In the event that insurance becomes payable under said policies on account of an accident, occurrence or event not resulting in an actual or constructive total loss or an agreed or compromised total loss of any Vessel, the Mortgagee (1) shall if there is no existing Default and if none of the events described in Section 3.03 of this Mortgage has occurred, in accordance with a Mortgagor’s Request, pay, or consent that the underwriters pay, direct for repairs, liabilities, salvage claims or other charges and expenses (including use and labor charges due or paid by the Mortgagor) covered by the policies, or (to the extent that, as stated in an Officer's Certificate delivered to the Mortgagee, accompanied by written confirmation by the underwriter or a surveyor or adjuster, the damage shall have been repaired and the cost thereof paid of such liabilities, salvage claims, or other charges and expenses discharged or paid) reimburse, or consent that the underwriters reimburse, the Mortgagor therefor and (after all known damage with respect to the particular loss shall have been repaired, except to the extent the Mortgagor, with the Mortgagee’s consent, deems the said repair inadvisable, and all known costs, liabilities, salvage claims, charges and expenses covered by the policies, with respect to such loss shall have been discharged or paid, as stated in an Officer's Certificate delivered to the Mortgagee, accompanied by written confirmation by the underwriters or a surveyor or adjuster) pay, or consent that the underwriters pay, any balance to the Mortgagor; or (2) if there is an existing default, shall direct the underwriters to pay to the Mortgagee all insurance proceeds due and owing, and the Mortgagee shall apply such proceeds to the Mortgagor’s defaulted debt, or, in the Mortgagee’s sole discretion, to repairs to the Vessel; or (3) if the Guarantee shall have terminated pursuant to Section 2.04(c) of Annex C of the Agreement or if the Mortgagee shall have assumed the Mortgagor's rights and duties under the Note Purchase Agreement and the Note and made any payments in default under Chapter 537 and none of the events described Section 3.03 of this Mortgage has occurred, apply the insurance as provided in Section 5.04 hereof; or (4) if the Guarantee shall have terminated pursuant to Section 2.04(b) of Annex C of the Agreement, pay the insurance to the Mortgagor. (c) Claim for Constructive Total Loss. In the event of an accident, occurrence or event resulting in a constructive total loss of any Vessel, the Mortgagee shall have the right, with the prior consent of the Mortgagee, unless there is an existing Default, to claim for a constructive total loss of such Vessel. If (1) such claim is accepted by all underwriters under all policies then in force as to such Vessel under which payment is due for total loss and (2) payment in full is made in cash under such policies to the Mortgagee, then the Mortgagee shall have the right to abandon such Vessel to the underwriters of such policies, free from the Lien of this Mortgage and the Agreement. (d) Protection and Indemnity Insurance. Commencing on the Delivery Date of each Vessel, the Mortgagor shall, without cost to the Mortgagee, keep each such Vessel insured against marine and war risk protection and indemnity risks and liabilities by policies of insurance approved by the Mortgagee as to form and in the amount of the Insurance Requirements; provided that, (1) the Mortgagor shall, as soon as possible before such Delivery Date, present any such policy to the Mortgagee (who shall promptly approve or disapprove the same), (2) any approval of a policy under this Subsection shall be effective until the end of the policy period or until sixty (60) days after the Mortgagee shall notify the Mortgagor of a desired change in the form and/or amount thereof, whichever shall first occur, and (3) war risk protection and indemnity insurance shall be required unless the Mortgagee gives notice to the Mortgagor stating that such insurance is not required.

First Preferred [Fleet/Ship] Mortgage, Contract No. MA-\_\_\_\_\_\_ Page 11