Exhibit 10.13


 


EXHIBIT I-1


TO THE CREDIT
AGREEMENT


 


FORM OF


FIRST
PREFERRED SHIP MORTGAGE


 


ON
MARSHALL ISLANDS FLAG VESSEL


 


[VESSEL]


OFFICIAL
NO. [OFFICIAL NUMBER]


 


executed
by


 


[SHIPOWNER],


as
Shipowner


 


in
favor of


 


NORDEA
BANK FINLAND PLC, NEW YORK BRANCH


as
Security Trustee and Mortgagee


 


 


[CLOSING
DATE]


 





















 


TABLE
OF CONTENTS


 


	
  ARTICLE I

  	
   

  
	
  Section 1. Existence:
  Authorization

  	
   

  
	
  Section 2. Title to Vessel

  	
   

  
	
  Section 3. ISM and ISPS
  Compliance

  	
   

  
	
  ARTICLE II

  	
   

  
	
  Section 1. Payment of
  Indebtedness

  	
   

  
	
  Section 2. Mortgage Recording

  	
   

  
	
  Section 3. Lawful Operation

  	
   

  
	
  Section 4. Payment of Taxes

  	
   

  
	
  Section 5. Prohibition of
  Liens

  	
   

  
	
  Section 6. Notice of Mortgage

  	
   

  
	
  Section 7. Removal of Liens

  	
   

  
	
  Section 8. Release from Arrest

  	
   

  
	
  Section 9. Maintenance

  	
   

  
	
  Section 10. Inspection;
  Reports

  	
   

  
	
  Section 11. Flag; Home Port

  	
   

  
	
  Section 12. No Sales,
  Transfers or Charters

  	
   

  
	
  Section 13. Insurance

  	
   

  
	
  Section 14.
  Reimbursement for Expenses

  	
   

  
	
  Section 15. Performance
  of Charters

  	
   

  
	
  Section 16. Change in
  Ownership

  	
   

  
	
  Section 17. Prepayment
  if Event of Loss

  	
   

  
	
  ARTICLE III

  	
   

  
	
  Section 1. Events of
  Default; Remedies

  	
   

  
	
  Section 3. Power of
  Attorney-Sale

  	
   

  
	
  Section 4. Power of
  Attorney-Collection

  	
   

  
	
  Section 5. Delivery of Vessel

  	
   

  
	
  Section 6. Mortgagee to
  Discharge Liens

  	
   

  
	
  Section 7. Payment of
  Expenses

  	
   

  
	
  Section 8. Remedies
  Cumulative

  	
   

  
	
  Section 9. Cure of Defaults

  	
   

  
	
  Section 10.
  Discontinuance of Proceedings

  	
   

  
	
  Section 11. Application
  of Proceeds

  	
   

  
	
  Section 12. Possession
  Until Default

  	
   

  
	
  Section 13.
  Severability of Provisions. Etc

  	
   

  
	
  ARTICLE IV

  	
   

  
	
  Section 1. Successors and
  Assigns

  	
   

  
	
  Section 2. Power of
  Substitution

  	
   

  
	
  Section 3. Counterparts

  	
   

  
	
  Section 4. Notices

  	
   

  
	
  Section 5. Recording: Clause

  	
   

  
	
  Section 6. Further Assurances

  	
   

  
	
  Section 7. Governing Law

  	
   

  
	
  Section 8. Additional
  Rights of the Mortgagee

  	
   

  
	
   

  	
   

  
	
  SIGNATURE

  	
   

  



 





















 


FIRST
PREFERRED MORTGAGE


 


[VESSEL]


 


This First Preferred
Ship Mortgage made [CLOSING DATE] (this “Mortgage”), by [SHIPOWNER], a Marshall
Islands limited liability company (the “Shipowner”), in favor of NORDEA BANK
FINLAND PLC, NEW YORK BRANCH as Security Trustee (together with its successors
in trust and assigns, the “Mortgagee”), pursuant to the Credit Agreement
referred to below.


 


W
I T N E S S E T H


 


WHEREAS:


 


A. The Shipowner is the
sole owner of the whole of the Marshall Islands flag vessel [VESSEL NAME],
Official Number [OFFICIAL NUMBER] of [GROSS TONS] gross tons and [NET TONS] net
tons built in [YEAR BUILT] at [YARD AND LOCATION BUILT], with her home port at
Majuro, Marshall Islands.


 


B. General Maritime
Corporation, a Marshall Islands corporation (the “Borrower”), the Lenders party
thereto from time to time, and Nordea Bank Finland plc, New York Branch, as
Administrative Agent and as Collateral Agent, have entered into a Credit
Agreement dated as of October 26, 2005 (as the same may be amended,
supplemented or otherwise modified from time to time, the 


“Credit Agreement”), providing for the making of loans
to the Borrower in the principal amount of up to Eight Hundred Million United
States Dollars (U.S. $800,000,000) (the Lenders, the Administrative Agent and
Collateral Agent, collectively, the “Lender Creditors”). A copy of the form of
the Credit Agreement (without attachments) is attached hereto as Exhibit A
and made a part hereof. Except as otherwise defined herein, capitalized terms
used herein and defined in the Credit Agreement shall be used herein as so
defined.


 


C. The Borrower may at
any time and from time to time enter into, or guaranty the obligations of one
or more Subsidiary Guarantors or any of their respective Subsidiaries under,
one or more Interest Rate Protection Agreements or Other Hedging Agreements
with respect to the Loans (and/or the Commitments) with one or more Lenders or
any Affiliate thereof (each such Lender or Affiliate, even if the respective
Lender subsequently ceases to be a Lender under the Credit Agreement for any
reason, together with such Lender’s or Affiliate’s successors and assigns, if
any, collectively, the “Other Creditors” and, together with the Lender
Creditors, the “Secured Creditors”). The estimated aggregate notional amount of
the liabilities of the Borrower under the Interest Rate Protection Agreements
or Other Hedging Agreements entered into with respect to the Loans (and/or the
Commitments) is Fifty Million United States Dollars (U.S. $50,000,000).


 


D. The Shipowner is a
wholly-owned subsidiary of the Borrower.


 


E. The Shipowner entered
into the Subsidiaries Guaranty in favor of the Secured Creditors pursuant to
which the Shipowner has guaranteed (i) to the Lender Creditors, all
obligations of the Borrower under the Credit Agreement and each other Credit
Document to which the Borrower is a party, and (ii) to each of the Other
Creditors, all obligations of the Borrower under each Interest


 





















 


Rate Protection Agreement and each Other Hedging
Agreement entered into with respect to the Loans (and/or the Commitments). A
copy of the form of the Subsidiaries Guaranty is attached hereto as Exhibit B
and made a part hereof. The Lenders have committed to make Loans subject to the
terms and on the conditions set forth in the Credit Agreement; the Shipowner
acknowledges that it is justly indebted to the Secured Creditors under the
Subsidiaries Guaranty.


 


F. In order to secure
its obligations under the Subsidiaries Guaranty according to the terms thereof,
and the payment of all other such sums that may hereinafter be secured by this
Mortgage in accordance with the terms hereof, and to secure the performance and
observance of and compliance with all the agreements, covenants and conditions
contained herein and in the Subsidiaries Guaranty, the Shipowner has duly
authorized the execution and delivery of this First Preferred Mortgage under
Chapter 3 of the Marshall Islands Maritime Act 1990 as amended.


 


G. Pursuant to the
Credit Agreement, the Mortgagee has agreed to act as Trustee for the Secured
Creditors.


 


NOW, THEREFORE, in
consideration of the premises and other good and valuable consideration, and in
order to secure the Shipowner’s obligations under the Subsidiaries Guaranty
according to the terms thereof, and the payment of all other sums that may
hereafter be secured by this Mortgage in accordance with the terms hereof (all such
obligations and other sums hereinafter called the “Indebtedness hereby secured”)
and to secure the performance and observance of and compliance with all of the
agreements, covenants and conditions contained in this Mortgage and the
Subsidiaries Guaranty, the Shipowner has granted, conveyed, mortgaged, pledged,
confirmed, assigned, transferred and set over and by these presents does grant,
convey, mortgage, pledge, confirm, assign, transfer and set over, unto the
Mortgagee, and its successors and assigns, the whole of the said vessel [VESSEL
NAME], including, without being limited to, all of the boilers, engines,
machinery, masts, spars, boats, anchors, cables, chains, fuel (to the extent
owned by the Shipowner), rigging, tackle, capstans, outfit, tools, pumps and
pumping equipment, apparel, furniture, drilling equipment, fittings, equipment,
spare parts, and all other appurtenances thereunto appertaining or belonging,
whether now owned or hereafter acquired, and also any and all additions,
improvements, renewals and replacements hereafter made in or to such vessel or
any part thereof, including all items and appurtenances aforesaid (such vessel,
together with all of the foregoing, being herein called the “Vessel”).


 


TO HAVE AND TO HOLD all
and singular the above mortgaged and described property unto the Mortgagee and
its successors and assigns, to its and to its successors’ and assigns’ own use,
benefit and behoof forever.


 


PROVIDED, and these
presents are upon the condition, that, if the Shipowner or its successors or
assigns shall pay or cause to be paid the Indebtedness hereby secured as and
when the same shall become due and payable in accordance with the terms of the
Subsidiaries Guaranty and this Mortgage, and all other such sums as may
hereafter become secured by this Mortgage in accordance with the terms hereof,
and the Shipowner shall duly perform, observe and comply with or cause to be
performed, observed, or complied with all the covenants, terms and conditions
of this Mortgage and the Subsidiaries Guaranty expressed or implied, to be
performed, then this Mortgage and the estate and rights hereunder shall cease,
determine and be void, otherwise to remain in full force and effect.


 


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The Shipowner, for
itself, its successors and assigns, hereby covenants, declares and agrees with
the Mortgagee and its successors and assigns that the Vessel is to be held
subject to the further covenants, conditions, terms and uses hereinafter set
forth.


 


The Shipowner covenants
and agrees with the Mortgagee as follows:


 


ARTICLE I


 


Representations
and Warranties of the Shipowner


 


Section 1. Existence: Authorization. The
Shipowner is a limited liability company duly organized and validly existing
under the laws of the Republic of the Marshall Islands and shall so remain
during the life of this Mortgage. The Shipowner has full power and authority to
own and mortgage the Vessel; has full right and entitlement to register the
Vessel in its name under the flag of the Republic of the Marshall Islands and
all action necessary and required by law for the execution and delivery of this
Mortgage has been duly and effectively taken; and each of the Indebtedness
hereby secured and the Mortgage is and will be the legal, valid and binding
obligation of the Shipowner enforceable in accordance with its terms.


 


Section 2. Title to Vessel. The Shipowner
lawfully owns and is lawfully possessed of the Vessel free from any lien or
encumbrance whatsoever other than this Mortgage, liens for current crew’s wages
and liens not yet required to be removed under Section 7 of Article II
hereof and will warrant and defend the title and possession thereto and to
every part thereof for the benefit of the Mortgagee against the claims and
demands of all persons whomsoever.


 


Section 3. ISM and ISPS Compliance. The Shipowner
has obtained all necessary ISM Documentation in connection with the Vessel and
is in full compliance with the ISM Code and the ISPS Code (as such terms are
defined in Section 9 of Article II.


 


ARTICLE II


 


Covenants
of the Shipowner


 


Section 1. Payment of Indebtedness. The Shipowner
will pay or cause to be paid the Indebtedness hereby secured and will observe,
perform and comply with the covenants, terms and conditions herein and in the
Subsidiaries Guaranty, express or implied, on its part to be observed,
performed or complied with. In the event of inconsistency between this Mortgage
and the Subsidiaries Guaranty, the provisions of this Mortgage shall prevail
but only to the extent required by Marshall Islands law.


 


The obligation of the
Indebtedness hereby secured is an obligation in United States Dollars and the
term “$” when used herein shall mean such United States Dollars.
Notwithstanding fluctuations in the value or rate of United States Dollars in
terms of gold or any other currency, all payments hereunder or otherwise in
respect of the Indebtedness hereby secured shall be payable in 


terms of United States Dollars when due, in United
States Dollars when paid, whether such payment is made before or after the due
date.


 


Section 2. Mortgage Recording. The Shipowner will
cause this Mortgage to be duly recorded or filed in the Office of the Deputy
Commissioner of Maritime Affairs of the Republic


 


3





















 


of the Marshall Islands, in accordance with the
provisions of Chapter 3 of the Republic of the Marshall Islands Maritime Act of
1990, as amended, and will otherwise comply with and satisfy all of the
provisions of applicable laws of the Republic of the Marshall Islands in order
to establish and maintain this Mortgage as a first preferred mortgage
thereunder upon the Vessel and upon all renewals, replacements and improvements
made in or to the same for the amount of the Indebtedness hereby secured.


 


Section 3. Lawful Operation. The Shipowner will
not cause or permit the Vessel to be operated in any manner contrary to law,
and the Shipowner will not engage in any unlawful trade or violate any law or
carry any cargo that will expose the Vessel to penalty, forfeiture or capture,
and will not do, or suffer or permit to be done, anything which can or may
injuriously affect the registration of the Vessel under the laws and
regulations of the Republic of the Marshall Islands and will at all times keep
the Vessel duly documented thereunder.


 


Section 4. Payment of Taxes. The Shipowner will
pay and discharge when due and payable, from time to time, all taxes,
assessments, governmental charges, fines and penalties lawfully imposed on the
Vessel or any income therefrom.


 


Section 5. Prohibition of Liens. Neither the
Shipowner, any charterer, the Master of the Vessel nor any other person has or
shall have any right, power or authority to create, incur or permit to be
placed or imposed or continued upon the Vessel, its freights, profits or hire
any lien whatsoever other than this Mortgage, other liens in favor of the
Mortgagee and for crew’s wages and salvage.


 


Section 6. Notice of Mortgage. The Shipowner will
place, and at all times and places will retain a properly certified copy of
this Mortgage on board the Vessel with her papers and will cause such certified
copy and the Vessel’s marine document to be exhibited to any and all persons
having business therewith which might give rise to any lien thereon other than
liens for crew’s wages and salvage, and to any representative of the Mortgagee.


 


The Shipowner will place
and keep prominently displayed in the chart room and in the Master’s cabin on
the Vessel a framed printed notice in plain type reading as follows:


 


NOTICE
OF MORTGAGE


 


THIS VESSEL IS OWNED BY
[SHIPOWNER], AND IS SUBJECT TO A FIRST PREFERRED MORTGAGE IN FAVOR OF NORDEA
BANK FINLAND PLC, NEW YORK BRANCH, AS TRUSTEE/MORTGAGEE UNDER AUTHORITY OF
CHAPTER 3 OF THE MARSHALL ISLANDS MARITIME ACT 1990, AS AMENDED. UNDER THE
TERMS OF SAID MORTGAGE, NEITHER THE SHIPOWNER, ANY CHARTERER, THE MASTER OF THE
VESSEL, NOR ANY OTHER PERSON HAS ANY RIGHT, POWER OR AUTHORITY TO CREATE, INCUR
OR PERMIT TO BE PLACED OR IMPOSED UPON THE VESSEL, ANY ENCUMBRANCES WHATSOEVER
OR ANY OTHER LIEN WHATSOEVER OTHER THAN FOR CREW’S WAGES AND SALVAGE.


 


Section 7. Removal of Liens. Except for the lien
of this Mortgage, the Shipowner will not suffer to be continued any lien,
encumbrance or charge on the Vessel, and in due course and in any event within
thirty (30) days after the same becomes due and payable or within


 


4





















 


fourteen (14) days after being requested to do so by
the Mortgagee, the Shipowner will pay or cause to be discharged or make adequate
provision for the satisfaction or discharge of all claims or demands, and will
cause the Vessel to be released or discharged from any lien, encumbrance or
charge therefor.


 


Section 8. Release from Arrest. If a libel,
complaint or similar process be filed against the Vessel or the Vessel be
otherwise attached, levied upon or taken into custody by virtue of any legal
proceeding in any court, the Shipowner will promptly notify the Mortgagee
thereof by telex, or telefax confirmed by letter, at the address, as specified
in this Mortgage, and within fourteen (14) days will cause the Vessel to be
released and all liens thereon other than this Mortgage to be discharged, will
cause a certificate of discharge to be recorded in the case of any recording of
a notice of claim of lien, and will promptly notify the Mortgagee thereof in
the manner aforesaid. The Shipowner will notify the Mortgagee within
forty-eight (48) hours of any average or salvage incurred by the Vessel.


 


Section 9. Maintenance. (a) The Shipowner will
at all times and without cost or expense to the Mortgagee maintain and
preserve, or cause to be maintained and preserved, the Vessel and all its
equipment, outfit and appurtenances, tight, staunch, strong, in good condition,
working order and repair and in all respects seaworthy and fit for its intended
service, and will keep the Vessel, or cause her to be kept, in such condition
as will entitle her to the highest classification and rating for vessels of the
same age and type in the American Bureau of Shipping or other classification
society listed on Schedule X to the Credit Agreement. The Shipowner
covenants to deliver annually to the Mortgagee a certificate from such class
society showing such classification to be maintained. The Shipowner will
without cost or expense to the Mortgagee promptly, irrevocably and
unconditionally instruct and authorize the classification society of the
Vessel, and shall request the classification society to give an undertaking to
the Mortgagee as follows:


 


1.
to send to the Mortgagee, following receipt of a written request from the
Mortgagee, certified true copies of all original class records held by the
classification society relating to the Vessel;


 


2.
to allow the Mortgagee (or its agents), at any time and from time to time, to
inspect the original class and related records of the Shipowner and the Vessel
at the offices of the classification society and to take copies of them;


 


3.
following receipt of a written request from the Mortgagee:


 


(a) to
advise of any facts or matters which may result in or have resulted in a
change, suspension, discontinuance, withdrawal or expiry of the Vessel’s class
under the rules or terms and conditions of the Shipowner’s or the Vessel’s
membership of the classification society; and


 


(b) to
confirm that the Shipowner is not in default of any of its contractual
obligations or liabilities to the classification society and, without limiting
the foregoing, that it has paid in full all fees or other charges due and
payable to the classification society; and


 


(c) if
the Shipowner is in default of any of its contractual obligations or
liabilities to the classification society, to specify to the Mortgagee in
reasonable detail


 


5





















 


the facts and circumstances
of such default, the consequences thereof, and any remedy period agreed or
allowed by the classification society; and


 


(d) to
notify the Mortgagee immediately in writing if the classification society
receives notification from the Shipowner or any other person that the Vessel’s
classification society is to be changed.


 


Notwithstanding the
above instructions and undertaking given for the benefit of the Mortgagee, the
Shipowner shall continue to be responsible to the classification society for
the performance and discharge of all its obligations and liabilities relating
to or arising out of or in connection with the contract it has with the
classification society, and nothing herein or therein shall be construed as
imposing any obligation or liability of the Mortgagee to the classification
society in respect thereof.


 


The Shipowner shall
further notify the classification society that all the foregoing instructions
and authorizations shall remain in full force and effect until revoked or
modified by written notice to the classification society received from the
Mortgagee, and that the Shipowner shall reimburse the classification society
for all its costs and expenses incurred in complying with the foregoing
instructions. 


 


(b) The Vessel
shall, and the Shipowner covenants that she will, at all times comply with all
applicable laws, treaties and conventions to which the Republic of the Marshall
Islands is a party, and rules and regulations issued thereunder, and shall
have on board as and when required thereby valid certificates showing
compliance therewith. The Shipowner will not make, or permit to be made, any
substantial change in the structure, type or speed of the Vessel or change in
her rig, without first receiving the written approval thereof by the Mortgagee.


 


(c) The Shipowner
agrees to give the Mortgagee at least ten (10) days notice of the actual
date and place of any survey or drydocking, in order that the Mortgagee may
have representatives present if desired. The Shipowner agrees that at the
Mortgagee’s request it will satisfy the Mortgagee that the expense of such
survey or drydocking or work to be done thereat is within Shipowner’s financial
capability and will not result in a claim or lien against the Vessel in
violation of the provisions of this Mortgage, the Credit Agreement, the Subsidiaries
Guaranty or any other Credit Document.


 


(d) The Shipowner
shall promptly notify the Mortgagee of and furnish the Mortgagee with full
information, including copies of reports and surveys, regarding any material
accident or accident involving repairs where the aggregate cost is likely to
exceed Five Hundred Thousand Dollars (U.S. $500,000) (or its equivalent in
another currency), any major damage to the Vessel, any event affecting the
Vessel’s class, any occurrence in consequence whereof the Vessel has become or
is likely to suffer an Event of Loss.


 


(e) The Mortgagee
shall have the right at any time, on reasonable notice, to have its surveyor
conduct inspections and surveys of the Vessel to ascertain the condition of the
Vessel and to satisfy itself that the Vessel is being properly repaired and
maintained. Such inspections and surveys shall be conducted at such times and
in such manner as will not interfere with the Shipowner’s normal business
operations and schedule.


 


6





















 


(f) The Shipowner
will furnish to the Mortgagee on demand true and complete copies of the DOC
(the SMC referred to in the definition of ISM Code Documentation below) and
such other ISM Code documentation as the Mortgagee may reasonably request in
writing.


 


(g) The Shipowner
will comply or procure compliance with the ISM Code and the ISPS Code (as such
terms are defined below) and notify the Mortgagee forthwith upon:


 


(i) any
claim for breach of the ISM Code or the ISPS Code being made against the
Shipowner, an ISM Responsible Person (as such term is defined below) or the
manager of the Vessel in connection with the Vessel; or


 


(ii) any
other matter, event or incident, actual or which will or could lead to the ISM
Code or the ISPS Code not being complied with;


 


and
keep the Mortgagee advised in writing on a regular basis and in such detail as
the Mortgagee shall require, of the Shipowner’s and Vessel manager’s response to
the items referred to in subclauses (i) and (ii) above.


 


For the purposes of this
Mortgage:


 


“ISM
Code” means in relation to its application the Shipowner, the Vessel and its
operation:


 


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


 


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


 


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


 


“ISM Code Documentation”
includes:


 


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


 


(b) the
interim safety management certificate (“Interim SMC”) issued pursuant to the
ISM Code in relation to the Vessel prior to or on the delivery date thereof;


 


7





















 


(c) all
other documents and data which are relevant to the ISM SMS and its
implementation and verification which the Mortgagee may require by request; and


 


(d) any
other documents which are prepared or which are otherwise relevant to establish
and maintain the Vessel’s or the Shipowner’s compliance with the ISM Code which
the Mortgagee may require by request.


 


“ISM
SMS” means the safety management system which is required to be developed,
implemented and maintained under the ISM Code.


 


“ISPS
Code” means the International Ship and Port Facility Security Code constituted
pursuant to resolution A.924(22) of the International Maritime Organisation (“IMO”)
adopted by a Diplomatic conference of the IMO on Maritime Security on 13 December 2002
and now set out in Chapter XI-2 of the Safety of Life at Sea Convention (SOLAS)
1974 (as amended) to take effect on July 1, 2004.


 


Section 10. Inspection; Reports. (a) The
Shipowner will at all reasonable times afford the Mortgagee or its authorized
representatives full and complete access to the Vessel for the purpose of
inspecting the Vessel and her cargo and papers, including without limitation
all records pertaining to the Vessel’s maintenance and repair, and, at the
request of the Mortgagee, the Shipowner will deliver for inspection copies of
any and all contracts and documents relating to the Vessel, whether on board or
not.


 


(b) The Shipowner
hereby agrees to furnish promptly to the Mortgagee, on demand, any reports or
information which the Shipowner may submit to shareholders or regulatory
agencies and any additional information which the Mortgagee may request in
respect of the financial condition of the Shipowner.


 


Section 11. Flag; Home Port. (a) The
Shipowner will not change the flag or home port of the Vessel without the
written consent of the Mortgagee and any such written consent to anyone change
of flag or home port shall not be construed to be a waiver of this provision
with respect to any subsequent proposed change of flag or home port.


 


(b) Notwithstanding
the foregoing provisions of this Section 11, upon not less than 30 days
prior written notice to the Mortgagee, provided no Default or Event of Default
under the Credit Agreement shall have occurred and be continuing, the Shipowner
may change the flag or home port of the Vessel to another flag or home port
reasonably satisfactory to the Mortgagee, provided that the Shipowner shall
promptly take all actions necessary or desirable to establish, preserve,
protect and maintain the security interest of the Mortgagee in the Vessel to
the satisfaction of the Mortgagee, and the Shipowner shall have provided to the
Mortgagee and the Lenders such opinions of counsel as may be reasonably
requested by the Mortgagee to assure itself that the conditions of this proviso
have been satisfied.


 


Section 12. No Sales, Transfers or Charters. The
Shipowner will not sell, mortgage, transfer, or change the management of, or
demise charter the Vessel for any period longer than twelve (12) months
(including any permitted extensions or renewals) in each case, without the
written consent of the Mortgagee first had and obtained, and any such written
consent to anyone sale, mortgage, demise charter, transfer, or change of
management shall not be construed to be a waiver of this provision with respect
to any subsequent proposed sale, mortgage, demise charter, transfer, or


 


8





















 


change of management. Any such sale, mortgage, demise
charter, transfer, or change of management of the Vessel shall be subject to
the provisions of this Mortgage and the lien hereof.


 


Section 13. Insurance. (a) The Shipowner, at
its own expense, or with respect to part (a)(iii) of this Section 13
the Mortgagee at the expense of the Shipowner, will keep the Vessel insured
with insurers and protection and indemnity clubs or associations of
internationally recognized responsibility, and placed in such markets, on such
terms and conditions, and through brokers, in each case reasonably satisfactory
to the Mortgagee and under forms of policies approved by the Mortgagee against
the risks indicated below and such other risks as the Mortgagee may specify
from time to time:


 


(i) Marine
and war risk, including London Blocking and Trapping Addendum and Lost Vessel
Clause, hull and machinery insurance in an amount in U.S. dollars equal to,
except as otherwise approved or required in writing by the Mortgagee, the
greater of (x) the then full commercial value of the Vessel and (y) an amount
which, when aggregated with such insured value of the other Mortgaged Vessels
(if the other Mortgaged Vessels are then subject to a mortgage in favor of the
Mortgagee under the Credit Agreement, and have not suffered an Event of Loss),
is equal to 120% of (A) the then aggregate Total Commitment minus (B) the
product of $25,000,000 multiplied by the number of vessel(s) then being built
under a Construction Contract and which have not yet been delivered thereunder
and mortgaged in favor of the Mortgagee under the Credit Agreement.


 


(ii) Marine
and war risk protection and indemnity insurance or equivalent insurance
(including coverage against liability for passengers, fines and penalties
arising out of the operation of the Vessel, insurance against liability arising
out of pollution, spillage or leakage, and workmen’s compensation or
longshoremen’s and harbor workers’ insurance as shall be required by applicable
law) in such amounts approved by the Mortgagee; provided, however that
insurance against liability under law or international convention arising out
of pollution, spillage or leakage shall be in an amount not less than the
greater of:


 


(y)
the maximum amount available, as that amount may from time to time change, from
the International Group of Protection and Indemnity Associations or
alternatively such sources of pollution, spillage or leakage coverage as are
commercially available in any absence of such coverage by the International
Group as shall be carried by prudent shipowners for similar vessels engaged in
similar trades plus amounts available from customary excess insurers of such risks
as excess amounts shall be carried by prudent shipowners for similar vessels
engaged in similar trades; and 


 


(z)
the amounts required by the laws or regulations of the United States of America
or any applicable jurisdiction in which the Vessel may be trading from time to
time.


 


(iii) Mortgagee’s
interest insurance (including extended mortgagee interest-additional
perils-pollution) coverage satisfactory to the Mortgagee in an amount which,
when aggregated with such insured value of the other Mortgaged Vessels (if the
other Mortgaged Vessels are then subject to a mortgage in favor of the
Mortgagee under the Credit Agreement, and have not suffered an Event of Loss),
is equal to 120% of (A) the then aggregate Total Commitment minus (B) the
product of $25,000,000 multiplied by the number of


 


9





















 


vessel(s) then being
built under a Construction Contract and which have not yet been delivered
thereunder and mortgaged in favor of the Mortgagee under the Credit Agreement;
all such mortgagee’s interest insurance cover shall in the Mortgagee’s
discretion be obtained directly by the Mortgagee and the Shipowner shall on
demand pay all costs of such cover.


 


(iv) While
the Vessel is idle or laid up, at the option of the Shipowner and in lieu of
the above-mentioned marine and war risk hull insurance, port risk insurance
insuring the Vessel against the usual risks encountered by like vessels under
similar circumstances.


 


(b) The
marine and commercial war-risk insurance required by this Section 13 shall
have deductibles and franchises no higher than the following: (i) Hull and
Machinery - U.S. $115,000 for all hull claims and U.S. $150,000 for all machinery
claims each accident or occurrence and (ii) Protection and Indemnity - U.S.
$50,000 for cargo claims, U.S. $35,000 for crew claims, U.S. $10,000 passenger
claims and U.S. $15,000 all other claims, in each case each accident or
occurrence.


 


All
insurance maintained hereunder shall be primary insurance without right of
contribution against any other insurance maintained by the Mortgagee.  Each policy of marine and war risk hull and
machinery insurance with respect to the Vessel shall provide that the Mortgagee
shall be a named insured and a loss payee. Each entry in a marine and war risk
protection indemnity club with respect to the Vessel shall note the interest of
the Mortgagee. The Mortgagee and its successors and assigns shall not be
responsible for any premiums, club calls, assessments or any other obligations
or for the representations and warranties made therein by the Shipowner or any
other person.


 


(c) The
Shipowner will furnish the Mortgagee from time to time on request, and in any
event at least annually, a detailed report signed by a firm of marine insurance
brokers acceptable to the Mortgagee with respect to P & I entry, the hull
and machinery and war risk insurance carried and maintained on the Vessel, together
with their opinion as to the adequacy thereof and its compliance with the
provisions of this Mortgage. At the Shipowner’s expense the Shipowner will cause
such insurance broker and the P & I club or association providing P &
I insurance referred to in part (a)(ii) of this Section 13, to agree
to advise the Mortgagee by telex or telecopier confirmed by letter of any
expiration, termination, alteration or cancellation of any policy, any default
in the payment of any premium and of any other act or omission on the part of
the Shipowner of which it has knowledge and which might invalidate or render unenforceable,
in whole or in part, any insurance on the Vessel, and to provide an opportunity
of paying any such unpaid premium or call, such right being exercisable by the
Mortgagee on a vessel by vessel and not on a fleet basis. In addition, the
Shipowner shall promptly provide the Mortgagee with any information which the
Mortgagee reasonably requests for the purpose of obtaining or preparing any
report from an independent marine insurance consultant as to the adequacy of
the insurances effected or proposed to be effected in accordance with this
Mortgage as of the date hereof or in connection with any renewal thereof, and
the Shipowner shall upon demand indemnify the Mortgagee in respect of all
reasonable fees and other expenses incurred by or for the account of the Mortgagee
in connection with any such report; provided the Mortgagee shall be entitled to
such indemnity only for one such report during any period of twelve months.


 


The
underwriters or brokers shall furnish the Mortgagee with a letter or letters of
undertaking to the effect that:


 


10





















 


(i) they
will hold the instruments of insurance, and the benefit of the insurances
thereunder, to the order of the Mortgagee in accordance with the terms of the
loss payable clause referred to in the relevant Assignment of Insurances for
the Vessel; and


 


(ii) they
will have endorsed on each and every policy as and when the same is issued the
loss payable clause and the notice of assignment referred to in the relevant
Assignment of Insurances for the Vessel; and


 


(iii) they
will not set off against any sum recoverable in respect of a claim against the
Vessel under the said underwriters or brokers or any other person in respect of
any other vessel nor cancel the said insurances by reason of non-payment of
such premiums or other amounts. 


 


All policies of
insurance required hereby shall provide for not less than 14 days prior written
notice to be received by the Mortgagee of the termination or cancellation of
the insurance evidenced thereby. All policies of insurance maintained pursuant
to this Section 13 for risks covered by insurance other than that provided
by a P & I Club shall contain provisions waiving underwriters’ rights
of subrogation thereunder against any assured named in such policy and any
assignee of said assured. The Shipowner has assigned to the Mortgagee its rights
under any policies of insurance in respect of the Vessel. The Shipowner agrees
that, unless the insurances by their terms provide that they cannot cease (by
reason of nonrenewal or otherwise) without the Mortgagee being informed and having
the right to continue the insurance by paying any premiums not paid by the
Shipowner, receipts showing payment of premiums for required insurance and also
of demands from the Vessel’s P & I underwriters shall be in the hands
of the Mortgagee at least two (2) days before the risk in question
commences.


 


(d) Unless the
Mortgagee shall otherwise agree, all amounts of whatsoever nature payable under
any insurance must be payable to the Mortgagee for distribution first to itself
and thereafter to the Shipowner or others as their interests may appear.
Nevertheless, until otherwise required by the Mortgagee by notice to the
underwriters upon the occurrence and continuance of a Default or an event of
default hereunder, (i) amounts payable under any insurance on the Vessel
with respect to protection and indemnity risks may be paid directly to the
Shipowner to reimburse it for any loss, damage or expense incurred by it and covered
by such insurance or to the person to whom any liability covered by such insurance
has been incurred provided that the underwriter shall have first received
evidence that the liability insured against has been discharged, and (ii) amounts
payable under any insurance with respect to the Vessel involving any damage to
the Vessel not constituting an Event of Loss, may be paid by underwriters
directly for the repair, salvage or other charges involved or, if the Shipowner
shall have first fully repaired the damage or paid all of the salvage or other
charges, may be paid to the Shipowner as reimbursement therefor; provided,
however, that if such amounts (including any franchise or deductible) are in
excess of U.S. $250,000, the underwriters shall not make such payment without
first obtaining the written consent thereto of the Mortgagee.


 


(e) All amounts
paid to the Mortgagee in respect of any insurance on the Vessel shall be
disposed of as follows (after deduction of the expenses of the Mortgagee in
collecting such amounts):


 


(i) any
amount which might have been paid at the time, in accordance with the
provisions of paragraph (d) above, directly to the Shipowner or others
shall be paid by the Mortgagee to, or as directed by, the Shipowner;


 


11





















 


(ii) all
amounts paid to the Mortgagee in respect of an Event of Loss of the Vessel
shall be applied by the Mortgagee to the payment of the Indebtedness hereby
secured pursuant to Section 4.02(c) of the Credit Agreement;


 


(iii) all
other amounts paid to the Mortgagee in respect of any insurance on the Vessel
may, in the Mortgagee’s sole discretion, be held and applied to the prepayment
of the Indebtedness hereby secured or to making of needed repairs or other work
on the Vessel, or to the payment of other claims incurred by the Shipowner
relating to the Vessel, or may be paid to the Shipowner or whosoever may be
entitled thereto.


 


(f) In the event
that any claim or lien is asserted against the Vessel for loss, damage or
expense which is covered by insurance required hereunder and it is necessary
for the Shipowner to obtain a bond or supply other security to prevent arrest
of the Vessel or to release the Vessel from arrest on account of such claim or
lien, the Mortgagee, on request of the Shipowner, may, in the sole discretion
of the Mortgagee, assign to any person, firm or corporation executing a surety
or guarantee bond or other agreement to save or release the Vessel from such
arrest, all right, title and interest of the Mortgagee in and to said insurance
covering said loss, damage or expense, as collateral security to indemnify
against liability under said bond or other agreement.


 


(g) The Shipowner
shall deliver to the Mortgagee certified copies and, whenever so requested by
the Mortgagee, the originals of all certificates of entry, cover notes,
binders, evidences of insurance and policies and all endorsements and riders
amendatory thereof in respect of insurance maintained under this Mortgage for
the purpose of inspection or safekeeping, or, alternatively, satisfactory
letters of undertaking from the broker holding the same. The Mortgagee shall be
under no duty or obligation to verify the adequacy or existence of any such
insurance or any such policies, endorsement or riders.


 


(h) The Shipowner
agrees that it will not execute or permit or willingly allow to be done any act
by which any insurance may be suspended, impaired or cancelled, and that it
will not permit or allow the Vessel to undertake any voyage or run any risk or
transport any cargo which may not be permitted by the policies in force,
without having previously notified the Mortgagee in writing and insured the
Vessel by additional coverage to extend to such voyages, risks, passengers or
cargoes.


 


(i) In case any
underwriter proposes to pay less on any claim than the amount thereof, the
Shipowner shall forthwith inform the Mortgagee, and if a Default, an Event of
Default or an Event of Loss has occurred and is continuing, the Mortgagee shall
have the exclusive right to negotiate and agree to any compromise.


 


(j) The Shipowner will
comply with and satisfy all of the provisions of any applicable law,
convention, regulation, proclamation or order concerning financial responsibility
for liabilities imposed on the Shipowner or the Vessel with respect to
pollution by any state or nation or political subdivision thereof and will
maintain all certificates or other evidence of financial responsibility as may
be required by any such law, convention, regulation, proclamation or order with
respect to the trade in which the Vessel is from time to time engaged and the
cargo carried by it.


 


Section 14. Reimbursement for Expenses. The
Shipowner will reimburse the Mortgagee promptly for any and all expenditures
which the Mortgagee may from time to time make, layout or expend in providing
such protection in respect of insurance, discharge or purchase of liens,


 


12





















 


taxes, dues, tolls, assessments, governmental charges,
fines and penalties lawfully imposed, repairs, attorney’s fees, and other
matters as the Shipowner is obligated herein to provide, but fails to provide
or which, in the sole judgment of the Mortgagee are necessary or appropriate
for the protection of the Vessel or the security granted by this Mortgage. Such
obligation of the Shipowner to reimburse the Mortgagee shall be an additional
indebtedness due from the Shipowner, shall bear interest at the interest rate
as set forth in Section 1.07(b) of the Credit Agreement from the date
of payment by the Mortgagee to and including the date of reimbursement by the
Shipowner, shall be secured by this Mortgage, and shall be payable by the
Shipowner on demand. The Mortgagee, though privileged to do so, shall be under
no obligation to the Shipowner to make any such expenditure, nor shall the
making thereof relieve the Shipowner of any default in that respect.


 


Section 15. Performance of Charters. The
Shipowner will fully perform any and all charter parties which may be entered
into with respect to the Vessel and will promptly notify the Mortgagee of any
material claim by any charterer of non-performance thereunder by the Shipowner.


 


Section 16. Change in Ownership. The Shipowner
further covenants and agrees with the Mortgagee that, so long as any part of
the Indebtedness hereby secured remains unpaid, there shall be no change in the
ownership of the Vessel or any of the shares of the Shipowner without the prior
written consent of the Mortgagee.


 


Section 17. Prepayment if Event of Loss. In the
event that the Vessel suffers an Event of Loss, then and in each such case the
Shipowner shall forthwith repay the Indebtedness hereby secured at the time and
in the amount set forth in Section 4.02(c) of the Credit Agreement
except to the extent such amounts have otherwise been paid as therein provided.


 


ARTICLE III


 


Events
of Default and Remedies


 


Section 1. Events of Default; Remedies. In case
anyone or more of the following events, herein termed “events of default”,
shall happen:


 


(a) the
Shipowner fails to pay on the date due any payment of principal in respect of
the Indebtedness hereby secured as provided herein or the Shipowner fails to
pay within three (3) Business Days of the date due any payment of interest
or any Commitment Commission or any other amount owing under the Subsidiaries
Guaranty; or


 


(b) the
statements in Article I shall prove to have been untrue when made in a
material way; or


 


(c) a
default in the due and punctual observance and performance of any of the
provisions of Sections 2, 3, 7, 8, 9(b), 11, 12, 13(a), (b), (d), (h) and
(j), 16 or 17 of Article II hereof shall have occurred and be continuing;
or


 


(d) a
breach or omission in the due and punctual observance of any of the other covenants
and conditions herein required to be kept and performed by the Shipowner and
such breach or omission shall continue for 30 days after the day the Shipowner
first knew or should have known of such breach or omission; or


 


13





















 


(e) an
Event of Default shall have occurred and be continuing under the Credit
Agreement; or


 


(f) a
payment default by the Borrower under any Interest Rate Protection Agreement or
Other Hedging Agreement shall have occurred and be continuing; or


 


(g) any
notice shall have been issued by the government or any bureau, department,
officer, board or agency thereof of the country of registry of the Vessel to
the effect that the Vessel is subject to cancellation from such registry or the
certificate of registry of the Vessel is subject to revocation or cancellation
for any reason whatsoever, and such notice shall not have been cancelled or
annulled on or before seven (7) Business Days prior to the date set forth
in such notice for such cancellation or revocation; or


 


(h) the
Vessel shall be cancelled from the country of registry of the Vessel or the
certificate of registry of the Vessel is revoked or cancelled for any reason
whatsoever;


 


then:


 


the security constituted
by this Mortgage shall become immediately enforceable and that without
limitation, the enforcement remedies specified can be exercised irrespective of
whether or not the Mortgagee has exercised the right of acceleration under the
Credit Agreement or any of the other Credit Documents and the Mortgagee shall
have the right to:


 


(i) Declare
all the then unpaid Indebtedness hereby secured to be due and payable
immediately, and upon such declaration, the same shall become and be
immediately due and payable provided, however, that no declaration shall be
required if an event of default shall have occurred by reason of a default
under Section 10.05 of the Credit Agreement, then and in such case, the
Indebtedness hereby secured shall become immediately due and payable on the
occurrence of such event of default without any notice or demand;


 


(ii) Exercise
all of the rights and remedies in foreclosure and otherwise given to a
mortgagee by the provisions of the laws of the country of registry of the
Vessel or of any other jurisdiction where the Vessel may be found;


 


(iii) Bring
suit at law, in equity or in admiralty, as it may be advised, to recover
judgment for the Indebtedness hereby secured, and collect the same out of any
and all property of the Shipowner whether covered by this Mortgage or
otherwise;


 


(iv) Take
and enter into possession of the Vessel, at any time, wherever the same may be,
without legal process and without being responsible for loss or damage and the
Shipowner or other person in possession forthwith upon demand of the Mortgagee
shall surrender to the Mortgagee possession of the Vessel;


 


(v) Without
being responsible for loss or damage, the Mortgagee may hold, lay up, lease,
charter, operate or otherwise use such Vessel for such time and upon such terms
as it may deem to be for its best advantage, and demand, collect and retain all
hire, freights, earnings, issues, revenues, income, profits, return premiums,
salvage awards or


 


14





















 


recoveries, recoveries
in general average, and all other sums due or to become due in respect of such
Vessel or in respect of any insurance thereon from any person whomsoever,
accounting only for the net profits, if any, arising from such use of the
Vessel and charging upon all receipts from the use of the Vessel or from the
sale thereof by court proceedings or pursuant to subsection (vi) next
following, all costs, expenses, charges, damages or losses by reason of such
use; and if at any time the Mortgagee shall avail itself of the right herein
given them to take the Vessel, the Mortgagee shall have the right to dock the
Vessel, for a reasonable time at any dock, pier or other premises of the
Shipowner without charge, or to dock her at any other place at the cost and
expense of the Shipowner;


 


(vi) Without
being responsible for loss or damage, the Mortgagee may sell the Vessel upon
such terms and conditions as to the Mortgagee shall seem best, free from any
claim of or by the Shipowner, at public or private sale, by sealed bids or
otherwise, by mailing, by air or otherwise, notice of such sale, whether public
or private, addressed to the Shipowner at its last known address and to any
other registered mortgagee, twenty (20) calendar days prior to the date fixed
for entering into the contract of sale and by first publishing notice of any
such public sale for ten (10) consecutive days, in daily newspapers of
general circulation published in the City of New York, State of New York; in
the event that the Vessel shall be offered for sale by private sale, no newspaper
publication of notice shall be required, nor notice of adjournment of sale;
sale may be held at such place and at such time as the Mortgagee by notice may
have specified, or may be adjourned by the Mortgagee from time to time by
announcement at the time and place appointed for such sale or for such
adjourned sale, and without further notice or publication the Mortgagee may
make any such sale at the time and place to which the same shall be so
adjourned; and any sale may be conducted without bringing the Vessel to the
place designated for such sale and in such manner as the Mortgagee may deem to
be for its best advantage, and the Mortgagee may become the purchaser at any
sale. The Shipowner agrees that any sale made in accordance with the terms of
this paragraph shall be deemed made in a commercially reasonable manner insofar
as it is concerned;


 


(vii) Require
that all policies, contracts, certificates of entry and other records relating
to the insurance with respect to the Vessel, including, but not limited to,
those described in Article II, Section 13 hereof (the “Insurances”)
(including details of and correspondence concerning outstanding claims) be
forthwith delivered to or to the order of the Mortgagee;


 


(viii) Collect,
recover, compromise and give a good discharge for any and all monies and claims
for monies then outstanding or thereafter arising under the Insurances or in
respect of the earnings or any requisition compensation and to permit any
brokers through whom collection or recovery is effected to charge the usual
brokerage therefor.


 


Section 2. Power of Sale. Any sale of the Vessel
made in pursuance of this Mortgage, whether under the power of sale hereby
granted or any judicial proceedings, shall operate to divest all right, title
and interest of any nature whatsoever of the Shipowner therein and thereto, and
shall bar the Shipowner, its successors and assigns, and all persons claiming
by, through or under them.  No purchaser
shall be bound to inquire whether notice has been given, or whether any default
has occurred, or as to the propriety of the sale, or as to the application of
the proceeds thereof. In case of any such sale, the Mortgagee, if it is the
purchaser, shall be entitled, for the purpose of making settlement or payment
for the property purchased, to use and apply the Indebtedness hereby


 


15





















 


secured in order that there may be credited against
the amount remaining due and unpaid thereon the sums payable out of the net
proceeds of such sale to the Mortgagee after allowing for the costs and expense
of sale and other charges; and thereupon such purchaser shall be credited, on
account of such purchase price, with the net proceeds that shall have been so
credited upon the Indebtedness hereby secured. At any such sale, the Mortgagee
may bid for and purchase such property and upon compliance with the terms of
sale may hold, retain and dispose of such property without further
accountability therefor.


 


Section 3. Power of Attorney-Sale. The Mortgagee
is hereby irrevocably appointed attorney-in-fact of the Shipowner to execute
and deliver to any purchaser aforesaid, and is hereby vested with full power
and authority to make, in the name and on behalf of the Shipowner, a good
conveyance of the title to the Vessel so sold. Any person dealing with the
Mortgagee or attorney-in-fact shall not be put on enquiry as to whether the
power of attorney contained herein has become exercisable. In the event of any
sale of the Vessel, under any power herein contained, the Shipowner will, if
and when required by the Mortgagee, execute such form of conveyance of the
Vessel as the Mortgagee may direct or approve.


 


Section 4. Power of Attorney-Collection. The
Mortgagee is hereby irrevocably appointed attorney-in-fact of the Shipowner
upon the happening of any event of default, in the name of the Shipowner to
demand, collect, receive, compromise and sue for, so far as may be permitted by
law, all freight, hire, earnings, issues, revenues, income and profits of the
Vessel and all amounts due from underwriters under any insurance thereon as
payment of losses or as return premiums or otherwise, salvage awards and
recoveries, recoveries in general average or otherwise, and all other sums due
or to become due at the time of the happening of any event of default as
defined in Section 1 of Article III hereof in respect of the Vessel,
or in respect of any insurance thereon, from any person whomsoever, and to
make, give and execute in the name of the Shipowner acquittances, receipts,
releases or other discharges for the same, whether under seal or otherwise, and
to endorse and accept in the name of the Shipowner all checks, notes, drafts,
warrants, agreements and other instruments in writing with respect to the
foregoing. Any person dealing with the Mortgagee or attorney-in-fact shall not
be put on enquiry as to whether the Power of Attorney contained herein has
become exercisable.


 


Section 5. Delivery of Vessel. Upon the security
constituted by this Mortgage becoming immediately enforceable pursuant to Section 1
of Article III, the Mortgagee shall (in addition to the powers described
in Section 1 of Article III) become forthwith entitled (but not
bound) to appoint, by an instrument in writing under its seal or under the hand
of any director or officer or authorized signatory, a receiver and/or manager
of the Vessel upon such terms as to remuneration and otherwise as the Mortgagee
shall deem fit with power from time to time to remove any receiver and appoint
another in his stead and any receiver shall be the agent of the Shipowner (who
shall be solely responsible for his acts and defaults and remuneration) and
shall have all the powers conferred by law by way of addition to, but without
limiting, those powers any receiver shall have all the powers and entitlements
conferred on the Mortgagee by this Mortgage and generally shall be entitled to
the same protection and to exercise the same powers and discretions as are
granted to the Mortgagee under this Mortgage.


 


Section 6. Mortgagee to Discharge Liens. The
Shipowner authorizes and empowers the Mortgagee or its appointees or any of
them to appear in the name of the Shipowner, its successors and assigns, in any
court of any country or nation of the world where a suit is pending against the
Vessel because of or on account of any alleged lien against the Vessel from
which the 


 


16





















 


Vessel has not been released and to take such
proceedings as to them or any of them may seem proper towards the defense of
such suit and the purchase or discharge of such lien, and all expenditures made
or incurred by them or any of them for the purpose of such defense or purchase
or discharge shall be a debt due from the Shipowner, its successors and
assigns, to the Mortgagee, and shall be secured by the lien of this Mortgage in
like manner and extent as if the amount and description thereof were written
herein.


 


Section 7. Payment of Expenses. The Shipowner
covenants that upon the happening of any one or more of the events of default,
then, upon written demand of the Mortgagee, the Shipowner will pay to the
Mortgagee the whole amount due and payable in respect of the Indebtedness
hereby secured; and in case the Shipowner shall fail to pay the same forthwith
upon such demand, the Mortgagee shall be entitled to recover judgment for the
whole amount so due and unpaid, together with such further amounts as shall be
sufficient to cover the reasonable compensation of the Mortgagee or its agents,
attorneys and counsel and any necessary advances, expenses and liabilities made
or incurred by it or them or the Mortgagee hereunder. All moneys collected by
the Mortgagee under this Section 7 shall be applied by the Mortgagee in
accordance with the provisions of Section 11 of this Article III.


 


Section 8. Remedies Cumulative. Each and every
power and remedy herein given to the Mortgagee shall be cumulative and shall be
in addition to every other power and remedy herein given or now or hereafter
existing at law, in equity, in admiralty or by statute, and each and every
power and remedy whether herein given or otherwise existing may be exercised
from time to time and as often and in such order as may be deemed expedient by
the Mortgagee, and the exercise or the beginning of the exercise of any power
or remedy shall not be construed to be a waiver of the right to exercise at the
same time or thereafter any other power or remedy. The Mortgagee shall not be
required or bound to enforce any of its rights under any of the other Credit
Documents, prior to enforcing its rights under this Mortgage. No delay or
omission by the Mortgagee in the exercise of any right or power or in the
pursuance of any remedy accruing upon any default as above defined shall impair
any such right, power or remedy or be construed to be a waiver of any such
event of default or to be an acquiescence therein; nor shall the acceptance by
the Mortgagee of any security or of any payment of or on account of the
Indebtedness hereby secured maturing after any event of default or of any
payment on account of any past default be construed to be a waiver of any right
to exercise its remedies due to any future event of default or of any past
event of default not completely cured thereby. 
No consent, waiver or approval of the Mortgagee shall be deemed to be
effective unless in writing and duly signed by authorized signatories of the
Mortgagee; any waiver by the Mortgagee of any of the terms of this Mortgage or
any consent given under this Mortgage shall only be effective for the purpose and
on the terms which it is given and shall be without prejudice to the right to
give or withhold consent in relation to future matters (which are either the
same or different).


 


Section 9. Cure of Defaults. If at any time after
an event of default and prior to the actual sale of the Vessel by the Mortgagee
or prior to any enforcement or foreclosure proceedings the Shipowner offers
completely to cure all events of default and to pay all expenses, advances and
damages to the Mortgagee consequent on such events of default, with interest at
the interest rate set forth in Section 1.07(b) of the Credit
Agreement, then the Mortgagee may, but shall not be obligated to, accept such
offer and payment and restore the Shipowner to its former position, but such
action, if taken, shall not affect any subsequent event of default or impair
any rights consequent thereon.


 


Section 10. Discontinuance of Proceedings. In
case the Mortgagee shall have proceeded to enforce any right, power or remedy
under this Mortgage by foreclosure, entry or


 


17





















 


otherwise, and such proceedings shall have been
discontinued or abandoned for any reason or shall have been determined
adversely to the Mortgagee, then and in every such case the Shipowner and the
Mortgagee shall be restored to its former position and right hereunder with
respect to the property subject or intended to be subject to this Mortgage, and
all rights, remedies and powers of the Mortgagee shall continue as if no such
proceedings had been taken.


 


Section 11. Application of Proceeds. After an
event of default hereunder shall have occurred and be continuing, the proceeds
of any sale of the Vessel and any and all other moneys received by the
Mortgagee pursuant to or under the terms of this Mortgage or in any proceedings
hereunder, the application of which has not elsewhere herein been specifically
provided for, shall be applied as follows:


 


First:
To the payment of all costs and expenses (together with interest thereon as set
forth in Section 14 of Article II) of the Mortgagee, including the
reasonable compensation of its agents and attorneys, by reason of any sale,
retaking, management or operation of the Vessel and all other sums payable to
the Mortgagee hereunder by reason of any expenses or liabilities incurred or
advances made by it for the protection, maintenance and enforcement of the
security or of any of its rights hereunder, under the Credit Agreement, the
Subsidiaries Guaranty and under the other Credit Documents or in the pursuit of
any remedy hereby or thereby conferred; and at the option of the Mortgagee to
the payment of any taxes, assessments or liens claiming priority over the lien of
this Mortgage; and


 


Second:
To the Pledgee (as defined in the Pledge Agreement) for its distribution in
accordance with the provisions of Section 9 of the Pledge Agreement; and


 


Third:
To the Shipowner or as may be directed by a court of competent jurisdiction.


 


Section 12. Possession Until Default. Until one
or more of the events of default hereinafter described shall happen, the
Shipowner (a) shall be suffered and permitted to retain actual possession
and use of the Vessel and (b) shall have the right, from time to time, in
its discretion, and without application to the Mortgagee, and without obtaining
a release thereof by the Mortgagee, to dispose of, free from the lien hereof,
any boilers, engines, machinery, masts, spars, sails, rigging, boats, anchors,
chains, tackle, apparel, furniture, fittings or equipment or any other
appurtenances of the Vessel that are no longer useful, necessary, profitable or
advantageous in the operation of the Vessel, first or simultaneously replacing
the same by new boilers, engines, machinery, masts, spars, sails, rigging,
boats, anchors, chains, tackle, apparel, furniture, fittings, equipment, or
other appurtenances of substantially equal value to the Shipowner, which shall
forthwith become subject to the lien of this Mortgage as a first priority
mortgage thereon.


 


Section 13. Severability of Provisions, etc. (a) If
any provision of this Mortgage should be deemed invalid or shall be deemed to
affect adversely the preferred status of this Mortgage under any applicable
law, such provision shall be void and of no effect and shall cease to be a part
of this Mortgage without affecting the remaining provisions, which shall remain
in full force and effect.


 


(b) In the event
that the Subsidiaries Guaranty, this Mortgage, any of the other Credit
Documents or any of the documents or instruments which may from time to time be
delivered thereunder or hereunder or any provision thereof or hereof shall be
deemed invalidated by present or future law of any nation or by decision of any
court, this shall not affect the validity and/or


 


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enforceability of all or any other parts of the
Subsidiaries Guaranty, this Mortgage, any of the other Credit Documents or such
documents or instruments and, in any such case, the Shipowner covenants and
agrees that, on demand, it will execute and deliver such other and further
agreements and/or documents and/or instruments and do such things as the
Mortgagee in its sole discretion may reasonably deem to be necessary to carry
out the true intent of this Mortgage, the Subsidiaries Guaranty and the other
Credit Documents.


 


(c) In the event
that the title, or ownership of the Vessel shall be requisitioned, purchased or
taken by any government of any country or any department, agency or
representative thereof, pursuant to any present or future law, proclamation,
decree order or otherwise, the lien of this Mortgage shall be deemed to attach
to the claim for compensation therefor, and the compensation, purchase or other
taking of such title or ownership is hereby agreed to be payable to the
Mortgagee who shall be entitled to receive the same and shall apply it as
provided in Section 11 of this Article III. In the event of any such requisition,
purchase or taking, and the failure of the Mortgagee to receive proceeds as
herein provided, the Shipowner shall promptly execute and deliver to the
Mortgagee such documents, if any, as in the opinion of the Mortgagee may be necessary
or useful to facilitate or expedite the collection by the Mortgagee of such
part of the compensation, purchase price, reimbursement or award as is payable
to it hereunder.


 


(d) Anything herein
to the contrary notwithstanding, it is intended that nothing herein shall waive
the priority status of this Mortgage, and if any provision of this Mortgage or
portion thereof shall be construed to waive the priority status of this
Mortgage, then such provision to such extent shall be void and of no effect.


 


ARTICLE IV


 


Sundry
Provisions


 


Section 1. Successors and Assigns. All of the
covenants, promises, stipulations and agreements of the Shipowner in this
Mortgage contained shall bind the Shipowner and its successors and shall inure
to the benefit of the Mortgagee and its successors and assigns. In the event of
any assignment or transfer of this Mortgage, the term “Mortgagee”, as used in
this Mortgage, shall be deemed to mean any such assignee or transferee.


 


Section 2. Power of Substitution. Wherever and
whenever herein any right, power or authority is granted or given to the
Mortgagee, such right, power or authority may be exercised in all cases by the
Mortgagee or such agent or agents as it may appoint, and the act or acts of
such agent or agents when taken shall constitute the act of the Mortgagee
hereunder.


 


Section 3. Counterparts. This Mortgage may be
executed in any number of counterparts, each of which shall be an original, but
such counterparts shall together constitute but one and the same instrument. 


 


Section 4. Notices. Except as otherwise expressly
provided herein, all notices and other communications provided for hereunder
shall be in writing (including telexed, telegraphic, telex, telecopier or cable
communication) and mailed, telexed, telecopied, cabled or delivered, if to


 


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the Shipowner or to the Mortgagee, at its address as
specified below, or at such other address as shall be designated by such party
in a written notice to the other party:


 


If to the Shipowner,
addressed to it in care of:


 


General Maritime
Corporation


299 Park Avenue


New York, NY 10171-0002


Telephone: (212) 763-5600


Facsimile: (212) 763-5602


 


If to the Mortgagee,
addressed to it:


 


Nordea Bank Finland PLC,
New York Branch


437 Madison Avenue, 21st
Floor


New York, NY 10022


Attention:  Mr. Hans Chr. Kjelsrud


Facsimile: (212) 421
4420


 


All such notices and communications shall, (i) when
mailed, be effective three Business Days after being deposited in the mails,
prepaid and properly addressed for delivery, (ii) when sent by overnight
courier, be effective one Business Day after delivery to the overnight courier
prepaid and properly addressed for delivery on such next Business Day, or (iii) when
sent by telex or telecopier, 


be effective when sent by telex or telecopier, except
that notices and communications to the Mortgagee shall not be effective until
received by the Mortgagee.


 


Section 5. Recording: Clause. For purposes of
recording this First Preferred Mortgage as required by Chapter 3 of the
Republic of the Marshall Islands Maritime Act of 1990, as amended, the total
amount of the direct and contingent obligations secured by this Mortgage is
Eight Hundred Fifty Million United States Dollars (U.S. $850,000,000), and
interest and performance of mortgage covenants. The maturity date is on demand.
There is no separate discharge amount.


 


Section 6. Further Assurances. The Shipowner shall
execute and do all such assurances, acts and things as the Mortgagee, or any
receiver in its absolute discretion may require for:


 


(a) perfecting
or protecting the security created (or intended to be created) by this
Mortgage; or


 


(b) preserving
or protecting any of the rights of the Mortgagee under this Mortgage (or any of
them); or


 


(c) ensuring
that the security constituted by this Mortgage and the covenants and
obligations of the Shipowner under this Mortgage shall enure to the benefit of
assignees of the Mortgagee (or any of them); or


 


(d) facilitating
the appropriation or realization of the Vessel or any part thereof and
enforcing the security constituted by this Mortgage on or at any time after the
same shall have become enforceable; or


 


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(e) the
exercise of any power, authority or discretion vested in the Mortgagee under
this Mortgage,


 


in any
such case, forthwith upon demand by the Mortgagee and at the expense of the
Shipowner. Without limitation of the foregoing, in connection with any Interest
Rate Protection Agreements or Other Hedging Agreements entered into from time
to time, the Shipowner shall, at its expense, enter into, deliver and cause to
be recorded such amendments and supplements to this Mortgage, and such other
instruments and legal opinions, as the Mortgagee may reasonably request.


 


Section 7. Governing Law. The provisions of this
Mortgage shall, with respect to its validity, effect, recordation and
enforcement, be governed by and construed in accordance with the applicable
laws of the Republic of the Marshall Islands.


 


Section 8. Additional Rights of the Mortgagee. In
the event the Mortgagee shall be entitled to exercise any of its remedies under
Article III hereof, the Mortgagee shall have the right to arrest and take
action against the Vessel at whatever place the Vessel shall be found lying and
for the purpose of any action which the Mortgagee may bring before the Courts
of such jurisdiction or other judicial authority and for the purpose of any
action which the Mortgagee may bring against the Vessel, any writ, notice,
judgment or other legal process or documents may (without prejudice to any
other method of service under applicable law) be served upon the Master of the
Vessel (or upon anyone acting as the Master) and such service shall be deemed
good service on the Shipowner for all purposes.


 


IN WITNESS WHEREOF, the Shipowner has caused this
First Preferred Mortgage over the [VESSEL NAME] to be duly executed by its
authorized representative the day and year first above written.


 


	
   

  	
  [NAME OF SHIPOWNER]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  



 


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ACKNOWLEDGMENT


 


	
  STATE OF NEW YORK

  	
  )

  
	
   

  	
  :

  	
  SS:

  
	
  COUNTY OF NEW YORK

  	
  )

  



 


On this [   ] day of [DATE], before me
personally appeared [NAME], known to me to be the person who executed the
foregoing instrument, who, being by me duly sworn did depose and say that he
resides at                                  ,
New York, NY; that he is [TITLE] of [SHIPOWNER], the Marshall Islands limited
liability company described in and which executed the foregoing instrument;
that he signed his name pursuant to authority granted to him by [SHIPOWNER];
and that he further acknowledged that said instrument is the act and deed of
[SHIPOWNER].


 


 


	
   

  	
   

  	
   

  
	
   

  	
  Notary Public

  



 


[FOR
USE IN THE REPUBLIC OF THE MARSHALL ISLANDS]


 


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