Document:

Exhibit 4.18

 

SUPPLEMENTAL
LETTER

 

	
  To:

  	
  Danaos Corporation

  
	
   

  	
  Trust Company Complex

  
	
   

  	
  Ajeltake Road

  
	
   

  	
  Ajeltake Island

  
	
   

  	
  Majuro

  
	
   

  	
  Marshall Islands MH 96960

  

 

June 26, 2009

 

Loan
Agreement dated 20 February 2007 (as amended and supplemented, the “Loan
Agreement”) made between (i) Danaos Corporation (the “Borrower”), (ii) the
banks and financial institutions listed in Schedule 1 thereto as lenders and (iii) The
Royal Bank of Scotland plc as swap bank, issuing bank, agent and security
trustee in respect of a revolving credit facility of up to US$700,000,000.

 

We refer to the Loan
Agreement.  Words and expressions defined
in the Loan Agreement shall have the same meaning when used in this letter.

 

1                                         Requests and Lenders’ agreement.  We further refer to our recent discussions
regarding your requests that we consent to:

 

(a)                                  the release of
the Guarantees given by each of Megacarrier (No.1) Corp. and Megacarrier (No.2)
Corp. and of all other Finance Documents entered into by such companies;

 

(b)                                 the re-allocation
of the Pre-Delivery Advances of $79,760,000 in aggregate currently allocated to
Hyundai Hull S456 and Hyundai Hull S457 (each of which has been ordered by
Megacarrier (No. 1) Corp. and Megacarrier (No. 2) Corp. respectively)
in the manner described in the New Schedule 8 to the Loan Agreement (the text
of which is set out in Clause 2(n) below);

 

(c)                                  provide pre and
post-delivery financing in the aggregate amount of $95,000,000 in order to
assist with the acquisition of a 8,563 TEU container carrier newbuilding currently
under construction at Shanghai Jiangnan Changxing Heavy Industries having Hull
number H1022A; and

 

(d)                                 that we agree to
the novation of SPD trades 3102 & 3103 under the Stand-alone ISDA
Agreement dated 15 June 2007 into the swap facility under the Master
Agreement dated 20 February 2007.

 

Our approval of
your requests is subject to the satisfaction of the conditions referred to in
Clause 2 below.

 

2                                         Amendments to Loan Agreement and Finance Documents.  The arrangements in this letter necessitate
certain amendments to the Loan Agreement and we confirm that the Loan Agreement
shall be amended (with effect from the date on which the Borrower and the other
Security Parties sign the acknowledgement to this letter) as follows:

 

(a)                                  by construing all references in the
Loan Agreement to “this Agreement” and all references in the Finance Documents
(other than the Loan Agreement) to the “Loan Agreement” as references to the
Loan Agreement as amended and supplemented by this letter;

 

(b)                                 by adding the following definitions in
Clause 1.1 thereof:

 

 

“Additional Approved Shipbuilding Contract A” means
the shipbuilding contract dated 19 September 2007 and made between
Jiangnan and CSTC as seller and Teucarrier as buyer, for the construction by
Jiangnan of Hull No. H1022A and its purchase by Teucarrier, as
supplemented from time to time;

 

“Additional Approved Shipbuilding
Contract B” means the shipbuilding contract dated 16 March 2007
and made between Hanjin and Expresscarrier for the construction by Hanjin of
Hull No. N-218 and its purchase by Expresscarrier, as supplemented from
time to time;

 

“Additional Approved
Shipbuilding Contract C” means the shipbuilding dated
9 November 2007 and made between Hyundai and Cellcontainer for the
construction by Hyundai of Hull No. S461 and its purchase by
Cellcontainer, as supplemented from time to time;

 

“Additional
Approved Ship Availability Period” 
means, in respect of any Advance which is to be used in financing, or is
to be allocated to, an Additional Approved Ship:

 

(a)                                   in the case of
any Advance in respect of:

 

(i)            Additional
Approved Ship A, 30 November 2011;

 

(ii)           Additional
Approved Ship B, 31 December 2010; and

 

(iii)          Additional
Approved Ship C, 28 February 2011; or

 

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

 

“Additional
Approved Ship Tranche”  means,
in respect of each Additional Approved Ship, the aggregate of all Advances
which have been used to part-finance the acquisition of that Additional
Approved Ship;

 

“Additional Approved Ships”
means each of:

 

(a)                                   the 8,530 TEU
container carrier newbuilding currently being constructed by Jiangnan and
having Hull No. H1022A to be purchased by Teucarrier pursuant to the
Additional Approved Shipbuilding Contract A (“Additional  Approved Ship A”);

 

(b)                                  the 6,500 TEU
container carrier newbuilding currently being constructed by Hanjin and having
Hull  No. N-218 to be purchased by
Expresscarrier pursuant to the Additional Approved Shipbuilding Contract B (“Additional 
Approved Ship B”); and

 

(c)                                   the 10,100 TEU
container carrier newbuilding currently being constructed by Hyundai and having
Hull No. S461 to be purchased by Cellcontainer pursuant to the Additional
Approved Shipbuilding Contract C (“Additional  Approved Ship C”),

 

and in the
singular means any of them;

 

“Amendment Mortgage”
means, in relation to “ZIM MONACO”, an addendum to the first priority Maltese
ship mortgage executed or to be executed by Continent Marine Inc. in favour of
the Security Trustee in such form as the Agent may approve or require;

 

“Cellcontainer” means
Cellcontainer (No.6) Corp., a corporation existing under the laws of Liberia
whose registered office is at 80 Broad Street, Monrovia, Liberia;

 

“CSTC”  means China Shipbuilding
Trading Company Limited, a company organised and existing under the laws of the
Republic of China, having its registered office at Faugyan

 

2

 

Mansion, 56 (Yi) Zhongguancum Nan Dajie, Beijing
100044, The People’s Republic of China;

 

“Expresscarrier” means
Expresscarrier (No.5) Corp., a corporation existing under the laws of Liberia
whose registered office is at 80 Broad Street, Monrovia, Liberia;

 

“H1022A Equity
Payments” means an aggregate amount of $37,750,000 applied or to be
applied in satisfying the equity payments to be paid by Teucarrier to Jiangnan
(being the amount by which the aggregate of the second, third, fourth and fifth
instalments payable pursuant to the Additional Approved Shipbuilding Contract A
exceeds the maximum amount of the H1022A Predelivery Advances for the same
instalments);

 

“H1022A
Predelivery Advances” means an aggregate amount of $75,050,000 made
or to be made available to finance or allocated or to be allocated towards the
pre-delivery stage payments payable pursuant to the Additional Approved
Shipbuilding Contract A;

 

“H1022A Tranche” means
the aggregate of the H1022A Predelivery Advances and all other amounts or
Advances allocated to such Tranche as referred to in Clause 4.12 (in an
aggregate amount of $95,000,000), made or to be made available to assist
Teucarrier with the acquisition of Additional Approved Ship A;

 

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

 

“Hull S456” means the container vessel with
Hull Number S456 of approximately 12,600 TEU currently under construction by
Hyundai pursuant to a shipbuilding contract dated 28 September 2007 and
executed between Megacarrier (No. 1) and Hyundai;

 

“Hull
S457” means the container vessel of approximately 12,600
TEU currently under construction by Hyundai and having Hull Number S457
pursuant to a shipbuilding contract dated 28 September 2007 and executed
between Megacarrier (No. 2) and Hyundai;

 

“Hull
S458” means the container vessel of approximately 12,600
TEU currently under construction by Hyundai and having Hull Number S458
pursuant to a shipbuilding contract dated 28 September 2007 and executed
between Megacarrier (No. 3) and Hyundai;

 

“Hull
S459” means the container vessel of approximately 12,600
TEU currently under construction by Hyundai and having Hull Number S459
pursuant to a shipbuilding contract dated 28 September 2007 and executed
between Megacarrier (No. 4) and Hyundai;

 

“Hull
S460” means the container vessel of approximately 12,600
TEU currently under construction by Hyundai and having Hull Number S460
pursuant to a shipbuilding contract dated 28 September 2007 and executed
between Megacarrier (No. 5) and Hyundai;

 

“Hyundai”  means Hyundai
Samho Heavy Industries Co. Ltd., a company organised and existing under the
laws of the Republic of Korea whose registered office is 1700, Yongdang-Ri,
Samho-Eup, Youngam-Gun, Chollanam-Do, Korea;

 

“Jiangnan”  means Shanghai
Jiangnan Changxing Heavy Industry Company Limited, a company organised and
existing under the laws of the People’s Republic of China whose registered
office is Marine Tower, No. 1 Pudong Da Dao, Shanghai 200120, The People’s
Republic of China;

 

“Megacarrier (No. 1)”  means Megacarrier
(No. 1) Corp., a corporation existing under the laws of Liberia whose
registered office is at 80 Broad Street, Monrovia, Liberia;

 

“Megacarrier (No. 2)”  means Megacarrier
(No. 2) Corp., a corporation existing under the laws of Liberia whose
registered office is at 80 Broad Street, Monrovia, Liberia;

 

3

 

“Megacarrier (No. 3)”  means Megacarrier
(No. 3) Corp., a corporation existing under the laws of Liberia whose
registered office is at 80 Broad Street, Monrovia, Liberia;

 

“Megacarrier (No. 4)”  means Megacarrier
(No. 4) Corp., a corporation existing under the laws of Liberia whose
registered office is at 80 Broad Street, Monrovia, Liberia;

 

“Megacarrier (No. 5)”  means Megacarrier
(No. 5) Corp., a corporation existing under the laws of Liberia whose
registered office is at 80 Broad Street, Monrovia, Liberia;

 

“Minimum Liquidity
Amount”  has the meaning given
in Clause 12.24;

 

“Mortgage Addendum”
means, in respect of “HYUNDAI BRIDGE”, “HYUNDAI HIGHWAY” and “HYUNDAI PROGRESS”
the second addendum thereto, executed or to be executed by the relevant Owner
in favour of the Security Trustee in such form as the Agent may approve or
require and, in the plural, means all of them;

 

“Outgoing Hulls” means
Hull S456 and Hull S457, and in the singular means either of them;

 

“RCF & Swaps Cash Deposit
Account”  means an
account in the name of the Borrower with the Agent in Piraeus designated “RBS/Danaos
Corporation RCF & Swaps” (having account number 577411) or any other
account (with that or another office of the Agent) which is designated by the
Agent as the Swaps Cash Deposit Account for the purposes of the Stand-alone
ISDA Agreement or the Loan Agreement;

 

“RCF & Swaps Cash Deposit
Account Pledge”  means the deed containing, inter alia, a
charge in respect of the Swaps Cash Deposit Account executed or to be executed
by the Borrower in favour of the Security Trustee in such form as the Lenders
may approve or require;

 

“Stand-alone ISDA Agreement”  means the ISDA
Agreement and collateral schedule each dated 15 June 2007 (on the 1992
ISDA (Multicurrency-Crossborder) form) made between the Borrower and The Royal
Bank of Scotland plc;

 

“Teucarrier” means
Teucarrier (No.5) Corp., a corporation existing under the laws of Liberia whose
registered office is at 80 Broad Street, Monrovia, Liberia;

 

“Waiver Period”  means the period
commencing on 31 December 2008 (inclusive) and ending on 31 January 2010
(inclusive);

 

(c)                                  by adding the words “or an Additional
Approved Ship” after the words “an Alternative Ship” in the definitions of “Approved
Purchase Contract”, “Approved Seller”, “Delivery Date”, “Pre-Delivery Security
Assignment” and “Refund Guarantee” in Clause 1.1 thereof and in the second line
of Clause 12.20 thereof;

 

(d)                                 by adding a new paragraph (d) in
the definition of “Designated Transaction” in Clause 1.1 thereof as follows:

 

“(d)         it is entered into by
the Borrower pursuant to the Stand-alone ISDA Agremeent”;

 

(e)                                  by deleting the definition of “Margin”
in Clause 1.1 thereof and replacing it with the following:

 

““Margin” means, with effect from 22 May 2009,
2.25 per cent. per annum;”;

 

(f)                                    by adding in the third line of the
definition of “Pre-Delivery Advance” in Clause 1.1 thereof after the words “an
Alternative Ship” the words “or an Additional Approved Ship”;

 

4

 

(g)                                by adding in the definition of “Ships”
in Clause 1.1 thereof after the words “the Alternative Ships” the words “ and
the Additional Approved Ships”;

 

(h)                                by adding in the definition of “Tranche
B” in Clause 1.1 thereof after the words “(or subject to the other terms of
this Agreement, an Advance which has been redrawn following the repayment or
prepayment of any of the above-mentioned Alternative Advances)” the words “and
each Additional Approved Ship Tranche”;

 

(i)                                    by adding in Clause 4.2(g) thereof
after the figure “$272,000,000” the following:

 

“(or, as from the
date on which the re-allocation of the Pre-Delivery Advances takes effect
pursuant to Clause 4.11, $198,000,000)”;

 

(j)                                    by adding a new Clause 4.2(m) in
the Loan Agreement as follows:

 

“(m)                           in the case of the H1022A Tranche, the
aggregate of the H1022A Predelivery Advances shall not exceed:

 

(i)                               in the case of
the first Advance, an amount of $18,800,000 which has been made available to
finance 80 per cent. of the first instalment payable pursuant to the Additional
Approved Shipbuilding Contract A;

 

(ii)                            in the case of the
second Advance, an amount up to the lesser of (aa) $18,800,000 and (bb) 80 per
cent. of the second instalment payable pursuant to the Additional Approved
Shipbuilding Contract A;

 

(iii)                         in the case of the third
Advance, an amount up to the lesser of (aa) $18,800,000 and (bb) 80 per cent.
of the third (keel-laying) instalment payable pursuant to Additional Approved
Shipbuilding Contract A; and

 

(iv)                        in the case of the fourth
Advance, an amount up to the lesser of (aa) $18,650,000 and (bb) 79.4 per cent.
of the fourth (launching) instalment payable pursuant to Additional Approved
Shipbuilding Contract A;

 

(k)                                 by adding new Clauses 4.11, 4.12 and
4.13 in the Loan Agreement as follows:

 

“4.11                  Re-allocation of Pre-Delivery
Advances.  On the date on which the Finance Documents
relating to the Outgoing Hulls are released and/or discharged, the Pre-Delivery
Advances shall be re-allocated in the manner set out in Schedule 8.

 

4.12                        Constitution of H1022A Tranche. 
Subject to Clause 4.11, the H1022A Tranche will be constituted as
follows:

 

(a)                                  an amount of $18,800,000 which has been
drawn down by way of a Pre-Delivery Advance to finance 80 per cent. of the
first instalment paid pursuant to Additional Approved Shipbuilding Contract A;

 

(b)                                 an amount of $35,250,000 (which is
currently constituted by a Guarantee issued by the Issuing Bank to Jiangnan),
representing the whole of the second and 50 per cent. of the third
(keel-laying) instalments payable pursuant to Additional Shipbuilding Contract
A;

 

(c)                                  the aggregate undrawn amount of the
Tranche A Limit and the Tranche B Limit, in the amount of $21,000,800; and

 

(d)                                 an amount of $19,950,000 representing
part of the Pre-Delivery Advances allocated to Hull S457 (prior to the
re-allocation which will be effected pursuant to Clause 4.11).

 

5

 

4.13                        “Further re-allocation of the Pre-Delivery Advances.

 

Notwithstanding
the other provisions of this Agreement, the Pre-Delivery Advances may be
allocated to the Additional Approved Ships subject to the following conditions:

 

(a)                                 the aggregate of the Advances to be
allocated to the Additional Approved Ships shall not exceed $293,000,000 in
aggregate (constituted by the aggregate amount of the Pre-Delivery Advances on
26 June 2009, being $271,999,200 and the undrawn balance of the Tranche A
Limit and the Tranche B Limit on the same date, being $21,000,800) which shall
be divided between each Additional Approved Ship as follows:

 

(i)                                     up
to $95,000,000 in respect of Additional Approved Ship A represented by the
H1022A Tranche;

 

(ii)                                  up
to $80,000,000 in respect of Additional Approved Ship B; and

 

(iii)                               up
to $118,000,000 in respect of Additional Approved Ship C;

 

(b)                                 each Advance
(other than an Advance under the H1022A Tranche to which the provisions of
Clause 4.2(m) will apply) allocated to each of Additional Approved Ship B
and Additional Approved Ship C in respect of a pre-delivery stage payment
payable pursuant to either Additional Approved Shipbuilding Contract B or
Additional Approved Shipbuilding Contract C will not exceed 80 per cent. of
that pre-delivery stage payment;

 

(c)                                  on or prior to
each date (a “Payment Date”) on
which a payment (a “Payment”)
needs to be made pursuant to either Additional Approved Shipbuilding Contract B
or Additional Approved Shipbuilding Contract C, the Borrower shall ensure that
it has deposited in the RCF & Swaps Cash Deposit Account an amount
(which when aggregated with any other freely available amounts standing to the
credit of that account (which shall exclude, without limitation, the Minimum
Liquidity Amount) equal to such Payment and on the Payment Date the following
shall take place:

 

(i)                                   the Agent shall
remit the relevant Payment to Hanjin or, as the case may be, Hyundai; and

 

(ii)                                the Agent shall
re-allocate an amount equal to 80 per cent. of the Payment then allocated as a
Pre-Delivery Advance in respect of any of Hull S458, Hull S459 or Hull S460 as
an Advance (in an equal amount) in respect of either Additional Approved Ship B
or Additional Approved Ship C subject to the value of all security maintained
by the Agent at the relevant time in respect of all Advances for Additional
Approved Ship B and Additional Approved Ship C and all other Pre-delivery
Advances then outstanding being at least equal to the aggregate of (1) 125
per cent. of any Refund Guarantees which have been assigned to the Security
Trustee by means of a Pre-Delivery Security Assignment (with the value of such
Refund Guarantees being, on each Payment Date, an amount equal in aggregate to
all instalments secured by that Refund Guarantee which have been paid on or
before the Payment Date) and (2) 100 per cent. of any cash security
maintained with any Creditor Party in respect of the Advances; and

 

(iii)                             following any
re-allocation of an Advance pursuant to this Clause 4.13(c), the Agent shall
send the Borrower a table substantially in the form set out in Schedule 8
giving details of the manner in which the 

 

6

 

Advances are
allocated between the various Ships subject to those Advances and the security
for the Advances;

 

(d)                                the
Borrower shall ensure that the Agent receives a notice by no later than 11.00 a.m.
(Greek time) 3 Business Days prior to a Payment Date notifying the Agent of the
Payment to be made on that Payment Date and the Payment Date shall be a
Business Day falling within the Availability Period for the relevant Advance;

 

(e)                                 on
or before the date on which an Advance is re-allocated, the Borrower shall
ensure that it has complied with the applicable conditions precedent referred
to in Clause 10.1 (with all references in such Clause to an “Approved Ship”
being construed as references to an “Additional Approved Ship”);”

 

(f)                                   each
Advance in respect of, or allocated to, an Additional Approved Ship will be
treated as an Advance under Tranche B;

 

(g)                                on
or before the Delivery Date in respect of Additional Approved Ship A, the
Borrower shall provide the Agent and its legal advisers with satisfactory
evidence that Additional Approved Ship A will, as from the Delivery Date, be
subject to a 12-year charter with CMA CGM at a rate of $43,000 per day until September 2023;

 

(h)                                on
or before the Delivery Date in respect of Additional Approved Ship B, the
Borrower shall provide the Agent and its legal advisers with satisfactory
evidence that Additional Approved Ship B will, as from the Delivery Date,
subject to a 15-year charter with Yang Ming at a rate of $34,325 per day until July 2022;
and

 

(i)                                    on
or before the Delivery Date in respect of Additional Approved Ship C, the
Borrower shall provide the Agent and its legal advisers receive satisfactory
evidence that Additional Approved Ship C will, as from the Delivery Date, be
subject to a 12-year charter with Hanjin Shipping at a rate of $54,000 per day
until December 2025;”;

 

(l)                                  by adding new Clauses 9.15 and 9.16 in
the Loan Agreement as follows:

 

“9.15                    Repayment of Additional Approved Ship Tranches.  Subject to Clause
9.16, each Additional Approved Ship Tranche shall be repaid in accordance with
Clause 9.1.

 

9.16                          Review of repayment of Additional Approved Tranches.  The Agent (acting upon the instructions of
all the Lenders) will, by no later than 31 January 2010, review, in
consultation with the Borrower, the repayment of each Additional Approved Ship
Tranche by reference to then prevailing conditions in the shipping and finance
markets.  Any amendments to the manner of
repayment will take effect as from 31 January 2010 subject to the Agent
having served a written notice on the Borrower with the new repayment schedule
at least (3) Business Days in advance.”;

 

(m)                             by adding in the second line of Clause
10.1(b) and 10.1(c) thereof after the words “Approved Ship”, the
words “or Additional Approved Ship”;

 

(n)                               by adding a new Clause 12.24 in the
Loan Agreement as follows:

 

“12.24                 Minimum Liquidity. The Borrower shall maintain throughout
the Security Period in the RCF & Swaps Cash Deposit Account an amount
in aggregate of not less than $53,793,000 (the “Minimum Liquidity Amount”) which may be applied in the following
manner (in the sole discretion of the Agent (acting upon the instructions of
the Majority Lenders)):

 

7

 

(a)                                        first,
as security for any out of the market position in respect of any Transactions
entered into pursuant to the Stand-alone ISDA Agreement for amounts exceeding
in aggregate $15,000,000;

 

(b)                                       secondly,
in satisfaction of any obligation of the Borrower to provide additional
security pursuant to Clause 16.1(i) or (ii); and

 

(c)                                        thirdly,
any balance (in an amount not exceeding $37,750,000 in aggregate) shall be used
in funding the Hull 1022A Equity Payments in the following manner subject to no
Event of Default or Potential Event of Default being in existence at the
relevant time:

 

(i)                               an amount of up
to the lesser of (aa) $4,700,000 and (bb) 20 per cent. of the second instalment
payable pursuant to the Additional Approved Shipbuilding Contract A may be used
in paying part of the second instalment;

 

(ii)                            an amount of up
to the lesser of (aa) $4,700,000 and (bb) 20 per cent. of the third (keel
laying) instalment payable pursuant to the Additional Approved Shipbuilding
Contract A may be used in paying part of the third instalment;

 

(iii)                         an amount of up to the
lesser of (aa) $4,850,000 and (bb) 20.6 per cent. of the fourth (launching)
instalment payable pursuant to the Additional Approved Shipbuilding Contract A
may be used in paying part of the fourth instalment; and

 

(iv)                        an amount of up to the
lesser of (aa) $23,500,000 and (bb) 100 per cent. of the fifth (delivery)
instalment payable pursuant to the Additional Approved Shipbuilding Contract A
may be used in paying the whole of the fifth instalment”;

 

(o)                                by adding a new Clause 12.25 in the
Loan Agreement as follows:

 

“12.25     Additional
Security.  The Borrower will:

 

(a)                                    provide,
or ensure that a third party provides, additional security acceptable to the
Lenders if at any time the Minimum Liquidity Amount is insufficient to secure
the out of the market position in respect of any Transactions entered into
pursuant to the Stand-alone ISDA Agreement;

 

(b)                                   ensure,
that if the circumstances referred to in paragraph (a) above or in Clause
16.1(i) apply at any time, the Security Trustee (or, as the case may be,
the Lenders) receive, in priority to other banks or financial institutions,
Security Interests over ships to be nominated by the Borrower to, and accepted
by, the Agent (acting on the instructions of the Majority Lenders) which, in
the opinion of the Majority Lenders, are sufficient to meet any shortfall under
Clause 16.1 or in respect of the out of the market position for any
Transactions entered into pursuant to the Stand-alone ISDA Agreement (with such
Security Interests being documented in such terms as the Agent may, with
authorisation from the Majority Lenders, approve or require);

 

(p)                                by deleting in the first line of Clause
13.3(b) thereof the words “at any time” and replacing them with the
following:

 

“(i)                           at
any time during the Waiver Period and (ii) at any time thereafter (but
subject to Clause 13.8)”;

 

(q)                                by adding the words “(other than during
the Waiver Period in the case of Clause 13.4(a) below)” after the words “at
all times” in the first line of Clause 13.4 thereof;

 

(r)                                   by adding a new Clause 13.8 as follows:

 

8

 

“13.8                    Dividends.  The Agent shall, with effect from the last
day of the Waiver Period (the “Dividends
Review Date”), review the restriction which is to apply to the
payment of dividends and any other forms of distribution pursuant to Clause
13.3(b) in order to determine the level of dividends which may be paid or
the distributions which may be made thereafter and shall consult with the
Borrower in good faith regarding the same by no later than the date falling 15
days prior to the Dividends Review Date. 
The Agent shall notify the Borrower in writing by no later than 3
Business Days prior to the Dividends Review Date of the provisions which are to
apply as from that date regarding the payment of dividends and any other forms
of distribution and Clause 13.3(b)(ii) will, and from that date, be
construed accordingly.”;

 

(s)                                  by deleting in its entirety Clause 16.1
thereof and replacing it with the following:

 

“16.1                  Provision of
additional security cover; prepayment.  The Borrower
undertakes with each Creditor Party that, if at any time the Agent notifies the
Borrower that:

 

(a)                            the aggregate of the Market Values of
the Mortgaged Ships (which expression shall include for the purposes of this
Clause 16.1, all the Alternative Ships (with the Market Value of each Alternative
Ship being calculated pursuant to Clause 16.5 on the assumption that, on the
date of determination of its Market Value, that Alternative Ship had already
been delivered to its Owner);

 

(b)                           the aggregate equity contributions of
the Borrower and/or the Owners towards the construction costs of the Additional
Approved Ships (including, without limitation, the H1022A Equity Payments);

 

(c)                            any part of the Minimum Liquidity
Amount which is standing to the credit of the Swaps Cash Deposit Account and/or
any other account in the name of the Borrower with the Agent; plus

 

(d)                           the net realisable value of any
additional security previously provided under this Clause 16,

 

is below the
Relevant Percentage (as hereafter defined) of the aggregate of the Loan, the Swap
Exposure and the Outstandings less the aggregate of all Pre-Delivery Advances,

 

the Borrower
will, within 14 Business Days after the date on which the Agent’s notice is
served, either:

 

(i)                                    provide,
or ensure that a third party provides, additional security acceptable to the
Lenders which, in the opinion of the Majority Lenders, has a net realisable
value at least equal to the shortfall and which, if it consists of or includes
a Security Interest, covers such asset or assets and is documented in such terms
as the Agent may, with authorisation from the Majority Lenders, approve or
require; or

 

(ii)                                 prepay in accordance with Clause 9 such
part (at least) of the Loan and/or procure cancellation of such part of the
Outstandings as will eliminate the shortfall.

 

In
this Clause 16.1, “Relevant Percentage”
means:

 

(a)                                  during the Waiver Period, 100 per
cent.; and

 

(b)                                   at all other times, 125 per cent.
(subject to the review of the Security Cover requirement to be made by the
Agent at the end of the Waiver Period pursuant to Clause 16.11);”; and

 

9

 

(t)                                    by adding a new Clause 16.11 in the
Loan Agreement as follows:

 

“16.11               Security Cover requirement.  The Agent shall, with effect from the last
day of the Waiver Period (the “Security Cover
Review Date”), review the security cover requirement which is to
apply pursuant to this Clause 16 in order to determine the level of the
Relevant Percentage which is to apply thereafter and shall consult with the
Borrower in good faith regarding the same by no later than the date falling 15
days prior to the Review Date.  The Agent
shall notify the Borrower in writing by no later than 3 Business Days prior to
the Security Cover Review Date of the Relevant Percentage which is to apply as
from that date and the definition of “Relevant Percentage” will, as from that
date, be construed to mean the percentage referred to in the Agent’s notice to
the Borrower.”;

 

(u)                                 by adding a new Schedule 8 to the Loan
Agreement as follows:

 

SCHEDULE 8

 

Existing allocation of Pre-Delivery Advances

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Ship allocated to

  Advance

  	
   

  	
  Exposure

  ($)

  	
   

  	
  Refund Guarantees

  ($)

  	
   

  	
  Cash

  ($)

  	
   

  
	
  HN S-461

  	
   

  	
  18,550,000

  	
   

  	
  58,096,000

  	
   

  	
   

  	
   

  
	
  HN S-456

  	
   

  	
  39,879,840

  	
   

  	
  49,850,000

  	
   

  	
   

  	
   

  
	
  HN S-457

  	
   

  	
  39,879,840

  	
   

  	
  49,850,000

  	
   

  	
   

  	
   

  
	
  HN S-458

  	
   

  	
  39,879,840

  	
   

  	
  49,850,000

  	
   

  	
   

  	
   

  
	
  HN S-459

  	
   

  	
  39,879,840

  	
   

  	
  49,850,000

  	
   

  	
   

  	
   

  
	
  HN S-460

  	
   

  	
  39,879,840

  	
   

  	
  49,850,000

  	
   

  	
   

  	
   

  
	
  HN H1022A

  	
   

  	
  18,800,000

  	
   

  	
  23,500,000

  	
   

  	
   

  	
   

  
	
  HN H1022A (Performance
  Guarantee)

  	
   

  	
  35,250,000

  	
   

  	
   

  	
   

  	
  7,050,000

  	
   

  
	
  Total

  	
   

  	
  271,999,200

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

New allocation of Pre-Delivery Advances

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Ship allocated to

  Advance

  	
   

  	
  Exposure

  ($)

  	
   

  	
  Refund Guarantees

  ($)

  	
   

  	
  Cash

  ($)

  	
   

  
	
  HN S-461

  	
   

  	
  46,477,000

  	
   

  	
  58,096,000

  	
   

  	
   

  	
   

  
	
  HN N-218

  	
   

  	
  15,840,000

  	
   

  	
  19,800,000

  	
   

  	
   

  	
   

  
	
  HN S-458

  	
   

  	
  39,879,840

  	
   

  	
  49,850,000

  	
   

  	
   

  	
   

  
	
  HN S-459

  	
   

  	
  39,879,840

  	
   

  	
  49,850,000

  	
   

  	
   

  	
   

  
	
  HN S-460

  	
   

  	
  39,879,840

  	
   

  	
  49,850,000

  	
   

  	
   

  	
   

  
	
  HN H1022A

  	
   

  	
  Transferred to H1022A Tranche

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  HN H1022A  (Performance Guarantee)

  	
   

  	
  Transferred to H1022A Tranche

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  HN S461 & HN
  N218

  	
   

  	
  16,043,000

  	
   

  	
   

  	
   

  	
  16,043,000

  	
   

  
	
  Total

  	
   

  	
  197,999,520

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

10

 

2                                         Conditions.  Our consent to your requests is subject to
the condition that the Agent shall have received in form and substance
satisfactory to it and its legal advisers:

 

(a)                                  evidence that the persons executing
this Supplemental Letter, the RCF & Swaps Cash Deposit Account Pledge,
the Mortgage Addenda and the Amendment Mortgage on behalf of the Borrower and
the Owners are duly authorised to execute the same;

 

(b)                                 documents of the kind specified in
paragraphs 2, 3 and 4 of Schedule 3, Part A to the Loan Agreement in
relation to the relevant Owner in connection with their execution of the
Mortgage Addenda and the Amendment Mortgage updated with appropriate
modifications to refer to this Letter;

 

(c)                                  an extract of the standing resolutions
of the Borrower signed by the Secretary of the Borrower pursuant to which the
persons who have executed this Supplemental Letter and the RCF & Swaps
Cash Deposit Account Pledge have derived their authority to do so;

 

(d)                                 evidence that there is an amount of not
less than $53,793,000 in aggregate standing to the credit of the RCF &
Swaps Cash Deposit Account and any other account held in the name of the
Borrower with the Agent in Piraeus;

 

(e)                                  evidence that the RCF & Swaps
Cash Deposit Account has been opened and all mandate forms, documentation
required by the Agent in relation to the Borrower and any Security Party
pursuant to the Agent’s “know your customer” requirements have been received;

 

(f)                                    evidence that each of Teucarrier,
Expresscarrier and Cellcontainer is a direct or indirect wholly-owned
subsidiary of the Borrower;

 

(g)                                 receipt of an original of each Mortgage
Addendum and Amendment Mortgage duly signed by the relevant Owner and evidence
satisfactory to the Agent and its lawyers that the same has been registered as
a valid addendum, or amendment as the case may be, to the applicable Mortgage
in accordance with the laws of Panama and Malta (as the case may be);

 

(h)                                 such legal opinions as the Agent may
require in respect of the matters contained in this Supplemental Letter, the
RCF & Swaps Cash Deposit Account Pledge, the Mortgage Addenda, the
Amendment Mortgage and any other Finance Document entered into pursuant to this
Supplemental Letter;

 

(i)                                     evidence that the agent referred to in
clause 30.4 of the Loan Agreement has accepted its appointment as agent for
service of process under this Supplemental Letter, the RCF & Swaps
Cash Deposit Account Pledge and any other Finance Document entered into
pursuant to this Supplemental Letter; and

 

(j)                                     on or before the date of this
Supplemental Letter we have received the fee payable pursuant to Clause 4(a) below.

 

3                                         Representations and Warranties.  The Borrower
represents and warrants to the Agent that:

 

(a)                                  the representations and warranties in
Clause 11 of the Loan Agreement, as amended and supplemented by this
Supplemental Letter, remain true and not misleading if repeated on the date of
this Supplemental Letter with reference to the circumstances now existing; and

 

(b)                                 the representations and warranties in
the Finance Documents (other than the Loan Agreement) to which it is a party,
as amended and supplemented by this Supplemental Letter remain true and not
misleading if repeated on the date of this Supplemental Letter with reference
to the circumstances now existing.

 

4                                         Fees and Expenses.  The Borrower will pay (or, in the case of
paragraph (a) below, has paid) to the Agent:

 

11

 

(a)                                 on the date of
acceptance of the Agent’s commitment letter dated 19 May 2009, a
non-refundable fee of $100,000 (for the sole account of the Agent);

 

(b)                                on the Drawdown
Date of the first H1022A Predelivery Advance to be drawn down following the
date of this Supplemental Letter, a non-refundable fee of $166,250
(representing 0.175 per cent. of the maximum amount of the H1022A Tranche));

 

(c)                                 on the Drawdown
Date of the first Advance which will be used to finance the acquisition of
Additional Approved Ship B, a non-refundable fee of $140,000 (representing
0.175 per cent. of the maximum amount of the Advances which may be used to
finance the acquisition of Additional Approved Ship B, being $80,000,000); and

 

(d)                                on the Drawdown
Date of the first Advance which will be used to finance the acquisition of
Additional Approved Ship C, a non-refundable fee of $206,500 (representing
0.175 per cent. of the maximum amount of the Advances which may be used to
finance the acquisition of Additional Approved Ship C, being $118,000,000).

 

5                                         Notices.  The
provisions of Clause 29 (Notices) of the Loan Agreement shall apply as if they
were expressly incorporated herein.

 

6                                         Governing law.  This
letter shall be governed by and construed in accordance with English law and
the provisions of Clause 35 (Law and Jurisdiction) of the Loan Agreement shall
apply to this letter as if they were expressly incorporated herein.

 

Unless amended by the terms of this letter, the provisions
of the Loan Agreement and the other Finance Documents shall remain in full
force and effect.

 

Please confirm your acceptance to the foregoing terms and conditions
by signing the acceptance and acknowledgement below.

 

Yours faithfully

 

 

	
  /s/ Alex Rodopoulos

  	
   

  
	
   

  	
   

  
	
  for and on behalf of

  	
   

  
	
  THE ROYAL BANK OF SCOTLAND plc

  	
   

  

 

 

We hereby acknowledge
receipt of the above letter, confirm our agreement to the terms of the same.

 

 

	
  /s/ Iraklis Prokopakis

  	
   

  
	
   

  	
   

  
	
  for and on behalf of

  	
   

  
	
  DANAOS
  CORPORATION

  	
   

  

 

Date: June 26, 2009

 

12

 

We hereby confirm and
acknowledge that we have read and understood the terms and conditions of the above
letter and agree in all respects to the same and confirm that the Finance
Documents to which we are a party shall remain in full force and effect and
shall continue to stand as security for the obligations of the Borrower under
the Loan Agreement.

 

 

	
  /s/ Zoe Lappa

  	
   

  	
  /s/ Zoe Lappa

  
	
  for and on behalf of

  	
   

  	
  for and on behalf of

  
	
  FEDERAL MARINE INC.

  	
   

  	
  AUCKLAND MARINE INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Zoe Lappa

  	
   

  	
  /s/ Zoe Lappa

  
	
   

  	
   

  	
   

  
	
  for and on behalf of

  	
   

  	
  for and on behalf of

  
	
  SEACARRIERS SERVICES INC.

  	
   

  	
  WELLINGTON MARINE INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Zoe Lappa

  	
   

  	
  /s/ Zoe Lappa

  
	
   

  	
   

  	
   

  
	
  for and on behalf of

  	
   

  	
  for and on behalf of

  
	
  MEGACARRIER (NO. 1) CORP

  	
   

  	
  TEUCARRIER (NO. 5) CORP.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Zoe Lappa

  	
   

  	
  /s/ Zoe Lappa

  
	
   

  	
   

  	
   

  
	
  for and on behalf of

  	
   

  	
  for and on behalf of

  
	
  MEGACARRIER (NO. 3) CORP

  	
   

  	
  MEGACARRIER (NO. 2) CORP.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Zoe Lappa

  	
   

  	
  /s/ Zoe Lappa

  
	
   

  	
   

  	
   

  
	
  for and on behalf of

  	
   

  	
  for and on behalf of

  
	
  MEGACARRIER (NO. 5) CORP

  	
   

  	
  MEGACARRIER (NO. 4) CORP.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Zoe Lappa

  	
   

  	
  /s/ Zoe Lappa

  
	
   

  	
   

  	
   

  
	
  for and on behalf of

  	
   

  	
  for and on behalf of

  
	
  SEACARRIERS
  LINES INC.

  	
   

  	
  SPEEDCARRIER
  (NO. 7) CORP

  

 

13

 

	
  /s/ Zoe Lappa

  	
   

  	
  /s/ Zoe Lappa

  
	
  for and on
  behalf of

  	
   

  	
  for and on
  behalf of

  
	
  CELLCONTAINER (NO. 6) CORP.

  	
   

  	
  SPEEDCARRIER (NO. 6) CORP

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Zoe Lappa

  	
   

  	
   

  
	
  for and on
  behalf of

  	
   

  	
   

  
	
  SPEEDCARRIER (NO. 8) CORP

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date: June 26, 2009

  	
   

  	
   

  

 

14•  •  •

•  •  •

STRATEGIC ALLIANCE AGREEMENT

BETWEEN

GLOBAL ECOLOGY CORPORATION.

AND

SUREWATER SOLUTIONS LLC

•  •  •

JULY 2009

•  •  •

LAW OFFICES OF RONALD I. PALTROWITZ

1375 BROADWAY, 3RD FLOOR, 

NEW YORK, NEW YORK 10018

TABLE OF CONTENTS

                Page

INTRODUCTION

1

ARTICLE I:

DEFINITIONS

1

ARTICLE II:

GRANT OF RIGHTS; PURCHASE AGREEMENTS

5

ARTICLE III:

TERM AND TERMINATION

6

ARTICLE IV:

ROYALTIES, PURCHASE AND AUDIT RIGHTS

7

ARTICLE V:

RESPONSIBILITIES AND OBLIGATIONS

8

ARTICLE VI:

CONFIDENTIAL INFORMATION AND NON-DISCLOSURE 

10

ARTICLE VII:

INDEMNIFICATION

11

ARTICLE VIII:

LIMITATION OF LIABILITY

12

ARTICLE IX:

CHANGE OF OWNERSHIP

12

ARTICLE X:

RELATIONSHIP OF THE PARTIES

12

ARTICLE XI: 

ACKNOWLEDGMENTS

12

ARTICLE XI I:

FORCE MAJEURE

13

ARTICLE XIII: 

DISPUTE RESOLUTION

13

ARTICLE XIV:

AUTHORITY

13

ARTICLE XV: 

GENERAL 

14

SIGNATURES:

15

SCHEDULE 1

 EXCLUSIVE TERRITORY

17

EXHIBIT “A” 

SPECIFICATIONS

18

-i-

Law Offices of Ronald I. Paltrowitz

1375 Broadway, 3rd Floor, New York, New York 10018

STRATEGIC ALLIANCE AGREEMENT

BETWEEN

GLOBAL ECOLOGY CORPORATION.

AND

SUREWATER SOLUTIONS LLC

This is a Strategic Alliance Agreement entered into by and between Global Ecology Corporation. and SureWater Solutions LLC.

WITNESSETH:

WHEREAS, Global Ecology Corporation is the owner of an “Invention” (as hereinafter defined); and 

WHEREAS, SureWater Solutions LLC desires to be the “Developer”, “Manufacturer” and “Distributor” on an “Exclusive Basis” (as these terms are hereinafter defined), and Global Ecology Corporation desires to appoint SureWater Solutions LLC as the  Developer, Manufacturer and Distributor, of the Invention on an Exclusive Basis, of the “Invention” and “Revised Invention(s)” (as hereinafter defined), in accordance with the provisions of this Strategic Alliance Agreement; and

WHEREAS, Global Ecology Corporation. and SureWater Solutions LLC agree that a Strategic Alliance between their two companies will be the most efficient and economical means to develop, manufacture, market, sell and distribute the “Invention” and any “Revised Invention(s)”;

NOW, THEREFORE, in consideration of the mutual agreements, obligations and covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties agree as follows:

ARTICLE I: DEFINITIONS

As used in this “Agreement”:

1.1

“Additional Distributor(s)” means such additional distributor(s) of the “Invention” and/or the “Revised Invention(s)” as may be mutually agreed upon, from time to time, by “Global” and “SureWater”.

1.2

“Additional Manufacturer(s)” means such additional manufacturer(s) of the “Invention” and/or “Revised Invention(s)”as may be mutually agreed upon, from time to time, by “Global” and “SureWater”.

1.3

“Affiliates” means two or more “Subsidiaries” owned by the same “Party”.

1.4

“Agreement” shall mean this Strategic Alliance Agreement.

1.5

“Chemicals” means the copper sulfate chemical to be used in the “Invention” and/or any “Revised Invention(s)”.

1.6

“Cost of Goods Sold” shall mean the cost of buying the raw materials for, and the labor in the manufacturing of, the “Invention” and/or any “Revised Invention(s)”, inclusive of all overhead but exclusive of all costs for insurance, freight, and/or applicable taxes.

1.7

“Current Members” of “SureWater” shall mean Richard Conte, Douglas J. Hedberg, Victor B. Hedberg, William J. Brinsky, and Ronald I. Paltrowitz, Esq.

1.8

"Derivative Work" means a product or other work that is based upon the “Invention” and/or “Revised Invention(s)”, such as a revision, modification, expansion, or any other form in which the “Invention” and/or “Revised Invention(s)” may be recast, adapted, transformed, or otherwise altered, and that, if prepared without authorization by the owner of the “Invention” and/or “Revised Invention(s)”, would constitute an infringement of the owner's “Intellectual Property Rights”.

1.9

“Developer” refers to “SureWater” as the developer on an “Exclusive Basis” of next generation and/or revised models of the “Invention” (hereinafter referred to as “Revised Invention(s)”).

1.10

“Distributors” means (i) “Global” other than in the “Territory” and (ii) “SureWater” on an “Exclusive Basis” in the “Territory”, of the “Invention” and/or “Revised Invention(s)”. 

1.11

"Effective Date" shall be the later of the dates on which the “Parties” execute the “Agreement”.

1.12

“Exclusive Basis” means that during the Term: (i) “SureWater” shall be the only “Developer” authorized by “Global”; and (ii) “SureWater” shall be the only “Manufacturer”, unless and until “Additional Manufacturer(s)” are appointed, and “SureWater” shall be the only Distributor in the “Territory”. 

1.13

“Global” shall mean Global Ecology Corporation, f/k/a Homeland Security Network, Inc.., a Nevada corporation having a principal place of business at 140 Smith Street, Keasbey, New Jersey 06632.

1.14

“Global Purchase Price” shall mean a price equal to the “Cost of Goods” times 1.15.

1.15

“Gross Lease Price” shall mean the total rental paid by lessee during the full term of the lease less any part of the rental payments attributable to taxes.

1.16

“Gross Sales Price” shall mean the total price paid for each “Invention” and/or “Revised Invention(s)” less the cost of insurance, freight, and direct marketing cost (such as consultants and brokers) and any and all taxes and/or duties imposed.

1.17

“Intellectual Property Rights” shall mean all rights, title and interest that “Global” now has in the “Invention”, any all rights, title and interest that “Global” and/or “SureWater” may have in any “Revised Invention(s)”, or any “Derivative Works”.

1.18

“Invention” shall mean collectively the “Mobile Pure Water Station Water Treatment System” as described in the specifications annexed hereto as Exhibit “A”, and any Revised Invention(s).

1.19

“Invention Documentation” shall mean any and all documentation, whether in written or electronic form, that describes and/or relates to the installation, use, and/or maintenance of the “Invention” and/or any “Revised Invention(s)” or to the terms of sale and/or lease of the “Invention” and/or any “Revised Invention(s)”.

1.20

“Licenses” shall mean the grant of all rights set forth in Section 2.1.

1.21

Manufacturer” refers to “SureWater” as the manufacturer on an “Exclusive Basis” of the “Invention” and/or “Revised Invention(s)” subject to the right of “Global” and “SureWater” to appoint “Additional Manufacturers”.

1.22

“Minimum Sales Requirements” shall mean the sale by SureWater of not less than fifteen (15) “Inventions” by calendar year end 2009, and fifteen (15) “Inventions” during each six (6) month period thereafter.

1.23

“Parties” shall mean “Global” and “SureWater”, collectively.

1.24

“Party” shall mean either “Global” or “SureWater”, individually, as the context requires.

1.25

“Patent” means any patent issued for, or in connection with, the “Invention” and/or any “Revised Invention(s)”, whether or not a patent has been issued or filed as of the “Effective Date”, as well as any and all other classes or types of patents, including original patents, design patents, process patents, utility models, as well as divisions, reissues, reexaminations, continuations, issued for or in connection with the “Invention” and/or any “Revised Invention(s)”, and applications for any of the aforementioned in all countries of the world.

1.26

 “Person” means any corporation, limited liability company, or partnership, general or limited partnership, sole proprietorship, association, joint venture, individual in whatever capacity (including as trustee, receiver, conservator, administrator or liquidator), governmental authority, or other entity or body, whether domestic or foreign.

1.27

“Retail Sales Price” means the price paid by a third party for the Invention and/or the Chemicals exclusive of freight, insurance, and taxes.

1.28

“Revised Invention(s) means any design or systems modifications to the Invention.

1.29

 “Subsidiaries” means any “Person” more than fifty percent (50%) owned by a Party.

1.30

“SureWater” shall mean SureWater Solutions LLC, a limited liability company organized under the laws of the State of New York having its registered office at P.O. Box 338, Lake Peekskill, New York 12537, and any of its “Subsidiaries” and/or “Affiliates”.

1.31

“SureWater Purchase Price” shall mean a price equal to Global’s actual cost for the Chemicals times 1.15.

1.32

 “Term” shall mean the period commencing on the “Effective Date” and continuing perpetually, unless terminated pursuant to the provisions of Article III.

1.33

"Territory" shall mean certain countries, regions, provinces, states, industries, corporations and government agencies, both foreign and domestic, to be mutually agreed upon by the parties and set forth on Schedule 1, as it may be amended from time to time by mutual consent, which consent shall not be unreasonably withheld.

1.34

Throughout the remainder of this Agreement, “Invention” and “Revised Invention(s)” shall be collectively referred to as the “Invention(s)”.

ARTICLE II: GRANT OF RIGHTS; PURCHASE AGREEMENTS

0.1

During the Term, Global hereby grants to SureWater, on the terms and conditions contained herein, all appropriate rights and licenses under its control contained in the Patent and/or other Intellectual Property Rights, which it now has or will acquire, necessary to enable SureWater to be the Developer and Manufacturer of the Invention(s).  The license granted to SureWater under this Article 2.1 shall be effective unless and until this Agreement is terminated pursuant to the provisions of Article III.

0.2

Global hereby appoints SureWater, on the terms and conditions contained herein, as the Distributor of the Invention(s) in the Territory and SureWater hereby accepts such appointment in the Territory.  Global also agrees that, upon receipt of prior consent, in writing, SureWater may sell and/or lease Invention(s) to prospective purchasers and/or lessors outside the Territory.

0.3

SureWater, as Developer, shall have the right at any time to make changes and/or revisions in the design and/or processes of the Invention(s).  SureWater will give to Global thirty (30) days prior notice of final alterations in the design and/or processes of the Invention(s).  SureWater and Global agree that they shall be co-creators of any Intellectual Property associated with such alterations and/or revisions.

0.4

No licenses under any copyrights, trademarks or other intellectual property rights other than the Patent and Intellectual Property Rights referred to herein are granted under this Agreement.

2.6

No license is granted by Global at this time, either directly or by implication, estoppel or otherwise, in connection with the Patent and/or any Intellectual Property Rights licensed by reason of this Agreement, to any third party that acquires any Invention(s) manufactured by SureWater or any Additional Manufacturers.

.2.7

Global hereby grants SureWater a non-exclusive, royalty free, fully paid right and license to use, adapt, make, or have made Derivative Works of all or any portion of the Invention Documentation, solely for use and distribution with the Invention(s), in the Territory.

2.8

Except as specified herein, Global shall retain all right, title, and interest in and to the Invention, Invention Documentation, and the Intellectual Property licensed hereunder.

2.9

Global agrees to purchase the Invention(s) solely and directly from SureWater and/or approved Additional Manufacturers., except that, prior to purchasing an Invention(s) from an Additional Manufacturer, Global shall first offer the right to manufacture the Invention(s) to SureWater.  All purchases by Global of Invention(s) from SureWater shall be at the Global Purchase Price.

2.10

SureWater agrees that it will manufacture all Invention(s) requested by Global.  In the event that SureWater is unable to complete the manufacture of any Invention(s) within a commercially reasonable period of time, SureWater will so advise Global, in writing, and Global shall have the right to purchase any such Invention(s) from an Additional Manufacturer.

2.10

SureWater agrees to purchase from Global, and Global agrees to sell to SureWater, all of SureWater’s requirements for Chemicals at the SureWater Purchase Price.

2.10

SureWater and Global acknowledge and agree that it will be in their mutual best interests to publicize their joint development and sale and the use of the Invention(s) and agree that they will issue mutually acceptable joint press releases when deemed appropriate to the furtherance of their best interests.  Nothing contained herein shall entitle either Party to publicize or use the name or trademark of the other Party in any manner unrelated to this Agreement without that Party’s written consent or from issuing separate press releases that do not concern or refer to the activities of the other Party.

ARTICLE III: TERM AND TERMINATION

0.1

This Agreement shall continue perpetually unless and until either Party shall terminate the Agreement for “Cause”.  For the purposes of this paragraph, “Cause” shall mean a breach of a “Material Term” of the Agreement by a Party that remains uncured for more than thirty (30) days after receipt of notice, pursuant to the terms of paragraph 16.6, by that Party of the alleged breach and “Material Term” shall mean a term that goes to the root of the Agreement, the breach of which substantially defeats the purpose of the Agreement.  A breach will not be deemed “uncured for more than thirty (30) days after notice” if the Party so notified, within the thirty (30) day period, has commenced a good faith effort to cure a breach that cannot, through no fault of that Party, be cured within thirty (30) days. 

0.2

Either party may terminate this Agreement at any time by written notice given to the other party not less than ninety (90) days prior to the effective date of such notice. In the event either party terminates this Agreement without cause, the terminating party shall pay to the non-terminating party one percent (1%) of the gross amount received from the sale of any Invention or Derivative Work, for a period of seven (7) years from the effective date of such termination.

0.3

Global may, but shall not be required to, revoke SureWater’s” exclusivity in the Territory if “SureWater” fails to meet the “Minimum Sales Requirement”.

0.4

The Licenses shall end upon termination of this Agreement, except as may be required for SureWater to continue to support its existing end-users' use and operation of the Invention(s). 

0.5

The termination of this Agreement will not relieve the Parties of any obligations incurred prior to the date of termination.

ARTICLE IV: ROYALTIES, PURCHASE AND AUDIT RIGHTS

0.1

In consideration of the mutual covenants and agreements of the Parties contained herein, SureWater agrees to:

(i)

sell the Invention(s) to Global for the Global Purchase Price;

(ii)

pay Global a Licensing Fee of two percent (2%) of the Retail Sales Price (but not more than fifteen percent (15%) of the difference between the Retail Sails Price and the Cost of Goods Sold on any single transaction) with respect to any Invention or Derivative Work sold by SureWater to any party other than Global; and

(iii)

pay Global for all Chemicals purchased in any calendar month no later than the 15th day of the following month or on the next business day if the 15th day of a month is a Saturday, Sunday, or holiday.

i.1

In consideration mutual covenants and agreements of the Parties contained herein, Global agrees to:

(i)

pay SureWater for all Invention(s) purchased in any calendar month no later than the 15th day of the following month or on the next business day if the 15th day of a month is a Saturday, Sunday, or holiday;

(ii)

pay SureWater a Royalty of two percent (2%) of the Retail Sales Price (but not more than fifteen percent (15%) of the difference between the Retail Sails Price and the Cost of Goods Sold on any single transaction) with respect to any Invention sold by Global that was not purchased from SureWater; and

(iii)

sell the Chemicals to SureWater for the SureWater Purchase Price.

i.1

SureWater and Global agree that each of them shall fully disclose to the other sufficient documentation to establish the Cost of Goods Sold and/or the Retail Sales Price and/or the purchase price for the Chemicals in connection with each transaction.

i.2

Neither Party shall be entitled to any royalties or discounts other than as set forth herein.

i.3

Each Party shall have the right, at its own expense and during reasonable business hours, to review the records of the other Party upon which Cost of Goods Sold, Retail Sales Price, and/or purchase price for Chemicals were based.

ARTICLE V: RESPONSIBILITIES AND OBLIGATIONS

.1

SureWater shall:

(i)

establish the process and provide the facilities for the manufacture of the Invention(s) pursuant to the Specifications;

(ii)

establish and maintain quality control procedures and performance minimums necessary to assure the proper manufacture of the Invention(s);

(iii)

engage in research and development necessary to assure the continuous improvement of the Invention(s);

(iv)

work with Global to develop international and domestic markets for the Invention;

(v)

maintain appropriate customer service and management of customer relationships for all purchasers and/or lessor of the Invention(s);

(vi)

establish maintain all necessary facilities and personnel for the maintenance and/or repair of all Invention(s) sold by SureWater and/or Global and/or any Additional Distributors and/or Additional Manufacturers, as may be required;

(vii)

work with Global to develop and publish such marketing materials as may be deemed necessary for the successful marketing of the Invention(s); 

(viii)

work with Global to create and publish the Invention Documentation; and

(ix)

take any and all other actions as may be reasonably necessary to carry out the purposes of the Agreement.

(x)

i.1

Global shall:

(i)

provide SureWater with its Chemicals’ requirements;

(ii)

work with SureWater to develop international and domestic markets for the Invention(s);

(iii)

maintain appropriate customer service and management of customer relationships;

(iv)

refer all maintenance and repair requirements for all Invention(s) sold by Global to SureWater;

(v)

work with SureWater to develop and publish such marketing materials as may be deemed necessary for the successful marketing of the Invention(s) 

(vi)

work with SureWater to create and publish the Invention Documentation; and

(vii)

take any and all other actions as may be reasonably necessary to carry out the purposes of the Agreement.

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ARTICLE VI: CONFIDENTIAL INFORMATION AND NON-DISCLOSURE

i.1

Both Parties, in connection with this Agreement, may disclose to the other Party information considered confidential and proprietary information of the disclosing Party ("Confidential Information"). Information shall be considered Confidential Information if identified as confidential in nature by the disclosing Party at the time of disclosure, or that by its nature is normally and reasonably considered confidential, such as information related to past, present or future research, development, or business affairs, any proprietary products, materials or methodologies, or any other information that provides the disclosing party with a competitive advantage. Neither Party shall disclose such Confidential Information to any third party without the prior written consent of the disclosing Party. The receiving Party shall protect the disclosing Party's Confidential Information with the same degree of care that it regularly uses to protect its own Confidential Information from unauthorized use or disclosure. No rights or licenses under patents, trademarks, trade secrets, or copyrights are granted or implied by any disclosure of Confidential Information.

i.2

The obligations of confidentiality imposed by this Agreement shall not apply to any Confidential Information that: (a) is rightfully received from a third party without accompanying markings or disclosure restrictions; (b) is independently developed by employees of the receiving Party who have not had access to such Confidential Information; (c) is or becomes publicly available through no wrongful act of the receiving Party; (d) is already known by the receiving Party as evidenced by documentation bearing a date prior to the date of disclosure; or, (e) is approved for release in writing by an authorized representative of the disclosing Party. In addition, each Party shall be entitled to disclose the other Party's Confidential Information to the extent such disclosure is requested by the order of a court of competent jurisdiction, administrative agency, or other governmental body, provided that the Party required to make the disclosure shall provide prompt, advance notice thereof to enable the other Party to seek a protective order or otherwise prevent such disclosure.

i.3

Except as authorized in writing by the other Party, neither Party shall at any time, either during or after the Term of this Agreement, disclose or use, directly or indirectly, any Confidential Information of which the Party gains knowledge during or by reason of this Agreement and each Party shall retain all such information in trust in a fiduciary capacity for the sole use and benefit of the other Party.

i.4

The terms and conditions of this Agreement, but not its existence, are considered Confidential Information.

ARTICLE VII: INDEMNIFICATION

.1

SureWater shall indemnify and defend Global from and against any and all claims, suits, losses, expenses, or damages including, without limitation, reasonable attorneys’ fees, resulting from any suit or proceeding brought by a third party for any claim including, but not limited to, bodily injury, death, and/or property damage caused by a defect in the manufacture of the Invention(s), intellectual property infringement or violations, or violations of other agreements to which SureWater is a party, or in any way resulting from the improper, negligent, or illegal acts of SureWater including SureWater’s breach of its representations and warranties, provided that Global gives SureWater prompt written notice of any infringement claim, available information, and sole authority and control to settle or defend the claim at SureWater's expense.  SureWater reserves the right to choose the attorneys who may pursue any action that arises under this section.

.2

Global shall indemnify and defend SureWater from and against any and all claims, losses, expenses, costs, or damages including, without limitation, reasonable attorneys’ fees, resulting from any suit or proceeding brought by a third party for any claim including, but not limited to, intellectual property infringement or violations, or violations of other agreements to which Global is a party, in any way resulting from the improper, negligent, or illegal acts of Global including Global’s breach of its representations and warranties, provided that SureWater gives Global prompt written notice of any claim, available information, and sole authority and control to settle or defend the claim at Global 's expense. Global reserves the right to choose the attorneys who may pursue any action that arises under this section.

ARTICLE VIII: LIMITATION OF LIABILITY

NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY DIRECT, INDIRECT SPECIAL, INCIDENTAL, OR CONSEQUENTIAL DAMAGES, INCLUDING LOST PROFITS, ARISING OUT OF THIS AGREEMENT OR ANY PERFORMANCE HEREUNDER, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

ARTICLE IX: CHANGE OF OWNERSHIP

SureWater covenants and agrees that neither the limited liability company (“LLC”) nor any of its Current Members, either individually or collectively, shall sell ownership interests in the LLC sufficient to reduce the Current Members’ ownership interests to less than fifty-one percent (51%).  A violation of this provision shall be considered “cause” for the purposes of Article III.

ARTICLE X: RELATIONSHIP OF THE PARTIES

The Parties acknowledge and agree that: (i) the relationship between Global and SureWater is that of licensor and licensee and/or vendor and vendee; (ii) each Party shall be solely responsible for all of the obligations to be performed by the Party as contemplated by this Agreement; (iii) under no circumstances shall either Party be deemed an employee, agent, or representative of the other; and (iv) neither Party shall have the authority to bind the other to any contractual obligations.

ARTICLE XI: ACKNOWLEDGMENTS

Each Party acknowledges that no representation or statement, and no understanding or agreement, has been made, or exists other than as set forth in this Agreement, that this Agreement and the Exhibits hereto constitute the entire understanding between the Parties concerning the subject matter hereof and supersede all prior discussions, agreements and representations, whether oral or written and whether or not executed by the Parties, and that in entering into this Agreement each Party has not relied on anything done or said or on any presumption in fact or in law, (1) with respect to this Agreement, or to the duration, termination or renewal of this Agreement, or with respect to the relationship between the parties, other than as expressly set forth in this Agreement; or (2) that in any way tends to change or modify the terms, or any of them, of this Agreement or to prevent this Agreement becoming effective; or (3) that in any way affects or relates to the subject matter hereof; and each of the Parties further acknowledges that (i) it has had the opportunity to consult counsel of its choice: (ii) it has participated in the negotiation and drafting of the Agreement; and (iii) the terms and conditions of the Agreement are reasonable, fair and equitable.

ARTICLE XII: FORCE MAJEURE

Neither Party shall be liable for delays in delivery or performance, other than the payment of money, when caused by any of the following which are beyond the actual control of the delayed party: (i) acts of God, (ii) acts of the public enemy, (iii) acts or failure to act by the other party, (iv) acts of civil or military authority, (v) governmental priorities, strikes or other labor disturbances, (vi) hurricanes, (vii) earthquakes, (viii) fires, (ix) floods, (x) epidemics, (xi) embargoes, (xii) war, and (xiii) riots. In the event of any such delay, the date of delivery or performance shall be extended for a period equal to the effect of time lost by reason of the delay.

ARTICLE XIII: DISPUTE RESOLUTION

Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration before one (1) arbitrator, in Newark, New Jersey, in accordance with the rules of the American Arbitration Association then in effect.  Judgment may be entered on the arbitrator’s award in any court of competent jurisdiction.  The prevailing party shall be entitled to recover from the other all costs for such arbitration including reasonable attorneys’ fees and costs incurred in enforcing the terms and conditions of this Agreement.  The parties agree that any demand for arbitration may be served by certified mail/return receipt requested.

ARTICLE XIV: AUTHORITY

Each of the Parties represents and warrants that (i) it has obtained all necessary approvals, consents and authorizations of third parties and/or governmental authorities to enter into this Agreement and to perform and carry out its obligations hereunder, (ii) the persons executing this Agreement on its behalf have express authority to do so, and, in so doing, to bind the party thereto; (iii) the execution, delivery, and performance of this Agreement does not violate any provision of any bylaw, charter, regulation, or any other governing authority of the party; and (iv) the execution, delivery and performance of this Agreement has been duly authorized by all necessary partnership or corporate action and this Agreement is a valid and binding obligation of such party, enforceable in  accordance with its terms.

ARTICLE XV: GENERAL

16.1

Governing Law. The laws of the State of New Jersey govern this Agreement.

16.2 

No Waiver. No waiver of a breach or default of any provision of this Agreement shall be considered a waiver of any subsequent breach or default of any kind or nature.

16.3 

Assignment; Modification; 

Neither Global nor SureWater may assign this Agreement to any Person without the express written consent of other party, except that such approval shall not be required if SureWater shall choose to assign this Agreement to another entity in which it SureWater or William Briskly, Richard Conte, Douglas Hedberg, and or Victor Hedberg  have an ownership interest of 51% or greater.  No waiver, amendment, or modification of this Agreement shall be valid unless in writing and signed by both Global and SureWater.

16.4 

Severability. The invalidity or unenforceability of any particular provision, or part of any provision, of this Agreement, shall not affect the validity of the remaining provisions or parts thereof, and this Agreement shall be construed in all respects as if such invalid or unenforceable provision(s) or part(s) of provision(s) were omitted, except that, in the event that such invalid or unenforceable provision(s) or part(s) of provision(s) may be interpreted in a way that would permit its enforceability, the parties agree that the court or arbitrator may so interpret such provision.

16.5 

Survival of Provisions. The parties agree that where the context of any provision indicates an intent that it shall survive the term or termination of this Agreement, then it shall so survive.

16.6 

Notices. Any notices or order provided for in this Agreement shall be provided in writing to the other party at the addresses first set forth in Article I, shall be delivered by hand, overnight courier service or certified mail, and shall be deemed received upon actual receipt or refusal to accept delivery.

16.7 

Attorneys' Fees.  In the event of litigation other than an arbitration required by Article XIV, the prevailing party shall have the right to receive court costs and reasonable attorneys' fees.

16.8. 

Captions; Gender; Number. The captions are inserted only for convenience and are not a part of this Agreement or a limitation of the scope of the particular section to which each refers.  If the context of any section of this Agreement so requires, the masculine, feminine, and neuter genders shall be deemed to include the other or others.  The singular and plural numbers shall each be deemed to include the other.

16.9. 

Agreement Executed in Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, and all of which, taken together, shall be deemed to be one and the same instrument.

IN WITNESS WHEREOF, the Parties hereto have entered into this Agreement as of the Effective Date.

SureWater Solutions LLC

Global Ecology Corporation.

By: /s/ Richard Conte 

By: /s/ Peter Ubaldi

Richard Conte, Member

Peter Ubaldi, President

[THIS SPACE INTENTIONALLY LEFT BLANK]

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Law Offices of Ronald I. Paltrowitz

1375 Broadway, 3rd Floor, New York, New York 10018

STATE OF CONNECTICUT

}

}:ss.:

COUNTY OF FAIRFIELD

}

On the 3rd day of July, 2009, before me, the undersigned, a Notary Public in and for the State of Connecticut, personally appeared Richard Conte, personally known to me or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the Agreement and who did depose and say that he she is a Member of SureWater Solutions LLC, the limited liability company described in the foregoing Agreement, and acknowledged that he executed the same by consent of the Members of the Limited Liability Company.

___________________________

Notary Public

STATE OF 

}

}:ss.:

COUNTY OF

}

On the ____ day of July, 2009, before me, the undersigned, a Notary Public in and for the State of ______________, personally appeared Peter Ubaldi, personally known to me or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the Agreement and who did depose and say that he is the President of Global Ecology Corp., the corporation described in the foregoing Agreement, and acknowledged that he executed the same by consent of the board of directors of the corporation.

____________________________

Notary Public

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SCHEDULE 1

EXCLUSIVE TERRITORY

AFRICA INCLUDING, BUT NOT LIMITED TO, NIGERIA, CAMEROON, GHANA, KENYA, AND UGANDA

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EXHIBIT “A”:

SPECIFICATIONS

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