Document:

Exhibit 10.6

 

EXHIBIT J-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 July 1,
2004 (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 Twenty-Five Million
United States Dollars (U.S. $825,000,000) (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 advanced the
Term Loans pursuant to the Credit Agreement and have committed to make the
Revolving 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.

 

2

 

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 mortgage 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 or (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 the then outstanding aggregate
principal amount of the Term Loans and the Total Revolving Loan Commitment
whether used or unused.

 

(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 the then outstanding aggregate
principal amount of the Term Loans and the Total Revolving Loan Commitment
whether used or unused; all such mortgagee’s interest insurance cover shall in
the

 

9

 

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

 

18

 

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 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:

 

19

 

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

 

General Maritime Corporation

35 West 56th Street

New York, NY 10019

Telephone: (212) 763-5600

Facsimile: (212) 763-5603

 

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 Seventy-Five Million United States Dollars (U.S.
$875,000,000), 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

 

20

 

(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.

 

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

 

21

 

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:

  

 

22

 

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]

 

23Exhibit 10.7

 

EXHIBIT J-2

TO THE CREDIT AGREEMENT

 

FORM OF

FIRST PREFERRED SHIP MORTGAGE

 

 

ON LIBERIAN 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
  2.

  	
  Power
  of Sale

  	
   

  
	
  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 Liberian 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 Liberian 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
Monrovia, Liberia.

 

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 July 1, 2004 (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 Twenty-Five Million United States Dollars (U.S. $825,000,000) (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 advanced the
Term Loans pursuant to the Credit Agreement and have committed to make the
Revolving 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 and pursuant to
Title 21 of the Liberian Code of Laws of 1956, 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.

 

The Shipowner, for itself, its successors and assigns, hereby
covenants, declares and agrees

 

2

 

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 Liberia
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 Liberia 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 Liberian 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 of Liberia, in accordance with the provisions of
Chapter 3 of Title 21 of the Liberian Code of Laws of

 

3

 

1956, as amended, and will
otherwise comply with and satisfy all of the provisions of applicable laws of
the Republic of Liberia 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
Liberia 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 TITLE 21 OF THE LIBERIAN CODE OF LAWS OF
1956, 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 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.

 

4

 

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 fortyeight (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 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

 

5

 

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 Liberia 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.

 

(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.

 

6

 

(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;

 

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

 

7

 

(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 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.

 

8

 

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 or (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 the then outstanding aggregate principal amount of the Term
Loans and the Total Revolving Loan Commitment whether used or unused.

 

(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 the then outstanding aggregate principal amount of the Term
Loans and the Total Revolving Loan Commitment whether used or unused; 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.

 

9

 

(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:

 

(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

 

10

 

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;

 

(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

 

11

 

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, 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

 

12

 

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

 

(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

 

13

 

(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 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

 

14

 

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 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.

 

15

 

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 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

 

16

 

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
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

 

17

 

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 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

 

18

 

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 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

35 West 56th Street

New York, NY 10019

Telephone: (212) 763-5600

Facsimile: (212) 763-5603

 

19

 

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 Title 21 of the Liberian Code of
Laws of 1956, as amended, the total amount of this Mortgage is Eight Hundred
Seventy Five Million United States Dollars (U.S. $875,000,000), 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

 

(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.

 

20

 

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 Liberia.

 

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.

 

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

 

21

 

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:

  

 

22

 

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 Liberian 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 LIBERIA]

 

23

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