AGREEMENT DATED 29TH JANUARY, 2004 US$144,000,000 CREDIT FACILITY FOR KARLITA SHIPPING COMPANY LIMITED And RAMONA MARINE COMPANY LIMITED GUARANTEED BY DANAOS HOLDINGS LIMITED ARRANGED BY THE EXPORT-IMPORT BANK OF KOREA AND FORTIS CAPITAL CORP. WITH...

AGREEMENT DATED 29TH JANUARY, 2004 US$144,000,000 CREDIT FACILITY FOR KARLITA SHIPPING COMPANY LIMITED And RAMONA MARINE COMPANY LIMITED GUARANTEED BY DANAOS HOLDINGS LIMITED ARRANGED BY THE EXPORT-IMPORT BANK OF KOREA AND FORTIS CAPITAL CORP. WITH...

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

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

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

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

Exhibit 10.8

EXECUTION VERSION

AGREEMENT

DATED 29TH JANUARY, 2004

US$144,000,000

CREDIT FACILITY

FOR

KARLITA SHIPPING COMPANY LIMITED

And

XXXXXX MARINE COMPANY LIMITED

GUARANTEED BY

DANAOS HOLDINGS LIMITED

ARRANGED BY

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

WITH

FORTIS CAPITAL CORP.

as Facility Agent

LONDON

CONTENTS

Clause		Page

1.	Interpretation	4
2.	Facility	24
3.	Conditions Precedent	25
4.	Utilisation	26
5.	Repayment	27
6.	Prepayment and Cancellation	28
7.	Interest	31
8.	Terms	33
9.	Market Disruption	34
10.	Taxes	35
11.	Increased Costs	36
12.	Earnings, Retention and Operating Expenses Accounts	37
13.	Payments	39
14.	Guarantee and Indemnity	41
15.	Representations	43
16.	Information Covenants	48
17.	General Covenants	50
18.	Financial Covenants of the Xxxxxxxxx	00
00.	Valuation	69
20.	Default	70
21.	Security	74
22.	The Administrative Parties	77
23.	Evidence and Calculations	81
24.	Fees	81
25.	Indemnities and Break Costs	82
26.	Expenses	84
27.	Waiver of Consequential Damages	85
28.	Amendments and Waivers	85
29.	Changes to the Parties	86
30.	Disclosure of Information	89
31.	Set-Off	89
32.	Pro Rata Sharing	90
33.	Severability	91
34.	Counterparts	91
35.	Notices	91
36.	Language	93
37.	Governing Law	93
38.	Enforcement	93

Schedules

1.	Original Parties	95
2.	Initial Conditions Precedent Documents	97
3.	Delivery Date Conditions Precedent Documents	100
4.	Form of Request	103
5.	Form of Transfer Certificate	106
6.	Repayment Schedule	108
7.	Annual Compliance Certificate	110
8.	Incidental Vessel Costs	112


Signatories		113

THIS AGREEMENT is dated 29th January, 2004

BETWEEN:

(1) THE COMPANIES listed in Part 1 of Schedule 1, each of which is a company incorporated according to the law of the country indicated against its name in Schedule 1, with registered office at the address indicated against its name in Part 1 of Schedule 1 (each a Borrower and together the Borrowers);

(2) DANAOS HOLDINGS LIMITED which is incorporated according to the laws of Liberia with its registered office at 00 Xxxxx Xxxxxx, Xxxxxxxx, Xxxxxxx (the Guarantor);

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

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

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

IT IS AGREED as follows:

1. INTERPRETATION

1.1 Definitions

In this Agreement:

Accounts means together the Earnings Accounts, the Retention Accounts and the Operating Expenses Accounts.

Account Bank means Fortis Bank (Nederland) N.V. whose registered office is situated at Xxxxxxxxxx 00, 0000 XX Xxxxxxxxx, Xxx Xxxxxxxxxxx or any other bank or financial institution with which, with the prior written consent of the Facility Agent (acting in accordance with the instructions of the Majority Lenders), any of the Accounts are at any time held.

Administrative Party means the Arrangers or the Facility Agent.

Affiliate means a Subsidiary or a Holding Company of a person or any other Subsidiary of that Holding Company.

Agreement means this credit agreement, including any schedules or appendices hereto, as amended from time to time.

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

AML Time Charter Assignments means together the deeds of assignment of the AML Time Charters granted by the relevant Borrower in favour of the Facility Agent together with any and all notices and acknowledgments entered into in connection therewith and AML Time Charter Assignment means either of them.

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

Applicable Law means any or all applicable law (whether civil, criminal or administrative), common law, statute, statutory instrument, treaty, convention, regulation, directive, by-law, demand, decree, ordinance, injunction, resolution, order, judgment, rule, permit, licence or restriction (in each case having the force of law) and codes of practice or conduct, circulars and guidance notes generally accepted and applied by the global container shipping industry, in each case of any government, quasi-government, supranational, federal, state or local government, statutory or regulatory body, court, agency or association relating to all laws, rules, directives and regulations, national or international, public or private in any applicable jurisdiction from time to time.

Approved Valuers means two such independent reputable shipbrokers one of which shall be nominated by the Borrowers and one of which shall be nominated by the Facility Agent (acting in accordance with the instructions of the Majority Lenders) from time to time.

Availability Period means, in respect of a Loan, the period from and including the date of this Agreement to and including the Delivery Date of the relevant Vessel.

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

Bareboat Charterer means Allocean Maritime Container (No.3) Limited, a company incorporated under the laws of England and Wales (registered number 4806608) whose registered office is at Xxxxxx Xxxxx, 00 Xxxxx Xxxxxx, Xxxxxx XX0X 0XX.

Break Costs means the amount (if any) which a Lender is entitled to receive under this Agreement as compensation if any part of a Loan or overdue amount is prepaid other than on the last day of a Term for such Loan or overdue amount as determined pursuant to Clause 25.3 hereof.

Builder means Samsung Heavy Industries Co. Ltd., a corporation organised and existing under the laws of the Republic of Korea with its registered office at Samsung Xxxxxx Xxxxxxxx, 000-0, Xxxxxx-Xxxx, Xxxxxxx-Xx, Xxxxx, Xxxxx 135-080.

Business Day means a day (other than a Saturday or a Sunday) on which banks are open for general business in London, England, New York, United States of America, Seoul, Korea, Athens, Greece and Amsterdam, Holland.

Charter Assignment Agreements means together each of the deeds of assignment entered or to be entered into between the Bareboat Charterer and the relevant Owner together with any and all notices and acknowledgments entered into in connection therewith and Charter Assignment Agreement means either of them.

Charterer means China Shipping (Group) Company or any substitute charterer from time to time in accordance with the provisions of Clause 17.25.

Commitment means:

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

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

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

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

Contract Price means in respect of either Vessel, the lower of (i) the amount specified in Article II Clause 1 of the Shipbuilding Contract for that Vessel as the contract price as at the date of that Shipbuilding Contract without adjustment and (ii) the total amount actually paid to the Builder by the relevant Owner under that Shipbuilding Contract.

Danaos Group means the Guarantor and its Subsidiaries.

Date of Total Loss means, in respect of a Vessel, the date of Total Loss of that Vessel which date shall be deemed to have occurred:

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

(b) in the case of a constructive total loss, upon the date and at the time notice of abandonment is given to the Insurers for the time being (provided a claim for total loss is admitted by such Insurers) or, if such Insurers do not forthwith admit such a claim, at the date and at the time at which either a total loss is subsequently admitted by the Insurers or a total loss is subsequently adjudged by a competent court of law or arbitration tribunal to have occurred;

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

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

(e) in the case of capture, seizure, arrest, detention, requisition for hire or confiscation by any government or by persons acting or purporting to act on behalf of any government which deprives the Borrower or, as the case may be, the Charterer of the use of that Vessel for more than 60 days, upon the expiry of the period of 60 days after the date upon which the relevant capture, seizure, arrest, detention, requisition or confiscation occurred.

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

Deeds of Counter-Indemnity means together each of the deeds of counter-indemnity granted by the Sponsor in favour of the Facility Agent and Deed of Counter-Indemnity means either of them.

Default means:

(a) an Event of Default; or

(b) an event which would be (with the expiry of a grace period, the giving of notice or the making of any determination under the Finance Documents or any combination of them) an Event of Default.

Delivery Date means, in respect of a Vessel, the date of actual delivery of that Vessel to the relevant Owner under the terms of the relevant Shipbuilding Contract.

Delivery Date Instalment means, in respect of a Vessel, the amount due and payable by the relevant Owner in accordance with the Shipbuilding Contract relating to that Vessel on or one (1) Business Day prior to the relevant Delivery Date under that Shipbuilding Contract.

Deposit Accounts means together the Karlita Deposit Account and the Xxxxxx Deposit Account and Deposit Account means either of them.

Deposit Bank means the Royal Bank of Scotland plc of 000 Xxxxxxxxxxx, Xxxxxx, XX0X 0XX.

Dollars or US$ means the lawful currency for the time being of the United States of America.

Drawing means, in respect of a Loan under the Facility, the amount of each advance made by the Lenders.

Earnings means, in respect of a Vessel, all present and future moneys and claims which are earned by or become payable to or for the account of the relevant Borrower in connection with the operation of that Vessel and including but not limited to:

(a) freights, passage and hire moneys (howsoever earned);

(b) remuneration for salvage and towage services;

(d) all moneys and claims in respect of the requisition for hire of that Vessel; or

(e) payments received in respect of off-hire insurance.

Earnings Accounts means together the two bank accounts opened by each of the Borrowers with the Account Bank and designated “Name of Borrower” – Earnings Account and Earnings Account means either of them.

Earnings Account Charges means together the two charges each in respect of all monies standing to the credit from time to time of one of the Earnings Accounts one entered into by each of the Borrowers together with any and all notices and acknowledgements entered into in connection therewith and Earnings Account Charge means either of them.

Environment means:

(a) any land including, without limitation, surface land and sub-surface strata, sea bed or river bed under any water (as referred to below) and any natural or man-made structures;

(b) water including, without limitation, coastal and inland waters, surface waters, ground waters and water in drains and sewers; and

(c) air including, without limitation, air within buildings and other natural or man-made structures above or below ground.

Environmental Affiliate means each Borrower, each Owner, the Guarantor, the Bareboat Charterer and the Manager together with their respective employees and, during the Post-Delivery Period in respect of any activities undertaken in relation to either of the Vessels by persons for whom they are responsible under any Applicable Law, such persons.

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

Environmental Claim means any claim by any person or persons or any governmental, judicial or regulatory authority which arises out of any breach, contravention or violation of Environmental Law or of the existence of any liability or potential liability arising from such breach, contravention or violation or the presence of Hazardous Material in contravention of Environmental Laws. In this context, claim means a claim for damages, compensation, fines, penalties or any other payment of any kind whether or not similar to the foregoing; an order or direction to take, or not to take, certain action or to desist from or suspend certain action by any governmental, judicial or regulatory authority, and any form of enforcement or regulatory action.

Environmental Laws means any or all Applicable Law relating to or concerning:

(a) pollution or contamination of the Environment, any ecological system or any living organisms which inhabit the Environment or any ecological system;

(b) the generation, manufacture, processing, distribution, use (including abuse), treatment, storage, disposal, transport or handling of Hazardous Materials; and

(c) the emission, leak, release, spill or discharge into the Environment of noise, vibration, dust, fumes, gas, odours, smoke, steam effluvia, heat, light, radiation (of any kind), infection, electricity or any Hazardous Material and any matter or thing capable of constituting a nuisance or an actionable tort or breach of statutory duty of any kind in respect of such matters,

including, without limitation, the following laws of the United States of America: the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, the Hazardous Materials Transportation Act, as amended, the Oil Pollution Act of 1990, as amended, the Resource Conservation and Recovery Act, as amended, and the Toxic Substances Control Act, as amended, together, in each case, with the regulations promulgated and the guidance issued pursuant thereto.

Equity Contribution means, in respect of each Vessel, an amount equal to US$18,000,000 to be contributed by the Borrower towards the cost of acquiring that Vessel.

Equity Contribution Side Letter means the letter setting out the manner in which adjustments to the Equity Contribution shall be dealt with.

Event of Default means an event specified as such in Clause 20 of this Agreement.

Excess Risks means, in respect of a Vessel:

(a) the proportion of claims for general average, salvage and salvage charges which are not recoverable as a result of the value at which that Vessel is assessed for the purpose of such claims exceeding her hull and machinery insured value; and

(b) collision liabilities not recoverable in full under the hull and machinery insurance by reason of those liabilities exceeding such proportion of the insured value of that Vessel as is covered by the hull and machinery insurance.

Exposure Fee means the fee payable by each Borrower pursuant to Clause 24.1.

Facility means the credit facility made available under this Agreement.

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

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

Final Maturity Date means, in respect of a Loan, the day which is the twelfth anniversary of the Delivery Date of the Vessel to which that Loan relates.

Finance Document means:

(a) this Agreement;

(b) a Security Document;

(d) the Manager’s Undertaking;

(e) the Supplemental Agreement;

(f) the Intercreditor Deed;

(g) the Multipartite Deed;

(h) the Second Deposit Charge Side Letter;

(i) a Transfer Certificate; and

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

Finance Party means a Lender or an Administrative Party.

Financial Indebtedness means any indebtedness for or in respect of:

(a) moneys borrowed;

(b) any acceptance credit;

(d) any redeemable preference share;

(e) any finance or capital lease;

(f) receivables sold or discounted (otherwise than on a non-recourse basis);

(g) the acquisition cost of any asset to the extent payable after its acquisition or possession by the party liable where the deferred payment is arranged primarily as a method of raising finance or financing the acquisition of that asset;

(h) any derivative transaction protecting against or benefiting from fluctuations in any rate or price (and, except for non-payment of an amount, the then xxxx to market value of the derivative transaction will be used to calculate its amount);

(i) any other transaction (including any forward sale or purchase agreement) which has the commercial effect of a borrowing;

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

(k) any guarantee, indemnity or similar assurance against financial loss of any person.

First Priority Deposit Account Charge means each of the first priority deposit agreement and deposit charges granted by the relevant Borrower in respect of the relevant Deposit Account.

First Required Amount means, in respect of a Vessel, that amount which from the Delivery Date of that Vessel until the last day of the third year after the Delivery Date of that Vessel is 110 per cent. of the aggregate of the outstanding Loan relating to that Vessel.

Forex Obligations means, in respect of a Borrower, the obligations of that Borrower pursuant to Clause 2.3 of the relevant Second Priority Deposit Account Charge.

General Assignments means together each of the assignments entered or to be entered into by the relevant Partnership (acting by its General Partner), the relevant Owner and the Facility Agent in respect of the Assigned Property (as such term is defined therein) together with any and all notices and acknowledgments entered into in connection therewith and General Assignment means either of them.

General Partner means Allco Finance Limited.

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

Hazardous Material means any element or substance, whether natural or artificial, and whether consisting of gas, liquid, solid or vapour, whether on its own or in any combination with any other element or substance, which is listed, identified, defined or determined by any Environmental Law or other Applicable Law to be, to have been, or to be capable of being or becoming harmful to mankind or any living organism or damaging to the Environment, including, without limitation, oil (as defined in the United States Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended).

Holding Company means a holding company within the meaning of section 736 of the Companies Xxx 0000.

Incidental Costs means, in respect of a Vessel, the Incidental Vessel Costs and the Incidental Loan Costs.

Incidental Loan Costs means, in respect of a Vessel, the exposure fee payable in accordance with Clause 24.1, the commitment fee payable in accordance with Clause 24.2, the management fee payable in accordance with Clause 24.3, the Arranger’s fee payable in accordance with Clause 24.4 and interest calculated and payable in accordance with Clause 7.1(a) and 7.1(b).

Incidental Vessel Costs means, in respect of a Vessel, costs paid, or in respect of costs arising or to be paid after the Delivery Date, to be paid, by the Borrower in connection with that Vessel in excess of the Contract Price, in respect of those items detailed in Schedule 8 for which supporting invoices or receipts have been provided to the Facility Agent or, in respect of costs to be paid after the Delivery Date, pro-forma invoices, and which are, in respect of each item, in an aggregate amount not exceeding the amount detailed against that item in Schedule 8.

Increased Cost means:

(a) an additional or increased cost;

(b) a reduction in the rate of return under a Finance Document or on its overall capital; or

which is incurred or suffered by a Finance Party or any of its Affiliates but only to the extent attributable to that Finance Party having entered into any Finance Document or funding or performing its obligations under any Finance Document.

Instalment means in respect of each Shipbuilding Contract an amount due and payable by the relevant Owner under the terms of that Shipbuilding Contract.

Insurers means the underwriters or insurance companies with whom any Obligatory Insurances are effected and the managers of any protection and indemnity or war risks association in which either of the Vessels may at any time be entered.

Intercreditor Deed means the deed entered into or to be entered into between the Investor, the Guarantor and the Facility Agent.

Investor means Lloyds TSB Equipment Leasing (No.6) Limited, company number 04440302, whose registered office is at 00 Xxxxxxx Xxxxxx, Xxxxxx XX0X 0XX.

ISM Code means the International Safety Management Code (including the guidelines on its implementation), adopted by the International Maritime Organization Assembly as Resolutions A.741(18) and A.788(19), as the same may have been or may be amended or supplemented from time to time. The terms “safety management system”, “Safety Management Certificate”, “Document of Compliance” and “major non-conformity” shall have the same meanings as are given to them in the ISM Code.

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

Karlita means Karlita Shipping Company Limited.

Karlita Deposit Account means the account held with the Deposit Bank, designated “Karlita Shipping Company Limited” with account number 00000000 in the name of Karlita.

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

KEXIM means The Export-Import Bank of Korea.

Korea means the Republic of Korea.

L/C Bank means the Royal Bank of Scotland plc of 000 Xxxxxxxxxxx, Xxxxxx XX0X 0XX.

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

Lender means:

(a) an Original Lender; or

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

and Lenders means all of them.

LIBOR means for a Term of any Loan or overdue amount:

(a) the applicable Screen Rate; or

(b) if no Screen Rate is available for the relevant currency or Term of that Loan or overdue amount, the arithmetic mean (rounded upward to four decimal places) of the rates, as supplied to the Facility Agent at its request, quoted by the Reference Banks to leading banks in the London interbank market,

as of 11.00 a.m. on the second London Business Day before the start of the Term for the offering of deposits in the currency of that Loan or overdue amount for a period comparable to that Term.

Loans means together Vessel Loan 1 and Vessel Loan 2 (each a Loan).

London Business Day means a day (other than a Saturday or a Sunday) on which banks are open for business in London.

Losses means each and every liability, loss, charge, claim, demand, action, proceeding, damage, judgment, order or other sanction, enforcement, penalty, fine, fee, commission, interest, lien, salvage, general average, cost and expense of whatsoever nature suffered or incurred by or imposed on the Lenders.

Majority Lenders means:

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

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

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

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

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

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

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

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

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

Manager means Allocean Maritime Limited having its registered office at Xxxxxx Xxxxx, 00 Xxxxx Xxxxxx, Xxxxxx XX0X 0XX, a company incorporated according to the laws of England and Wales or such other professional manager or managers as may be approved by the Facility Agent (acting in accordance with the instructions of the Majority Lenders) from time to time.

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

Material Adverse Effect means a material adverse effect on:

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

(b) the ability of any Obligor to perform its obligations under any Finance Document; or

Maximum Available Loan Amount means, in respect of a Vessel, the lesser of 80% of the Vessel Cost and seventy two million Dollars (US$72,000,000) being the total of the Maximum Available Tranche A Loan Amount and the Maximum Available Tranche B Loan Amount.

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

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

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

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

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

Mortgage means, in respect of a Vessel, the first priority Republic of Cyprus ship mortgage and deed of covenant collateral thereto to be given by the relevant Owner of that Vessel in favour of the Facility Agent on the Delivery Date.

Multipartite Deeds means together each of the deeds entered or to be entered between the Facility Agent, the relevant Borrower, the L/C Bank and the Deposit Bank and Multipartite Deed means either of them.

Novation Agreement means, in respect of a Vessel, the agreement dated November, 2004 entered into by the relevant Borrower, the relevant Owner and the Builder whereby the parties agreed that the relevant Vessel would be delivered to the relevant Owner.

Obligatory Insurances means in respect of each Vessel:

(a) all contracts and policies of insurance and all entries in clubs and/or associations which are from time to time required to be effected and maintained in accordance with this Agreement in respect of each of the Vessels; and

(b) all benefits under the contracts, policies and entries under paragraph (a) above and all claims in respect of them and the return of premiums.

Obligor means the Guarantor or a Borrower.

Operating Expenses means, in respect of a Vessel, expenses properly and reasonably incurred by the Borrower of that Vessel in connection with the operation, employment, maintenance, repair and insurance of that Vessel (whether by way of payment of the operating expenses element of charterhire under the relevant AML Time Charter or otherwise).

Operating Expenses Accounts means together the two bank accounts one to be opened by each of the Borrowers with the Account Bank and designated “Name of Borrower” – Operating Expenses Account and Operating Expenses Account means either of them.

Operating Expenses Account Charges means together the two charges each in respect of all monies standing to the credit from time to time of one of the Operating Expenses Accounts, one to be entered into by each of the Borrowers together with any and all notices and acknowledgements entered into in connection therewith and Operating Expenses Account Charge means either of them.

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

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

Owners Pledges of Shares means together the two pledges each in respect of the issued share capital of an Owner to be granted by the relevant Partnership acting by the General Partner in favour of the Facility Agent and Owners Pledge of Shares means either of them.

Partnerships means together each of the Ocean Container (No.3) Partnership, and the Ocean Container (No.4) Partnership each a limited partnership in England under the Limited Partnerships Xxx 0000 whose principal place of business is at 0xx Xxxxx, 00 Xxxxx Xxxxxx, Xxxxxx XX0X 0XX acting by the General Partner and Partnership means either of them.

Party means a party to this Agreement or any Finance Document.

Permitted Liens means, in respect of a Vessel:

(a) Security Interests created by the Security Documents;

(b) Security Interests created by the Second Security Documents and the Third Security Documents (as each such term is defined under the Intercreditor Deed);

(c) liens for unpaid crew’s wages including wages of the master and stevedores employed by the Vessel, outstanding in the ordinary course of trading for not more than one calendar month after the due date for payment;

(d) liens for salvage;

(e) liens for classification or scheduled dry docking or for necessary repairs to that Vessel whose aggregate cost does not exceed US$3,000,000 at any one time in respect of that Vessel;

(f) liens for collision;

(g) liens for master’s disbursements incurred in the ordinary course of trading; and

(h) statutory and common law liens of carriers, warehousemen, mechanics, suppliers, materials men, repairers or other similar liens, including maritime liens, in each case arising in the ordinary course of business, outstanding for not more than one month whose aggregate value does not exceed US$500,000,

in the case of paragraphs (b) to (g) inclusive provided that the amounts which give rise to such liens are paid when due or, if not paid when due are being disputed in good faith by appropriate proceedings (and for the payment of which adequate reserves or security are at the relevant time maintained or provided), provided further that such proceedings, whether by payment of adequate security into Court or otherwise, do not give rise to a material risk of the relevant Vessel or any interest therein being seized, sold, forfeited or otherwise lost or of criminal liability on any Finance Party.

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

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

Post-Delivery Tranche B Margin means 1.25 per cent. per annum.

Post-Delivery Period means, in respect of a Vessel, the period from the Delivery Date of that Vessel until the Final Maturity Date of the Loan which relates to that Vessel.

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

Pre-Delivery Period means, in respect of a Vessel, the period from the date of the first Drawing under this Agreement in respect of the Loan relating to that Vessel, to the Delivery Date of that Vessel.

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

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

Pro Rata Share means:

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

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

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

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

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

Proceeds means:

(i) any Final Disposition Proceeds;

(ii) any Total Loss Proceeds;

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

(iv) any moneys received by the Facility Agent from any chartering of the Vessel by the Facility Agent (after the termination of the chartering of the Vessel pursuant to Clause 34.2 of the Bareboat Charter) prior to the Final Disposition thereof;

(v) all other moneys which by the terms of any Transaction Document (other than the Intercreditor Deed) or any Other Transaction Documents are expressed to be payable

to the Facility Agent or the Proceeds Account for application pursuant to the Intercreditor Deed;

where each capitalised terms used above shall have the meaning given to that term in the relevant Intercreditor Deed.

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

Xxxxxx means Xxxxxx Marine Company Limited.

Xxxxxx Deposit Account means the account held with the Deposit Bank, designated “Xxxxxx Marine Company Limited” with account number 00000000 in the name of Xxxxxx.

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

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

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

Refund Guarantor means The Export-Import Bank of Korea, Seoul, Korea.

Related Contracts means any or all of the following (as the context requires):

(a) the Refund Guarantees;

(b) the Shipbuilding Contracts;

(d) the Bareboat Charters;

(e) the AML Time Charters;

(f) the Time Charters;

(g) the Charterer’s Assignments;

(h) the Declarations of Trust;

(i) the Letters of Credit;

(j) the First Priority Deposit Charges; and

(k) the Vessel Management Agreements.

Release means an emission, spill, release or discharge into or upon the air, surface water, groundwater, or soils of any Hazardous Materials for which any of the Environmental Affiliates has any liability under Environmental Law, except in accordance with a valid Environmental Approval.

Repayment Date means, in respect of a Loan, each date which is a Tranche A Repayment Date.

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

Repayment Schedule means the schedule of Repayment Dates as detailed in Schedule 6 (Repayment Schedule), to be replaced as required in accordance with Clause 5.1(b).

Request means a request made by a Borrower for a Drawing, substantially in the form of Schedule 4 (Form of Request).

Required Amount means, as the context may require, the relevant First Required Amount, Second Required Amount or Third Required Amount.

Required Insurance Amount means, in respect of a Vessel, 120 per cent. of the aggregate of the outstanding Loan relating to that Vessel.

Requisition Compensation means, in respect of a Vessel, all moneys or other compensation payable by reason of requisition for title to, or other compulsory acquisition of, that Vessel including requisition for hire.

Retention Accounts means together the two bank accounts one to be opened by each of the Borrowers with the Account Bank and designated “Name of Borrower” – Retention Account and Retention Account means either of them.

Retention Account Charges means together the two fixed charges each in respect of all monies standing to the credit from time to time of one of the Retention Accounts, one granted or to be granted by each of the Borrowers in favour of the Facility Agent together with any and all notices and acknowledgements entered into in connection therewith and Retention Account Charge means either of them.

Retention Period means, in respect of a Loan, each period which is either (or both) a Tranche A Retention Period and/or Tranche B Retention Period.

Screen Rate means, for LIBOR, and in respect of a Term, the percentage rate per annum for a period substantially the same as the relevant Term displayed on page 3750 of the Telerate screen. If the relevant page is replaced or the service ceases to be available, the Facility Agent may specify another page or service displaying the appropriate rate.

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

Second Deposit Charge Side Letter means the side letter provided by the General Partner to the Facility Agent confirming its obligations in respect of the Second Deposit Charges.

Second Required Amount means, in respect of a Vessel, that amount which from the first day of the fourth year after the Delivery Date of that Vessel until the last day of the fifth year

after the Delivery Date of that Vessel is 120 per cent. of the aggregate of the outstanding Loan relating to that Vessel.

Secured Liabilities means all present and future obligations and liabilities (actual or contingent) of the Borrowers to the Finance Parties or any of them under or in connection with any Finance Document.

Security Agreements means:

(i) the Mortgages;

(ii) the General Assignments;

(iii) the Pledges of Shares;

(iv) the Owners Pledges of Shares;

(v) the Time Charter and Earnings Assignments;

(vi) the Second Priority Deposit Account Charges;

(vii) the Deeds of Counter-Indemnity;

(viii) the Earnings Account Charges;

(ix) the Retention Account Charges;

(x) the Operating Expenses Account Charges;

(xi) the AML Time Charter Assignments; and

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

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

Security Document means:

(a) each Security Agreement; and

(b) any other document evidencing or creating security over any asset of a Borrower to secure any obligation of a Borrower to the Finance Parties or any of them under the Finance Documents.

Security Interest means any mortgage, pledge, lien, charge, assignment, hypothecation or security interest or any other agreement or arrangement having a similar effect.

Shareholders means together Sapfo Navigation Inc., whose registered office is Xxxxx Xxxxxx, 00, Xxxxxxxx, Xxxxxxx (the sole shareholder of Xxxxxx) and Xxxxx Enterprises S.A. whose registered office is 00 Xxxxx Xxxxxx, Xxxxxxxx, Xxxxxxx (the sole shareholder of Karlita) and Shareholder means either of them.

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

build and deliver that Vessel to the relevant Borrower and which has been novated to the relevant Owner by the Novation Agreement.

Sponsor means Allco Finance (UK) Limited, a company registered in England & Wales with company number 02818852 whose registered office is at 0xx Xxxxx, 00 Xxxxx Xxxxxx, Xxxxxx, XX0X 0XX.

Subsidiary means:

(a) a subsidiary within the meaning of section 736 of the Companies Xxx 0000; and

(b) unless the context otherwise requires, a subsidiary undertaking within the meaning of section 258 of the Companies Xxx 0000.

Supplemental Agreement means the agreement dated November, 2004 entered into between the parties hereto.

Tax means any tax, levy, impost, duty or other charge or withholding of a similar nature (including, without limitation, any penalty or interest payable in connection with any failure to pay or any delay in paying any of the same).

Tax Deduction means a deduction or withholding for or on account of Tax made from a payment under a Finance Document by a payer for or on account of Tax imposed on that payer by any jurisdiction from which such payment is made or within which such payment arises.

Tax Payment means a payment made by an Obligor to a Finance Party in any way relating to a Tax Deduction or under any indemnity given by that Obligor in respect of Tax under any Finance Document.

Term means each period determined under this Agreement by reference to which interest payable on a Loan or, as the case may be, a Drawing under a Loan, or an overdue amount is calculated.

Third Required Amount means, in respect of a Vessel, that amount which from the first day of the sixth year after the Delivery Date of that Vessel until the Final Maturity Date is 130 per cent. of the aggregate of the outstanding Loan relating to that Vessel.

Time Charter means, in respect of a Vessel, the time charterparty dated 18th November, 2003 entered into by the relevant Borrower and the Charterer or such other time charterparty entered into from time to time by the Borrower in respect of a Vessel.

Time Charter and Earnings Assignment means, in respect of a Vessel, the assignment of the Time Charter and the Earnings granted or to be granted by the Borrower in respect of that Vessel in favour of the Facility Agent together with any and all notices and acknowledgements entered into in connection therewith.

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

Total Loss means in relation to a Vessel:

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

(b) requisition for title or other compulsory acquisition of that Vessel otherwise than by requisition for hire;

(c) capture, seizure, arrest, detention, or confiscation of that Vessel by any government or by persons acting or purporting to act on behalf of any government which deprives the Borrower or as the case may be the Charterer of the use of that Vessel for more than 60 days after that occurrence; and

(d) requisition for hire of that Vessel by any government or by persons acting or purporting to act on behalf of any government which deprives the Borrower or as the case may be the Charterer of the use of that Vessel for a period of 60 days, other than a charter of the Vessel to a government or government agency approved by the relevant Borrower and by the Facility Agent (acting on the instructions of the Majority Lenders).

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

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

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

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

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

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

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

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

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

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

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

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

Vessels means together Vessel 1 and Vessel 2, being the vessels detailed in Part 1 of Schedule 1 and Vessel means either of them.

Vessel Cost means, in respect of each Vessel the total of (i) the Contract Price and (ii) the Incidental Costs, such amount not to exceed US$90,000,000.

Vessel Loan 1 means such part of the Facility as is drawndown in respect of the acquisition of Vessel 1 and is in the maximum principal amount of the lesser of:

(i) 80 per cent. of the Vessel Cost of Vessel 1, and

(ii) when aggregated with Vessel Loan 2, the Maximum Facility Amount,

or the principal amount thereof from time to time outstanding under this Agreement.

Vessel Loan 2 means such part of the Facility as is drawndown in respect of the acquisition of Vessel 2 and is in the maximum principal amount of the lesser of:

(i) 80 per cent. of the Vessel Cost of Vessel 2; and

(ii) when aggregated with Vessel Loan 1, the Maximum Facility Amount,

or the principal amount thereof from time to time outstanding under this Agreement.

Vessel Management Agreement means, in respect of a Vessel, the management agreement entered into or to be entered into between, the Manager and the Bareboat Charterer.

1.2 Construction

(a) In this Agreement, unless the contrary intention appears, a reference to:

(i) an amendment includes a supplement, novation, restatement, re-enactment or increases in the amount of the facilities granted hereunder and amended will be construed accordingly;

assets includes present and future properties, revenues and rights of every description;

an authorisation includes an authorisation, consent, approval, resolution, licence, exemption, filing, registration or notarisation;

disposal means a sale, transfer, grant, lease or other disposal, whether voluntary or involuntary, and dispose will be construed accordingly;

indebtedness includes any obligation (whether incurred as principal or as surety) for the payment or repayment of money;

a person includes any individual, company, corporation, unincorporated association or body (including a partnership, trust, joint venture or consortium), government, state, agency, organisation or other entity whether or not having separate legal personality and their successors in title, permitted assigns and permitted transferees;

a regulation includes any regulation, rule, official directive, request or guideline (whether or not having the force of law but, if not having the force of law, being of a type with which any person to which it applies is accustomed to comply) of any governmental, inter-governmental or supranational body, agency, department or regulatory, self-regulatory or other authority or organisation;

(ii) a currency is a reference to the lawful currency for the time being of the relevant country;

(iii) a Default being outstanding means that it has not been cured, remedied or waived;

(iv) a provision of law is a reference to that provision as extended, applied, amended or re-enacted and includes any subordinate legislation;

(v) a Clause, a Subclause or a Schedule is a reference to a clause or subclause of, or a schedule to, this Agreement;

(vi) a Finance Document or another document is a reference to that Finance Document or other document as amended;

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

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

(b) Unless the contrary intention appears, a reference to a month or months is a reference to a period starting on one day in a calendar month and ending on the numerically corresponding day in the next calendar month or the calendar month in which it is to end, except that:

(i) if the numerically corresponding day is not a Business Day, the period will end on the next Business Day in that month (if there is one) or the preceding Business Day (if there is not);

(ii) if there is no numerically corresponding day in that month, that period will end on the last Business Day in that month; and

(iii) notwithstanding sub-paragraph (i) above, a period which commences on the last Business Day of a month will end on the last Business Day in the next month or the calendar month in which it is to end, as appropriate.

(c) Unless expressly provided to the contrary in a Finance Document, a person who is not a party to a Finance Document may not enforce any of its terms under the Contracts (Rights of Third Parties) Xxx 0000 and notwithstanding any term of any Finance Document, the consent of any third party is not required for any variation (including any release or compromise of any liability) or termination of that Finance Document.

(d) Unless the contrary intention appears or unless the context otherwise permits:

(i) a reference to a Party will not include that Party if it has ceased to be a Party under this Agreement;

(ii) a word or expression used in any other Finance Document or in any notice given in connection with any Finance Document has the same meaning in that Finance Document or notice as in this Agreement; and

(iii) any obligation of a Borrower under the Finance Documents which is not a payment obligation remains in force in accordance with its terms for so long as any payment obligation of a Borrower is or may be outstanding under the Finance Documents.

(e) Joint and several liability

(i) All obligations, covenants, representations, warranties and undertakings in or pursuant to the Finance Documents assumed, given, made or entered into by the Borrowers shall, unless otherwise expressly provided, be assumed, given, made or entered into by the Borrowers jointly and severally.

(ii) Each of the Borrowers agrees that any rights which it may have at any time during the term of the Facility by reason of the performance of its obligations under the Finance Documents to be indemnified by the other Borrower and/or to take the benefit of any security taken by the Facility Agent pursuant to the Finance Documents shall be exercised in such manner and on such terms as the Facility Agent may require or as provided in this Agreement. Each of the Borrowers agrees to hold any sums received by it as a result of its having exercised any such right on trust for the Facility Agent absolutely.

(iii) Each of the Borrowers agrees that it will not at any time during the term of the Facility claim any set-off or counterclaim against the other Borrower in respect of any liability owed to it by that other Borrower under or in connection with the Finance Documents, nor prove in competition with any of the Finance Parties in any liquidation of (or analogous proceeding in respect of) the other Borrower in respect of any payment made under the Finance Documents or in respect of any sum which includes the proceeds of realisation of any security held by the Facility Agent for the repayment of the Loans.

(f) The headings in this Agreement do not affect its interpretation.

2. FACILITY

2.1 Facility and Purpose

Subject to the terms of this Agreement, the Lenders make available to the Borrowers a term loan facility in a maximum aggregate amount equal to the Maximum Facility Amount. The term loan facility shall be made available in two Loans (Vessel Loan 1 and Vessel Loan 2, each of which shall be made available to the relevant Borrower). Each Loan shall be capable of being drawn, up to the maximum amount of the relevant Vessel Loan, on the dates described in Clause 4.2(a).

2.2 Loans

Each Loan may be used only in or towards assisting with financing the cost of acquiring the Vessel to which it relates and such other items and costs as are included in the relevant Vessel Cost.

2.3 No obligation to monitor

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

2.4 Nature of a Finance Party’s rights and obligations

Unless otherwise agreed by all the Finance Parties:

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

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

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

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

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

3. CONDITIONS PRECEDENT

3.1 Conditions precedent documents

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

(b) A Request representing the amount of a Delivery Date Instalment may not be given until the Facility Agent has notified the relevant Borrower and the Lenders that it has received all of the documents and evidence set out in Schedule 3 (Delivery Date Conditions Precedent Documents) and Schedule 2 (Conditions Subsequent to first Drawing) in form and substance satisfactory to the Facility Agent or that it expects to receive outstanding documents or evidence on or before the relevant Delivery Date (in each case acting in accordance with the instructions of the Majority Lenders). The Facility Agent must give this notification to the relevant Borrower and the Lenders promptly upon receiving such instructions.

3.2 Further conditions precedent

The obligations of each Lender to advance either Loan are subject to the further conditions precedent that on both the date of the Request and the Utilisation Date for that Loan:

(a) the representations made under Clause 15 are correct in all material respects; and

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

4. UTILISATION

4.1 Giving of Requests

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

(b) Unless the Facility Agent otherwise agrees, the latest time for receipt by the Facility Agent of a duly completed Request is 11.00 a.m., Seoul time, three Business Days prior to the proposed date for the borrowing.

4.2 Completion of Requests

A Request for a Drawing under a Loan will not be regarded as having been duly completed unless:

(a) the Utilisation Date is a Business Day falling within the Availability Period and is a date which either (i) falls on or after the date on which the relevant Instalment under the relevant Shipbuilding Contract falls due or (ii) in respect of a Request for Incidental Costs only is the last day of a Term and such request is submitted with the relevant original invoices and/or receipts (or, in the case of costs to be paid after the Delivery Date, pro-forma invoices) relating to such costs;

(b) in respect of a Drawing under a Loan:

(i) in respect of the first Drawing it is in an amount not exceeding the aggregate of (x) the balance of the amount of the Instalments paid or payable to the Builder after deducting therefrom an amount equal to the Equity Contribution and (y) the Incidental Vessel Costs in respect of the relevant Vessel on the relevant Utilisation Date;

(ii) in respect of a Drawing other than the Drawing referred to in paragraph (i) and the Drawing of the Delivery Date Instalment, it is in an amount not exceeding the Incidental Vessel Costs in respect of the relevant Vessel on the relevant Utilisation Date less the amount of any such Incidental Vessel Costs which have been reimbursed to the relevant Borrower in an earlier Drawing;

(iii) in respect of the Drawing on the Delivery Date, it is in an amount not exceeding the aggregate of (x) the balance of the amount of the Instalment payable to the Builder on the Delivery Date, and (y) the Incidental Vessel Costs not taken into account under sub-paragraphs (i) and (ii) above and (z) an amount equal to the reduction (if any) in the Equity Contribution calculated in accordance with the Equity Contribution Side Letter, in respect of the relevant Vessel on the relevant Utilisation Date;

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

(v) the amount requested for the Drawing does not exceed, when aggregated with (x) existing Drawings under that Loan, (y) the amounts to be drawndown under any other Request under that Loan issued for drawdown on the proposed Utilisation Date and (z) any amounts capitalised or to be capitalised on the proposed Utilisation Date pursuant to Clause 4.3(a) in respect of Incidental Loan Costs for that Loan, the Maximum Available Loan Amount;

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

(d) the proposed Term complies with this Agreement.

Only one Drawing may be requested in a Request.

4.3 Capitalisation of Incidental Loan Costs

(a) To the extent that the amount of any Incidental Loan Costs to be capitalised does not exceed, when aggregated with the Drawings already made, and amounts already capitalised under the relevant Loan, the Maximum Available Loan Amount then, during the Pre-Delivery Period, in respect of a Vessel, the Exposure Fee payable in accordance with Clause 24.1, the commitment fee payable in accordance with Clause 24.2 and interest calculated and payable in accordance with Clause 7.1(a), relating to that Vessel, shall, unless otherwise requested in writing by the Borrowers to the Facility Agent (in which case the Borrowers shall immediately irrevocably and unconditionally pay such fees and interest in cash to the Facility Agent), accrue on the Loan relating to that Vessel and shall, on the last day of each Term during the Pre-Delivery Period, be capitalised and added to the principal amount of the Loan outstanding on a pro-rata basis between Tranche A and Tranche B. The Arranger’s fee payable in accordance with Clause 24.4 relating to a Vessel shall accrue on the Loan relating to that Vessel and shall, on the date of the first Drawing in respect of that Loan, be capitalised and added to the principal amount of the Loan outstanding.

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

5. REPAYMENT

5.1 Repayment of the Loans

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

(b) The Facility Agent shall notify the Borrowers and the Lenders of any change in the amount or the timing of any Repayment Instalment, as soon as practicable after the Delivery Date for the relevant Vessel. In the event of any such notification, the Facility Agent shall replace the relevant Repayment Schedule attached at Schedule 6 with a new Repayment Schedule reflecting the correct Repayment Instalments and the correct Repayment Dates and promptly provide a copy thereof to the Borrowers and the Lenders. In any event, Tranche A of each Loan shall be repaid in full on the Final Maturity Date for that Loan.

6. PREPAYMENT AND CANCELLATION

6.1 Mandatory prepayment - illegality

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

(b) After notification under paragraph (a) above, the Owners and that Lender shall thereafter consult with each other in good faith for a period of thirty (30) days or in the event that the Event of Illegality takes effect before the expiration of 30 days, for the maximum number of days available before the Event of Illegality takes effect with a view to restructuring the Facility in such a way as to avoid the effect of the Event of Illegality.

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

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

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

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

6.2 Mandatory prepayment – change of control of the Guarantor

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

(b) After notification under paragraph (a) above or if the Facility Agent otherwise becomes aware of the same, the Facility Agent may (acting on the instructions of the Majority Lenders), by notice to the Lenders and the Borrowers delivered to the Borrowers within 30 days of such notification:

(i) cancel the Facility; and

(ii) declare all outstanding Loans to be promptly, and in any event within 60 days of such declaration, due and payable.

Any such notice will take effect in accordance with its terms.

control has the meaning given to it in section 416 of the Income and Corporation Taxes Xxx 0000; and

acting in concert has the meaning given to it in the City Code on Takeovers and Mergers.

6.3 Mandatory prepayment- Change of control of the Charterer

(a) The Borrowers must promptly notify the Facility Agent if any of them becomes aware of any person or group of persons acting in concert gaining control of the Charterer, be it direct or indirect.

(b) After notification under paragraph (a) above or if the Facility Agent otherwise becomes aware of the same in respect of the Charterer, each of the Lenders may undertake a credit review of the Charterer in the context of the terms of this Agreement. In carrying out the credit review and reaching a conclusion, the Lenders shall act in good faith but otherwise in their absolute discretion.

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

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

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

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

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

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

(g) In paragraph (a) above:

control and acting in concert shall have the meaning given to them in Clause 6.2(c).

6.4 Mandatory prepayment – Non-delivery, Sale or Total Loss of a Vessel

(a) The Borrowers shall be obliged to prepay the whole of the Loan then outstanding in relation to a Vessel in the following circumstances and at the following times:

(i) if that Vessel is sold, on or before the date on which the sale is completed by delivery of that Vessel to a buyer;

(ii) if there is a Total Loss (whether before or after the Delivery Date), on the earlier of the date falling 90 days after the Date of Total Loss and the date of receipt by the Facility Agent of the proceeds of insurance relating to such Total Loss;

(iii) if the Shipbuilding Contract relating to that Vessel is terminated in circumstances where the Refund Guarantee is payable, upon the date of receipt of the monies under the Refund Guarantee; or

(iv) if the Shipbuilding Contract relating to that Vessel is terminated in circumstances other than those referred to in paragraph (iii), on the date of its termination.

(b) In the event that a mandatory prepayment obligation arises under Clause 6.4(a) for whatever reason, the Facility Agent shall be entitled to procure immediate valuations of the remaining Vessel in accordance with Clause 19, at the cost of the Borrowers. In the event that such valuations show that the relevant Required Amount is not satisfied, the Borrowers shall be obliged to apply the balance of any funds received by the Borrowers pursuant to the relevant Intercreditor Deed to the extent required to ensure that the relevant Required Amount is satisfied. Any balance of funds received by the Borrowers pursuant to the relevant Intercreditor Deed after such application shall be available to the relevant Borrower. In the event that the funds received pursuant to the relevant Intercreditor Deed are not adequate to ensure that the relevant Required Amount is satisfied, the Borrowers shall be obliged to pay an amount equal to such shortfall to the Facility Agent no later than 5 Business Days after receipt of notification from the Facility Agent of details of the amount required to satisfy the Required Amount.

6.5 Voluntary prepayment

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

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

(c) Unless the Facility Agent otherwise agrees, any voluntary prepayment under this Clause 6.5 shall be applied against the Repayment Instalments of the relevant Loan in the inverse order of their maturity and shall be applied pro-rata in respect of the amounts outstanding to the Tranche A Lenders and the Tranche B Lenders.

6.6 Automatic cancellation

The Commitment of each of the Lenders will be automatically cancelled at the close of business on the last day of the relevant Availability Period.

6.7 Voluntary cancellation

(a) The Borrowers may, by giving not less than ten Business Days’ prior notice to the Facility Agent, cancel the unutilised amount of the Total Commitments in whole or in part.

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

6.8 Voluntary prepayment and cancellation

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

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

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

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

(c) The date for repayment or prepayment of a Lender’s share in a Loan(s) will be the last day of the Term of each relevant Loan which is current at the time of the notice from the Borrower(s) or, if earlier, the date specified by the Borrower(s) in the notice delivered to the Facility Agent.

6.9 Partial prepayment of Loans

(a) Except where this Clause 6 expressly provides otherwise any partial prepayment of a Loan will be applied against the remaining Repayment Instalments in respect of that Loan, in the inverse order of their maturity and shall be applied pro-rata in respect of the amounts outstanding to the Tranche A Lenders and the Tranche B Lenders.

(b) Upon any such partial prepayment, the Facility Agent shall replace the relevant Repayment Schedule attached at Schedule 6 with a new Repayment Schedule reflecting the correct Repayment Instalments and promptly provide a copy thereof to the relevant Borrower.

6.10 Miscellaneous provisions

(a) Any notice of prepayment and/or cancellation under this Agreement is irrevocable and must specify the relevant date(s).

(b) All prepayments under this Agreement must be made with accrued interest on the amount prepaid. A prepayment of a Tranche A Loan made other than in accordance with Clause 6.1, Clause 6.2, Clause 6.3 and Clause 6.4(a)(ii), to (iv) inclusive shall be subject to a prepayment fee equal to 0.5% of the amount of principal of the relevant Tranche A Loan prepaid. All prepayments shall also be subject to Break Costs.

7. INTEREST

7.1 Calculation of interest

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

(i) Pre-Delivery Tranche A Margin;

(ii) Exposure Fee; and

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

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

(i) Pre-Delivery Tranche B Margin; and

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

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

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

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

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

(A) LIBOR; and

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

(d) Interest shall be calculated by reference to the actual number of days elapsed and on the basis of a year of 360 days. Interest shall accrue from and including the first day of each Term to but excluding the last day of such Term.

7.2 Payment of interest

Except where it is provided to the contrary in this Agreement, the Borrowers must pay accrued interest and, in respect of a Tranche A Loan, the Exposure Fee on each Loan on the last day of each Term. During the Pre-Delivery Period in respect of a Vessel, interest and, in respect of a Tranche A Loan, Exposure Fee shall accrue on the basis set out in Clause 7.1 above and shall, on the last day of each Term during the Pre-Delivery Period, be capitalised and added to the principal amount of the Loan outstanding.

7.3 Interest on overdue amounts

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

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

(i) the first Term for that overdue amount will be the unexpired portion of that Term; and

(ii) the rate of interest on the overdue amount for that first Term will be two per cent per annum above the Pre-Delivery Tranche A Interest Rate or the Tranche A Interest Rate, as applicable.

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

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

(i) the first Term for that overdue amount will be the unexpired portion of that Term; and

(ii) the rate of interest on the overdue amount for that first Term will be two per cent per annum above the Pre-Delivery Tranche B Interest Rate or the Tranche B Interest Rate, as applicable.

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

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

(e) Interest (if unpaid) on an overdue amount will be compounded with that overdue amount at the end of each of its Terms but will remain immediately due and payable.

7.4 Notification of rates of interest

In respect of a Vessel, during the Pre-Delivery Period, and in respect of Tranche B, during the Post-Delivery Period, the Facility Agent must promptly notify each relevant Party of the determination of a rate of interest under this Agreement.

8. TERMS

8.1 Selection

(a) Each Loan has successive Terms.

(b) Each Term shall be for a period of six months subject always to the provisions of Clauses 8.2, 8.3 and 8.4 below.

8.2 Consolidation

The first Term for a Drawing under a Loan will commence on the date that Drawing is made and each subsequent Term shall commence on the last day of the previous Term. Each Term for such Drawing during the Pre-Delivery Period will be of six months’ duration (subject to Clause 8.3) provided always that:

(i) the first Term for the second and subsequent Drawings under a Loan shall end on the last day of the current Term for existing Drawings under that Loan and on the last day of the current Term for any existing Drawings under the other Loan;

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

(iii) each Term during the Post-Delivery Period will end on the next Repayment Date for that Loan or, in the case of the final Term for a Loan, on the Final Maturity Date.

8.3 End of Term on Delivery Date

If a Term in relation to a Loan or a Drawing under a Loan would otherwise overrun the Delivery Date of the Vessel to which the relevant Loan relates, it will be shortened so that it

ends on the Delivery Date of that Vessel. Each subsequent Term will be ascertained in accordance with Clause 8.2.

8.4 No overrunning the Final Maturity Date

If a Term would otherwise overrun the Final Maturity Date, it will be shortened so that it ends on the Final Maturity Date.

8.5 Other adjustments

The Facility Agent and the Borrowers may enter into such other arrangements as they may agree for the adjustment of Terms and the consolidation and/or splitting of Loans.

9. MARKET DISRUPTION

9.1 Failure of the Reference Banks to supply a rate

If LIBOR is to be calculated by reference to the Reference Banks but if the Reference Banks are unable to supply a rate by 11:00 a.m. on the second Business Day before the first day of the relevant Term, the applicable LIBOR will be calculated in accordance with Clause 9.2.

9.2 Market disruption

(a) A market disruption event shall arise where,

(i) no, or only one, Reference Bank supplies a rate by 11:00 a.m. on the second Business Day before the first day of the relevant Term; or

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

(b) The Facility Agent must promptly notify the Borrowers and the Lenders of a market disruption event.

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

(i) Pre-Delivery Margin;

(ii) the rate notified to the Facility Agent by that Lender as soon as practicable, and in any event before interest is due to be paid in respect of that Term, to be that which expresses as a percentage rate per annum the cost to that Lender of funding the Loan from whatever source it may reasonably select; and

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

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

(i) Post-Delivery Tranche B Margin; and

(ii) the rate notified to the Facility Agent by that Lender as soon as practicable, and in any event before interest is due to be paid in respect of that Term, to be that which expresses as a percentage rate per annum the cost to that Lender of funding the Tranche B Loan from whatever source it may reasonably select.

9.3 Alternative basis of interest or funding

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

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

10. TAXES

10.1 Tax gross-up

(a) Each Obligor must make all payments to be made by it under the Finance Documents without any Tax Deduction, unless a Tax Deduction is required by an Applicable Law.

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

(c) If an Obligor is required to make a Tax Deduction, that Obligor must make the minimum Tax Deduction and must make any payment required in connection with that Tax Deduction within the time allowed by the Applicable Law.

(d) Within 15 days of making either a Tax Deduction or a payment required in connection with a Tax Deduction or, if later, forthwith following receipt of the same, the Obligor making that Tax Deduction or payment must deliver to the Facility Agent for the relevant Finance Party, documents or other information (or certified copies thereof) evidencing satisfactorily to that Finance Party (acting reasonably) that the Tax Deduction has been made or (as applicable) the appropriate payment has been paid to the relevant taxing authority.

10.2 Tax Indemnity

Without prejudice to the provisions of 10.1 (Tax gross-up), if any Lender is required to make any payment on account of Tax (not being a Tax imposed on the net income of a Lender or its Facility Office by the jurisdiction in which it is incorporated, or the jurisdiction in which its Facility Office is located or on the capital of that Lender employed in such jurisdiction or jurisdictions) on any sum received or receivable hereunder (including, without limitation, any sum received or receivable under this Clause 10.2) or any liability in respect of any such payment is asserted, imposed, levied or assessed against a Lender, each Obligor shall, upon demand of the Facility Agent promptly indemnify that Lender against such payment or liability, together with any interest, penalties and expenses payable or incurred in connection therewith.

10.3 Tax Credit

If a Lender or, as the case may be, the Facility Agent determines in its absolute discretion, acting in good faith, that it has received, realised, utilised and retained a Tax benefit by reason of any deduction or withholding in respect of which an Obligor has made an increased payment or paid a compensating sum under this Clause 10 that Lender or, as the case may be, the Facility Agent shall, provided it has received all amounts which are then due and payable by the Obligors under any of the provisions of this Agreement and the other Finance Documents, pay to the Obligors (to the extent that that Lender or, as the case may be, the Facility Agent can do so without prejudicing the amount of that benefit and the right of that Lender, or as the case may be, the Facility Agent to obtain any other benefit, relief or allowance which may be available to it), such amount, if any, as that Lender, or as the case may be, the Facility Agent shall determine in its absolute discretion acting in good faith, will leave that Lender, or as the case may be, the Facility Agent in no better and no worse position than it would have been in if the deduction or withholding had not been required and so that it retains no benefit as a result of the receipt of such deduction.

10.4 Confidentiality of Tax Affairs

If a Lender intends to make a claim pursuant to Clause 10.2 (Tax Indemnity) it shall, as soon as reasonably practicable after becoming aware that it may be entitled to make a claim under Clause 10.2, notify each Borrower of the event by reason of which it is entitled to do so, provided that nothing herein shall require that Lender to disclose any confidential information relating to the organisation of its affairs.

10.5 Stamp taxes

Each Borrower must pay and indemnify each Finance Party against any stamp duty, registration or other similar Tax payable by that Finance Party in connection with the entry into, performance or enforcement of any Finance Document, except for any such Tax payable in connection with the entry into a Transfer Certificate.

10.6 Value added taxes

Any amount (including costs and expenses) payable under a Finance Document by an Obligor is exclusive of any value added tax or any other Tax of a similar nature which might be chargeable in connection with that amount. If any such Tax is chargeable, the Obligor must pay to the relevant Finance Party (in addition to and at the same time as paying that amount) an amount equal to the amount of that Tax.

11. INCREASED COSTS

11.1 Increased Costs

Except as provided below in this Clause 11, each Borrower must pay to a Finance Party the amount of any Increased Cost incurred by that Finance Party or its Affiliates as a result of:

(a) the introduction of, or any change in, or any change in the interpretation or application of, any law or regulation; or

(b) compliance with any law or regulation,

made after the date of this Agreement.

11.2 Exceptions

A Borrower need not make any payment for an Increased Cost to the extent that the Increased Cost is:

(a) compensated for under another Clause or would have been but for an exception to that Clause;

(b) a Tax on the relevant Finance Party or any of its Affiliates; or

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

11.3 Claims

If a Finance Party intends to make a claim for an Increased Cost it must notify the Borrowers promptly of the circumstances giving rise to, and the amount of, the claim.

11.4 Mitigation

(a) Each Finance Party must, in consultation with the Borrowers, use its best endeavours to mitigate any circumstances which arise and which result or would result in any Increased Cost being payable to that Finance Party;

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

(c) A Finance Party is not obliged to take any step under this Subclause if, in the opinion of that Finance Party (acting reasonably), to do so might be prejudicial to it in any material respect and is not otherwise capable of being compensated under paragraph (b).

12. EARNINGS, RETENTION AND OPERATING EXPENSES ACCOUNTS

12.1 Maintenance of accounts

The Borrowers shall maintain the Earnings Accounts, the Retention Accounts and the Operating Expenses Accounts with the Account Bank until the Final Maturity Date, free of Security Interests and rights of set-off other than as created by or pursuant to the Security Documents.

12.2 Earnings

Each of the Borrowers shall procure that there is credited to the relevant Earnings Account for the Vessel chartered by that Borrower all Earnings for the Vessel chartered by that Borrower.

12.3 Transfers to Retention Accounts

In respect of each Loan, upon payment of any Earnings into the relevant Earnings Account (an Earnings Deposit Date) the relevant Borrower shall procure that there is transferred from the relevant Earnings Account for the Vessel which is the subject of that Loan (and irrevocably authorise the Facility Agent to instruct the Account Bank to transfer from the relevant Earnings Account) to the relevant Retention Account an amount calculated in accordance with the following formula:

a = A X n/N

where:

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

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

N= the number of days in a Retention Period; and

n= actual number of days elapsed from (and including) the immediately preceding Earning Deposit Date in the Retention Period or the first day of the Retention Period (where there is no preceding Earning Deposit Date in a Retention Period) up to (but excluding) the Earning Deposit Date.

PROVIDED ALWAYS that on the last Earnings Deposit Date for a Retention Period and, if there remains a shortfall, on the last day of a Retention Period there shall be transferred to the relevant Retention Account out of the relevant Earnings Account an amount (taking into account the existing balance of the relevant Retention Account) required to repay (i) in the case of the relevant Tranche A Loan, the principal, interest and Exposure Fee and (ii) in the case of the relevant Tranche B Loan, interest payable in respect of that Loan on the next Repayment Date or, in the final Retention Period, the amount required to repay (x) in the case of the relevant Tranche A Loan, the principal, interest and Exposure Fee and (y) in the case of the relevant Tranche B Loan, principal and interest payable on the Final Maturity Date in respect of the Loan to which the Earnings Account relates.

12.4 Additional payments to Retention Accounts

If for any reason the amount standing to the credit of the relevant Earnings Account shall be insufficient to make any transfer to the relevant Retention Account required by Clause 12.3, the Borrowers shall, without demand, procure that there is credited to the relevant Retention Account, within 5 Business Days of the date on which the relevant amount would have been transferred from the Earnings Account, an amount equal to the amount of the shortfall.

12.5 Application of Retention Accounts

The relevant Borrower shall procure that there is transferred from the relevant Retention Account (and irrevocably authorise the Facility Agent to instruct the Account Bank to transfer from the relevant Retention Account) to the Facility Agent in respect of each Loan:

(a) on each Repayment Date for that Loan, the amount of the Repayment Instalment for that Loan then due and, in the case of the Final Maturity Date, the outstanding balance of the relevant Tranche B Loan; and

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

12.6 Borrowers’ obligations not affected

If for any reason the amount standing to the credit of the Retention Accounts shall be insufficient to pay any Repayment Instalment or to make any payment of interest or the Exposure Fee when due, the Borrowers’ obligation to pay that Repayment Instalment or to make that payment of interest or the Exposure Fee shall not be affected.

12.7 Release of surplus

The Facility Agent shall instruct the Account Bank to release to the Operating Expenses Account for the relevant Vessel any amount remaining to the credit of the relevant Earnings Account following the making of any transfer required by Clause 12.3 (unless an Event of Default shall have occurred and be continuing). Thereafter, the relevant Borrower shall be entitled to withdraw sums of money standing to the credit of the Operating Expenses Account in the following circumstances: (i) in and towards payment of any Operating Expenses; (ii) in the event of a reduction in the relevant Borrower’s Equity Contribution, an amount equal to such reduction, (iii) an amount equal to any late payment of Earnings made to the Earnings Account of the relevant Borrower after the Borrower has funded the transfer from the Earnings Account required by Clause 12.3; (iv) distribution to shareholders in accordance with and subject to Clause 17.8 and (v) in or towards a voluntary prepayment of the relevant Loan in accordance with Clause 6.5 (Voluntary prepayment).

12.8 Restriction on withdrawal

During the term of the Facility, no sum may be withdrawn from any of the Earnings Accounts or the Retention Accounts (except in accordance with this Clause 12) without the prior written consent of the Facility Agent (acting on the instructions of the Majority Lenders).

13. PAYMENTS

13.1 Place

Unless a Finance Document specifies that payments under it are to be made in another manner, all payments by a Party (other than the Facility Agent) under the Finance Documents must be made to the Facility Agent to its account no. 0011624418 with XX Xxxxxx Xxxxx, New York, ABA No. 021 000 021 for the credit of Fortis Capital Corp. or such other account in the United States of America as the Facility Agent may notify to that Party for this purpose by not less than five Business Days’ prior notice.

13.2 Funds

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

13.3 Distribution

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

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

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

13.4 Currency

All amounts payable under the Finance Documents are payable in Dollars provided always that amounts payable in respect of costs and expenses are payable in the currency in which those costs and expenses are incurred.

13.5 No set-off or counterclaim

All payments made by an Obligor under the Finance Documents must be made without set-off or counterclaim.

13.6 Business Days

(a) If a payment under the Finance Documents is due on a day which is not a Business Day, the due date for that payment will instead be the next Business Day in the same calendar month (if there is one) or the preceding Business Day (if there is not).

(b) During any extension of the due date for payment of any principal under this Agreement interest is payable on that principal at the rate payable on the original due date.

13.7 Payments

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

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

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

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

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

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

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

(vii) seventh, after all amounts payable or which may become payable under the Finance Documents have been paid in full and the Finance Documents have been discharged, in or towards payment of the surplus if any, to the relevant Borrower or other persons entitled thereto.

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

13.8 Timing of payments

If a Finance Document does not provide for when a particular payment is due, that payment will be due within three Business Days of demand by the relevant Finance Party.

14. GUARANTEE AND INDEMNITY

14.1 Guarantee and indemnity

The Guarantor irrevocably and unconditionally:

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

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

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

14.2 Continuing guarantee

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

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

14.3 Reinstatement

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

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

14.4 Waiver of defences

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

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

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

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

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

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

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

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

14.5 Immediate recourse

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

14.6 Appropriations

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

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

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

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

14.7 Non-competition

Unless:

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

(b) the Facility Agent otherwise directs,

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

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

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

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

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

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

14.8 Additional security

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

15. REPRESENTATIONS

15.1 Representations

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

15.2 Status

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

(b) It and each of its Subsidiaries has the power to own and hold on charter its assets and carry on its business as it is being conducted.

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

15.3 Powers and authority

It has the power to enter into and perform, and has taken all necessary action to authorise the entry into and performance of, the Finance Documents to which it is or will be a party and the transactions contemplated by those Finance Documents.

15.4 Legal validity

Subject to any general principles of law limiting its obligations and referred to in any legal opinion required under this Agreement, each Finance Document to which it is a party is its legally binding, valid and enforceable obligation.

15.5 Non-conflict

The entry into and performance by it of, and the transactions contemplated by, the Finance Documents to which it is a party do not conflict in any material respect with:

(a) any law or regulation applicable to it;

(b) its or any of its Subsidiaries’ constitutional documents; or

15.6 No default

(a) No Default is outstanding or will result from the execution of, or the performance of any transaction contemplated by, any Finance Document; and

(b) No other event is outstanding which constitutes a default under any document which is binding on it or any of its Subsidiaries or any of its or its Subsidiaries’ assets to an extent or in a manner which is reasonably likely to have a Material Adverse Effect.

15.7 Authorisations

Except for registration of the Mortgages at the Cyprus Ships Registry, of any Security Agreement creating a charge over Security Assets of the Borrowers or either of them at the Cyprus Companies Registry and of any relevant Security Agreement under the Companies Xxx 0000 all authorisations required by it in connection with the entry into, performance, validity and enforceability of, and the transactions contemplated by, the Finance Documents have been obtained or effected (as appropriate) and are in full force and effect.

15.8 Financial statements

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

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

(b) fairly represent its financial condition (consolidated, if applicable) as at the date to which they were drawn up,

except, in each case, as disclosed to the contrary in those financial statements.

15.9 No material adverse change

There has been no material adverse change in the business, condition (financial or otherwise) or operations of the Obligors, or any of them, or any member of the Danaos Group since 31st December, 2002 or, if incorporated after 31st December, 2002, since the date of incorporation or following the receipt by the Facility Agent of an Annual Compliance Certificate, since the date of the then latest Annual Compliance Certificate. Insofar as this representation relates to the members of the Danaos Group other than the Obligors it is given on the date of this Agreement and each Utilisation Date only.

15.10 Litigation

No litigation, arbitration or administrative proceedings of or before any court, arbitral body or agency (including, but not limited to, investigative proceedings) which, if adversely determined, might reasonably be expected to have a Material Adverse Effect have (to the best of its knowledge and belief) been started or threatened against the Obligors or any of them, or any member of the Danaos Group. Insofar as this representation relates to the members of the Danaos Group other than the Obligors it is given on the date of this Agreement and each Utilisation Date only.

15.11 Pari passu ranking

Its payment obligations under the Finance Documents rank at least pari passu with all its other present and future unsecured payment obligations, except for obligations mandatorily preferred by law applying to companies generally.

15.12 Taxes on payments

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

15.13 Stamp duties

Except as notified in writing to and accepted by the Facility Agent no stamp or registration duty or similar Tax or charge is payable in its jurisdiction of incorporation in respect of any Finance Document or Related Contract.

15.14 Environment

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

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

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

(c) no Borrower nor any of its Environmental Affiliates has received notice of any Environmental Claim in relation to the relevant Vessel which alleges that such Borrower is not in compliance with applicable Environmental Laws in relation to such Vessel or Environmental Approvals in relation to such Vessel;

(d) there is no Environmental Claim in relation to either Vessel pending or threatened which is such that a first class owner or operator of vessels such as the Vessels making all due enquiries and complying in all respects with its obligations under the ISM Code ought to have known about; and

(e) there has been no Release of Hazardous Materials by or in respect of either Vessel about which a first class owner or operator of vessels such as the Vessels making all due enquiries and complying in all respects with its obligations under the ISM Code ought to have known about.

15.15 Security Interests

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

15.16 Security Assets

Each Borrower is solely and absolutely entitled to the Security Assets over which it has or will create any Security Interest pursuant to the Security Documents to which it is a party, or will be, a party and there is no agreement or arrangement under which it is obliged to share any proceeds of or derived from such Security Assets with any third party.

15.17 ISM Code compliance

On each Delivery Date, each Owner and the Bareboat Charterer is in full compliance with the ISM Code in respect of its Vessel.

15.18 ISPS Code Compliance

On each Delivery Date, each Owner and the Bareboat Charterer is in full compliance with the ISPS Code in respect of its Vessel.

15.19 No amendments to Related Contracts

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

15.20 Money Laundering

Any borrowing by any Borrower and the performance of its obligations hereunder and under the other Finance Documents to which it is a party will be for its own account and will not involve any breach by it of any law or regulatory measure relating to money laundering as defined in Article 1 of the Directive (91/308/EEC) of the Council of the European Communities or any equivalent law or regulatory measure in any other jurisdiction.

15.21 Insolvency

(a) No Obligor, nor any member of the Danaos Group is unable, or admits or has admitted its inability, to pay its debts or has suspended making payments on any of its debts.

(b) No Obligor nor any member of the Danaos Group, by reason of actual or anticipated financial difficulties has commenced, or intends to commence, negotiations with one or more of its creditors with a view to rescheduling any of its Financial Indebtedness.

(c) The value of the assets of each Obligor, and each member of the Danaos Group is not less than its liabilities (taking into account contingent and prospective liabilities).

(d) No moratorium has been, or may, in the reasonably foreseeable future be, declared in respect of any indebtedness of any Obligor or any member of the Danaos Group.

15.22 Immunity

(a) The execution by it of each Finance Document to which it is a party constitutes, and the exercise by it of its rights and performance of its obligations under each such Finance Document will constitute, private and commercial acts performed for private and commercial purposes.

(b) It will not be entitled to claim immunity from suit, execution, attachment or other legal process in any proceedings taken in its jurisdiction of incorporation in relation to any Finance Document.

15.23 No adverse consequences

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

(i) in order to enable the Facility Agent to enforce its rights under any Finance Document; or

(ii) by reason of the execution of any Finance Document or the performance by it of its obligations under any Finance Document,

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

(b) The Facility Agent will not be deemed to be resident, domiciled or carrying on business in its jurisdiction of incorporation by reason only of the execution, performance and/or enforcement of any Finance Document.

15.24 Jurisdiction/governing law

(a) Its:

(i) irrevocable submission under this Agreement to the jurisdiction of the courts of England;

(ii) agreement that this Agreement is governed by English law; and

(iii) agreement not to claim any immunity to which it or its assets may be entitled,

are legal, valid and binding under the laws of its jurisdiction of incorporation; and

(b) Any judgment obtained in England will be recognised and be enforceable by the courts of its jurisdiction of incorporation, subject to any statutory or other conditions of such jurisdiction.

15.25 Times for making representations

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

(b) Unless a representation is expressed to be given at a specific date, each representation given by each Obligor is deemed to be repeated by each Obligor during the Pre-Delivery Period in respect of the relevant Vessel on each Utilisation Date and during the Post Delivery Period in respect of the relevant Vessel, annually on each anniversary of the first Utilisation Date when the relevant Borrower and the Guarantor shall provide to the Facility Agent an Annual Compliance Certificate.

16. INFORMATION COVENANTS

16.1 Financial statements

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

(i) its audited financial statements for each of its financial years ending after the date hereof;

(ii) its interim unaudited financial statements for the first half-year of each of its financial years; and

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

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

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

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

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

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

(d) All financial statements must be supplied as soon as they are available and:

(i) in the case of audited financial statements, within 180 days;

(ii) in the case of interim semi-annual financial statements, within 120 days; and

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

of the end of the relevant financial period.

16.2 Form of financial statements

(a) Each Obligor must ensure that each set of financial statements supplied by it under this Agreement gives (if audited) a true and fair view of, or (if unaudited) fairly represents, the financial condition (consolidated or otherwise) of the relevant person as at the date to which those financial statements were drawn up.

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

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

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

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

(d) If requested by the Facility Agent, each Obligor must enter into discussions for a period of not more than 30 days with a view to agreeing any amendments required to be made to this Agreement to place the Facility Agent in the same position as it would have been in if the change had not happened.

(e) If no agreement is reached under paragraph (d) above on the required amendments to this Agreement, each Obligor must ensure that its auditors certify those amendments; the certificate of the auditors will be, in the absence of manifest error, binding on all the Parties.

16.3 Access to Books and Records

Upon the request of the Facility Agent, each Obligor shall provide the Facility Agent and any of its representatives, professional advisors and contractors with access to and permit inspection of its books and records, in each case at reasonable times and upon reasonable notice.

16.4 Information - miscellaneous

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

(a) copies of all documents despatched by it to its creditors generally or any class of them at the same time as they are despatched;

(b) promptly upon becoming aware of them, details of any litigation, arbitration or administrative proceedings which are current, threatened or pending against it and which might, if adversely determined, have a Material Adverse Effect; and

(c) promptly on request, such further information, in sufficient copies for all the Lenders, regarding the financial condition and operations of an Obligor as the Facility Agent may reasonably request.

16.5 Notification of Default

(a) Unless the Facility Agent has already been so notified, each Obligor must notify the Facility Agent of any Default (and the steps, if any, being taken to remedy it) promptly upon becoming aware of its occurrence.

(b) Promptly on request by the Facility Agent but not more often than once in each period of 12 months, unless the Facility Agent, acting reasonably, believes an Event of Default has occurred and is continuing (in which event the Facility Agent shall be entitled to make such requests as and when it considers it appropriate to do so), each Borrower must, and the Guarantor shall procure that each Borrower shall, supply to the Facility Agent a certificate, signed by two of its authorised signatories on its behalf, certifying that no Default is outstanding or, if a Default is outstanding, specifying the Default and the steps, if any, being taken to remedy it.

16.6 Year end

The Obligors may not change their financial year-end.

17. GENERAL COVENANTS

17.1 General

Each of the Obligors agrees to be bound by the covenants set out in this Clause relating to it, or where relevant, agrees to procure that the Bareboat Charterer will be bound.

17.2 Authorisations

Each Obligor must promptly obtain, maintain and comply, in all material respects, with the terms of any authorisation required under any Applicable Law to enable it to perform its obligations under, or for the validity or enforceability of, any Finance Document.

17.3 Compliance with laws

Each Obligor must comply, and must procure that the Manager, the Owners and the Bareboat Charterer each complies in all respects with all Applicable Laws to which it is subject where failure to do so is reasonably likely to have a Material Adverse Effect.

17.4 Pari passu ranking

Each Obligor must ensure that its payment obligations under the Finance Documents rank at least pari passu with all its other present and future unsecured payment obligations, except for obligations mandatorily preferred by law applying to companies generally.

17.5 Security Interests

Each Borrower shall not (and the Guarantor shall procure that each Borrower shall not), and the Obligors shall procure that the Manager, the Owners and the Bareboat Charterer do not, create or permit to subsist any Security Interest over the Obligatory Insurances or any other Security Assets or any Related Contract other than:

(a) Permitted Liens; or

(b) with the prior written consent of the Facility Agent (acting on the instructions of the Majority Lenders).

17.6 Disposals

(a) Except as provided below, no Borrower may, either in a single transaction or in a series of transactions and whether related or not, dispose of all or any part of its assets unless (i) such assets are being replaced by that Borrower on a like-for-like basis or are being sold by that Borrower on normal commercial terms and on an arm’s length basis, and (iii) any such disposal is not, in the reasonable opinion of the Majority Lenders, likely to have a Material Adverse Effect.

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

(c) The Guarantor shall not, without the prior written consent of the Facility Agent (acting on the instructions of the Majority Lenders) sell, transfer, lend, lease or otherwise dispose of (in any such case otherwise than for full consideration in the ordinary course of trading) any of its shares in any Shareholder or the whole or, in the opinion of the Facility Agent, any substantial part of its business, property, assets, whether by a single transaction or by a series of transactions (related or not).

17.7 No other business assets or Financial Indebtedness

No Borrower shall, and the Guarantor shall procure that no Borrower shall, engage in any business other than the direct or indirect ownership, operation and chartering of the relevant Vessel or any business incidental thereto nor shall any Borrower (and the Guarantor shall procure that no Borrower shall) own any asset other than any asset incidental to the operation and chartering of the relevant Vessel, nor shall any Borrower (and the Guarantor shall procure that no Borrower shall) incur any Financial Indebtedness other than the Financial Indebtedness contemplated by this Agreement and any other short term indebtedness not exceeding, when aggregated with such other Financial Indebtedness of that Borrower, US$1,000,000 incurred in the ordinary course of business solely for the purpose of funding Operating Expenses.

17.8 Payment of dividends

No Borrower shall, and the Guarantor shall procure that no Borrower shall, pay any dividends or make any other distributions to shareholders or issue any new shares unless it has available surplus funds which, under Applicable Law and accounting principles in its jurisdiction of incorporation it is entitled to distribute as dividends and where the following conditions are satisfied:

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

(b) no Default has occurred and is continuing.

17.9 Change of business

(a) Each Borrower must (and the Guarantor shall procure that each Borrower shall) ensure that no change is made to the general nature of its business from that carried on at the date of this Agreement.

(b) Each Borrower must (and the Guarantor shall procure that each Borrower shall) maintain its place of business, and keep its corporate documents and records, at the address stated opposite its name in Schedule 1, and the Borrowers will not establish, or do anything as a

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

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

17.10 Mergers

None of the Obligors shall enter into any amalgamation, demerger, merger or reconstruction otherwise than under an intra-group re-organisation on a solvent basis or other transaction agreed by the Facility Agent.

17.11 Security

Each Borrower (and the Guarantor shall procure that each Borrower):

(a) will procure that the relevant Mortgage is on the Delivery Date, and continues to be, registered as a first priority mortgage with the Cyprus Ships Registry;

(b) will procure that the Mortgage and any other security conferred under any Security Document is registered as a first priority interest with the relevant authorities within the period prescribed by the Applicable Laws and is maintained and perfected with the relevant authorities;

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

(d) without limiting the generality of paragraph (a) above, will at its own cost, promptly register, file, record or enrol any Finance Document with any court or authority, pay any stamp, registration or similar tax payable in respect of any Finance Document, give any notice or take any other step which, in the reasonable opinion of the Facility Agent, is or has become necessary or desirable for any Finance Document to be valid, enforceable or admissible in evidence or to ensure or protect the priority of any Security Interest which it creates.

17.12 Registration of the Vessels

Each Borrower shall (and the Guarantor shall procure that each Borrower shall) and shall procure that the relevant Owner shall:

(a) procure and maintain with effect from the Delivery Date of the relevant Vessel, the valid and effective provisional registration of the Vessel under the flag of the Republic of Cyprus and shall effect permanent registration of the Vessel within 2 months from the relevant Delivery Date, or such other flag of equivalent reputation as is satisfactory to the Facility Agent (acting on the instructions of the Majority Lenders) in its absolute discretion, and shall ensure nothing is done or omitted by which the registration of the Vessels would or might be defeated or imperilled; and

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

17.13 Partial prepayments or additional security

(a) If and so often as, at any time on or after the Delivery Date of the first Vessel to be delivered until the date falling on the last day of the third year after the Delivery Date of the first Vessel to be delivered, the market value of either of the delivered Vessels (determined in accordance with Clause 19) shall be less than the First Required Amount in respect of that Vessel, the Borrowers will (and the Guarantor shall procure that the Borrowers will), within thirty days of the request of the Facility Agent to do so, either (i) prepay such amount of the Loan relating to that Vessel as will ensure that the market value of that Vessel (determined as aforesaid) is not less than the First Required Amount in respect of that Vessel; or (ii) provide or cause to be provided to the Facility Agent such additional security as may be satisfactory to each of the Lenders acting in good faith but otherwise in their absolute discretion. Clauses 6.9 and 6.10 shall apply, mutatis mutandis, to any prepayment made pursuant to this Clause save that no prepayment fee equal to 0.5% of the amount of principal of the Tranche A Loan shall be payable. Any prepayment made in accordance with Clause 17.13(a)(i) shall be applied against the Repayment Instalments of the relevant Loan in the inverse order of their maturity.

(b) If and so often as, at any time on or after the date falling on the last day of the third year after the Delivery Date of the first Vessel until the date falling on the last day of the fifth year after the Delivery Date of the first Vessel, the market value of either of the delivered Vessels (determined in accordance with Clause 19) shall be less than the Second Required Amount in respect of that Vessel, the Borrowers will (and the Guarantor shall procure that the Borrowers will), within thirty days of the request of the Facility Agent to do so, either (i) prepay such amount of the Loan relating to that Vessel as will ensure that the market value of that Vessel (determined as aforesaid) is not less than the Second Required Amount in respect of that Vessel or (ii) provide or cause to be provided to the Facility Agent such additional security acceptable to each of the Lenders acting in good faith but otherwise in their entire discretion. Clauses 6.9 and 6.10 shall apply, mutatis mutandis, to any prepayment made pursuant to this Clause save that no prepayment fee equal to 0.5% of the amount of principal of the Tranche A Loan shall be payable. Any prepayment made in accordance with Clause 17.13(b)(i) shall be applied against the Repayment Instalments of that Loan in the inverse order of their maturity.

(c) If and so often as, at any time on or after the date falling on the last day of the fifth year after the Delivery Date of the first Vessel until the Final Maturity Date, the market value of either of the delivered Vessels (determined in accordance with Clause 19) shall be less than the Third Required Amount in respect of that Vessel , the Borrowers will (and the Guarantor shall procure that the Borrowers will), within thirty days of the request of the Facility Agent to do so either (i) prepay such amount of the Loan relating to that Vessel as will ensure that the market value of that Vessel (determined as aforesaid) is not less than the Third Required Amount in respect of that Vessel or (ii) provide or cause to be provided to the Facility Agent such additional security acceptable to each of the Lenders acting in good faith but otherwise in their entire discretion. Clauses 6.9 and 6.10 shall apply, mutatis mutandis, to any prepayment made pursuant to this Clause save that no prepayment fee equal to 0.5% of the amount of principal of the Tranche A Loan shall be payable Any such prepayment made in accordance with Clause 17.13(c)(i) shall be applied against the Repayment Instalments of that Loan in the inverse order of their maturity.

17.14 Classification and repair

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

(a) ensure that the Vessels are surveyed from time to time as required by the classification society in which the Vessel is for the time being entered and maintain and preserve the Vessel in good working order and repair, ordinary wear and tear excepted, and in any event in such condition as will entitle each to the classification of 100A1 Containership, Shipright (SDA, FDA, CM)* IWS, @ LMC, UMS, SCM, EP, CAC NAVI or, if such classification is not available with the highest equivalent classification available, with Lloyds Register of Shipping, (or to the equivalent classification in another internationally recognised classification society of like standing acceptable to the Facility Agent (acting on the instructions of the Majority Lenders)), free of all overdue requirements and recommendations of that classification society;

(b) procure that all repairs to or replacement of any damaged, worn or lost parts or equipment shall be effected in such manner (both as regards workmanship and quality of materials) as not to diminish the value of the Vessels;

(c) not remove any material part of either of the Vessels, or any item of equipment installed on either of the Vessels unless the part or item so removed is forthwith replaced by a suitable part or item which is in the same condition as or better condition than the part or item removed, is free from any Security Interest or any right in favour of any person other than the Facility Agent and becomes on installation on that Vessel the property of the Owner and subject to the security constituted by the relevant Security Document(s) provided that the Owner may install and remove equipment owned by a third party if the equipment can be removed without any risk of damage to a Vessel;

(d) ensure that each Vessel complies with all Applicable Laws from time to time applicable to vessels registered under the laws and flag of the Republic of Cyprus or such other flag, under which the Vessels may be registered from time to time in accordance with this Agreement; and

(e) not without the prior written consent of the Facility Agent (acting on the instructions of the Majority Lenders)), (such consent not to be unreasonably withheld) cause or permit to be made any substantial change in the structure, type or performance characteristics of either of the Vessels and provide notification of such substantial changes in structure, type or performance characteristics of either of the Vessels to the Facility Agent and furthermore provide confirmation to the Facility Agent that such substantial change in structure, type or performance characteristics of either of the Vessels shall not result in a breach of any covenant under this Agreement.

17.15 Lawful and Safe Operation

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

(a) operate each Vessel and cause each of the Vessels to be operated in a manner consistent in all material respects with any and all laws, regulations, treaties and conventions (and all rules and regulations issued thereunder) from time to time applicable to the Vessel;

(b) not cause or permit either of the Vessels to trade with, or within the territorial waters of any country in which her safety may be imperilled by exposure to piracy,

terrorism, arrest, requisition, confiscation, forfeiture, seizure, destruction or condemnation as prize;

(c) not cause or permit either of the Vessels to be employed in any manner which will or may give rise to any reasonable degree of likelihood that such Vessel would be liable to requisition, confiscation, forfeiture, seizure, destruction or condemnation as prize;

(d) not cause or permit either of the Vessels to be employed in any trade or business which is forbidden by international law or is illicit or in carrying illicit or prohibited goods;

(e) in the event of hostilities in any part of the world (whether war be declared or not) not cause or permit either of the Vessels to be employed in carrying any contraband goods and that she does not trade in any zone after it has been declared a war zone by any authority or by any of that Vessel’s war risks insurers unless that Vessel’s insurers shall have confirmed to the relevant Owner that such Vessel is held covered under the Obligatory Insurances for the voyage(s) in question; and

(f) not charter either of the Vessels or permit either of the Vessels to serve under any contract of affreightment with any foreign country or national of any foreign country which is specified by legislation or regulations of Korea or any other jurisdiction in which a Facility Office is located and such that, if the earnings or any part of earnings were derived from such charter or affreightment, that fact would render any Finance Document or the security conferred by the Security Documents unlawful.

17.16 Repair of the Vessels

Each Borrower will not (and the Guarantor shall procure that each of the Borrowers will not) and will procure that the Manager, the Owners and the Bareboat Charterer will not, at any time after the Delivery Date of a relevant Vessel, put either of the Vessels into the possession of any person for the purpose of work being done upon her beyond the amount of US$3,000,000 (or equivalent), other than for classification or scheduled dry docking unless such person shall have given an undertaking to the Facility Agent not to exercise any lien on that Vessel or Obligatory Insurances for the cost of that work or otherwise.

17.17 Arrests and Liabilities

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

(a) pay and discharge all obligations and liabilities whatsoever which have given or may give rise to liens (other than liens arising in the ordinary course of operation of either of the Vessels in each case for amounts the payment of which is not yet due or, if due and payable, is being disputed in good faith by appropriate proceeding (and for the payment of which adequate reserves have been provided or are and continue to be available)) on or claims enforceable against either of the Vessels and take all reasonable steps to prevent a threatened arrest of either of the Vessels;

(b) notify the Facility Agent promptly in writing of the levy of any distress on either of the Vessels or her arrest, detention, seizure, condemnation as prize, compulsory acquisition or requisition for title or use and (save in the case of compulsory acquisition or requisition for title or use) obtain her release within 21 days;

(c) pay and discharge when due all dues, taxes, assessments, governmental charges, fines and penalties lawfully imposed on or in respect of either of the Vessels or the relevant Borrower, the Manager, the relevant Owner or the Bareboat Charterer except those which are being disputed in good faith by appropriate proceedings (and for the payment of which adequate reserves have been provided or are and continue to be available) and provided that the continued existence of such dues, taxes, assessments, governmental charges, fines or penalties does not give rise to any reasonable degree of likelihood that the Vessel would be liable to arrest, requisition, confiscation, forfeiture, seizure, destruction or condemnation as prize; and

(d) pay and discharge all other obligations and liabilities whatsoever in respect of either of the Vessels and the Obligatory Insurances except those which are being disputed in good faith by appropriate proceedings (and for the payment of which adequate reserves have been provided or are and continue to be available) and provided that the continued existence of those obligations and liabilities in respect of either of the Vessels and the Obligatory Insurances does not give rise to any reasonable degree of likelihood that the Vessel would be liable to arrest, requisition, confiscation, forfeiture, seizure, destruction or condemnation as prize and provided always that each Vessel remains properly managed and insured at all times in accordance with the terms of this Agreement.

17.18 Related Contracts

The Borrower shall not (and the Guarantor shall procure that each Borrower shall not) and the Manager, the Owners and the Bareboat Charterer shall not, take any action, enter into any document or agreement or omit to take any action or to enter into any document or agreement which would, or could reasonably be expected to, cause any Related Contract to cease to remain in full force and effect and shall use all reasonable endeavours to procure that each other party to any Related Contract does not take any action, enter into any document or agreement or omit to take any action or to enter into any document or agreement which would, or could reasonably be expected to, cause any Related Contract to cease to remain in full force and effect.

17.19 Environment

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

(a) comply with all applicable Environmental Laws including, without limitation, requirements relating to the establishment of financial responsibility (and shall require that all Environmental Affiliates of each Borrower comply with all applicable Environmental Laws and obtain and comply with all required Environmental Approvals, which Environmental Laws and Environmental Approvals relate to either of the Vessels or her operation or her carriage of cargo); and

(b) promptly upon the occurrence of any of the following events, provide to the Facility Agent a certificate of an officer of the relevant Borrower or of the relevant Borrower’s agents specifying in detail the nature of the event concerned:

(i) the receipt by the Borrower or any Environmental Affiliate (where the Borrower has knowledge of the receipt) of any Environmental Claim; or

(ii) any Release of Hazardous Materials.

17.20 Information regarding the Vessels

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

(a) promptly notify the Facility Agent of the occurrence of any accident, casualty or other event which has caused or resulted in or may cause or result in its Vessel being or becoming a Total Loss;

(b) promptly notify the Facility Agent of any requirement or recommendation made by any Insurer or classification society or by any competent authority which is not complied with in a timely manner;

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

(e) promptly notify the Facility Agent of any claim for breach of the ISM Code being made in connection with either of the Vessels or its operation;

(f) promptly notify the Facility Agent of any claim for breach of the ISPS Code being made in connection with any of the Vessels or its operation;

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

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

(i) promptly furnish the Facility Agent with full information of any casualty or other accident or damage to either of the Vessels involving an amount in excess of US$3,000,000 (or equivalent);

(j) give to the Facility Agent and its duly authorised representatives reasonable access to either of the Vessels for the purpose of conducting on board inspections and/or surveys of the Vessel and pay the reasonable expenses incurred by the Facility Agent in connection with the inspections and/or surveys provided that, unless a Default has occurred and is continuing, such inspections and/or surveys shall not take place at the expense of the Borrower and the Facility Agent shall co-operate with the Borrower in respect of the timing for and the place where such surveys take place in order to minimise disruption to the activities of either of the Vessels; and

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

17.21 Provision of further information

Each Obligor shall, and shall procure that the Manager, the Owners and the Bareboat Charterer shall, as soon as practicable following receipt of a request by the Facility Agent, provide the Facility Agent, with sufficient copies for all the Lenders, with any additional or further financial or other information relating to either of the Vessels, the Obligatory Insurances or to any other matter relevant to, or to any provision of, a Finance Document which the Facility Agent may reasonably request.

17.22 Management

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

(a) the relevant Vessel is managed by the Manager; and

(b) the Manager shall not terminate or materially vary the terms of its management or appoint an alternative manager, provided that the Bareboat Charterer shall be entitled so to do with the prior written consent of the Facility Agent (acting on the instructions of the Majority Lenders).

However, in the event that the Manager’s appointment as manager of either one of the Vessels ceases or is terminated in circumstances where it was not possible for the Bareboat Charterer to obtain the prior written consent of the Facility Agent, the relevant Borrower shall promptly and in any event within 10 days from the date of the termination of the Manager’s appointment, provide to the Facility Agent details of a replacement manager, such manager to be satisfactory to the Facility Agent (acting on the instructions of the Majority Lenders) .

17.23 Proceeds from sale or Total Loss of a Vessel

(a) Each Borrower shall (and the Guarantor shall procure that each Borrower shall) procure that the proceeds from a sale or Total Loss of the relevant Vessel shall immediately upon receipt by the Owner or a Borrower be paid to the Facility Agent for application in accordance with the relevant provisions of the relevant Intercreditor Deed and the provisions of Clause 13.7.

(b) For and so long as an Owner or a Borrower holds any such proceeds as referred to in paragraph (a) it shall do so on trust for the Facility Agent.

17.24 Charters

(a) No Borrower will (and the Guarantor shall procure that no Borrower will) and shall procure that neither of the Owners nor the Bareboat Charterer will let either of the Vessels on demise, consecutive voyage or voyage charter for any period without the consent of the Facility Agent (acting on the instructions of the Majority Lenders) such consent not to be unreasonably withheld other than the AML Time Charters, the Bareboat Charters and the Time Charters .

(b) Each Borrower shall be entitled to let its Vessel, in accordance with the terms of the Time Charter PROVIDED always that:

(i) the Borrower shall remain liable under any time charter to perform all the obligations assumed by it under the Time Charter;

(ii) the Facility Agent shall not be under any obligations or liability under any time charter or liable to make any payment under that time charter; and

(iii) the Facility Agent shall not be obliged to enforce against any charterer any term of any time charter, or to make any enquiries as to the nature or sufficiency of any payment received by the Facility Agent.

(c) If so required by the Facility Agent (acting in accordance with the instructions of the Majority Lenders) each of the Borrowers shall exercise its respective rights to extend the charter period in respect of the relevant Vessel beyond the Initial Charter Period (as such term is defined in the AML Time Charters) for such period as the Facility Agent may require, all in accordance with the provisions of Clause 32.1 of the AML Time Charters.

17.25 Substitution of Charterer

(a) At all times during the Post-Delivery Period, the Borrowers shall (and the Guarantor shall procure that each Borrower shall) advise the Facility Agent of any of the following events:

(i) any breach by the Charterer of the terms of a Time Charter of which the relevant Borrower becomes aware;

(ii) the termination of a Time Charter by either the relevant Borrower or the Charterer;

(iii) as soon as it becomes aware of such event, the occurrence of an event of cross default of the nature referred to in Clause 20.6 in respect of the Charterer, PROVIDED always that such event shall not arise in respect of the Charterer where the aggregate amount of the relevant Financial Indebtedness of the Charterer is less than US$50,000,000 or its equivalent; or

(iv) as soon as it becomes aware of such event, the occurrence of an insolvency event of the nature referred to in Clause 20.7, 20.8 or 20.9 in respect of the Charterer.

Upon the occurrence of any such event the Facility Agent shall be entitled (acting on the instructions of the Majority Lenders) to require that the relevant Borrower exercises all of its rights under the relevant Time Charter including, where applicable, the termination of the Time Charter in respect of the relevant Vessel.

(b) In the event of a termination of a Time Charter in accordance with Clause 17.25(a) or otherwise, the relevant Borrower shall within 45 days of such termination:

(i) propose by written notice to the Facility Agent, a substitute charterer; or

(ii) prepay the outstanding Loan in respect of that Vessel, together with accrued interest and all other amounts accrued under the Finance Documents in respect of that Vessel in accordance with Clause 6,

provided always that, until either a substitute charterer is in place or the Loan has been prepaid, the Borrower shall on each date which would, had the Time Charter not terminated, have been an Earnings Deposit Date, deposit in the relevant Earnings Account an amount equal to the amount which would have been required, on that date, to have been transferred to the relevant Retention Account. Such deposit by the Borrower shall be treated as Earnings and Clause 12 shall apply thereto on that basis. If the Borrower fails to make such deposit into the Earnings Account, the Borrowers’ rights in Clause 17.25 shall immediately cease and

the Facility Agent shall be entitled to treat such failure to pay (after any applicable grace period) as an Event of Default.

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

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

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

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

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

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

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

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

(i) In the event that the relevant Borrower enters into a substitute charter in accordance with Clause 17.25(c) or Clause 17.25(h), the Borrower shall execute an assignment of time charter and earnings in the same form (mutatis mutandis) as the Time Charter and Earnings Assignment together with all notices and acknowledgements thereto.

17.26 Scope of Obligatory Insurances

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

(a) procure the Builder’s compliance with the Builder’s Risk Insurances as detailed in Article XVII of each Shipbuilding Contract.

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

(c) at all times after the relevant Delivery Date keep that Vessel insured in the Required Insurance Amount in the same manner as above against war risks (including risks of mines and all risks, whether or not regarded as war risks, London Blocking and Trapping Addendum and Lost Vessel Clause, excepted by the free of capture and seizure clauses in the standard form of Lloyds marine policy) either:

(i) with underwriters or insurance companies approved by the Facility Agent (acting on the instructions of the Majority Lenders) and by policies in form and content approved by the Facility Agent (acting on the instructions of the Majority Lenders); or

(ii) by entering the relevant Vessel in an approved war risks association,

and for the avoidance of doubt, such war risks insurance will include protection and indemnity liability up to at least the Required Insurance Amount, excluding any liability in respect of death, injury or damage to crew;

(d) at all times after the relevant Delivery Date keep that Vessel entered in respect of her full value and tonnage in an approved protection and indemnity association against all risks as are normally covered by such protection and indemnity association (including pollution risks and the proportion not recoverable in case of collision under the running down clause inserted in the ordinary Lloyds policies), such cover for pollution risks to be for:

(i) a minimum amount of US$1,000,000,000 or such other amount of cover against pollution risks as shall at any time be comprised in the basic entry of each Vessel with either a protection and indemnity association which is an acceptable member of either the International Group of protection and indemnity associations (or any successor organisation designated by the Facility Agent for this purpose) or the International Group (or such successor organisation) itself; or

(ii) if the International Group or any such successor ceases to exist or ceases to provide or arrange any cover for pollution risks (or any supplemental cover for pollution risks over and above that afforded by the basic entry of each Vessel with its protection and indemnity association), such aggregate amount of cover against pollution risks as shall be available on the open market and by basic entry with a protection and indemnity association for ships of the same type, size, age and flag as each respective Vessel,

provided that, if either Vessel has ceased trading or is in lay up and in either case has unloaded all cargo, the level of pollution risks cover afforded by ordinary protection and indemnity cover available through a member of the International Group or such successor organisation or, as the case may be, on the open market in such circumstances shall be sufficient for such purposes;

(e) at all times after either of the Vessels is let on charter, maintain in full force and effect off-hire insurance in respect of that Vessel with underwriters or insurance companies approved by the Facility Agent (acting on the instructions of the Majority Lenders) in form and content approved by the Facility Agent (acting on the instructions of the Majority Lenders); and

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

17.27 Mortgagee’s interest and additional perils insurances

The Facility Agent shall, in respect of each Vessel, be entitled from time to time to effect from the Delivery Date, maintain and renew all or any of the following insurances in the relevant Required Insurance Amount, and on such terms, through such insurers and in such manner as the Facility Agent (acting on the instructions of the Majority Lenders) may from time to time consider appropriate:

(a) a mortgagee’s interest marine insurance providing for the indemnification of the Finance Parties for any Losses under or in connection with any Finance Document which directly or indirectly result from loss of or damage to a Vessel or a liability of a Vessel or a Borrower, being a loss or damage which is prima facie covered by an Obligatory Insurance but in respect of which there is a non-payment (or reduced payment) by the underwriters by reason of, or on the basis of any allegation concerning:

(i) any act or omission on the part of an Owner or the Manager or the Bareboat Charterer or a Borrower, of any other operator or manager of any Vessel or of any officer, employee or agent of an Owner or the Manager or the Bareboat Charterer or of any such person, including any breach of warranty or condition or any non-disclosure relating to such Obligatory Insurance;

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

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

(b) where any Vessel is trading into the waters of the United States of America or any other jurisdiction which in the future introduces unlimited liability regimes, a mortgagee’s interest additional perils policy providing for the indemnification of the Finance Parties against, amongst other things, any Losses or other consequences of any Environmental Claim, including the risk of expropriation, arrest or any form of detention of any Vessel, or the imposition of any Security Interest over any Vessel and/or any other matter capable of being insured against under a mortgagee’s interest additional perils (pollution) policy whether or not similar to the foregoing,

and the Borrowers shall (and the Guarantor shall procure that each Borrower shall) upon demand fully indemnify the Facility Agent in respect of all premiums which are incurred in connection with or with a view to effecting, maintaining or renewing any such insurance or dealing with, or considering, any matter arising out of any such insurance.

17.28 Obligatory Insurances

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

(a) not without the prior consent of the Facility Agent (acting on the instructions of the Majority Lenders) alter any Obligatory Insurance nor make, do, consent or agree to any act or omission which would or might render any Obligatory Insurance invalid, void, voidable or unenforceable or render any sum paid out under any Obligatory Insurance repayable in whole or in part;

(b) not cause or permit any Vessel to be operated in any way inconsistent with the provisions or warranties of, or implied in, or outside the cover provided by, any Obligatory Insurance or to be engaged in any voyage or to carry any cargo not permitted by any Obligatory Insurances without first covering the relevant Vessel in the relevant Required Insurance Amount and her freights for an amount approved by the Facility Agent (acting on the instructions of the Majority Lenders) in Dollars or another approved currency with the approved insurers;

(c) duly and punctually pay all premiums, calls, contributions or other sums of money from time to time payable in respect of any Obligatory Insurance;

(d) renew all Obligatory Insurances at least 14 days before the relevant policies or contracts expire and procure that the approved brokers and/or war risks and protection and indemnity clubs and associations shall promptly confirm in writing to the Facility Agent as and when each renewal is effected;

(e) forthwith upon the effecting of any Obligatory Insurance, give written notice of the insurance to the Facility Agent stating the full particulars (including the dates and amounts) of the insurance, and on request produce the receipts for each sum paid by it pursuant to paragraph (c) above;

(f) not settle, release, compromise or abandon any claim in respect of any Total Loss unless the Facility Agent (acting on the instructions of the Majority Lenders) is satisfied that such release, settlement compromise or abandonment will not prejudice the interests of the Finance Parties under or in relation to any Finance Document;

(g) arrange for the execution and delivery of such guarantees as may from time to time be required by any protection and indemnity or war risks club or association;

(h) procure that the interest of the Facility Agent is noted on all policies of insurance;

(i) procure that a loss payee provision in the form scheduled to the relevant Bareboat Charter and reflecting the provisions of Clause 17.29 (Application of Insurance Proceeds) is endorsed on all policies of insurance;

(j) obtain from the relevant insurance brokers and P&I Club letters and undertakings in form and substance satisfactory to the Facility Agent (acting in accordance with the instructions of the Majority Lenders); and

(k) in the event that an Owner, a Borrower or the Bareboat Charterer receives payment of any moneys under the General Assignment, save as provided in the loss payable clauses scheduled to the relevant Bareboat Charter, forthwith pay over the same to the Facility Agent and until paid over such moneys shall be held in trust for the Facility Agent by a Borrower, the Owner or the Bareboat Charterer, as the case may be.

17.29 Application of Insurance Proceeds

(a) All sums receivable in respect of the Obligatory Insurances after the occurrence of an Event of Default shall be paid to the Facility Agent and the Facility Agent shall apply them in accordance with the relevant provisions of the relevant Intercreditor Deed and thereafter in accordance with Clause 13.7 (Payments).

(b) Subject to paragraph (a) above:

(i) each sum receivable in respect of a major casualty (being any casualty in respect of which the claim or the aggregate of the claims exceeds US$3,000,000 (or its equivalent)), other than in respect of protection and indemnity risk insurances, shall be paid to the Facility Agent; and

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

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

(B) upon a Borrower furnishing evidence satisfactory to the Facility Agent that all loss and damage resulting from the casualty has been properly made good and repaired, to the Owner or, at the option of the Facility Agent, to the person by whom any repairs have been or are to be effected.

(iii) The receipt by any such person referred to in paragraph (A) and (B) of paragraph (ii) above shall be a full and sufficient discharge of the same to the Facility Agent.

(c) Subject to paragraph (a) above, each sum receivable in respect of the Obligatory Insurances (insofar as the same are hull and machinery or war risks insurances) which does not exceed US$3,000,000 or its equivalent shall be paid in full to the Bareboat Charterer or to its order and shall be applied by it for the purpose of making good the loss and fully repairing all damage in respect of which the receivable shall have been collected.

(d) Subject to paragraph (a) above, each sum receivable in respect of protection and indemnity risk Obligatory Insurances shall be paid direct to the person to whom the liability, to which that sum relates, was incurred, or to the Bareboat Charterer in reimbursement to it of moneys expended in satisfaction of such liability.

(e) Subject to paragraph (a), each sum receivable in respect of off-hire insurance shall be paid into the relevant Earnings Account and shall be applied in accordance with the relevant provisions of the relevant Intercreditor Deed and thereafter in accordance with Clause 12.

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

17.30 Power of Facility Agent to Insure

If an Owner, the Borrowers or the Bareboat Charterer fails to effect and keep in force Obligatory Insurances in accordance with this Agreement, it shall be permissible, but not obligatory, for the Facility Agent (acting on the instructions of the Majority Lenders) to effect and keep in force insurance or insurances in the amounts required under this Agreement and entries in a protection and indemnity association or club and, if it deems necessary or expedient, to insure the war risks upon either Vessel, and the Borrowers will reimburse the Facility Agent for the costs of so doing.

17.31 ISM Code

Each Borrower shall (and the Guarantor will procure that each Borrower shall), and shall procure that the Manager, the Owners and the Bareboat Charterer shall:

(a) at all times after the Delivery Date of a Vessel comply, and be responsible for compliance by itself and by such Vessel, with the ISM Code;

(b) at all times after the Delivery Date of a Vessel ensure that:

(i) the Vessel has a valid Safety Management Certificate;

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

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

and shall deliver to the Facility Agent, on or before the Delivery Date in respect of that Vessel, a copy of a valid Safety Management Certificate and a valid Document of Compliance in respect of the relevant Vessel, in each case duly certified by an officer of the Owner of that Vessel;

(c) promptly notify the Facility Agent of any actual or, upon becoming aware of the same, threatened withdrawal of an applicable Safety Management Certificate or Document of Compliance;

(d) promptly notify the Facility Agent of the identity of the person ashore designated for the purposes of paragraph 4 of the ISM Code and of any change in the identity of that person; and

(e) promptly upon becoming aware of the same notify the Facility Agent of the occurrence of any accident or major non-conformity requiring action under the ISM Code.

17.32 No amendment to Related Contracts

The Borrower shall not (and the Guarantor shall procure that neither Borrower shall), and shall procure that the Owners and the Bareboat Charterer shall not, amend or agree to any amendment to the Related Contracts without the prior written consent of the Facility Agent (acting in accordance with the instructions of the Majority Lenders), subject always to the provisions of clause 8.2 of the Multipartite Deed.

17.33 ISPS Code

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

(a) comply and be responsible for compliance by itself and by such Vessel with the ISPS Code;

(b) ensure that:

(i) the Vessel has a valid International Ship Security Certificate;

(ii) the Vessel’s security system and its associated security equipment comply with section 19.1 of Part A of the ISPS Code;

(iii) the Vessel’s security system and its associated security equipment comply in all respects with the applicable requirements of Chapter XI-2 of SOLAS and Part A of the ISPS Code; and

(iv) an approved ship security plan is in place.

17.34 Financial Covenants of the Guarantor

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

18. FINANCIAL COVENANTS OF THE GUARANTOR

18.1 Undertakings

The Guarantor undertakes that:

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

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

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

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

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

18.2 Definitions

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

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

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

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

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

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

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

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

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

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

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

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

less

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

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

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

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

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

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

but adjusted by:

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

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

Outstanding Bank Debt means, in respect of the relevant period, the aggregate amount of principal due under the Bank Credit Agreements less cash held with banks or other financial institutions and any other short term investment of an equivalent liquidity and risk-free nature as cash over which, in each case, a Bank Credit Agreement has created a Security Interest.

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

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

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

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

For the purposes of this definition:

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

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

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

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

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

19. VALUATION

19.1 Valuation

For the purposes of this Clause 19:

(a) the value of either Vessel shall be the mean average of two valuations each certified in Dollars and carried out by two of the Approved Valuers, reporting to the Facility Agent on the basis of sale for prompt delivery of the Vessel for cash (free of Security Interests) at arm’s-length on normal commercial terms as between willing seller and buyer;

(b) any valuation shall be on a charter-free basis; and

(c) there shall be deducted from any value or valuation the amount which is owing or might become owing and which is secured on the asset concerned by any prior or equal ranking Security Interest (other than in favour of the Facility Agent to secure the Secured Liabilities).

19.2 Delivery of valuations

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

(b) The Borrowers will procure in favour of the Facility Agent and the Approved Valuers all such information, facilities and rights of inspection as they may reasonably (having regard to the use and operation of the relevant Vessel) require in order to effect such valuations.

(d) The Facility Agent shall be entitled to require that the relevant Borrower provide a valuation in respect of a Vessel at any time during the Post-Delivery Period. In the event that such valuation shows that the value of that Vessel does not reach the relevant Required Amount as required under Clause 17.13 (a), (b) or, as the case may be, (c), the provisions of that Clause shall apply.

(e) In the event that a valuation procured by the Facility Agent pursuant to Clause 19.2(d) does show that the value of that Vessel reaches the relevant Required Amount as required under Clause 17.13 (a), (b) or, as the case may be, (c), such valuation shall be at the expense of the Facility Agent.

(f) If an Event of Default has occurred and is continuing, the relevant Borrower shall be liable to pay for up to five valuations of either Vessel (one from each of the Approved Valuers) under Clause 19.2(a) in any one calendar year.

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

20. DEFAULT

20.1 Events of Default

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

20.2 Non-payment

An Obligor does not pay on the due date any amount payable by it under the Finance Documents in the manner required under the Finance Documents, unless the non-payment:

(a) is caused by technical or administrative error; and

(b) is remedied within three Business Days of the due date.

20.3 Breach of other obligations

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

(i) is capable of remedy; and

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

The Obligor acknowledges that for the purposes of paragraph (i) above, non-compliance with the following provisions of this Agreement shall not be capable of remedy:

(i) Clause 17.11(a) and 17.11(b) (Security), but in respect of sub-paragraph (b) only insofar as it relates to the Mortgage, the General Assignment, the Time Charter and Earnings Assignment, the Second Priority Deposit Account Charge and the Deed of Counter-Indemnity;

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

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

(b) Subject to paragraph (c) below, any Party (other than a Finance Party) does not comply with any other term of the Finance Documents or the Related Contracts (other than the Vessel Management Agreements and the Bareboat Charters) not already referred to in this Clause which the Facility Agent (acting on the instructions of the Majority Lenders) considers to be material, unless the non-compliance:

(i) is capable of remedy; and

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

(c) Any Party (other than a Finance Party) does not comply with any other term of the Vessel Management Agreements or the Bareboat Charter which the Facility Agent (acting on the instructions of the Majority Lenders) considers to be material, unless the non-compliance:

(i) is capable of remedy; and

(ii) is remedied within 30 days of the earlier of the Facility Agent giving notice and the relevant Party becoming aware of the non-compliance.

provided always that (i) in the opinion of the Facility Agent, any delay in the enforcement by the Facility Agent of its rights and privileges is not likely to adversely affect the rights of the Lenders and (ii) the Borrowers shall continue to fulfil all other of their obligations under the Finance Documents and the Related Contracts during such period;

(d) The termination or expiry without renewal of either of the Bareboat Charters or either of the AML Time Charters;

(e) A Borrower does not serve an extension notice on AML under the AML Time Charter by the date falling 5 days before the last day on which it is able to serve such notice in accordance with the provisions of clause 32 of the AML Time Charter.

20.4 Breach by Guarantor of its financial covenants

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

20.5 Misrepresentation

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

the instructions of the Majority Lenders) considers to be material when made or deemed to be repeated, unless the circumstances giving rise to the misrepresentation:

(a) are capable of remedy; and

(b) are remedied within fourteen days of the earlier of the Facility Agent giving notice and the relevant Party becoming aware of the misrepresentation.

20.6 Cross-default

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

(a) any of its Financial Indebtedness is not paid when due (after the expiry of any originally applicable grace period);

(b) any of its Financial Indebtedness:

(i) becomes prematurely due and payable;

(ii) is placed on demand; or

(iii) is capable of being declared by a creditor to be prematurely due and payable or being placed on demand,

in each case, as a result of an event of default (howsoever described) and after the expiry of any applicable grace period; or

(c) any commitment for its Financial Indebtedness is cancelled or suspended as a result of an event of default (howsoever described),

unless the aggregate amount of Financial Indebtedness falling within paragraphs (a)-(c) above is less than US$5,000,000 or its equivalent (in the case of a Borrower) or US$20,000,000 or its equivalent (in the case of the Guarantor or any other member of the Danaos Group).

20.7 Insolvency

Any of the following occurs in respect of an Obligor or any other member of the Danaos Group:

(a) it is, or is deemed for the purposes of any Applicable Law to be, unable to pay its debts as they fall due or insolvent;

(b) it admits its inability to pay its debts as they fall due;

(d) by reason of actual or anticipated financial difficulties, it begins negotiations with any creditor for the rescheduling of any of its indebtedness; or

(e) a moratorium is declared in respect of any of its indebtedness.

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

20.8 Insolvency proceedings

(a) Except as provided below, any of the following occurs in respect of an Obligor or any other member of the Danaos Group, the Owners, the L/C Bank (or any replacement bank providing a letter of credit) or prior to the release or discharge of the Second Deposit Charge, the Deposit Bank (or any replacement bank holding the Deposit Accounts) or the Bareboat Charterer:

(i) any step is taken with a view to a moratorium, a composition, assignment or similar arrangement with any of its creditors;

(ii) a meeting of its shareholders, directors or other officers is convened for the purpose of considering any resolution to petition for or to file documents with a court for its winding-up, administration or dissolution or any such resolution is passed;

(iii) any person presents a petition, or files documents with a court for its winding-up, administration or dissolution;

(iv) an order for its winding-up, administration or dissolution is made;

(v) any liquidator, trustee in bankruptcy, judicial custodian, compulsory manager, receiver, administrative receiver, administrator or similar officer is appointed in respect of it or any of its assets;

(vi) its directors, shareholders or other officers request the appointment of, or give notice of their intention to appoint a liquidator, trustee in bankruptcy, judicial custodian, compulsory manager, receiver, administrative receiver, administrator or similar officer; or

(vii) any other analogous step or procedure is taken in any jurisdiction.

(b) Paragraph (a) above does not apply to a frivolous or vexatious petition for winding-up presented by a creditor which is being contested in good faith and with due diligence and is discharged or struck out within fourteen days.

20.9 Creditors’ process

Any attachment, sequestration, distress, execution or analogous event affects any asset(s) of an Obligor, or any other member of the Danaos Group, having an aggregate value of five Million Dollars (US$5,000,000) or its equivalent (in the case of a Borrower) and US$20,000,000 or its equivalent (in the case of the Guarantor or any other member of the Danaos Group), and is not discharged within fourteen days.

20.10 Cessation of business

An Obligor or any other member of the Danaos Group ceases, or threatens to cease, to carry on business except as a result of any disposal not prohibited under this Agreement.

20.11 Failure to pay final judgment

An Obligor or any other member of the Danaos Group fails to comply with or pay any sum due from it under any final judgement or any final order made or given by any court of competent jurisdiction.

20.12 Effectiveness of Finance Documents

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

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

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

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

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

20.13 Material adverse change

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

20.14 Invalidity of Security Documents

Any of the Security Documents ceases to be valid or any of those Security Documents creating a Security Interest in favour of the Facility Agent ceases to provide a perfected first priority security interest in favour of the Facility Agent.

20.15 Acceleration

If an Event of Default is outstanding, the Facility Agent may (and if the Majority Lenders so instruct it, shall), by notice to the Borrowers:

(a) cancel the undrawn, uncancelled amount of the Maximum Facility Amount; and/or

(b) declare that all or part of any amounts outstanding under the Finance Documents are:

(i) immediately due and payable; and/or

(ii) payable on demand by the Facility Agent.

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

21. SECURITY

21.1 Facility Agent as trustee

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

21.2 Responsibility

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

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

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

unless directly caused by its gross negligence or wilful misconduct.

21.3 Title

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

21.4 Possession of documents

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

21.5 Investments

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

21.6 Approval

Each Finance Party confirms its approval of each Security Document.

21.7 Release of security

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

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

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

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

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

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

21.8 Co-security Agent

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

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

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

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

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

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

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

21.9 Parallel Debt

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

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

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

21.10 Dutch Security

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

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

22. THE ADMINISTRATIVE PARTIES

22.1 Appointment and duties of the Facility Agent

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

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

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

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

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

22.2 Role of the Arrangers

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

22.3 No fiduciary duties

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

22.4 Individual position of an Administrative Party

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

(b) Each Administrative Party may:

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

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

22.5 Reliance

The Facility Agent may:

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

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

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

22.6 Majority Lenders’ instructions

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

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

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

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

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

22.7 Responsibility

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

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

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

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

(i) has made, and will continue to make, its own independent appraisal of all risks arising under or in connection with the Finance Documents (including the financial condition and affairs of each Obligor and its related entities and the nature and extent of any recourse against any Party or its assets); and

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

22.8 Exclusion of liability

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

(b) No Party (other than the Facility Agent) may take any proceedings against any officer, employee or agent of the Facility Agent in respect of any claim it might have against the Facility Agent or in respect of any act or omission of any kind by that officer, employee or agent in connection with any Finance Document. Any officer, employee or agent of the Facility Agent may rely on this Subclause and enforce its terms under the Contracts (Rights of Third Parties) Xxx 0000.

22.9 Default

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

(b) If the Facility Agent:

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

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

it must promptly notify the Lenders.

22.10 Information

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

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

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

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

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

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

22.11 Indemnities

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

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

22.12 Compliance

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

22.13 Resignation of the Facility Agent

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

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

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

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

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

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

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

22.14 Relationship with Lenders

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

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

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

22.15 Notice period

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

23. EVIDENCE AND CALCULATIONS

23.1 Accounts

Accounts maintained by the Facility Agent in connection with this Agreement are conclusive (save for manifest error) evidence of the matters to which they relate for the purpose of any litigation or arbitration proceedings.

23.2 Certificates and determinations

Any certification or determination by the Facility Agent of a rate or amount under the Finance Documents will be, in the absence of manifest error, conclusive evidence of the matters to which it relates.

23.3 Calculations

Any interest or fee accruing under this Agreement accrues from day to day and is calculated on the basis of the actual number of days elapsed and a year of 360 days or otherwise, depending on what the Facility Agent determines is market practice.

24. FEES

24.1 Exposure fee

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

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

24.2 Commitment fee

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

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

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

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

(b) Accrued commitment fee is payable semi-annually in arrears on the last day of each Term. Accrued commitment fee on that part of any Maximum Available Loan Amount which is cancelled is payable to the Facility Agent for a Lender on the date that Lender’s Commitment is cancelled in full.

24.3 Management fee

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

24.4 Arranger’s fee

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

24.5 Refund of fees

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

25. INDEMNITIES AND BREAK COSTS

25.1 Currency indemnity

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

(i) that Finance Party receiving an amount in respect of a Borrower’s liability under the Finance Documents; or

(ii) that liability being converted into a claim, proof, judgment or order,

in a currency other than the currency in which the amount is expressed to be payable under the relevant Finance Document.

(b) Each of the Borrowers waives any right it may have in any jurisdiction to pay any amount under the Finance Documents in a currency other than that in which it is expressed to be payable.

25.2 Other indemnities

(i) the occurrence of any Event of Default;

(ii) any failure by a Borrower to pay any amount due under a Finance Document on its due date;

(iii) (other than by reason of negligence or default by that Finance Party) a Loan not being made after a Request has been delivered for that Loan; or

(iv) a Loan (or part of a Loan) not being prepaid in accordance with a notice of prepayment.

The liability of the Borrowers in each case includes any cost, loss or expense on account of funds borrowed, contracted for or utilised to fund any amount payable under any Finance Document, any amount repaid or prepaid or any Loan.

(b) Each Borrower must indemnify against any cost, loss or liability incurred by any Finance Party as a result of:

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

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

(c) Each Borrower must indemnify and hold each Finance Party harmless on a full indemnity basis, from and against each and every Loss:

(i) arising directly or indirectly out of or in any way connected with the ownership, possession, performance, transportation, management, sale, import to or export from any jurisdiction, control, use or operation, registration, navigation, certification, classification, management, xxxxxxx, provisioning, the provision of bunkers and lubricating oils, testing, design, condition, delivery, acceptance, leasing, sub-leasing, chartering, insurance, maintenance, repair, service, modification, refurbishment, drydocking, survey, conversion, overhaul, replacement, removal, repossession, return, redelivery, storage, sale, disposal, the complete or partial removal, decommissioning, making safe, destruction, abandonment or loss by either of the Borrowers or any other person of either of the Vessels or caused by either of the Vessels becoming a wreck or an obstruction to navigation, whether or not such liability may be attributable to any defect in either of the Vessels or to the design, construction or use thereof or from any maintenance, service, repair, drydocking, overhaul, inspection or for any other reason whatsoever (whether similar to any of the foregoing or not), and regardless of when the same shall arise and whether or not either of the Vessels (or any part thereof) is in possession or control of the relevant Borrower or the Manager or any other person and whether or not the same is in United Kingdom waters or abroad;

(ii) arising directly or indirectly out of or in any way connected with any Release of Hazardous Material, any Environmental Claim, or any breach of an Environmental Law or the terms and conditions of an Environmental Approval;

(iii) as a consequence of any claim that any design, article or material in either of the Vessels or any part thereof or relating thereto or the operation or use thereof constitutes an infringement of patent, copyright, design or other proprietary right; or

(iv) in preventing or attempting to prevent the arrest, seizure, taking in execution, requisition, impounding, forfeiture or detention of either of the Vessels or in securing or attempting to secure the release of either of the Vessels.

25.3 Break Costs

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

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

(i) the interest which that Lender would have received for the period from the date of receipt of payment of a Loan or an overdue amount to the last day of the current Term for that Loan or overdue amount if the principal or overdue amount received had been paid on the last day of that Term;

exceeds

(ii) the amount which that Lender would be able to obtain by placing an amount equal to the amount received by it on deposit with a leading bank in the appropriate interbank market for a period starting on the Business Day following receipt and ending on the last day of the applicable Term.

26. EXPENSES

26.1 Initial costs

The Borrowers must pay to each Finance Party the amount of all reasonable costs and expenses (including legal fees) incurred by it in connection with (but not limited to) the negotiation, preparation, printing and execution of the Finance Documents.

26.2 Subsequent costs

The Borrowers must pay to each Finance Party the amount of all costs and expenses (including legal fees) incurred by it in connection with:

(a) the negotiation, preparation, printing and execution of any Finance Document executed after the date of this Agreement; and

(b) any amendment, waiver or consent requested by or on behalf of an Owner or specifically allowed by this Agreement.

The Borrowers shall not be required to bear the amount of any costs and expenses (including legal fees) incurred by a Lender or a New Lender (as that term is defined in Clause 29.2) in connection with any voluntary transfer made by a Lender under this Agreement or any of the Security Agreements. In the event that a Lender is required to undertake any such transfers as

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

26.3 Enforcement costs

The Borrowers must pay to each Finance Party the amount of all costs and expenses (including legal fees) incurred by it in connection with the enforcement or attempted enforcement of, or the preservation or attempted preservation of any rights under, any Finance Document.

27. WAIVER OF CONSEQUENTIAL DAMAGES

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

28. AMENDMENTS AND WAIVERS

28.1 Procedure

(a) Except as provided in this Clause, no term of the Finance Documents may be amended or waived without the agreement of the Borrowers and the Majority Lenders. The Facility Agent may effect, on behalf of any Finance Party, an amendment or waiver allowed under this Clause.

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

28.2 Exceptions

(a) An amendment or waiver which relates to:

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

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

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

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

(v) a release of an Obligor;

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

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

(viii) this Clause,

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

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

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

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

28.3 Change of currency

If a change in any currency of a country occurs (including where there is more than one currency or currency unit recognised at the same time as the lawful currency of a country), the Finance Documents will be amended to the extent the Facility Agent (acting reasonably and on the instructions of the Majority Lenders and after consultation with the Borrowers) determines is necessary to reflect the change.

28.4 Waivers and remedies cumulative

The rights of each Finance Party under the Finance Documents:

(a) may be exercised as often as necessary;

(b) are cumulative and not exclusive of its rights under the general law; and

Delay in exercising or non-exercise of any right is not a waiver of that right.

29. CHANGES TO THE PARTIES

29.1 Assignments and transfers by Obligors

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

29.2 Assignments and transfers by Lenders

(a) A Lender (the Existing Lender) may, subject to the following provisions of this Subclause, at any time assign or transfer (including by way of novation) any of its rights and obligations under this Agreement to (i) any commercial bank organized under the laws of any country that is a member of the OECD or has concluded special lending arrangements with the International Monetary Fund Associated with its General Arrangements to Borrow, or a political subdivision of any such country, and having total assets in excess of US$300,000,000 so long as such bank is acting through a branch or agency located in the country in which it is organized or another country that is described in this Subclause (i); or (ii) the central bank of any country that is a member of the OECD; or (iii) any Chinese bank having total assets in excess of US$300,000,000; or (iv) any finance company, insurance company or other financial institution or fund (whether a corporation, partnership, trust or

other entity) that is engaged in making, purchasing or otherwise investing in commercial loans in the ordinary course of its business and has total assets in excess of US$300,000,000; or (v) any other person approved by the Lenders and the Owners, such approval not to be unreasonably withheld (the New Lender), provided always that:

(i) each assignment or transfer shall be uniform, and not a varying percentage of all rights and obligations under this Agreement;

(ii) each assignment or transfer shall not result in increased liability to the Borrowers;

(iii) the Facility Agent shall provide to the Borrowers details of the proposed new lenders at least 7 Business Days prior to the proposed transfer date. The Borrowers shall be entitled to object to the identity of any one or more of the proposed new lenders on such list (such objections to be made on reasonable grounds). The relevant Existing Lender shall be entitled to effect a transfer or assignment to any proposed new lender on such list to which the Borrowers have not objected on reasonable grounds within such 7 Business Day period;

(iv) at no time shall the number of Tranche A Lenders exceed 8;

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

(b) A transfer of obligations will be effective only if either:

(i) the obligations are novated in accordance with the following provisions of this Clause 29; or

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

(c) On the transfer becoming effective in this manner the relevant Existing Lender will be released from its obligations under this Agreement to the extent that they are transferred to the New Lender.

(d) Any reference in this Agreement to a Lender includes a New Lender but excludes a Lender if no amount is or may be owed to or by it under this Agreement.

29.3 Procedure for transfer by way of novations

(a) In this Subclause:

Transfer Date means, for a Transfer Certificate, the later of:

(i) the proposed Transfer Date specified in that Transfer Certificate; and

(ii) the date on which the Facility Agent executes that Transfer Certificate.

(b) A novation is effected if:

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

(ii) the Facility Agent executes it.

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

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

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

29.4 Limitation of responsibility of Existing Lender

(a) Unless expressly agreed to the contrary, an Existing Lender is not responsible to a New Lender for:

(i) the legality, validity, effectiveness, completeness, accuracy, adequacy or enforceability of any Finance Document or any other document;

(ii) the financial condition of any Borrower;

(iii) the performance and observance by any Borrower of its obligations under the Finance Documents or any other documents; or

(iv) the accuracy of any statement or information (whether written or oral) made in or supplied in connection with any Finance Document,

and any representations or warranties implied by law are excluded.

(b) Each New Lender confirms to the Existing Lender that it:

(i) has made, and will continue to make, its own independent appraisal of all risks arising under or in connection with the Finance Documents (including the financial condition and affairs of each Borrower and its related entities and the nature and extent of any recourse against any Party or its assets) in connection with its participation in this Agreement; and

(ii) has not relied exclusively on any information supplied to it by the Existing Lender in connection with any Finance Document.

(i) accept a re-transfer from a New Lender of any of the rights and obligations assigned or transferred under this Clause; or

(ii) support any losses incurred by the New Lender by reason of the non-performance by a Borrower of its obligations under any Finance Document or otherwise.

29.5 Costs resulting from change of Lender or Facility Office

If:

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

(b) as a result of circumstances existing at the date the assignment, transfer or change occurs, a Borrower would be obliged to pay a Tax Payment or an Increased Cost,

then, unless the assignment, transfer or change is made by a Lender to mitigate any circumstances giving rise to a Tax Payment, Increased Cost or a right to be prepaid and/or cancelled by reason of illegality, the relevant Borrower need only pay that Tax Payment or Increased Cost to the same extent that it would have been obliged to if no assignment, transfer or change had occurred.

29.6 Changes to the Reference Banks

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

30. DISCLOSURE OF INFORMATION

Each Finance Party may disclose to:

(a) any of its Affiliates; or

(b) any other person who:

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

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

(iii) with (or through) whom a Lender enters into (or may potentially enter into) any sub-participation in relation to, or any other transaction under which payments are to be made by reference to, this Agreement or a Borrower; or

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

(d) its and the Obligors’ professional advisors,

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

31. SET-OFF

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

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

32. PRO RATA SHARING

32.1 Redistribution

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

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

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

32.2 Effect of redistribution

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

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

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

(d) If:

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

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

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

32.3 Exceptions

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

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

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

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

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

33. SEVERABILITY

If a term of a Finance Document is or becomes illegal, invalid or unenforceable in any jurisdiction, that shall not affect:

(a) the legality, validity or enforceability in that jurisdiction of any other term of the Finance Documents; or

(b) the legality, validity or enforceability in other jurisdictions of that or any other term of the Finance Documents.

34. COUNTERPARTS

Each Finance Document may be executed in any number of counterparts and by facsimile provided that original signed copies are provided within a reasonable period of time thereafter. This has the same effect as if the signatures on the counterparts were on a single copy of the Finance Document.

35. NOTICES

35.1 In writing

(a) Any communication in connection with a Finance Document must be in writing and, unless otherwise stated, may be given in person, by post, fax or e-mail or by any other electronic communication approved by the Facility Agent;

(b) For the purpose of the Finance Documents, an electronic communication will be treated as being in writing.

(c) Unless it is agreed to the contrary, any consent or agreement required under a Finance Document must be given in writing.

35.2 Contact details

(a) Except as provided below, the contact details of each Party for all communications in connection with the Finance Documents are those notified by that Party for this purpose to the Facility Agent on or before the date it becomes a Party.

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

Address: Kyriakou Matsi 00,

Xxxxx Xxxxxx, 0^xx Xxxxx,

X.X. 0000 Xxxxxxx, Xxxxxx

Fax number: x000 000 00000

Attention: Xx. X. Xxxxxxx

with a copy to:

Address: Danaos Shipping Co. Ltd

Akti Xxxxxxx 00,

000 00 Xxxxxxx

Xxxxxx

Fax number: x00 000 0000000

Attention: Xx. X. Xxxxxxxxxx

Address: Danaos Shipping Co. Ltd

Akti Xxxxxxx 00,

000 00 Xxxxxxx

Xxxxxx

Fax number: x00 000 0000000

Attention: Xx. X. Xxxxxxxxxx

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

Address: Fortis Capital Corp.

0 Xxxxxxxx Xxxxx

000 Xxxxxxx Xxxxxxxxx

Xxxxxxxx XX 00000

XXX

Fax number: x0 000 000 0000

Attention: Agency Department / Loan Administration

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

(f) Where a Party nominates a particular department or officer to receive a communication, a communication will not be effective if it fails to specify that department or officer.

35.3 Effectiveness

(a) Except as provided below, any communication in connection with a Finance Document will be deemed to be given as follows:

(i) if delivered in person, at the time of delivery;

(ii) if posted, five days after being deposited in the post, postage prepaid, in a correctly addressed envelope;

(iii) if by fax, when received in legible form; and

(iv) if by e-mail or any other electronic communication, when received in legible form.

(b) A communication given under paragraph (a) above but received on a non-working day or after business hours in the place of receipt will only be deemed to be given on the next working day in that place.

35.4 Obligor

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

35.5 Entire Agreement

This Agreement and the other Finance Documents entered into pursuant to this Agreement contain the whole agreement between the parties relating to the transactions contemplated by this Agreement and supersede all previous agreements between the parties relating to such transactions.

36. LANGUAGE

(a) Any notice given in connection with a Finance Document must be in English.

(b) Any other document provided in connection with a Finance Document must be:

(i) in English; or

(ii) (unless the Facility Agent otherwise agrees) accompanied by a certified English translation. In this case, the English translation prevails unless the document is a statutory or other official document.

37. GOVERNING LAW

This Agreement is governed by English law.

38. ENFORCEMENT

38.1 Jurisdiction

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

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

(c) This Clause is for the benefit of the Facility Agent and the Lenders only. To the extent allowed by law, the Facility Agent and/or the Lenders may take:

(i) proceedings in any other court; and

(ii) concurrent proceedings in any number of jurisdictions.

38.2 Service of process

(a) Each of the Obligors irrevocably appoints SH Process Agents Limited of Xxx, Xx Xxxxx Xxxxxxxxxx, Xxxxxx XX0X 0XX as its agent under the Finance Documents for service of process in any proceedings before the English courts.

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

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

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

38.3 Waiver of immunity

The Obligors each irrevocably and unconditionally:

(a) agrees not to claim any immunity from proceedings brought by a Finance Party against it in relation to a Finance Document and to ensure that no such claim is made on its behalf;

(b) consents generally to the giving of any relief or the issue of any process in connection with those proceedings; and

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

SCHEDULE 1

ORIGINAL PARTIES

PART 1

THE BORROWERS AND THE VESSELS

Name of Borrower	Country of Incorporation	Registered Office	Hull Number	Flag of Vessel

Karlita Shipping Company Limited	Republic of Cyprus	Kyriakou Matsi 00, Xxxxx Xxxxxx, 0^xx Xxxxx, 0000 Xxxxxxx, Xxxxxx	1559	Republic of Cyprus

Xxxxxx Marine Company Limited	Republic of Cyprus	Kyriakou Matsi 00, Xxxxx Xxxxxx, 0^xx Xxxxx, 0000 Xxxxxxx, Xxxxxx	1561	Republic of Cyprus

PART 2

ORIGINAL LENDERS

SCHEDULE 2

INITIAL CONDITIONS PRECEDENT DOCUMENTS

1. Obligors

(a) A certified copy* of the constitutional documents of each Obligor and each Shareholder together with an up to date Certificate of Goodstanding dated no more than ten Business Days prior to the first Utilisation Date.

(b) A certified copy* of a resolution of the board of directors of each Obligor and each Shareholder:

(i) approving the terms of, and the transactions contemplated by, each Finance Document and each Related Contract to which each Obligor or, as the case may be, each Shareholder is a party and resolving that it executes each such Finance Document and each Related Contract, then to be executed;

(ii) authorising a specified person or persons to execute each Finance Document and each Related Contract on its behalf to which it is a party, then to be executed; and

(iii) authorising a specified person or persons, on its behalf, to sign and/or despatch all other documents and notices to be signed and/or despatched by it under or in connection with each Finance Document and each Related Contract to which it is a party, then to be executed.

(d) A certified copy* of all other resolutions, consents, licences, exemptions and filings, corporate, official or otherwise which the Facility Agent may reasonably require in connection with this Agreement or any other Finance Document.

2. Finance Documents and Related Contracts

(a) A duly executed original of this Agreement.

(b) A duly executed original of each of the General Assignments.

(d) Duly executed originals of the Pledges of Shares, together with all certificates in respect of the Shares, undated letters of resignation by each of the directors and officers of the Owners and all (if any) unissued share or stock certificates of the Owners.

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

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

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

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

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

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

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

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

(m) Duly executed originals of all notices of assignment required to be served under each Security Document referred to above and faxed copies of the acknowledgements thereof (where it is not possible to provide originals of the same, with such originals to follow as soon as practicable after the first Utilisation Date), duly executed by each relevant counterparty.

3. Other documents

(a) A copy of any other authorisation or other document, opinion or assurance which the Facility Agent considers to be necessary or desirable in connection with the entry into and performance of, and the transactions contemplated by, any Finance Document or any Related Contract or for the validity and enforceability of any Finance Document or any Related Contract.

(b) A letter from Danaos Management Consultants (UK) Limited agreeing to its appointment as process agent for the Obligors under the Finance Documents.

(c) A letter from China Shipping (UK) Co., Ltd agreeing to its appointment as process agent for the Charterer in respect of the acknowledgement of the Time Charter and Earnings Assignment.

(d) Evidence satisfactory to the Facility Agent of receipt by the Builder from the Borrowers of the Equity Contribution in respect of the relevant Loan.

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

4. Legal opinions

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

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

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

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

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

5. Other Requirements

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

* Each certified copy document must be certified by a director, officer or duly authorised attorney of the relevant Borrower as being true and complete as at a date no earlier than the date of the Request for a first Drawing.

SCHEDULE 3

DELIVERY DATE CONDITIONS PRECEDENT DOCUMENTS

At the time of delivery of each Vessel, the Facility Agent shall require the following documentation from the relevant Borrower:-

1. Borrower

(a) A certified copy of the constitutional documents of the Borrower or a certificate of the Borrower certifying that such documents have not been amended since the first Drawing.

(b) A certified copy of a resolution of the board of directors of the Borrower (unless such a resolution in relation to the issues below is still in force):

(i) authorising a specified person or persons to execute such necessary documentation as is required to permit the Borrower to take physical possession of the relevant Vessel from the Bareboat Charterer; and

(ii) authorising a specified person or persons, on its behalf, to sign or despatch all documents and notices to be signed or despatched as necessary to take physical possession of the relevant Vessel from the Bareboat Charterer.

(c) A specimen of the signature of each person authorised by the resolution referred to in paragraphs (b)(i) and (ii) above.

2. Documents

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

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

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

(e) A copy of any other authorisation or other document, opinion or assurance which the Facility Agent considers to be necessary or desirable in connection with the entry into and performance of, and the transactions contemplated by, the Security Documents or for the validity and enforceability of any of those documents.

3. The Vessel to be delivered

(a) Evidence that:

(i) the title to the Vessel is held by the Owner free of all Security Interests other than Permitted Liens;

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

100

(iii) Confirmation acceptable to the Facility Agent that the Bareboat Charterer has accepted the Vessel pursuant to the terms of the relevant Bareboat Charter and executed an acceptance certificate.

(iv) Confirmation acceptable to the Facility Agent that the Borrower has accepted the Vessel pursuant to the terms of the relevant AML Time Charter and executed an acceptance certificate.

(v) Confirmation acceptable to the Facility Agent that the Charterer has accepted the Vessel pursuant to the terms of the relevant Time Charter and executed an acceptance certificate.

(vi) the Vessel is provisionally registered in the name of the Owner, as appropriate, as a Republic of Cyprus flag ship at the port of Limassol;

(vii) the Mortgage in respect of the Vessel has been duly recorded in the Republic of Cyprus Registry of Ships and constitutes a first priority security interest over the Vessel and that all taxes and fees payable to the Republic of Cyprus Registry of Ships in respect of the Vessel have been paid in full;

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

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

(b) A certified copy* of:

(i) a classification certificate in respect of the Vessel showing the Vessel to be in class without recommendation, condition or qualification or, in the event that this is not available, a faxed copy with a certified copy to follow as soon as practicable after the relevant Delivery Date;

(ii) a valid Interim Safety Management Certificate for the Vessel or, in the event that this is not available, a faxed copy with a certified copy to follow as soon as practicable after the relevant Delivery Date;

(iii) a valid International Ship Security Certificate; and

(iv) a valid Document of Compliance.

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

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

(e) A copy of the builder’s certificate in respect of the Vessel.

4. Insurance

(a) A certified copy of all current insurance policies in respect of the Vessel.

(b) A duly executed and, where necessary, notarised notice of assignment (and acknowledgement of the same) of the Obligatory Insurances in respect of the Vessel duly executed by the Owner substantially in the form provided for in the General Assignment.

101

(i) the relevant cover is in effect;

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

(iii) they will restrict their lien for unpaid premiums under any fleet policy to unpaid premiums in respect of that Vessel only;

(iv) they will issue a letter of undertaking in the current LIBA form (in the case of Lloyds brokers), in the form provided for in the General Assignment (in the case of non-Lloyds brokers and insurers other than clubs) or in their current standard form (in the case of clubs);

(v) they will accept endorsement of a loss payable clause on the policies in the form provided for in the General Assignment (in the case of brokers and insurers other than clubs) or will note the interest of the Facility Agent in the entry for the Vessel by way of a loss payable clause in their current standard form (in the case of clubs); and

(vi) they are not aware of any mortgage, charge, assignment or other encumbrance affecting the Obligatory Insurances with which they are concerned (other than any previously disclosed by the Borrower to the Facility Agent in writing).

(d) Confirmation from the Facility Agent of its satisfaction with a final insurance report prepared by Xxxxx Insurance Brokers.

5. Legal Opinions

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

(b) A legal opinion of the Republic of Cyprus legal advisers, or such other jurisdiction as may be chosen to be the flag of a Vessel, to the Lenders, addressed to the Facility Agent as agent for and on behalf of itself and the Lenders.

* Each certified copy document must be certified by a director, officer or duly authorised attorney of the Borrower as being true and complete as at a date no earlier than the Delivery Date of a Vessel.

102

SCHEDULE 4

PART 1

FORM OF REQUEST

To: Fortis Capital Corp. as Facility Agent

From: [The relevant Borrower]

Date: [ ]

US$144,000,000 Credit Agreement dated 29th January, 2004 (the Credit Agreement)
Hull No. 1559/1661

1. We wish to borrow a Drawing under a Loan from you as follows:

(a) Utilisation Date: [ ]

(b) Amount/currency: [ ]

Loan 1/Loan 2*

Amount payable to the Builder towards the Instalment under

Shipbuilding Contract: US$[ ]

Amount payable in respect of Incidental Vessel Costs

as set out below (as supported by the relevant invoices): US$[ ]

(a) Details of item: US$[ ]

(b) Details of item: US$[ ]

Total drawdown: US$[ ]

2. Payment Instructions:

To include provisions that:

(i) amount of Instalment payable under the relevant Shipbuilding Contract to be payable to the Builder’s account.

(ii) Incidental Costs to be credited to the relevant Operating Expenses Account.

* Delete as appropriate.

3. We confirm that each condition specified in Clause 3.2 (Further conditions precedent) of the Credit Agreement is satisfied on the date of this Request.

103

By:


BORROWER

Authorised Signatory

104

PART 2

PAYMENT ADVICE

To: [The relevant Borrower]

From: Fortis Capital Corp. as Facility Agent

Date: [ ]

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

Hull No. 1559/1661

Further to receipt of your request dated [ ] and attached hereto requesting the advance of a Drawing under a Loan, we confirm that all amounts have been advanced in accordance with the requirements of the attached Request.



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

105

SCHEDULE 5

FORM OF TRANSFER CERTIFICATE

To: The Borrowers

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

Date: [ ]

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

Hull No. 1559/1661

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

1. We [ ] (the Existing Bank) and [ ] (the New Bank) agree to the Existing Bank and the New Bank novating all the Existing Bank’s rights and obligations referred to in the Schedule in accordance with Clause 29.3 (Procedure for transfer by way of novations).

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

3. The Facility Office and address for notices of the New Bank for the purposes of Clause 35.2 (Contact details) are set out in the Schedule.

4. This Novation Certificate is governed by English law.

THE SCHEDULE

Rights and obligations to be novated

[Choose one of the following options (a) to (d):]

(a) all of the rights and obligations of the Existing Lender in respect of the Facility - principal amount US$[ ].

(b) all of the rights and obligations of the Existing Lender in respect of Vessel Loan [ ] [and Vessel Loan [ ]] -principal amount US$[ ].

(c) the principal amount of US$[ ] in respect of each of the Loans and all the rights and obligations attached to the same-total principal amount US$[ ].

(d) the principal amount of US$[ ] in respect of [each of] Vessel Loan [ ] [and Vessel Loan [ ]] and all the rights and obligations attached to the same.

106

[New Bank]

[Facility Office Address for notices]

[Existing Bank]		[New Bank]

By:		By:

Date:		Date:

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

FORTIS CAPITAL CORP.

By:

107

SCHEDULE 6

REPAYMENT SCHEDULE

PART 1

Vessel Hull No. 1559
	Interest rate :	4.75%
	Exposure Margin :	0.2700%

	Principal Repayment	Interest	Exposure Fee	No. of Days	Total Instalment	Outstanding Balance	Repayment Date
						67,500,000.00	2006-10-31
1	2,097,720.99	1,202,343.75	68,343.75	135	3,368,408.49	65,402,279.01	2007-03-15
2	2,812,500.00	1,587,821.99	90,255.14	184	4,490,577.13	62,589,779.01	2007-09-15
3	2,812,500.00	1,503,023.99	85,435.04	182	4,400,959.03	59,777,279.01	2008-03-15
4	2,812,500.00	1,451,259.49	82,492.64	184	4,346,252.13	56,964,779.01	15/09/08
5	2,812,500.00	1,360,429.68	77,329.68	181	4,250,259.36	54,152,279.01	2009-03-15
6	2,812,500.00	1,314,696.99	74,730.14	184	4,201,927.13	51,339,779.01	2009-09-15
7	2,812,500.00	1,226,093.75	69,693.75	181	4,108,287.50	48,527,279.01	2010-03-15
8	2,812,500.00	1,178,134.49	66,967.64	184	4,057,602.13	45,714,779.01	2010-09-15
9	2,812,500.00	1,091,757.81	62,057.81	181	3,966,315.62	42,902,279.01	2011-03-15
10	2,812,500.00	1,041,571.99	59,205.14	184	3,913,277.13	40,089,779.01	2011-09-15
11	2,812,500.00	962,711.49	54,722.54	182	3,829,934.03	37,277,279.01	2012-03-15
12	2,812,500.00	905,009.49	51,442.64	184	3,768,952.13	34,464,779.01	2012-09-15
13	2,812,500.00	823,085.93	46,785.93	181	3,682,371.86	31,652,279.01	2013-03-15
14	2,812,500.00	768,446.99	43,680.14	184	3,624,627.13	28,839,779.01	2013-09-15
15	2,812,500.00	688,750.00	39,150.00	181	3,540,400.00	26,027,279.01	2014-03-15
16	2,812,500.00	631,884.49	35,917.64	184	3,480,302.13	23,214,779.01	2014-09-15
17	2,812,500.00	554,414.06	31,514.06	181	3,398,428.12	20,402,279.01	2015-03-15
18	2,812,500.00	495,321.99	28,155.14	184	3,335,977.13	17,589,779.01	2015-09-15
19	2,812,500.00	422,398.99	24,010.04	182	3,258,909.03	14,777,279.01	2016-03-15
20	2,812,500.00	358,759.49	20,392.64	184	3,191,652.13	11,964,779.01	2016-09-15
21	2,812,500.00	285,742.18	16,242.18	181	3,114,484.36	9,152,279.01	2017-03-15
22	2,812,500.00	222,196.99	12,630.14	184	3,047,327.13	6,339,779.01	2017-09-15
23	2,812,500.00	151,406.25	8,606.25	181	2,972,512.50	3,527,279.01	2018-03-15
24	2,812,500.00	85,634.49	4,867.64	184	2,903,002.13	714,779.01	2018-09-15
25	714,779.01	21,408.62	1,216.91	46	737,404.54	0.00	2018-10-31
Total	67,500,000.00	20,334,305.38			88,990,150.00

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

108

PART 2

Vessel Hull No. 1561

	Interest rate :	4.75%
	Exposure Margin :	0.2700%

	Principal Repayment	Interest	Exposure Fee	No. of Days	Total Instalment	Outstanding Balance	Repayment Date
						67,500,000.00	2007-01-31
1	668,162.98	382,968.75	21,768.75	43	1,072,900.48	66,831,837.02	15/03/07
2	2,812,500.00	1,622,528.48	92,227.93	184	4,527,256.41	64,019,337.02	2007-09-15
3	2,812,500.00	1,537,353.24	87,386.39	182	4,437,239.63	61,206,837.02	2008-03-15
4	2,812,500.00	1,485,965.98	84,465.43	184	4,382,931.41	58,394,337.02	2008-09-15
5	2,812,500.00	1,394,570.31	79,270.31	181	4,286,340.62	55,581,837.02	2009-03-15
6	2,812,500.00	1,349,403.48	76,702.93	184	4,238,606.41	52,769,337.02	2009-09-15
7	2,812,500.00	1,260,234.37	71,634.37	181	4,144,368.74	49,956,837.02	2010-03-15
8	2,812,500.00	1,212,840.98	68,940.43	184	4,094,281.41	47,144,337.02	2010-09-15
9	2,812,500.00	1,125,898.43	63,998.43	181	4,002,396.86	44,331,837.02	2011-03-15
10	2,812,500.00	1,076,278.48	61,177.93	184	3,949,956.41	41,519,337.02	2011-09-15
11	2,812,500.00	997,040.74	56,673.89	182	3,866,214.63	38,706,837.02	2012-03-15
12	2,812,500.00	939,715.98	53,415.43	184	3,805,631.41	35,894,337.02	2012-09-15
13	2,812,500.00	857,226.56	48,726.56	181	3,718,453.12	33,081,837.02	2013-03-15
14	2,812,500.00	803,153.48	45,652.93	184	3,661,306.41	30,269,337.02	2013-09-15
15	2,812,500.00	722,890.62	41,090.62	181	3,576,481.24	27,456,837.02	2014-03-15
16	2,812,500.00	666,590.98	37,890.43	184	3,516,981.41	24,644,337.02	2014-09-15
17	2,812,500.00	588,554.68	33,454.68	181	3,434,509.36	21,831,837.02	2015-03-15
18	2,812,500.00	530,028.48	30,127.93	184	3,372,656.41	19,019,337.02	2015-09-15
19	2,812,500.00	456,728.24	25,961.39	182	3,295,189.63	16,206,837.02	2016-03-15
20	2,812,500.00	393,465.98	22,365.43	184	3,228,331.41	13,394,337.02	2016-09-15
21	2,812,500.00	319,882.81	18,182.81	181	3,150,565.62	10,581,837.02	2017-03-15
22	2,812,500.00	256,903.48	14,602.93	184	3,084,006.41	7,769,337.02	2017-09-15
23	2,812,500.00	185,546.87	10,546.87	181	3,008,593.74	4,956,837.02	2018-03-15
24	2,812,500.00	188,622.23	10,721.68	184	3,011,843.91	4,956,837.02	2018-09-15
25	2,144,337.02	90,255.74	5,130.32	138	2,239,723.08	0.00	2019-01-31
Total	67,500,000.00	20,444,649.37			89,106,766.17

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

109

SCHEDULE 7

ANNUAL COMPLIANCE CERTIFICATE

To: The Export-Import Bank of Korea

From: [Borrower and Guarantor]

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

Hull No. 1559/1661

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

2. The Borrower hereby certifies that [no Default has occurred and is continuing or is outstanding] [a Default under Clause [ ] of [specify document] is outstanding and the following steps are being taken to remedy it [ ].

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

[ ].

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

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

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

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

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

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

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

[ ].

Yours faithfully,

For and on behalf of [relevant Borrower]

[ ]

President

110

[or]

[Senior Officer]

and

[Senior Officer]

and

For and on behalf of Danaos Holdings Limited

[ ]

President

[or]

[Senior Officer]

and

[Senior Officer]

111

SCHEDULE 8

INCIDENTAL VESSEL COSTS

Per Vessel

		US$

1.	Lashings	1,000,000

2.	Supervision during Construction	320,000

3.	Delivery Ceremony	50,000

4.	Port fees on Delivery	30,000

5.	Pre-Delivery stores / supplies	600,000

6.	Lubricants, HFO, Chemicals	800,000

7.	Legal fees	90,000

8.	Spares by Owners	1,040,000

000

Xxx. 10.8

SIGNATORIES

Owners

KARLITA SHIPPING COMPANY LIMITED

By: /s/ Xxx Xxxxx - Papamattheou

XXXXXX MARINE COMPANY LIMITED

By: /s/ Xxx Xxxxx - Papamattheou

Guarantor

DANAOS HOLDINGS LIMITED

By: /s/ Xxx Xxxxx - Papamattheou

Original Lenders

THE EXPORT-IMPORT BANK OF KOREA

By:

FORTIS BANK (NEDERLAND) N.V.

By:

The Facility Agent

FORTIS CAPITAL CORP.

By: /s/ Xxxxx Xxxxx

113

Name of Original Lender

Tranche A
Commitments
(US$)

Tranche B
Commitments
(US$)

Facility Office

The Export Import Bank of Korea

00-0 Xxxxx-xxxx,
Xxxxxxxxxxxx-xx, Xxxxx, 000-
000, Xxxxx

Fortis Bank (Nederland) N.V.

Xxxxxxxxxx 00, 0000 XX
Rotterdam, The Netherlands