such notice by providing bail or otherwise as the
circumstances may require.

 

14.9                        Compliance
with laws etc.  The Borrower shall procure that
each Owner and the Approved Manager shall:

 

(a)                                  comply, or procure compliance
with the ISM Code, the ISPS Code, all Environmental Laws, the ISPS Code and all
other laws or regulations relating to the Ship owned by it, its ownership,
operation and management or to the business of that Owner;

 

(b)                                 not employ the Ship owned by
it nor allow her employment in any manner contrary to any law or regulation in
any relevant jurisdiction including but not limited to the ISM Code and the
ISPS Code; and

 

(c)                                  in the event of hostilities in
any part of the world (whether war is declared or not), not cause or permit the
Ship owned by it to enter or trade to any zone which is declared a war zone by
any government or by the Ship’s war risks insurers unless in the case of such
zone where an additional premium would be payable that Owner has (at its
expense) 

 

39

 

effected any special, additional or
modified insurance cover required for it to enter or trade to any war zone.

 

14.10                 Provision
of information.  The Borrower
shall procure that each Owner shall promptly provide the Agent with any
information which it reasonably requests regarding:

 

(a)                                  the Ship owned by it, her
employment, position, engagements and her Insurances;

 

(b)                                 the Earnings and payments and
amounts due to the master and crew of the Ship owned by it;

 

(c)                                  any expenses incurred, or
likely to be incurred, in connection with the operation, maintenance or repair
of the Ship owned by it and any payments made in respect of that Ship;

 

(d)                                 any towages and salvages; and

 

(e)                                  that Owner’s compliance, the
Approved Manager’s compliance or the compliance of the Ship owned by it with
the ISM Code and the ISPS Code,

 

and,
upon the Agent’s request, provide copies of any current charter relating to the
Ship owned by it and of any current charter guarantee, and of the ISM Code
Documentation and the ISPS Code Documentation.

 

14.11                 Notification
of certain events.  The Borrower
shall procure that each Owner shall as soon as it becomes aware of any of the
events referred to in this Clause 14.11 notify the Agent by fax, confirmed
forthwith by letter of:

 

(a)                                  any casualty which is or is
likely to be or to become a Major Casualty;

 

(b)                                 any occurrence as a result of
which the Ship owned by it has become or is, by the passing of time or
otherwise, likely to become a Total Loss;

 

(c)                                  any requirement or
recommendation made by any insurer or classification society or by any
competent authority which is not complied with in accordance with its terms
(including without limitation, any time limit specified by any insurer or
classification society or any competent authority);

 

(d)                                 any arrest or detention of the
Ship owned by it (if the arrest or detention has not been released within 3
Business Days of its imposition or the Borrower or the relevant Owner considers
that the arrest or detention will not be released within 3 Business Day of its
imposition), any exercise or purported exercise of any lien on that Ship or her
Earnings or her Insurances or any requisition of that Ship for hire;

 

(e)                                  any intended dry docking of
the Ship owned by it which the Owner knows, or reasonably determines, will or
may exceed (or has exceeded) 10 days in total;

 

(f)                                    any Environmental Claim made
against that Owner or in connection with the Ship owned by it, or any
Environmental Incident;

 

(g)                                 any claim for breach of the
ISM Code or the ISPS Code being made against that Owner and, to the extent that
that Owner is aware of such claim, the Approved Manager or otherwise in
connection with the Ship owned by it; or

 

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

 

40

 

and
that Owner shall keep the Agent advised in writing on a regular basis and in
such detail as the Agent shall require of that Owner’s or any other person’s
response to any of those events or matters.

 

14.12                 Restrictions
on chartering, appointment of managers etc.  The
Borrower shall procure that no Owner shall in relation to the Ship owned by it:

 

(a)                                  let the Ship owned by it on
demise charter for any period, without the Agent’s written consent, such
consent not to be unreasonably withheld;

 

(b)                                 (other than pursuant to the
Charterparty relative to its Ship), enter into any time or consecutive voyage
charter in respect of the Ship owned by it for a term which exceeds, or which
by virtue of any optional extensions may exceed, 12 months;

 

(c)                                  amend, vary or supplement the
Charterparty relative to that Ship if as a result of such amendment, variation
or supplement (whether alone or in combination with any previous amendments,
variations or supplements) the duration of the Charterparty is reduced by more
than 2 years, or the charter hire is reduced by more than 5 per cent., from
that specified in the Charterparty;

 

(d)                                 charter the Ship owned by it
otherwise than on bona fide arm’s length terms at the time when the Ship is
fixed;

 

(e)                                  appoint (or permit the
appointment of) a manager of the Ship owned by it other than the Approved
Manager or agree to any alteration to the terms of the Approved Manager’s
appointment;

 

(f)                                    de-activate or lay up the Ship
owned by it; or

 

(g)                                 put the Ship owned by it into
the possession of any person for the purpose of work being done upon her in an
amount exceeding or likely to exceed $1,000,000 (or the equivalent in any other
currency) unless that person has first given to the Security Trustee and in
terms satisfactory to it a written undertaking not to exercise any lien on that
Ship or her Earnings or her Insurances for the cost of such work or otherwise
or other arrangements satisfactory to the Security Trustee are made to ensure
that no such lien will be exercised.

 

14.13                 Notice of
Mortgage.  The Borrower shall procure that each Owner
shall keep the Mortgage registered against the Ship owned by it as a valid
first priority mortgage or preferred (as the case may be), carry on board that
Ship a certified copy of the relevant Mortgage and place and maintain in a
conspicuous place in the navigation room and the Master’s cabin of that Ship a
framed printed notice stating that that Ship is mortgaged by that Owner to the
Security Trustee or, as the case may be, the Lenders.

 

14.14                 Sharing
of Earnings.   The Borrower shall procure
that no Owner shall:

 

(a)                                  enter into any agreement or
arrangement for the sharing of any Earnings;

 

(b)                                 enter into any agreement or
arrangement for the postponement of any date on which any Earnings are due; the
reduction of the amount of any Earnings or otherwise for the release or adverse
alteration of any right of that Owner to any Earnings; or

 

(c)                                  enter into any agreement or
arrangement for the release of, or adverse alteration to, any guarantee or
Security Interest relating to any Earnings.

 

41

 

15                                  SECURITY
COVER

 

15.1                        Provision
of additional security cover; prepayment of Loan.  The Borrower undertakes with each Creditor
Party that, if at any time the Agent notifies the Borrower that:

 

(a)                                  the aggregate Market Value of
the Ships subject to a Mortgage; plus

 

(b)                                 the net realisable value of
any additional security previously provided under this Clause 15,

 

is below 125 per cent. of the aggregate of
the Loan and the Swap Exposure, the Borrower will, within 14 Business Days
after the date on which the Agent’s notice is served, either:

 

(i)                                     provide, or ensure that a
third party provides, additional security acceptable to the Agent which, in the
opinion of the Majority Lenders, has a net realisable value at least equal to
the shortfall and which consists of either (a) cash pledged to the
Security Trustee or the Lenders or (b) a mortgage over another vessel
documented in such terms as the Agent (with the authorisation of the Majority
Lenders) may approve or require; or

 

(ii)                                  prepay in accordance with
Clause 8 such part (at least) of the Loan as will eliminate the shortfall.

 

15.2                        Requirement
for additional documents.  The Borrower
shall not be deemed to have complied with paragraph (i) of Clause 15.1
until the Agent has received in connection with the additional security
certified copies of documents of the kinds referred to in paragraphs 2, 3 and 5
of Schedule 3, Part A and such legal opinions in terms acceptable to the
Majority Lenders from such lawyers as they may select.

 

15.3                        Valuation
of a Ship not subject to a long-term charter.  The
Market Value of a Ship which at the relevant time is not subject to a charter
or other contract of employment having an unexpired term of at least 12 months
with a first class charterer acceptable to the Lenders (in their absolute
discretion) is that shown by taking the average of two valuations prepared:

 

(a)                                  as at a date not more than 6
weeks previously;

 

(b)                                 by 2 Approved Brokers
appointed by the Borrower, with both reporting to the Agent;

 

(c)                                  with or without physical inspection
of that Ship (as the Agent may require);

 

(d)                                 on the basis of a sale for
prompt delivery for cash on normal arm’s length commercial terms as between a
willing seller and a willing buyer, free of any existing charter or other
contract of employment; and

 

(e)                                  after deducting the estimated
amount of the usual and reasonable expenses which would be incurred in
connection with the sale.

 

Provided that if the difference between the
2 valuations obtained at any one time pursuant to this Clause 15.3 is greater
than 10 per cent. a valuation shall be commissioned from a third Approved
Broker appointed by the Agent.  Such
valuation shall be conducted in accordance with this Clause 15.3 and the Market
Value of the Ship in such circumstances shall be the average of the initial 2
valuations and the valuation provided by the third Approved Broker.

 

15.4                        Valuation of
a Ship subject to long-term charter.  The Market Value of a Ship
subject to a Mortgage which at the relevant time is subject to a charter or
other contract of 

 

42

 

employment having an unexpired term of at
least 12 months with a first class charterer acceptable to the Lenders (in
their absolute discretion) shall be the aggregate of the present values (as may
be conclusively determined by the Agent) of:

 

(a)                                  the Bareboat-equivalent Time
Charter Income of the Ship in respect of the remaining unexpired term of the
relevant charter or other contract of employment excluding any periods for
which the relevant charter or contract of employment may be renewed at the
option of any party (for the purposes of this Clause 15.4, an “option period”); and

 

(b)                                 the current charter-free
market value (determined in accordance with Clause 15.3 but subject to the
adjustments referred to in this Clause 15.4) of a vessel with identical
characteristics to the Ship other than its age which shall, for the purposes of
this Clause 15.4, be considered to be the age of the Ship at the expiration of
the charter or other contract of employment to which the Ship is subject at the
relevant time (excluding any option periods), as such value may be adjusted to
take into account the terms of any commitments undertaken by the Owner of the
Ship which may affect its value.

 

For the purposes of this Clause 15.4, the
discount rate which will apply in calculating the present value of the amounts
referred to in paragraphs (a) and (b) will be the aggregate of (i) the
Margin and (ii) the applicable Interest Rate Swap Rate for a period equal
to the unexpired term of the Ship’s charter or other contract of employment
(excluding any option periods (rounded up to the nearest integral year)) unless
the unexpired term of the Ship’s charter or other contract of employment
(excluding any option periods) is less than 12 months in which the Interest
Rate Swap Rate for a period of 12 months will apply.

 

15.5                        Value of
additional security.  The net
realisable value of any additional security which is provided under Clause 15.1
and which consists of a Security Interest over a vessel shall be that shown by
a valuation complying with the requirements of Clause 15.3.

 

15.6                        Valuations
binding.  Any valuation under paragraph (i) of
Clause 15.1, Clauses 15.3, 15.4 or 15.5 shall, in the absence of manifest
error, be binding and conclusive as regards the Borrower, as shall be any
valuation which the Majority Lenders make of a security which does not consist
of or include a Security Interest.

 

15.7                        Provision
of information.  The Borrower
shall promptly provide the Agent and any Approved Broker or expert acting under
Clause 15.3, 15.4 or 15.5 with any information which the Agent or the Approved
Broker or expert may reasonably request for the purposes of the valuation; and,
if the Borrower fails to provide the information by the date specified in the
request, the valuation may be made on any basis and assumptions which the
Approved Broker or the Majority Lenders (or the expert appointed by them)
consider prudent.

 

15.8                        Payment
of valuation expenses.  Without
prejudice to the generality of the Borrower’s obligations under Clauses 20.2,
20.3 and 20.4, the Borrower shall, on demand, pay the Agent the amount of the
fees and expenses of any Approved Broker or expert instructed or approved by
the Agent under this Clause and all legal and other expenses incurred by the
Agent in connection with any matter arising out of this Clause.

 

15.9                        Frequency
of Valuations.  The Borrower shall commission
valuations of the Ships at such times as the Majority Lenders shall deem
necessary and, in any event, not less often than once during each 6-month
period of the Security Period.

 

16                                  PAYMENTS
AND CALCULATIONS

 

16.1                        Currency
and method of payments.  All payments
to be made:

 

(a)                                  by the Lenders to the Agent;

 

43

 

(b)                                 by the Borrower to the Agent,
the Security Trustee or any Lender,

 

under a Finance Document shall be made to the Agent or
to the Security Trustee, in the case of an amount payable to it:

 

(i)                                     by not later than 11.00 a.m.
(New York City time) on the due date;

 

(ii)                                  in same day Dollar funds
settled through the New York Clearing House Interbank Payments System (or in
such other Dollar funds and/or settled in such other manner as the Agent shall
specify as being customary at the time for the settlement of international
transactions of the type contemplated by this Agreement); and

 

(iii)                               to such account of the Agent
with a bank in New York as the Agent may from time to time notify the Borrower
and each Lender.

 

16.2                        Payment
on non-Business Day.  If any payment
by the Borrower under a Finance Document would otherwise fall due on a day
which is not a Business Day:

 

(a)                                  the due date shall be extended
to the next succeeding Business Day; or

 

(b)                                 if the next succeeding
Business Day falls in the next calendar month, the due date shall be brought
forward to the immediately preceding Business Day,

 

and interest shall be payable during any extension under paragraph (a) at
the rate payable on the original due date.

 

16.3                        Basis for
calculation of periodic payments.  All
interest and commitment fee and any other payments under any Finance Document
which are of an annual or periodic nature shall accrue from day to day and
shall be calculated on the basis of the actual number of days elapsed and a 360
day year.

 

16.4                        Distribution
of payments to Creditor Parties. 
Subject to Clauses 16.5, 16.6 and 16.7:

 

(a)                                  any amount received by the
Agent under a Finance Document for distribution or remittance to a Lender or
the Security Trustee shall be made available by the Agent to that Lender or, as
the case may be, the Security Trustee by payment, with funds having the same
value as the funds received, to such account as the Lender or the Security
Trustee may have notified to the Agent not less than 5 Business Days
previously; and

 

(b)                                 amounts to be applied in
satisfying amounts of a particular category which are due to the Lenders
generally shall be distributed by the Agent to each Lender pro rata to the
amount in that category which is due to it.

 

16.5                        Permitted
deductions by Agent. 
Notwithstanding any other provision of this Agreement or any other
Finance Document, the Agent may, before making an amount available to a Lender,
deduct and withhold from that amount any sum which is then due and payable to
the Agent from that Lender under any Finance Document or any sum which the
Agent is then entitled under any Finance Document to require that Lender to pay
on demand.

 

16.6                        Agent
only obliged to pay when monies received. 
Notwithstanding any other provision of this Agreement or any other
Finance Document, the Agent shall not be obliged to make available to the
Borrower or any Lender any sum which the Agent is expecting to receive for
remittance or distribution to the Borrower or that Lender until the Agent has
satisfied itself that it has received that sum.

 

44

 

16.7                        Refund to
Agent of monies not received.  If and to the
extent that the Agent makes available a sum to the Borrower or a Lender,
without first having received that sum, the Borrower or (as the case may be)
the Lender concerned shall, on demand:

 

(a)                                  refund the sum in full to the
Agent; and

 

(b)                                 pay to the Agent the amount
(as certified by the Agent) which will indemnify the Agent against any funding
or other loss, liability or expense incurred by the Agent as a result of making
the sum available before receiving it.

 

16.8                        Agent may
assume receipt.  Clause 16.7
shall not affect any claim which the Agent has under the law of restitution,
and applies irrespective of whether the Agent had any form of notice that it
had not received the sum which it made available (except an express notice from
a Lender that it will not fund its Contribution).

 

16.9                        Creditor
Party accounts.  Each Creditor
Party shall maintain accounts showing the amounts owing to it by the Borrower
and each Security Party under the Finance Documents and all payments in respect
of those amounts made by the Borrower and any Security Party.

 

16.10                 Agent’s
memorandum account.  The Agent
shall maintain a memorandum account showing the amounts advanced by the Lenders
and all other sums owing to the Agent, the Security Trustee and each Lender
from the Borrower and each Security Party under the Finance Documents and all
payments in respect of those amounts made by the Borrower and any Security
Party.

 

16.11                 Accounts
prima facie evidence.  If any
accounts maintained under Clauses 16.9 and 16.10 show an amount to be owing by
the Borrower or a Security Party to a Creditor Party, those accounts shall, be
prima facie evidence that that amount is owing to that Creditor Party.

 

17                                  APPLICATION
OF RECEIPTS

 

17.1                        Normal
order of application.  Except as any
Finance Document may otherwise provide, any sums which are received or
recovered by any Creditor Party under or by virtue of any Finance Document
shall be applied:

 

(a)                                  FIRST: in or towards
satisfaction of any amounts then due and payable under the Finance Documents in
the following order and proportions:

 

(i)                                     first, in or towards
satisfaction pro rata of all amounts then due and payable to the Creditor
Parties under the Finance Documents other than those amounts referred to at
paragraphs (ii) and (iii) (including, but without limitation, all
amounts payable by the Borrower under Clauses 20, 21 and 22 of this Agreement
or by the Borrower or any Security Party under any corresponding or similar
provision in any other Finance Document);

 

(ii)                                  secondly, in or towards
satisfaction pro rata of any and all amounts of interest or default interest
payable to the Creditor Parties under the Finance Documents (and, for this
purpose, the expression “interest” shall include any net amount which the
Borrower shall have become liable to pay or deliver under section 2
(Obligations) of the Master Agreement but shall have failed to pay or deliver
to the Swap Bank at the time of application or distribution under this Clause
17); and

 

(iii)                               thirdly, in or towards
satisfaction pro rata of the Loan and the Swap Exposure (in the case of the
latter) calculated as at the actual Early Termination Date applying to each particular
Transaction, or if no such Early Termination Date shall have 

 

45

 

occurred, calculated as if an Early
Termination Date occurred on the date of application or distribution
hereunder);

 

SECONDLY:
in retention of an amount equal to any amount not then due and payable under
any Finance Document but which the Agent, by notice to the Borrower, the
Security Parties and the other Creditor Parties states in its opinion will or
may become due and payable in the future and, upon those amounts becoming due
and payable, in or towards satisfaction of them in accordance with the
foregoing provisions of this Clause;

 

THIRDLY:
any surplus shall be paid to the Borrower or to any other person appearing to
be entitled to it.

 

17.2                        Variation
of order of application.  The Agent may,
with the authorisation of all the Lenders and the Swap Bank, by notice to the
Borrower, the Security Parties and the other Creditor Parties provide for a
different manner of application from that set out in Clause 17.1 either as
regards a specified sum or sums or as regards sums in a specified category or
categories.

 

17.3                        Notice of
variation of order of application.  The
Agent may give notices under Clause 17.2 from time to time in respect of sums
which may be received or recovered in the future.

 

17.4                        Appropriation
rights overridden.  This Clause 17
and any notice which the Agent gives under Clause 17.2 shall override any right
of appropriation possessed, and any appropriation made, by the Borrower or any
Security Party.

 

18                                  APPLICATION
OF EARNINGS

 

18.1                        Payment
of Earnings.  The Borrower undertakes with
each Creditor Party that, throughout the Security Period (subject only to the
provisions of the General Assignments), all the Earnings of a Ship are paid to
the Danaos Earnings Account.

 

18.2                        Application
of Earnings.  The Borrower undertakes with
each Creditor Party to procure that money from time to time credited to, or for
the time being standing to the credit of, the Danaos Earnings Account shall,
unless and until an Event of Default or Potential Event of Default shall have
occurred (whereupon the provisions of Clause 17.1 shall be and become
applicable), be available for application in the following manner:

 

(a)                                  in or towards meeting the costs
and expenses from time to time incurred by or on behalf of the relevant Owner
in connection with the operation of the Ship owned by it;

 

(b)                                 in or towards making payments
of all amounts due and payable by the Borrower under this Agreement other than
the payments of principal and interest pursuant to Clauses 8.1 and 5.1; and

 

(c)                                  as to any surplus from time to
time arising on the Danaos Earnings Account following application as aforesaid,
to be paid to the relevant Owner or, as the case may be, the Borrower or to
whomsoever the Borrower may direct.

 

18.3                        Location
of accounts.  The Borrower shall promptly:

 

(a)                                  comply with any requirement of
the Agent as to the location or re-location of the Danaos Earnings Account; and

 

(b)                                 execute any documents which
the Agent specifies to create or maintain in favour of the Security Trustee a
Security Interest over the Danaos Earnings Account.

 

46

 

19                                  EVENTS OF
DEFAULT

 

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

 

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

 

(i)                                     such failure is due to a bank
payment transmission, technical or administrative error; and

 

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

 

(b)                                 any breach occurs of Clause 9,
11.3, 12.2, 12.3, 12.4, 12.5, 13.2 or 15.1; or

 

(c)                                  any breach by the Borrower or
any Security Party occurs of any provision of a Finance Document (other than a
breach covered by paragraphs (a) or (b) above) if, in the opinion of
the Majority Lenders, such default is capable of remedy, and such default is
not remedied within 14 Business Days after written notice from the Agent
requesting action to remedy the same; or

 

(d)                                 (subject to any applicable
grace period specified in the Finance Document) any breach (which the Security
Trustee considers, in its discretion, to be material) by the Borrower or any
Security Party occurs of any provision of a Finance Document (other than a
breach covered by paragraphs (a), (b) or (c) above); or

 

(e)                                  any representation, warranty
or statement (which the Security Trustee considers, in its discretion, to be
material) made by, or by an officer of, the Borrower or a Security Party in a
Finance Document or in a Drawdown Notice or any other notice or document
relating to a Finance Document is untrue or misleading when it is made (such
failure shall not constitute an Event of Default if an innocent
misrepresentation has been made and which, if capable of remedy, is remedied
within 10 Business Days of its occurrence unless such innocent
misrepresentation is made on a Drawdown Date); or

 

(f)                                    any of the following occurs in
relation to any Financial Indebtedness of a Relevant Person (other than the
Borrower) or any Financial Indebtedness of the Borrower of at least $1,000,000
(or the equivalent in another currency) in aggregate in the case of any
Financial Indebtedness falling within paragraph (a) of the definition of
that term or any Financial Indebtedness falling within all other paragraphs of
the definition of that term (or, when aggregated with any Financial
Indebtedness falling within paragraph (a) of that term) of at least
$10,000,000 in aggregate (or the equivalent in another currency):

 

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

 

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

 

(iii)                               a lease, hire purchase
agreement or charter creating any Financial Indebtedness of a Relevant Person
is lawfully terminated by the lessor or owner or becomes capable of being
lawfully terminated as a consequence of any termination event; or

 

(iv)                              any overdraft, loan, note
issuance, acceptance credit, letter of credit, guarantee, foreign exchange or
other facility, or any swap or other derivative contract or transaction,
relating to any Financial Indebtedness of a Relevant Person ceases to 

 

47

 

be
available or becomes capable of being terminated as a result of any event of
default, or cash cover is required, or becomes capable of being required, in
respect of such a facility as a result of any event of default; or

 

(v)                                 any Security Interest securing
any Financial Indebtedness of a Relevant Person becomes enforceable; or

 

(g)                                 any of the following occurs in
relation to a Relevant Person:

 

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

 

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

 

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

 

(iv)                              a Relevant Person makes any
formal declaration of bankruptcy or any formal statement to the effect that it
is insolvent or likely to become insolvent, or a winding up or administration
order is made in relation to a Relevant Person, or the members or directors of
a Relevant Person pass a resolution to the effect that it should be wound up,
placed in administration or cease to carry on business, save that this
paragraph does not apply to a fully solvent winding up of a Relevant Person
other than the Borrower or an Owner which is, or is to be, effected for the
purposes of an amalgamation or reconstruction previously approved by the
Majority Lenders and effected not later than 3 months after the commencement of
the winding up; or

 

(v)                                 a petition is presented in any
Pertinent Jurisdiction for the winding up or administration, or the appointment
of a provisional liquidator, of a Relevant Person unless, in the case of an
involuntary petition, the petition is being contested in good faith and on
substantial grounds and is dismissed or withdrawn within 30 days of the
presentation of the petition; or

 

(vi)                              a Relevant Person petitions a
court, or presents any proposal for, any form of judicial or non-judicial
suspension or deferral of payments, reorganisation of its debt (or certain of
its debt) or arrangement with all or a substantial proportion (by number or
value) of its creditors or of any class of them or any such suspension or deferral
of payments, reorganisation or arrangement is effected by court order, contract
or otherwise; or

 

(vii)                           any meeting of the members or
directors of a Relevant Person is summoned for the purpose of considering a
resolution or proposal to authorise or take any action of a type described in
paragraphs (iii), (iv), (v) or (vi); or

 

(viii)                        in a Pertinent Jurisdiction
other than England, any event occurs or any procedure is commenced which, in
the reasonable opinion of the Majority Lenders, is similar to any of the
foregoing; or

 

(h)                                 the Borrower ceases, or
threatens to cease, to carry on all or a substantial part of its business or,
as a result of intervention by or under the authority of any government, the
business of the Borrower is wholly or partially curtailed or suspended, or all
or a substantial part of the assets or undertaking of the Borrower is seized,
nationalised, expropriate of compulsorily acquired; or

 

(i)                                     it becomes unlawful in any
Pertinent Jurisdiction or impossible:

 

48

 

(i)                                     for the Borrower or any
Security Party to discharge any liability under a Finance Document or to comply
with any other obligation which the Majority Lenders consider material under a
Finance Document; or

 

(ii)                                  for the Agent, the Security
Trustee or the Lenders to exercise or enforce any right under, or to enforce
any Security Interest created by, a Finance Document; or

 

(j)                                     any consent necessary to
enable any Owner to own, operate or charter the Ship owned by it or to enable
the Borrower, any Owner or any Security Party to comply with any provision
which the Majority Lenders consider material of a Finance Document, any
Charterparty or a Shipbuilding Contract is not granted, expires without being
renewed, is revoked or becomes liable to revocation or any condition of such a
consent is not fulfilled if this materially affects the security position of
the Creditor Parties or the ability of the Borrower or a Security Party to
timely discharge and/or perform its or their liabilities and obligations (or
any of them) under any Finance Document; or

 

(k)                                  if, without the prior consent
of the Majority Lenders, members of the Dr. John Coustas family (either
directly and/or through companies beneficially owned by members of the Dr. John
Coustas family and/or trusts or foundations of which members of the Dr. John
Coustas family are beneficiaries) own and control less than 51 per cent. of the
issued voting share capital of the Borrower; or

 

(l)                                     if, without the prior consent
of the Majority Lenders, the shares of the Borrower cease to be listed on the
New York Stock Exchange; or

 

(m)                               it appears to the Majority
Lenders that, without their prior consent, a change has occurred or probably
has occurred after the date of this Agreement in the ultimate beneficial
ownership of any of the shares in any Owner or in the ultimate control of the
voting rights attaching to any of those shares; or

 

(n)                                 any provision which the
Majority Lenders consider material of a Finance Document proves to have been or
becomes invalid or unenforceable, or a Security Interest created by a Finance
Document proves to have been or becomes invalid or unenforceable or such a
Security Interest proves to have ranked after, or loses its priority to,
another Security Interest or any other third party claim or interest; or

 

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

 

(p)                                 the Master Agreement is
terminated, cancelled, suspended, rescinded or revoked or otherwise ceases to
remain in full force and effect for any reason except with the consent of the
Agent (acting with the authorisation of the Majority Lenders); or

 

(q)                                 for any reason whatsoever, any
Ship ceases to be managed by the Approved Manager on terms in all respects
approved by the Agent; or

 

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

 

(s)                                  any other event occurs or any
other circumstances arise or develop including, without limitation:

 

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

 

49

 

(ii)                                  any accident or other event
involving any Ship or another vessel owned, chartered or operated by a Relevant
Person;

 

in the light of which the Majority Lenders consider
that there is a material risk that the Borrower is, or will later become,
unable to discharge its liabilities under the Finance Documents as they fall
due.

 

19.2                        Actions
following an Event of Default.  On, or at any
time after, the occurrence of an Event of Default which is continuing:

 

(a)                                  the Agent may, and if so
instructed by the Majority Lenders, the Agent shall:

 

(i)                                     serve on the Borrower a notice
stating that the Commitments and all other obligations of each Lender to the
Borrower under this Agreement are terminated; and/or

 

(ii)                                  serve on the Borrower a notice
stating that the Commitments, all accrued interest and all other amounts
accrued or owing under this Agreement are immediately due and payable or are
due and payable on demand; and/or

 

(iii)                               take any other action which,
as a result of the Event of Default or any notice served under paragraph (i) or
(ii) above, the Agent and/or the Lenders are entitled to take under any
Finance Document or any applicable law;

 

(b)                                 the Security Trustee may, and
if so instructed by the Agent, acting with the authorisation of the Majority
Lenders, the Security Trustee shall take any action which, as a result of the
Event of Default or any notice served under paragraph (a) (i) or
(ii), the Security Trustee, the Agent and/or the Lenders are entitled to take
under any Finance Document or any applicable law.

 

19.3                        Termination
of Commitments.  On the service
of a notice under paragraph (a)(i) of Clause 19.2, the Commitments and all
other obligations of each Lender to the Borrower under this Agreement shall
terminate.

 

19.4                        Acceleration.  On the service of a notice under paragraph
(a)(ii) of Clause 19.2, the Loan, all accrued interest and all other
amounts accrued or owing from the Borrower or any Security Party under this
Agreement and every other Finance Document shall become immediately due and
payable or, as the case may be, payable on demand.

 

19.5                        Multiple
notices; action without notice.  The Agent may
serve notices under paragraphs (a) (i) and (ii) of Clause 19.2
simultaneously or on different dates and it and/or the Security Trustee may
take any action referred to in that Clause if no such notice is served or
simultaneously with or at any time after the service of both or either of such
notices.

 

19.6                        Notification
of Creditor Parties and Security Parties.  The
Agent shall send to each Lender, the Security Trustee and each Security Party a
copy or the text of any notice which the Agent serves on the Borrower under
Clause 19.2; but the notice shall become effective when it is served on the
Borrower, and no failure or delay by the Agent to send a copy or the text of the
notice to any other person shall invalidate the notice or provide the Borrower
or any Security Party with any form of claim or defence

 

19.7                        Creditor
Party rights unimpaired.  Nothing in
this Clause shall be taken to impair or restrict the exercise of any right
given to individual Lenders under a Finance Document or the general law; and,
in particular, this Clause is without prejudice to Clause 3.1.

 

19.8                        Exclusion
of Creditor Party liability.  No Creditor
Party nor any receiver or manager appointed by the Security Trustee, shall have
any liability to the Borrower or a Security Party:

 

50

 

(a)                                  for any loss caused by an
exercise of rights under, or enforcement of a Security Interest created by, a
Finance Document or by any failure or delay to exercise such a right or to
enforce such a Security Interest; or

 

(b)                                 as mortgagee in possession or
otherwise, for any income or principal amount which might have been produced by
or realised from any asset comprised in such a Security Interest or for any
reduction (however caused) in the value of such an asset,

 

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

 

19.9                        Relevant
Persons.  In this Clause 19 “a Relevant
Person” means the Borrower, a Security Party and any company which
is a subsidiary of the Borrower or a Security Party or of which a Security
Party is a subsidiary but excluding any company which is dormant and the value
of whose gross assets is $50,000 or less.

 

19.10                 Interpretation.  In Clause 19.1(f) references to an event
of default or a termination event include any event, howsoever described, which
is similar to an event of default in a facility agreement or a termination
event in a finance lease; and in Clause 19.1(g) “petition” includes an application.

 

20                                  FEES AND
EXPENSES

 

20.1                        Arrangement
and commitment fees.  The Borrower
shall pay to the Agent:

 

(a)                                  a non-refundable arrangement
fee of $360,000 on the date of this Agreement; and

 

(b)                                 a commitment fee at the rate
of 0.25 per cent. per annum on the undrawn balance of the Loan during the
period from (and including) the date of this Agreement up to and including the
earlier of (i) the final Drawdown Date and (ii) the last day of the
Availability Period for Tranche C, such commitment fee to be payable every 3 months
in arrears and on the last day of such period.

 

20.2                        Costs of
negotiation, preparation etc.  The Borrower
shall pay to the Agent on its demand the amount of all expenses reasonably
incurred by the Agent, the Lenders or the Security Trustee in connection with
the negotiation, preparation, execution or registration of any Finance Document
or any related document or with any transaction contemplated by a Finance
Document or a related document.

 

20.3                        Costs of
variations, amendments, enforcement etc.  The
Borrower shall pay to the Agent, on the Agent’s demand, the amount of all
expenses incurred by a Lender in connection with:

 

(a)                                  any amendment or supplement to
a Finance Document, or any proposal for such an amendment to be made;

 

(b)                                 any consent or waiver by the
Agent, the Majority Lenders or the Lender concerned under or in connection with
a Finance Document, or any request for such a consent or waiver;

 

(c)                                  the valuation of any security
provided or offered under Clause 15 or any other matter relating to such
security; or

 

(d)                                 any step taken by the Lender
concerned with a view to the protection, exercise or enforcement of any right
or Security Interest created by a Finance Document or for any similar purpose.

 

51

 

There
shall be recoverable under paragraph (d) the full amount of all legal
expenses, whether or not such as would be allowed under rules of court or
any taxation or other procedure carried out under such rules.

 

20.4                        Documentary
taxes.  The Borrower shall promptly pay any tax
payable on or by reference to any Finance Document, and shall, on the Agent’s
demand, fully indemnify each Creditor Party against any liabilities and
expenses resulting from any failure or delay by the Borrower to pay such a tax.

 

20.5                        Certification
of amounts.  A notice which is signed by an
officer of a Creditor Party, which states that a specified amount, or aggregate
amount, is due to that Creditor Party under this Clause 20 and which indicates
(without necessarily specifying a detailed breakdown) the matters in respect of
which the amount, or aggregate amount, is due shall be prima facie evidence
that the amount, or aggregate amount, is due save in the case of manifest
error.

 

21                                  INDEMNITIES

 

21.1                        Indemnities
regarding borrowing and repayment of Loan.  The
Borrower shall fully indemnify the Agent and each Lender on the Agent’s demand
and the Security Trustee on its demand in respect of all expenses, liabilities
and losses which are incurred by that Creditor Party, or which that Creditor
Party reasonably and with due diligence estimates that it will incur, as a
result of or in connection with:

 

(a)                                  an Advance not being borrowed
on the date specified in the Drawdown Notice for any reason other than a
default by the Lender claiming the indemnity;

 

(b)                                 the receipt or recovery of all
or any part of the Loan or an overdue sum otherwise than on the last day of an
Interest Period applicable to it or other relevant period;

 

(c)                                  any failure (for whatever
reason) by the Borrower to make payment of any amount due under a Finance
Document on the due date or, if so payable, on demand (after giving credit for
any default interest paid by the Borrower on the amount concerned under Clause
7);

 

(d)                                 the occurrence and/or
continuance of an Event of Default or a Potential Event of Default and/or the
acceleration of repayment of the Loan under Clause 19;

 

and in respect of any tax (other than tax
on its overall net income) for which a Creditor Party is liable in connection
with any amount paid or payable to that Creditor Party (whether for its own
account or otherwise) under any Finance Document.

 

21.2                        Breakage
costs.  Without limiting its generality, Clause 21.1
covers any liability, expense or loss, including a loss of a prospective
profit, incurred by a Lender:

 

(a)                                  in liquidating or employing
deposits from third parties acquired or arranged to fund or maintain all or any
part of its Contribution and/or any overdue amount (or an aggregate amount
which includes its Contribution or any overdue amount); and

 

(b)                                 in terminating, or otherwise
in connection with, any interest and/or currency swap or any other transaction
entered into (whether with another legal entity or with another office or
department of the Lender concerned) to hedge any exposure arising under this
Agreement or that part which the Lender concerned determines is fairly
attributable to this Agreement of the amount of the liabilities, expenses or
losses (including losses of prospective profits) incurred by it in terminating,
or otherwise in connection with, a number of transactions of which this
Agreement is one.

 

52

 

21.3                        Miscellaneous
indemnities.  The Borrower shall fully
indemnify each Creditor Party severally on their respective demands in respect
of all claims, demands, proceedings, liabilities, taxes, losses and expenses of
every kind (“liability items”) which may be
made or brought against, or incurred by, the Creditor Party concerned, in any
country, in relation to:

 

(a)                                  any action taken, or omitted
or neglected to be taken, under or in connection with any Finance Document by
the Creditor Party concerned or by any receiver appointed under a Finance
Document;

 

(b)                                 any other event, matter or
question which occurs or arises at any time during the Security Period and
which has any connection with, or any bearing on, any Finance Document, any
payment or other transaction relating to a Finance Document or any asset
covered (or previously covered) by a Security Interest created (or intended to
be created) by a Finance Document;

 

other than liability items which are shown
to have been caused by the gross negligence or the wilful misconduct of the
officers or employees of the Creditor Party concerned.

 

21.4                        Extension
of indemnities; environmental indemnity. 
Without prejudice to its generality, Clause 21.3 covers:

 

(a)                                  any matter which would be
covered by Clause 20.3 if any of the references in that Clause to a Lender were
a reference to the Agent or (as the case may be) to the Security Trustee; and

 

(b)                                 any liability items which
arise, or are asserted, under or in connection with any law relating to safety
at sea, pollution or the protection of the environment, the ISM Code or the
ISPS Code.

 

21.5                        Currency
indemnity.  If any sum due from the
Borrower or any Security Party to a Creditor Party under a Finance Document or
under any order or judgment relating to a Finance Document has to be converted
from the currency in which the Finance Document provided for the sum to be paid
(the “Contractual Currency”) into another
currency (the “Payment Currency”) for the purpose
of:

 

(a)                                  making or lodging any claim or
proof against the Borrower or any Security Party, whether in its liquidation,
any arrangement involving it or otherwise; or

 

(b)                                 obtaining an order or judgment
from any court or other tribunal; or

 

(c)                                  enforcing any such order or
judgment;

 

the Borrower shall indemnify the Creditor
Party concerned against the loss arising when the amount of the payment
actually received by that Creditor Party is converted at the available rate of
exchange into the Contractual Currency.

 

In this Clause 21.5 the “available rate of exchange” means the rate at which the
Creditor Party concerned is able at the opening of business (London time) on
the Business Day after it receives the sum concerned to purchase the
Contractual Currency with the Payment Currency.

 

This Clause 21.5 creates a separate liability
of the Borrower which is distinct from its other liabilities under the Finance
Documents and which shall not be merged in any judgment or order relating to
those other liabilities.

 

21.6                        Application
to Master Agreement.  For the
avoidance of doubt, Clause 21.5 does not apply in respect of sums due from the
Borrower to the Swap Bank under or in connection

 

53

 

with the Master Agreement as to which sums
the provisions of section 8 (Contractual Currency) of the Master Agreement
shall apply.

 

21.7                        Certification
of amounts.  A notice which is signed by 2
officers of a Creditor Party, which states that a specified amount, or
aggregate amount, is due to that Creditor Party under this Clause 21 and which
indicates (without necessarily specifying a detailed breakdown) the matters in
respect of which the amount, or aggregate amount, is due shall be prima facie
evidence that the amount, or aggregate amount, is due.

 

21.8                        Sums
deemed due to a Lender.  For the purposes
of this Clause 21, a sum payable by the Borrower to the Agent or the Security
Trustee for distribution to a Lender shall be treated as a sum due to that
Lender save in the case of manifest error.

 

22                                  NO SET-OFF
OR TAX DEDUCTION

 

22.1                        No
deductions.  All amounts due from the
Borrower under a Finance Document shall be paid:

 

(a)                                  without any form of set-off,
cross-claim or condition; and

 

(b)                                 free and clear of any tax
deduction except a tax deduction which the Borrower is required by law to make.

 

22.2                        Grossing-up
for taxes.  If the Borrower is required by
law to make a tax deduction from any payment:

 

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

 

(b)                                 the Borrower shall pay the tax
deducted to the appropriate taxation authority promptly, and in any event
before any fine or penalty arises; and

 

(c)                                  the amount due in respect of
the payment shall be increased by the amount necessary to ensure that each
Creditor Party receives and retains (free from any liability relating to the
tax deduction) a net amount which, after the tax deduction, is equal to the
full amount which it would otherwise have received.

 

22.3                        Evidence
of payment of taxes.  Within 1 month
after making any tax deduction, the Borrower shall deliver to the Agent
documentary evidence satisfactory to the Agent that the tax had been paid to
the appropriate taxation authority.

 

22.4                        Exclusion
of tax on overall net income.  In this Clause
22 “tax deduction” means any
deduction or withholding for or on account of any present or future tax except
tax on a Creditor Party’s overall net income.

 

22.5                        Application
to the Master Agreement.  For the
avoidance of doubt, Clause 22 does not apply in respect of sums due from the
Borrower to the Swap Bank under or in connection with the Master Agreement as
to which sums the provisions of section 2(d) (Deduction or Withholding for Tax)
of the Master Agreement shall apply.

 

23                                  ILLEGALITY,
ETC

 

23.1                        Illegality.  This Clause 23 applies if a Lender (the “Notifying Lender”) notifies the Agent that it has become, or
will with effect from a specified date, become:

 

(a)                                  unlawful or prohibited as a
result of the introduction of a new law, an amendment to an existing law or a
change in the manner in which an existing law is or will be interpreted or
applied; or

 

54

 

(b)                                 contrary to, or inconsistent
with, a regulation;

 

for the Notifying Lender to maintain or
give effect to any of its obligations under this Agreement in the manner
contemplated by this Agreement.

 

23.2                        Notification
of illegality.  The Agent shall promptly notify
the Borrower, the Security Parties, the Security Trustee and the other Lenders
of the notice under Clause 23.1 which the Agent receives from the Notifying
Lender.

 

23.3                        Prepayment;
termination of Commitment.  On the Agent
notifying the Borrower under Clause 23.2, the Notifying Lender’s Commitment
shall terminate; and thereupon or, if later, on the date specified in the
Notifying Lender’s notice under Clause 23.1 as the date on which the notified
event would become effective the Borrower shall prepay the Notifying Lender’s
Contribution in accordance with Clause 8 (other than Clause 8.6).

 

24                                  INCREASED
COSTS

 

24.1                        Increased
costs.  This Clause 24 applies if a Lender (the “Notifying Lender”) notifies the Agent that the Notifying
Lender considers that as a result of:

 

(a)                                  the introduction or alteration
after the date of this Agreement of a law, or a regulation or an alteration
after the date of this Agreement in the manner in which a law or regulation is
interpreted or applied (disregarding any effect which relates to the
application to payments under this Agreement of a tax on the Notifying Lender’s
overall net income); or

 

(b)                                 the effect of complying with
any law or regulation (including any which relates to capital adequacy or
liquidity controls or which affects the manner in which the Notifying Lender
allocates capital resources to its obligations under this Agreement (including,
without limitation, the implementation of any regulations which shall replace,
amend and / or supplement those set out in the statement of the Basle Committee
on Banking Regulations and Supervisory Practices dated July 1988 and entitled “International
Convergence of Capital Measurement and Capital Structures”)) which is
introduced, or altered, or the interpretation or application of which is
altered, after the date of this Agreement,

 

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

 

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

 

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

 

(iii)                             an additional or increased cost of funding
or maintaining all or any of the advances comprised in a class of advances
formed by or including the Notifying Lender’s Contribution or (as the case may
require) the proportion of that cost attributable to the Contribution; or

 

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

 

55

 

but not an item attributable to a change in
the rate of tax on the overall net income of the Notifying Lender (or a parent
company of it) or an item covered by the indemnity for tax in Clause 21.1 or by
Clause 22.

 

For the purposes of this Clause 24.1 the
Notifying Lender may in good faith allocate or spread costs and/or losses among
its assets and liabilities (or any class thereof) on such basis as it considers
appropriate.

 

24.2                        Notification
to Borrower of claim for increased costs.  The
Agent shall promptly notify the Borrower and the Security Parties of the notice
which the Agent received from the Notifying Lender under Clause 24.1.

 

24.3                        Payment
of increased costs.  The Borrower
shall pay to the Agent, on the Agent’s demand, for the account of the Notifying
Lender the amounts which the Agent from time to time notifies the Borrower that
the Notifying Lender has specified to be necessary to compensate the Notifying
Lender for the increased cost.

 

24.4                        Notice of
prepayment.  If the Borrower is not willing
to continue to compensate the Notifying Lender for the increased cost under
Clause 24.3, the Borrower may give the Agent not less than 3 Business Days’
notice of its intention to prepay the Notifying Lender’s Contribution.

 

24.5                        Prepayment;
termination of Commitment.  A notice under
Clause 24.4 shall be irrevocable; the Agent shall promptly notify the Notifying
Lender of the Borrower’s notice of intended prepayment; and:

 

(a)                                  on the date on which the Agent
serves that notice, the Commitment of the Notifying Lender shall be cancelled;
and

 

(b)                                 on the date specified in its
notice of intended prepayment, the Borrower shall prepay (without premium or
penalty) the Notifying Lender’s Contribution, together with accrued interest
thereon at the applicable rate plus the Margin (but subject to Clause 21.1).

 

24.6                        Application
of prepayment.  Clause 8 shall apply in
relation to the prepayment.

 

25                                  SET-OFF

 

25.1                        Application
of credit balances.  Each Creditor
Party may without prior notice but following the occurrence of an Event of
Default which is continuing:

 

(a)                                  apply any balance (whether or
not then due) which at any time stands to the credit of any account in the name
of the Borrower at any office in any country of that Creditor Party in or
towards satisfaction of any sum then due from the Borrower to that Creditor
Party under any of the Finance Documents; and

 

(b)                                 for that purpose:

 

(i)                                     break, or alter the maturity of, all or any
part of a deposit of the Borrower;

 

(ii)                                 convert or translate all or any part of a
deposit or other credit balance into Dollars; and/or

 

(iii)                             enter into any other transaction or make
any entry with regard to the credit balance which the Creditor Party concerned
considers appropriate.

 

25.2                        Existing
rights unaffected.  No Creditor
Party shall be obliged to exercise any of its rights under Clause 25.1; and
those rights shall be without prejudice and in addition to

 

56

 

any right of set-off, combination of
accounts, charge, lien or other right or remedy to which a Creditor Party is
entitled (whether under the general law or any document).

 

25.3                        Sums
deemed due to a Lender.  For the
purposes of this Clause 25, a sum payable by the Borrower to the Agent or the
Security Trustee for distribution to, or for the account of, a Lender shall be
treated as a sum due to that Lender; and each Lender’s proportion of a sum so
payable for distribution to, or for the account of, the Lenders shall be
treated as a sum due to such Lender.

 

26                                  TRANSFERS
AND CHANGES IN LENDING OFFICES

 

26.1                        Transfer
by Borrower. The Borrower may not, without the prior consent of the Agent, given
with the authorisation of all the Lenders:

 

(a)                                  transfer any of its rights or
obligations under any Finance Document; or

 

(b)                                 enter into any merger,
de-merger or other reorganisation, or carry out any other act, as a result of
which any of its rights or liabilities would vest in, or pass to, another
person.

 

26.2                        Transfer
by a Lender.  Subject to Clause 26.4, a
Lender (the “Transferor Lender”) may cause:

 

(a)                                  its rights in respect of all
or part of its Contribution; and

 

(b)                                 an equal proportion of its
obligations in respect of all or part of its Commitment,

 

to be (in the case of its rights) transferred
to, or (in the case of its obligations) assumed by, another bank or financial
institution or special purpose vehicle established by any Lender (a “Transferee Lender”) by delivering to the Agent a completed
certificate in the form set out in Schedule 5 with any modifications approved
or required by the Agent (a “Transfer Certificate”)
executed by the Transferor Lender and the Transferee Lender.

 

Any rights and obligations of the
Transferor Lender in its capacity as Agent, the Agent or Security Trustee will
have to be dealt with separately in accordance with the Agency and Trust
Agreement.

 

A transfer pursuant to this Clause 26.2 shall:

 

(i)            require the
prior written the consent of the Agent;

 

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

 

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

 

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

 

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

 

26.3                        Transfer
Certificate, delivery and notification.  As
soon as reasonably practicable after a Transfer Certificate is delivered to the
Agent, it shall (unless it has reason to believe that the Transfer Certificate
may be defective):

 

(a)                                  sign the Transfer Certificate
on behalf of itself, the Borrower, the Security Parties, the Security
Trustee,  each of the other Lenders and
the Swap Bank;

 

57

 

(b)                                 on behalf of the Transferee
Lender, send to the Borrower and each Security Party letters or faxes notifying
them of the Transfer Certificate and attaching a copy of it; and

 

(c)                                  send to the Transferee Lender copies
of the letters or faxes sent under paragraph (b).

 

26.4                        Effective
Date of Transfer Certificate.  A Transfer
Certificate becomes effective on the date, if any, specified in the Transfer
Certificate as its effective date, provided
that it is signed by the Agent under Clause 26.3 on or before that
date.

 

26.5                        No
transfer without Transfer Certificate.  No
assignment or transfer of any right or obligation of a Lender under any Finance
Document is binding on, or effective in relation to, the Borrower, any Security
Party, the Agent or the Security Trustee unless it is effected, evidenced or
perfected by a Transfer Certificate.

 

26.6                        Lender
re-organisation; waiver of Transfer Certificate.  If a Lender enters into any merger,
de-merger or other reorganisation as a result of which all its rights or
obligations vest in a successor, the successor shall automatically and without
any further act being necessary become a Lender with the same Commitment and
Contribution as were held by the predecessor Lender.

 

26.7                        Effect of
Transfer Certificate.  A Transfer
Certificate takes effect in accordance with English law as follows:

 

(a)                                  to the extent specified in the
Transfer Certificate, all rights and interests (present, future or contingent)
which the Transferor Lender has under or by virtue of the Finance Documents are
assigned to the Transferee Lender absolutely;

 

(b)                                 the Transferor Lender’s
Commitment is discharged to the extent specified in the Transfer Certificate;

 

(c)                                  the Transferee Lender becomes
a Lender with a Contribution and a Commitment of an amount specified in the
Transfer Certificate;

 

(d)                                 the Transferee Lender becomes
bound by all the provisions of the Finance Documents which are applicable to
the Lenders generally, including those about pro-rata sharing and the exclusion
of liability on the part of, and the indemnification of, the Agent and the
Security Trustee and, to the extent that the Transferee Lender becomes bound by
those provisions (other than those relating to exclusion of liability), the
Transferor Lender ceases to be bound by them;

 

(e)                                  any part of the Loan which the
Transferee Lender advances after the Transfer Certificate’s effective date
ranks in point of priority and security in the same way as it would have ranked
had it been advanced by the Transferor Lender;

 

(f)                                    the Transferee Lender becomes
entitled to all the rights under the Finance Documents which are applicable to
the Lenders generally, including but not limited to those relating to the
Majority Lenders and those under Clause 5.7 and Clause 20, and to the extent
that the Transferee Lender becomes entitled to such rights, the Transferor
Lender ceases to be entitled to them; and

 

(g)                                 in respect of any breach of a
warranty, undertaking, condition or other provision of a Finance Document or any
misrepresentation made in or in connection with a Finance Document, the
Transferee Lender shall be entitled to recover damages by reference to the loss
incurred by it as a result of the breach or misrepresentation, irrespective of
whether the original Lender would have incurred a loss of that kind or amount.

 

The rights and equities of the Borrower or
any Security Party referred to above include, but are not limited to, any right
of set off and any other kind of cross-claim.

 

58

 

26.8                        Maintenance
of register of Lenders.  During the
Security Period the Agent shall maintain a register in which it shall record
the name, Commitment, Contribution and administrative details (including the
lending office) from time to time of each Lender and the effective date (in
accordance with Clause 26.4) of each Transfer Certificate; and the Agent shall
make the register available for inspection by any Lender, the Security Trustee
and the Borrower during normal banking hours, subject to receiving at least 3
Business Days prior notice.

 

26.9                        Reliance
on register of Lenders.  The entries on
that register shall, in the absence of manifest error, be conclusive in
determining the identities of the Lenders and the amounts of their Commitments
and Contributions and the effective dates of Transfer Certificates and may be
relied upon by the Agent and the other parties to the Finance Documents for all
purposes relating to the Finance Documents.

 

26.10                 Authorisation
of Agent to sign Transfer Certificates. The Borrower, the Security Trustee and
each Lender irrevocably authorises the Agent to sign Transfer Certificates on
its behalf.

 

26.11                 Registration
fee.  In respect of any Transfer Certificate, the
Agent shall, following its request and at its option, be entitled to recover a
registration fee of $2,500 from the Transferor Lender or (at the Agent’s
option) the Transferee Lender.

 

26.12                 Sub-participation;
subrogation assignment.  A Lender may
sub-participate all or any part of its rights and/or obligations under or in
connection with the Finance Documents without the consent of, or any notice to,
the Borrower, any Security Party, the Agent or the Security Trustee; and the
Lenders may assign, in any manner and terms agreed by the Majority Lenders, the
Agent and the Security Trustee, all or any part of those rights to an insurer
or surety who has become subrogated to them.

 

26.13                 Disclosure of information.  A Lender may provide or disclose to an actual
or potential Transferee Lender, any assignee or sub-participant or any person
who may otherwise enter into contractual relations with that Lender in
connection with this Agreement, a copy of this Agreement, copies of all
information provided by the Borrower or any of the Security Parties under or in
connection with each Finance Document, details of drawings made by the Borrower
under this Agreement and information regarding the performance by the Borrower
and the Security Parties of their obligations under this Agreement and the
other Finance Documents.

 

26.14                 Change of
lending office.  A Lender may
change its lending office and may change its booking office by giving notice to
the Agent and the change shall become effective on the later of:

 

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

 

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

 

26.15                 Notification.  On receiving a notice pursuant to Clause
26.14, the Agent shall notify the Borrower and the Security Trustee; and, until
the Agent receives such a notice, it shall be entitled to assume that a Lender
is acting through the lending office or is acting through the booking office of
which the Agent last had notice.

 

27                                  VARIATIONS
AND WAIVERS

 

27.1                        Variations,
waivers etc. by Majority Lenders. 
Subject to Clause 27.2, a document shall be effective to vary, waive,
suspend or limit any provision of a Finance Document, or any Creditor Party’s
rights or remedies under such a provision or the general law, only

 

59

 

if the document is signed, or specifically
agreed to by fax, by the Borrower, by the Agent on behalf and with the consent
of the Majority Lenders, by the Agent and the Security Trustee in their own
rights, and, if the document relates to a Finance Document to which a Security
Party is party, by that Security Party.

 

27.2                        Variations,
waivers etc. requiring agreement of all Lenders. 
However, as regards the following, Clause 27.1 applies as if the words “by
the Agent on behalf and with the consent of the Majority Lenders” were replaced
by the words “by or on behalf and with the consent of every Lender”:

 

(a)                                  a change in the definition of
the Margin or in the definition of LIBOR or EURIBOR;

 

(b)                                 a change to the date for, or
the amount of, any payment of principal, interest, fees, or other sum payable
under this Agreement;

 

(c)                                  a change to any Lender’s
Commitment;

 

(d)                                 an extension of the
Availability Period;

 

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

 

(f)                                    a change to the preamble or to
Clause 2, 3, 4, 5.1, 8.2, 11, 12.4, 17, 18, 19 or 30;

 

(g)                                 a change to this Clause 27;

 

(h)                                 any release of, or material
variation to, a Security Interest, guarantee, indemnity or subordination
arrangement set out in a Finance Document; and

 

(i)                                     any other change or matter as
regards which this Agreement or another Finance Document expressly provides
that each Lender’s consent is required.

 

27.3                        Exclusion
of other or implied variations.  Except for a
document which satisfies the requirements of Clauses 27.1 and 27.2, no
document, and no act, course of conduct, failure or neglect to act, delay or
acquiescence on the part of the Creditor Parties or any of them (or any person
acting on behalf of any of them) shall result in the Creditor Parties or any of
them (or any person acting on behalf of any of them) being taken to have
varied, waived, suspended or limited, or being precluded (permanently or
temporarily) from enforcing, relying on or exercising:

 

(a)                                  a provision of this Agreement
or another Finance Document; or

 

(b)                                 an Event of Default; or

 

(c)                                  a breach by the Borrower or a
Security Party of an obligation under a Finance Document or the general law; or

 

(d)                                 any right or remedy conferred
by any Finance Document or by the general law;

 

(e)                                  and there shall not be implied
into any Finance Document any term or condition requiring any such provision to
be enforced, or such right or remedy to be exercised, within a certain or
reasonable time.

 

28                                  NOTICES

 

28.1                        General.  Unless otherwise specifically provided, any
notice under or in connection with any Finance Document shall be given by
letter or fax; and references in the Finance Documents to written notices,
notices in writing and notices signed by particular persons shall be construed
accordingly.

 

60

 

	
  28.2

  	
  Addresses for communications.  A notice shall be sent:

  
	
   

  	
   

  	
   

  	
   

  
	
  (a)

  	
  to the Borrower:

  	
   

  	
  c/o Approved Manager

  
	
   

  	
   

  	
   

  	
  Akti Kondyli 14

  
	
   

  	
   

  	
   

  	
  185 45 Piraeus

  
	
   

  	
   

  	
   

  	
  Greece

  
	
   

  	
   

  	
   

  	
  Fax No: +30 210 422 0853

  
	
   

  	
   

  	
   

  	
   

  
	
  (b)

  	
  to a Lender:

  	
   

  	
  At the address below its name in Schedule 1 or (as
  the case may require) in the relevant Transfer Certificate

  
	
   

  	
   

  	
   

  	
   

  
	
  (c)

  	
  to the Agent and Security Trustee:

  	
   

  	
  Ludwig-Erhard-Straße 1

  
	
   

  	
   

  	
   

  	
  D-20459 Hamburg

  
	
   

  	
   

  	
   

  	
  Germany

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Fax No: + (49) 40 3701 4649

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Attention: Mr Wolfgang Steinle

  
	
   

  	
   

  	
   

  	
   

  
	
  (d)

  	
  to the Swap Bank:

  	
   

  	
  Theodor-Heuss-Allee 70

  
	
   

  	
   

  	
   

  	
  60486 Frankfurt am Main

  
	
   

  	
   

  	
   

  	
  Germany

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Fax No: + (49) 69 910 36097

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Attention: Legal Department

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  or to such other address as the relevant party may
  notify the other.

  
	
   

  	
   

  
	
  28.3

  	
  Effective date of notices. Subject to Clauses 28.4 and
  28.5:

  
	
   

  	
   

  
	
  (a)

  	
  a notice which is delivered personally or posted
  shall be deemed to be served, and shall take effect, at the time when it is
  delivered; and

  
	
   

  	
   

  
	
  (b)

  	
  a notice which is sent by fax shall be deemed to be
  served, and shall take effect, 2 hours after its transmission is completed.

  
	
   

  	
   

  
	
  28.4

  	
  Service outside business hours. However, if under Clause
  28.3 a notice would be deemed to be served:

  
	
   

  	
   

  
	
  (a)

  	
  on a day which is not a business day in the place of
  receipt; or

  
	
   

  	
   

  
	
  (b)

  	
  on such a business day, but after 5 p.m. local time,

  
	
   

  	
   

  
	
   

  	
  the
  notice shall (subject to Clause 28.5) be deemed to be served, and shall take
  effect, at 9 a.m. on the next day which is such a business day.

  
	
   

  	
   

  
	
  28.5

  	
  Illegible notices. Clauses 28.3 and 28.4 do
  not apply if the recipient of a notice notifies the sender within one hour
  after the time at which the notice would otherwise be deemed to be served
  that the notice has been received in a form which is illegible in a material
  respect.

  
	
   

  	
   

  
	
  28.6

  	
  Valid
  notices. A notice under or in connection with a Finance Document shall not be
  invalid by reason that its contents or the manner of serving it does not
  comply with the requirements of this Agreement or, where appropriate, any
  other Finance Document

  

 

61

 

under which it is served if the failure to
serve it in accordance with the requirements of this Agreement or other Finance
Document, as the case may be, has not caused any party to suffer any
significant loss or prejudice.

 

28.7                        English
language.  Any notice under or in connection with a
Finance Document shall be in English.

 

28.8                        Meaning
of “notice”.  In this Clause “notice”
includes any demand, consent, authorisation, approval, instruction, waiver or
other communication.

 

29                                  SUPPLEMENTAL

 

29.1                        Rights
cumulative, non-exclusive.  The rights and
remedies which the Finance Documents give to each Creditor Party are:

 

(a)                                  cumulative;

 

(b)                                 may be exercised as often as
appears expedient; and

 

(c)                                  shall not, unless a Finance
Document explicitly and specifically states so, be taken to exclude or limit
any right or remedy conferred by any law.

 

29.2                        Severability
of provisions.  If any provision of a Finance
Document is or subsequently becomes void, unenforceable or illegal, that shall
not affect the validity, enforceability or legality of the other provisions of
that Finance Document or of the provisions of any other Finance Document.

 

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

 

29.4                        Benefit and
binding effect.  The terms of this Agreement
shall be binding upon, and shall enure to the benefit of, the parties hereto
and their respective (including subsequent) successors and permitted assigns
and transferees.

 

29.5                        Third
party rights.  A person who is not a party to
this Agreement has no right under the Contracts (Rights of Third Parties) Act
1999 to enforce or to enjoy the benefit of any term of this Agreement.

 

30                                  LAW AND
JURISDICTION

 

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

 

30.2                        Exclusive
English jurisdiction.  Subject to
Clause 30.3, the courts of England shall have exclusive jurisdiction to settle
any disputes which may arise out of or in connection with this Agreement.

 

30.3                        Choice of
forum for the exclusive benefit of the Creditor Parties.  Clause 30.2 is for the exclusive benefit of
the Creditor Parties, each of which reserves the right:

 

(a)                                  to commence proceedings in
relation to any matter which arises out of or in connection with this Agreement
in the courts of any country other than England and which have or claim
jurisdiction to that matter; and

 

(b)                                 to commence such proceedings
in the courts of any such country or countries concurrently with or in addition
to proceedings in England or without commencing proceedings in England.

 

62

 

The Borrower shall not
commence any proceedings in any country other than England in relation to a
matter which arises out of or in connection with this Agreement.

 

30.4                        Process
agent.  The Borrower irrevocably appoints Danaos
Management Consultants at their office for the time being, presently at 4
Staple Inn, Holborrn, London WC1V 7QU, England to act as its process agent to
receive and accept on its behalf any process or other document relating to any
proceedings in the English courts which are connected with this Agreement.

 

30.5                        Lender
rights unaffected.  Nothing in
this Clause 30 shall exclude or limit any right which any Creditor Party may
have (whether under the law of any country, an international convention or
otherwise) with regard to the bringing of proceedings, the service of process,
the recognition or enforcement of a judgment or any similar or related matter
in any jurisdiction.

 

30.6                        Meaning
of “proceedings”.  In this Clause
30, “proceedings” means proceedings of any
kind, including an application for a provisional or protective measure.

 

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

 

63

 

SCHEDULE 1

 

LENDERS AND COMMITMENTS

 

	
  Lender and Lending Office

  	
   

  	
  Commitment

  	
   

  
	
   

  	
   

  	
  (US Dollars)

  	
   

  
	
  Deutsche
  Bank AG Filiale Deutschlandgeschäft

  	
   

  	
  180,000,000

  	
   

  
	
  Ludwig-Erhard-Straße
  1

  	
   

  	
   

  	
   

  
	
  D-20459
  Hamburg

  	
   

  	
   

  	
   

  
	
  Germany

  	
   

  	
   

  	
   

  

 

64

 

SCHEDULE 2

 

DRAWDOWN NOTICE

 

To:          Deutsche Bank AG Filiale
Deutschlandgeschäft

Ludwig-Erhard- Straße 1

D-20459 Hamburg

Germany

 

2008

 

DRAWDOWN NOTICE

 

1                                         We refer to the loan agreement
(the “Loan Agreement”) dated           2008 and made between us, the
Borrower, the Lenders referred to therein and yourselves as Agent and Security
Trustee, in connection with a senior secured term loan facility of up to
US$180,000,000. Terms defined in the Loan Agreement have their defined meanings
when used in this Drawdown Notice.

 

2                                         We request to borrow the
[      ] Advance of Tranche [          ] as follows:

 

(a)                                  Amount: US$[         ];

 

(b)                                 Drawdown Date:  [            
];

 

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

 

(d)                                 Payment instructions : account
of [                       ]
and numbered [                        ]
with [           ] of [                      ].

 

3                                         We represent and warrant that:

 

(a)                                  the representations and
warranties in Clause 10 of the Loan Agreement would remain true and not
misleading if repeated on the date of this notice with reference to the
circumstances now existing; and

 

(b)                                 no Event of Default or
Potential Event of Default has occurred or will result from the borrowing of
the Loan.

 

4                                         This notice cannot be revoked
without your prior consent.

 

5                                         We authorise you to deduct any
fees including the arrangement fee and any accrued commitment fee referred to
in Clause 20 from the amount of the Advance.

 

 

Attorney-in-Fact

for and on behalf of

DANAOS CORPORATION

 

65

 

SCHEDULE 3

 

CONDITION PRECEDENT DOCUMENTS

 

In this Schedule 2 “Relevant Ship” means, in relation to a
Tranche of an Advance to be made under such Tranche, the Ship which is to be
part-financed by that Tranche.

 

PART A

 

The following are the documents referred to in
Clause 9.1(a).

 

1                                         A duly executed original of
each Guarantee, the Master Agreement, the Agency and Trust Agreement, the
Master Agreement Assignment and the Danaos Earnings Account Pledge.

 

2                                         Certified copies of the
certificate of incorporation and constitutional documents of the Borrower and
each Owner.

 

3                                         Copies of resolutions of the
shareholders and directors of each Owner authorising the execution of each of
the Finance Documents to which that Owner is a party and, in the case of each
Owner ratifying the execution of the Shipbuilding Contracts.

 

4                                         Evidence that the Danaos
Earnings Account has been duly opened with the Agent by the Borrower.

 

5                                         The original of any power of
attorney under which any Finance Document is executed on behalf of the Borrower
or each Owner.

 

6                                         Copies of all consents which
the Borrower or any Security Party requires to enter into, or make any payment
under, any Finance Document or any Shipbuilding Contract.

 

7                                         Originals of the Refund
Guarantees and certified true copies of the Shipbuilding Contracts duly
executed by the parties thereto.

 

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

 

9                                         Favourable legal opinions
from lawyers appointed by the Agent on such matters concerning the laws of the
Marshall Islands, Liberia and Korea and such other relevant jurisdictions as
the Majority Lenders may require.

 

10                                  Copies of each Charterparty
duly executed by the parties thereto.

 

11                                  If the Lenders so requires,
in respect of any of the documents referred to above, a certified English
translation prepared by a translator approved by the Agent.

 

PART B

 

The following are the
documents referred to in Clause 9.1(b).

 

1                                         A duly executed original of
the Predelivery Security Assignment and the Charterparty Assignment for Ship A
(and of each document required to be delivered pursuant thereto).

 

2                                         Duly issued invoices from the
Builder showing all sums due and payable to the Builder pursuant to Article II.4(a),
(b), (c) and (d) of Shipbuilding Contract A, together with evidence that all
amounts payable thereunder have been fully paid.

 

66

 

PART C

 

The following are the documents referred to in Clause 9.1(c).

 

1                                         A duly executed original of
the Predelivery Security Assignment and the Charterparty Assignment for each of
Ship B and Ship C (and of each document required to be delivered pursuant
thereto).

 

2                                         Duly issued invoices from the
Builder showing all sums due and payable to the Builder pursuant to Articles
II.4(a), (b) and (c) of Shipbuilding Contract B and Shipbuilding Contract C
together with evidence that all amounts payable thereunder have been duly paid.

 

PART D

 

The following are the documents referred to in Clause 9.1(d).

 

1                                         Documentary evidence that Ship
B and Ship C have had their keel laid in accordance with the relevant
Shipbuilding Contract.

 

2                                         Duly issued invoices from the
relevant Builder showing all sums due and payable to that Builder pursuant to Article
II.4(d) of the Shipbuilding Contract B and C or, as the case may be, upon keel
laying of the Relevant Ship.

 

3                                         Written confirmation from the
relevant Owner and the Approved Manager that they have irrevocably accepted and
approved the building works which have been completed on the Relevant Ship up
to the date of her keel-laying.

 

PART E

 

The following are the
documents referred to in Clause 9.1(e).

 

1                                         A duly executed original of
the Mortgage, the Deed of Covenant (if applicable), the General Assignment (and
of each document to be delivered under each of them) in respect of the Relevant
Ship.

 

2                                         Documentary evidence that:

 

(a)                                  the Relevant Ship has been
unconditionally delivered by the relevant Builder to, and accepted by, the
relevant Owner under the relevant Shipbuilding Contract, and the full purchase
price payable under the relevant Shipbuilding Contract (in addition to the part
being financed by the relevant Tranche together with the amounts payable by the
relevant Owner) has been duly paid;

 

(b)                                 the Relevant Ship has been
unconditionally delivered by its Owner to, and accepted by, its Charterer for
operation under the Charterparty relative to that Ship;

 

(c)                                  the Relevant Ship is
definitively and permanently registered in the name of the relevant Owner under
an Approved Flag;

 

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

 

(e)                                  the Relevant Ship maintains
the highest available class with a classification society which is a member of
the International Association of Classification Societies and which his
acceptable to the Agent free of all overdue recommendations and conditions affecting
the class;

 

67

 

(f)                                    the Mortgage and (if
applicable) the Deed of Covenant in respect of the Relevant Ship have been duly
registered against the Relevant Ship as a valid first preferred or priority
ship mortgage and (if applicable) collateral deed of covenant in accordance
with the laws of the applicable Approved Flag State; and

 

(g)                                 the Relevant Ship is insured
in accordance with the provisions of this Agreement and all requirements
therein in respect of insurances have been complied with.

 

3                                         Documents establishing that
the Relevant Ship will, as from its Delivery Date, be managed by the Approved
Manager on terms acceptable to the Agent, together with:

 

(a)                                  the Approved Manager’s
Undertaking in respect of the Relevant Ship; and

 

(b)                                 copies of the document of
compliance (DOC), and the safety management certificate (SMC) pursuant to the
ISM Code and International Ship Security Certificate issued pursuant to the
ISPS Code in relation to the Ship, the relevant Owner and/or the Approved
Manager.

 

4                                         A valuation of the Relevant
Ship addressed to the Agent and dated no earlier than 30 days prior to the
relevant Delivery Date, stated to be for the purposes of this Agreement and
prepared in accordance with Clause 15 which shows the value of the Relevant
Ship in an amount acceptable to the Agent.

 

5                                         A favourable opinion (at the
cost of the Borrower) from an independent insurance consultant acceptable to
the Agent on such matters relating to the insurances for the Relevant Ship as
the Agent may require.

 

6                                         Favourable legal opinions from
lawyers appointed by the Agent on such matters concerning the laws of the
Marshall Islands, Liberia and Korea and such other relevant jurisdictions as
the Majority Lenders may require.

 

Every copy document delivered
under this Schedule shall be certified as a true and up to date copy by a
director or the secretary (or equivalent officer) of the relevant Owner.

 

68

 

SCHEDULE 4

 

AMOUNT OF ADVANCES

 

Ship A

 

	
  Stage of Construction

  	
   

  	
  Amount due

  to Yard

  under

  Shipbuilding

  Contract

  	
   

  	
  Maximum

  amount of

  Advance

  	
   

  
	
   

  	
   

  	
  ($)

  	
   

  	
  ($)

  	
   

  
	
  Issue
  of Refund Guarantee

  	
   

  	
  6,380,000

  	
   

  	
   

  	
   

  
	
  Six
  months after signing of Shipbuilding Contract

  	
   

  	
  6,380,000

  	
   

  	
  21,720,000

  	
   

  
	
  Steel-cutting

  	
   

  	
  6,380,000

  	
   

  	
   

  	
   

  
	
  Keel-laying

  	
   

  	
  6,380,000

  	
   

  	
   

  	
   

  
	
  Delivery

  	
   

  	
  38,280,000

  	
   

  	
  38,280,000

  	
   

  
	
  Total

  	
   

  	
   

  	
   

  	
  60,000,000

  	
   

  

 

Ship B

 

	
  Stage of Construction

  	
   

  	
  Amount due

  to Yard

  under

  Shipbuilding

  Contract

  	
   

  	
  Maximum

  amount of

  Advance

  	
   

  
	
   

  	
   

  	
  ($)

  	
   

  	
  ($)

  	
   

  
	
  Issue
  of Refund Guarantee

  	
   

  	
  6,380,000

  	
   

  	
   

  	
   

  
	
  Six
  months after signing of Shipbuilding Contract

  	
   

  	
  6,380,000

  	
   

  	
  15,340,000

  	
   

  
	
  Steel-cutting

  	
   

  	
  6,380,000

  	
   

  	
   

  	
   

  
	
  Keel-laying

  	
   

  	
  6,380,000

  	
   

  	
  6,380,000

  	
   

  
	
  Delivery

  	
   

  	
  38,280,000

  	
   

  	
  38,280,000

  	
   

  
	
  Total

  	
   

  	
   

  	
   

  	
  60,000,000

  	
   

  

 

69

 

Ship C

 

	
  Stage of
  Construction

  	
   

  	
  Amount due

  to Yard

  under

  Shipbuilding

  Contract

  	
   

  	
  Maximum

  amount of

  Advance

  	
   

  
	
   

  	
   

  	
  ($)

  	
   

  	
  ($)

  	
   

  
	
  Issue
  of Refund Guarantee

  	
   

  	
  6,380,000

  	
   

  	
   

  	
   

  
	
  Six
  months after signing of Shipbuilding Contract

  	
   

  	
  6,380,000

  	
   

  	
  15,340,000

  	
   

  
	
  Steel-cutting

  	
   

  	
  6,380,000

  	
   

  	
   

  	
   

  
	
  Keel-laying

  	
   

  	
  6,380,000

  	
   

  	
  6,380,000

  	
   

  
	
  Delivery

  	
   

  	
  38,280,000

  	
   

  	
  38,280,000

  	
   

  
	
  Total

  	
   

  	
   

  	
   

  	
  60,000,000

  	
   

  

 

70

 

SCHEDULE 5

 

TRANSFER CERTIFICATE

 

The Transferor and the
Transferee accept exclusive responsibility for ensuring that this Certificate
and the transaction to which it relates comply with all legal and regulatory
requirements applicable to them respectively.

 

To:          DEUTSCHE
BANK AG FILIALE DEUTSCHLANDGESCHÄFT for itself and for and on behalf of the
Borrower, each Security Party, the Security Trustee, and each Lender, as
defined in the Loan Agreement referred to below.

 

[                  ],
20[  ]

 

1              This Certificate relates to a Loan Agreement dated [·] 2008 (the “Agreement”)
and made between (1) Danaos Corporation (the “Borrower”), (2) the banks and financial institutions
listed in Schedule 1 as Lenders, (3) Deutsche Bank AG as Swap Bank and (4) Deutsche
Bank AG Filiale Deutschlandgeschäft as Agent and Security Trustee for a loan
facility of up to $180,000,000 in aggregate.

 

2              In this Certificate, terms defined in the Agreement
shall, unless the contrary intention appears, have the same meanings when used
in this Certificate and in addition:

 

“Relevant Parties” means the Agent, the Borrower, each
Security Party, the Security Trustee, each Lender and the Swap Bank;

 

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

 

“Transferee” means [full name] of [lending office].

 

3              The effective date of this Certificate is [·], provided
that this Certificate shall not come into effect unless it is signed
by the Agent on or before that date.

 

4              The Transferor assigns to the Transferee absolutely
and without recourse all rights and interests (present, future or contingent)
which the Transferor has as Lender under or by virtue of the Agreement and
every other Finance Document in relation to [·] per cent. of its Contribution, which
amounts to $[·].

 

5              By virtue of this Certificate and Clause 26 of the
Agreement, the Transferor is discharged [entirely from its Commitment which
amounts to $[·]] [from [·] per cent. of its Commitment which
percentage represents $[·]].

 

6              The Transferee undertakes with the Transferor and each
of the Relevant Parties that the Transferee will observe and perform all the obligations
under the Finance Documents which Clause 26 of the Agreement provides will
become binding on it upon this Certificate taking effect.

 

7              The Agent, at the request of the Transferee (which
request is hereby made) accepts, for the Agent itself and for and on behalf of
every other Relevant Party, this Certificate as a Transfer Certificate taking
effect in accordance with Clause 26 of the Agreement.

 

71

 

8              The Transferor:

 

(a)           warrants to the Transferee and each Relevant Party:

 

(i)            that the Transferor has full capacity to enter into
this transaction and has taken all corporate action and obtained all consents
which it needs in connection with this transaction; and

 

(ii)           that this Certificate is valid and binding as regards
the Transferor;

 

(b)           warrants to the Transferee that the Transferor is
absolutely entitled, free of encumbrances, to all the rights and interests
covered by the assignment in paragraph 4 above; and

 

(c)           undertakes with the Transferee that the Transferor
will, at its own expense, execute any documents which the Transferee reasonably
requests for perfecting in any relevant jurisdiction the Transferee’s title
under this Certificate or for a similar purpose.

 

9              The Transferee:

 

(a)           confirms that it has received a copy of the Agreement
and of each other Finance Document;

 

(b)           agrees that it will have no rights of recourse on any
ground against either the Transferor, the Agent, the Security Trustee, any of
the Arrangers or any Lender in the event that:

 

(i)            any Finance Document proves to be invalid or
ineffective;

 

(ii)           the Borrower or any Security Party fails to observe or
perform its obligations, or to discharge its liabilities, under any Finance
Document; or

 

(iii)          it proves impossible to realise any asset covered by a
Security Interest created by a Finance Document or the proceeds of such assets
are insufficient to discharge the liabilities of the Borrower or any Security
Party under the Finance Documents;

 

(c)           agrees that it will have no rights of recourse on any
ground against the Agent, the Security Trustee, the Arrangers or any Lender in
the event that this Certificate proves to be invalid or ineffective;

 

(d)           warrants to the Transferor and each Relevant Party:

 

(i)            that it has full capacity to enter into this
transaction and has taken all corporate action and obtained all consents which
it needs to take or obtain in connection with this transaction; and

 

(ii)           that this Certificate is valid and binding as regards
the Transferee; and

 

(e)           confirms the accuracy of the administrative details
set out below regarding the Transferee.

 

10           The Transferor and the Transferee each undertake with
the Agent and the Security Trustee severally, on demand, fully to indemnify the
Agent and/or the Security Trustee in respect of any claim, proceeding,
liability or expense (including all legal expenses) which they or either of
them may incur in connection with this Certificate or any matter arising out of
it, except such as are shown to have been mainly and directly caused by the
gross 

 

72

 

and
culpable negligence or dishonesty of the Agent’s or the Security Trustee’s own
officers or employees.

 

11           The Transferee shall repay to the Transferor on demand
so much of any sum paid by the Transferor under paragraph 10 above as exceeds
one-half of the amount demanded by the Agent or the Security Trustee in respect
of a claim, proceeding, liability or expense which was not reasonably
foreseeable at the date of this Certificate; but nothing in this paragraph
shall affect the liability of each of the Transferor and the Transferee to the
Agent or the Security Trustee for the full amount demanded by it.

 

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

 

	
  [Name of
  Transferor]

  	
   

  	
  [Name of
  Transferee]

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
  By:

  
	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
  Date:

  

 

Agent

 

Signed for
itself and for and on behalf of itself

as Agent and for every other Relevant Party

 

	
  [Name of
  Agent]

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  
	
   

  	
   

  
	
  Date:

  	
   

  

 

73

 

Administrative Details of Transferee

 

Name of
Transferee:

 

Lending
Office:

 

Contact Person

(Loan
Administration Department):

 

Telephone:

 

Telex:

 

Fax:

 

Contact Person

(Credit
Administration Department):

 

Telephone:

 

Telex:

 

Fax:

 

Account for
payments:

 

NOTE:                    THIS TRANSFER CERTIFICATE ALONE MAY NOT
BE SUFFICIENT TO TRANSFER A PROPORTIONATE SHARE OF THE TRANSFEROR’S INTEREST IN
THE SECURITY CONSTITUTED BY THE FINANCE DOCUMENTS IN THE TRANSFEROR’S OR
TRANSFEREE’S JURISDICTION OR IN THE JURISDICTION OF THE LAW WHICH GOVERNS A
PARTICULAR SECURITY INTEREST.  IT IS THE
RESPONSIBILITY OF EACH LENDER TO ASCERTAIN WHETHER ANY OTHER DOCUMENTS ARE
REQUIRED FOR THIS PURPOSE.

 

74

 

SCHEDULE 6

 

FORM OF COMPLIANCE CERTIFICATE

 

To:          Deutsche Bank AG Filiale Deutschlandgeschäft

Ludwig-Erhard-
Straße 1

D-20459
Hamburg

Germany

 

[·] 200[·]  

 

Dear Sirs,

 

We refer to a
loan agreement [·] 2008 (the “Loan Agreement”) made between (amongst
others) yourselves and ourselves in relation to a senior secured term loan
facility of up to $180,000,000 in aggregate.

 

Words and
expressions defined in the Loan Agreement shall have the same meaning when used
in this compliance certificate.

 

We enclose
with this certificate a copy of the [audited]/[unaudited] consolidated accounts
for the Borrower’s Group for the [Financial Year] [6-month period] ended [·]. 
The accounts (i) have been prepared in accordance with all
applicable laws and USGAAP all consistently applied, (ii) give a true and
fair view of the state of affairs of the Borrower’s Group at the date of the
accounts and of its profit for the period to which the accounts relate and (iii) fully
disclose or provide for all significant liabilities of the Borrower’s Group.

 

We also
enclose copies of the valuations of all the Fleet Vessels which were used in
calculating the Market Value Adjusted Total Assets of the Borrower’s Group as
at [·].

 

The Borrower
represents that no Event of Default or Potential Event of Default has occurred
as at the date of this certificate [except for the following matter or event [set out all material details of matter or event]].  In addition as of [·], the Borrower confirms compliance with
the financial covenants set out in Clause 12.5 of the Loan Agreement for the 6
months ending as of the date to which the enclosed accounts are prepared.

 

We now certify that, as at [·]:

 

(a)           the ratio of Total Liabilities (after deducting all
Cash and Cash Equivalents) to Market Value Adjusted Total Assets (after
deducting all Cash and Cash Equivalents) is [·]:[·];

 

(b)           the aggregate of all Cash and Cash Equivalents is $[·] per fleet vessel, representing [·] per cent. of the Consolidated Debt;

 

(c)           the Interest Coverage Ratio is [·]:[·]; and

 

(d)           the Market Value Adjusted Net Worth of the Borrower’s
Group is $[·].

 

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

 

	
   

  	
   

  
	
  [·]

  	
   

  
	
  Chief Financial Officer of

  	
   

  
	
  Danaos Corporation

  	
   

  

 

75

 

EXECUTION PAGE

 

	
  BORROWER

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SIGNED by Mr. Iraklis Prokopakis

  	
   

  	
  )

  
	
  for and on behalf of

  	
   

  	
  )

  	
  /s/ Iraklis Prokopakis

  
	
  DANAOS CORPORATION

  	
   

  	
  )

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  LENDERS

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SIGNED by Evangelia Hatziefstratiou

  	
   

  	
  )

  	
   

  
	
  for and on behalf of

  	
   

  	
  )

  	
   

  
	
  DEUTSCHE BANK AG FILIALE

  	
   

  	
  )

  	
  /s/ Evangelia Hatziefstratiou

  
	
  DEUTSCHLANDGESCHÄFT

  	
   

  	
  )

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  AGENT

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SIGNED by Evangelia Hatziefstratiou

  	
   

  	
  )

  	
   

  
	
  for and on behalf of

  	
   

  	
  )

  	
   

  
	
  DEUTSCHE BANK AG FILIALE

  	
   

  	
  )

  	
  /s/ Evangelia Hatziefstratiou

  
	
  DEUTSCHLANDGESCHÄFT

  	
   

  	
  )

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SECURITY TRUSTEE

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SIGNED by Evangelia Hatziefstratiou

  	
   

  	
  )

  	
   

  
	
  for and on behalf of

  	
   

  	
  )

  	
   

  
	
  DEUTSCHE BANK AG FILIALE

  	
   

  	
  )

  	
  /s/ Evangelia Hatziefstratiou

  
	
  DEUTSCHLANDGESCHÄFT

  	
   

  	
  )

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SWAP BANK

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SIGNED by Evangelia Hatziefstratiou

  	
   

  	
  )

  	
   

  
	
  for and on behalf of

  	
   

  	
  )

  	
  /s/ Evangelia Hatziefstratiou

  
	
  DEUTSCHE BANK AG

  	
   

  	
  )

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Witness to all the

  	
   

  	
  )

  	
   

  
	
  above signatures

  	
   

  	
  )

  	
  /s/ George Paleokrassas

  
	
   

  	
   

  	
   

  	
   

  
	
  Name: George Paleokrassas

  	
   

  	
   

  	
   

  
	
  Address:
  Watson, Farely & Williams

                 2,
  Defteras Merarchias

                 Piraeus
  185 – 36 — Greece

  	
   

  	
   

  	
   

  

 

76

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