Document:

Mortgage dated October 24, 2005

 

Exhibit 4.22

FIRST PREFERRED MORTGAGE

by

ADVENTURE TWO S.A.

as mortgagor

in favour of

HOLLANDSCHE BANK-UNIE N.V.

as mortgagee

DATED 24 OCTOBER 2005

relating to

m.v. “FREE DESTINY”

NAUTADUTILH N.V.

ROTTERDAM

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	Clause	 	Heading	 	Page	 
	 
	1.

	 	Interpretation
	 	2	 
	2.

	 	Representations and warranties
	 	7	 
	3.

	 	Payment covenants
	 	8	 
	4.

	 	Charging Clause
	 	9	 
	5.

	 	Continuing security and other provisions
	 	9	 
	6.

	 	Covenants
	 	 10	 
	7.

	 	Powers of Mortgagee to protect security and remedy defaults
	 	21	 
	8.

	 	Events of Default
	 	22	 
	9.

	 	Enforceability and Mortgagee’s powers
	 	26	 
	 10.

	 	Application of Moneys
	 	28	 
	 11.

	 	Omissions or Delay
	 	28	 
	 12.

	 	Delegation of Powers
	 	28	 
	 13.

	 	Indemnity
	 	29	 
	 14.

	 	Power of Attorney
	 	29	 
	 15.

	 	Further Assurance
	 	30	 
	 16.

	 	Discharge amount; maturity date
	 	30	 
	 17.

	 	Partial Invalidity
	 	30	 
	 18.

	 	Notices
	 	30	 
	 19.

	 	Law and jurisdiction
	 	31	 

 

 

  1

THIS FIRST PREFERRED MORTGAGE is made the 24th day of October 2005

BY:

ADVENTURE TWO S.A., a company incorporated and existing under the laws of the Marshall Islands,
having its registered office at Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960
(the “Mortgagor”)

IN FAVOUR OF:

HOLLANDSCHE BANK-UNIE N.V., a company incorporated and existing under the laws of the Netherlands,
having its corporate seat at Amsterdam, the Netherlands, acting herein through its branch office at
Coolsingel 104, 3011 AG Rotterdam, the Netherlands (the “Mortgagee”);

WHEREAS:

	(1)	 	the Mortgagor is the sole, absolute, legal and beneficial owner of the vessel described and
defined in clause 1.1;
	 
	(2)	 	by, and subject to and upon the terms and conditions of (i) a credit agreement signed by the
Mortgagee on the 23rd day of September 2005 and signed by the Mortgagor on the 26th day of
September 2005 and in which Adventure Three S.A. assumed joint and several liability towards
the Mortgagee for all sums which Mortgagor will owe to the Mortgagee under the credit
agreement from time to time and (ii) a short-term loan agreement dated the 26th day of
September 2005 and made between the Mortgagor and the Mortgagee (as each of the same may be
amended, supplemented or varied from time to time together with the therein referred to HBU
General Credit Provisions dated January 1999 collectively the “Financial Agreement”,
copies of which are annexed hereto as Exhibit A, B and C respectively), the Mortgagee agreed
to make available to the Mortgagor by way of an overdraft facility the amount of USD
3,700,000.00 (three million seven hundred thousand United States Dollars) (the
“Loan”);
	 
	(3)	 	it is a condition of the Financial Agreement that the Mortgagor shall execute in favour of
the Mortgagee a first preferred mortgage over the Vessel (as hereinafter defined) for securing
the Outstanding Indebtedness (as hereinafter defined) in the form herein set out;
	 
	(4)	 	the Mortgagor in order to secure the repayment of the Loan and the payment of interest
thereon and all other sums of moneys from time to time owing to

 

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	 	 	the Mortgagee under the Financial Agreement and the performance and observance of and
compliance with by the Mortgagor of all the covenants, terms and conditions contained in
the Financial Agreement and this Mortgage, has duly authorized the execution and delivery
of this First Preferred Mortgage under and pursuant to Chapter 3 of the Maritime Act, 1990
of the Republic of the Marshall Islands (as amended) which is executed by the Mortgagor in
consideration of the Mortgagee making available the Loan.

NOW THIS MORTGAGE PROVIDES as follows:

	1.	 	 Interpretation
	 
	1.1	 	In this Mortgage unless the context otherwise requires:
	 
	 	 	“Business Day” means a day on which the banks are open for business in Amsterdam,
London and New York (whichever is applicable) for all kinds of business as contemplated
herein and/or the Financial Agreement;
	 
	 	 	“DOC” means a document of compliance issued to an Operator in accordance with the
ISM Code;
	 
	 	 	“Dollars” and “USD” means the lawful currency of the United States of
America;
	 
	 	 	“Earnings” means all moneys whatsoever from time to time due or payable actually
or contingently to the Mortgagor arising out of the use or operation of the Vessel,
including without limitation all freight, hire and passage moneys, moneys arising under
any contract or other agreement or arrangement with any operator, income arising under
pooling arrangements, compensation payable to the Mortgagor as a result of, or otherwise
in connection with, the requisition of the Vessel for hire, remuneration for salvage and
towage services, demurrage and detention moneys, and all damages for breach, and all
payments for, or otherwise in connection with any variation or termination of any
charterparty, contract or other agreement or arrangement in respect of, or otherwise in
connection with the employment of the Vessel;
	 
	 	 	“Environmental Claim” means:

	 	(a)	 	any and all enforcement, clean-up, removal or other governmental, judicial
or regulatory action or order or claim instituted or made pursuant to any
Environmental Law or resulting from a Spill ; or

 

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	 	(b)	 	any claim made by any other party howsoever relating to a Spill;

	 	 	“Environmental Incident” means any Spill:

	 	(a)	 	from the Vessel;
	 
	 	(b)	 	from a vessel other than the Vessel in circumstances where:

	 	(i)	 	the Vessel or the Mortgagor, the Operator or the Manager
may be liable for Environmental Claims arising from the Spill (other than
the Environmental Claims arising and fully satisfied before the date of this
Mortgage); and/or
	 
	 	(ii)	 	the Vessel may be arrested or attached in connection with
any Environmental Claim arising from such Spill;

	 	 	“Environmental Law” means any and all national and international and state laws,
rules, regulations, treaties, conventions and agreements whatsoever relating to the
pollution or protection of human health or environment (including, without limitation the
United States Oil Pollution Act of 1990 and any comparable laws of the individual States
of the United States of America);
	 
	 	 	“Environmentally Sensitive Material” means pollutions, contaminants, toxic
substances, oil and its products and all hazardous substances and any other substance
whose release into the environment is regulated, prohibited or penalised by or pursuant to
any Environmental Law;
	 
	 	 	“Event of Default” means any one of the events of default specified and referred
to in the Financial Agreement and/or clause 8;
	 
	 	 	“Financial Agreement” has the meaning given in recital (2) hereto;
	 
	 	 	“Insurances” means all policies and contracts of insurance, including without
limitation all entries of the Vessel in a protection and indemnity or war risks
association which are from time to time in place or taken out or entered into by or for
the benefit of the Mortgagor in respect of, or otherwise in connection with, the Vessel
and/or her Earnings or any part thereof and all the benefits thereof, including without
limitation all claims of whatsoever nature and all return of premiums;
	 
	 	 	“ISM Code” means the International Safety Management Code for the Safe Operation
of Ships and for Pollution Prevention (as amended, including any

 

4

	 	 	regulation issued thereunder), as adopted by the Assembly of the International Maritime
Organisation on 4 November 1993 by resolution A.741 (18) and incorporated on 19 May 1994
as chapter IX of the Safety of Life at Sea Convention 1974;
	 
	 	 	“Loan” has the meaning given in recital (2) hereto;
	 
	 	 	“Major Casualty Amount” means USD 100,000.00 (one hundred thousand United States
Dollars) or the equivalent thereof in any other currency;
	 
	 	 	“Manager” means such manager of the Vessel as approved by the Mortgagee in
writing;
	 
	 	 	“Material Adverse Change” means (a) any material adverse change in the business,
assets, condition (financial or otherwise), operations, performance or prospects of any of
the Security Parties, (b) any material adverse effect on the ability of any of the
Security Parties to perform any of its obligations under any of the Security Documents to
which it is a party or (c) any material adverse effect on the validity, binding nature, or
enforceability of any of the Security Documents;
	 
	 	 	“Operator” means any entity who is at any time during the Security Period
concerned in the operation of the Vessel and falls within the definition of “Company” set
out in the ISM Code;
	 
	 	 	“Outstanding Indebtedness” means (a) the aggregate of all sums of money actual or
contingent, present or future due by the Mortgagor to the Mortgagee under or in
connection with the Security Documents or any of them and (b) all costs and expenses
incurred in connection with the Security Documents, including any taxes payable by
the Mortgagee (other than on net profit), as well as any reasonable costs and
expenses incurred by the Mortgagee in connection with the Mortgagor’s failure to
comply with or fulfil any obligation under the Security Documents at the time and in
the manner required, including collection charges, disbursements, fees of legal
consultants and other experts and costs of proceedings, irrespective against whom
brought;
	 
	 	 	“Pollutant” means and includes oil and its products, any other polluting, toxic or
hazardous substance and any other substance whose release into the environment is
regulated or penalised by Environmental Laws;
	 
	 	 	“Requisition Compensation” means all moneys or other compensation payable by
reason of requisition for title or other compulsory acquisition of the Vessel

 

5

	 	 	otherwise than by requisition for hire;
	 
	 	 	“Security Documents” means the Financial Agreement, this Mortgage and any other
such document as may be executed from time to time to secure and/or regulate the
Outstanding Indebtedness;
	 
	 	 	“Security Interest” means a mortgage, charge (whether fixed or floating), pledge,
lien, hypothecation, assignment or other security interest or arrangement of any kind
whatsoever;
	 
	 	 	“Security Parties” means the Mortgagor and Adventure Three S.A. of Majuro,
Marshall Islands;
	 
	 	 	“Security Period” means the period commencing on the date of this Mortgage and
terminating on the date upon which all moneys payable or to become payable from time to
time pursuant to the terms of the Financial Agreement, this Mortgage and/or any of the
other Security Documents shall have been paid and discharged in full;
	 
	 	 	“SMC” means a safety management certificate issued in respect of the Vessel in
accordance with the ISM Code;
	 
	 	 	“Spill” means any actual or threatened emission, spill, release or discharge of a
Pollutant into the environment;
	 
	 	 	“Total Loss” means:

	 	(a)	 	actual or constructive or compromised or arranged total loss of the Vessel;
	 
	 	(b)	 	requisition for title or other compulsory acquisition of the Vessel
otherwise than by requisition for hire;
	 
	 	(c)	 	capture seizure arrest detention or confiscation of the Vessel by any
government or entity or individual acting or purporting to act on behalf of any
government unless the Vessel be released and restored to the Mortgagor from such
capture seizure arrest detention or confiscation within thirty (30) days after the
occurrence thereof;

	 	 	“Vessel” means the Marshall Islands flag vessel “FREE DESTINY” with Official
Number [...], gross tonnage approximately [...], net tonnage approximately [...], built in
[...] at [...], by [...] and includes her engines,

 

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	 	 	machinery, boats, tackle, outfit, equipment, spare gear, fuel, consumable or other stores,
belongings and appurtenances whether on board or ashore and whether now owned or hereafter
required.
	 
	1.2	 	In clause 6.1:
	 
	 	 	“excess risks” means the proportion (if any) of claims for general average and
salvage charges and under the Institute Collision Clause not recoverable in consequence of
the value at which a vessel is assessed for the purpose of such claims exceeding her
insured value;
	 
	 	 	“protection and indemnity risks” means the usual risks (including pollution and a
Freight Demurrage and Defence cover) covered by a protection and indemnity association
including the proportion (if any) not recoverable in case of collision under the Institute
Collision Clause;
	 
	 	 	“war risks” includes the risks of mines and all risks excluded from the standard
form of English marine policy by the Institute War Exclusion Clause.
	 
	1.3	 	This Mortgage shall be read together with the Financial Agreement, but in the case of
conflict between the two instruments the provisions of the Financial Agreement shall prevail
in as far as it does not contravene the laws of the Marshall Islands.
	 
	1.4	 	In this Mortgage:

	 	(a)	 	clause headings are inserted for convenience of reference only and shall be
ignored in the interpretation of this Mortgage;
	 
	 	(b)	 	unless the context otherwise requires, words denoting the singular number
shall include the plural and vice versa;
	 
	 	(c)	 	references to clauses and schedules shall be construed as references to
clauses of and schedules to this Mortgage;
	 
	 	(d)	 	an “entity” shall be construed to include any firm, company, association,
partnership (whether or not having separate legal personality), institution,
government (local, national or supra-national), state, agency or sub division thereof
or international organisation;
	 
	 	(e)	 	reference to any document including this Mortgage shall be construed

 

7

	 	 	 	as reference to such document as amended supplemented or varied from time to
time;
	 
	 	(f)	 	words and expressions defined in the Financial Agreement shall, unless it
is stated otherwise herein, have the same meaning when used in this Mortgage; and
	 
	 	(g)	 	the Mortgagee, the Mortgagor, the Security Parties and any other entity or
individual shall include their respective successors in title, estates and, in the
event of an assignment permitted under this Mortgage, assignees.

	2.	 	 Representations and warranties
	 
	2.1	 	The Mortgagor hereby represents and warrants to the Mortgagee that:

	 	(a)	 	Entitlement to grant Mortgage
	 
	 	 	 	it is fully entitled to grant this Mortgage and further to agree and perform the
terms and conditions hereof and that such granting and performance will not
cause the Mortgagor to be in breach of any agreement to which it is a party;
	 
	 	(b)	 	Ownership of Vessel
	 
	 	 	 	it is the sole, absolute, legal and beneficial owner of the Vessel;
	 
	 	(c)	 	Charter and sharing Earnings
	 
	 	 	 	the Vessel is not subject to any charter which, if entered into after the date of
this Mortgage, would have required the consent of the Mortgagee under clause
6.1(k) and there is no existing agreement or arrangement whereby the Earnings
may be shared with any other entity or individual;
	 
	 	(d)	 	Security Interest
	 
	 	 	 	the Vessel is not subject to any Security Interest (save as constituted by the
Security Documents or otherwise permitted by the terms thereof); and

 

8

	 	(e)	 	DOC and SMC
	 
	 	 	 	the Operator has obtained and maintains a DOC (a true copy of which has been
delivered to the Mortgagee) and has obtained and maintains a SMC (a true copy of
which has been delivered to the Mortgagee) in respect of the Vessel, both are in
full force and effect and nothing has happened which might cause either to be
withdrawn, suspended, cancelled or modified.

	2.2	 	The Mortgagor hereby further represents and warrants to the Mortgagee that:

	 	(a)	 	all applicable Environmental Laws and Environmental Approvals relating to
the Vessel, its operation and management and the business of the Mortgagor (as now
conducted and as reasonably anticipated to be conducted in the future) have been
complied with;
	 
	 	(b)	 	no Environmental Claim has been made or threatened or is pending against
the Mortgagor, the Manager or otherwise in connection with the Vessel and not fully
satisfied; and
	 
	 	(c)	 	no Environmental Incident has occurred.

	3.	 	 Payment covenants
	 
	 	 	The Mortgagor hereby covenants duly to observe and perform all its obligations under the
Financial Agreement in accordance with the terms and conditions thereof and in particular:

	 	(a)	 	to repay the Loan by the instalments and on the dates referred to and
otherwise in the manner and upon the terms set out in the Financial Agreement;
	 
	 	(b)	 	to pay interest on the Loan and on other moneys payable under the Financial
Agreement at the rate or rates from time to time applicable thereto in the manner and
upon the terms set out in the Financial Agreement;
	 
	 	(c)	 	to pay all other moneys payable by the Mortgagor under or in connection
with the Security Documents or any of them at the times and in the manner therein
specified.

 

9

	4.	 	 Charging Clause
	 
	4.1	 	In pursuance of the Financial Agreement and in consideration of the premises and by way of
security for payment of the Outstanding Indebtedness and the performance of the obligations
under the Financial Agreement, this Mortgage and the other Security Documents by the
Mortgagor, the Mortgagor with full title guarantee hereby mortgages and charges
and agrees to mortgage and charge to and in favour of the Mortgagee all its right, title
and interest (present and future) to and in the Vessel TO HAVE AND HOLD the same unto and in
favour of the Mortgagee forever upon the terms set forth in this Mortgage to secure the
Outstanding Indebtedness and further to secure the performance and observance of and the
compliance with the covenants, terms and conditions in the Financial Agreement, this Mortgage
and the other Security Documents contained.
	 
	4.2	 	Notwithstanding anything to the contrary in this Mortgage it is not intended that any
provision of this Mortgage shall waive the preferred status of this Mortgage and that if any
provision or part thereof in this Mortgage shall be construed as waiving the preferred status
of this Mortgage, then such provisions shall to such extent be void and of no effect.
	 
	4.3	 	The Mortgagor shall remain liable to perform all the obligations assumed by it in relation to
the Vessel and the Mortgagee shall not be under any obligation of any kind whatsoever in
respect thereof or be under any liability whatsoever in event of any failure by the Mortgagor
to perform its obligations in respect thereof.
	 
	5.	 	 Continuing security and other provisions
	 
	 	 	It is declared and agreed that:

	 	(a)	 	the security created by this Mortgage and the other Security Documents
shall be held by the Mortgagee as a continuing security for the payment of the
Outstanding Indebtedness and the performance and observance of and compliance with
all obligations of the Mortgagor under the Security Documents or any of them, express
or implied;
	 
	 	(b)	 	the security so created shall not be satisfied by any intermediate payment
or satisfaction of any part of the Outstanding Indebtedness and shall be in addition
to and shall not in any way prejudice or affect and may be enforced by the Mortgagee
without prior recourse to the

 

10

	 	 	 	security created by any other of the Security Documents or by any other security
now or hereafter held by the Mortgagee and shall not in any way be prejudiced or
affected thereby or by the invalidity or unenforceability thereof or by the
Mortgagee releasing, modifying or refraining from perfecting or enforcing any of
the same or granting time or indulgence or compounding with any liable entity or
individual;
	 
	 	(c)	 	all the rights, remedies and powers vested in the Mortgagee under this
Mortgage shall be in addition to and not a limitation of any and every other right,
power or remedy vested in the Mortgagee under any other of the Security Documents or
at law (whether Marshall Islands or otherwise) and that all the powers so vested in
the Mortgagee may be exercised from time to time and as often as the Mortgagee may
deem expedient; and
	 
	 	(d)	 	the Mortgagee shall not be obliged to make any enquiry as to the nature or
sufficiency of any payment received by it under this Mortgage or to make any claim or
to take any action or to enforce any rights and benefits hereby assigned to the
Mortgagee or to which the Mortgagee may at any time be entitled under this Mortgage.

	6.	 	 Covenants
	 
	6.1	 	The Mortgagor further covenants with the Mortgagee throughout the Security Period:

	 	(a)	 	Insurance

	 	(i)	 	Type of insurances
	 
	 	 	 	to insure and keep the Vessel insured at the expense of the Mortgagor
against:

	 	(A)	 	fire and usual marine risks (including excess risks);
	 
	 	(B)	 	war risks;
	 
	 	(C)	 	protection and indemnity risks
(including pollution risks and a freight demurrage and defence
cover);
	 
	 	(D)	 	where the Vessel shall, at any time
enter waters under

 

11

	 	 	 	the jurisdiction of the United States of America and/or the
Exclusive Economic Zone (as defined in the United States Oil
Pollution Act of 1990) and oil pollution liability risks in
excess of the cover for oil pollution liability risks included
within the cover for protection and indemnity risks;

	 	 	 	and, at the option of the Mortgagee, either (i) to effect and keep
effected, in the name and for the benefit of the Mortgagee, but at the
expense of the Mortgagor or (ii) to reimburse the Mortgagee on demand
for any and all costs incurred by it in effecting and maintaining such
insurance in relation to the Vessel:

	 	(E)	 	a mortgagee’s interest insurance; and
	 
	 	(F)	 	(where the Vessel shall, at any time
enter waters under the jurisdiction of the United States of America
and/or the Exclusive Economic Zone (as defined in the United States
Oil Pollution Act of 1990)) an insurance against the possible
consequences of pollution due to, without limitation, oil or any
other substance involving the Vessel including, without limitation,
the risk of expropriation or sequestration of the Vessel or the
imposition of any Security Interest having priority over the
Mortgage (“Mortgagee’s Interest Insurance — Additional Perils
(Pollution)”);

	 	(ii)	 	Currency and amounts
	 
	 	 	 	to effect and keep effected the Insurances
(if not effected by the Mortgagee) in such amounts and in such
currency and upon such terms and through such brokers (hereinafter
called the “approved brokers”) and with such insurance
companies, underwriters, war risks and protection and indemnity
associations (hereinafter called the “approved
associations”) as shall from time to time be approved in
writing by the Mortgagee PROVIDED HOWEVER that the insurances
against war risks and protection and indemnity risks may be
effected by the entry of the Vessel with such war risks and
protection and indemnity risks associations as shall from time to
time be approved in writing by the Mortgagee and if so

 

12

	 	 	 	required by the Mortgagee (but without, as between the Mortgagor and the
Mortgagee, liability on the part of the Mortgagee for premiums or calls)
with the Mortgagee named as co-assured;
	 
	 	(iii)	 	Fleet cover
	 
	 	 	 	if any of the Insurances forms part of a
fleet cover, to procure that the approved brokers and (as the case
may be) the approved associations shall undertake to the Mortgagee
that they shall neither set off against any claims in respect of
the Vessel any premiums due in respect of other vessels under such
fleet cover or any premiums due for other insurances, nor cancel
such insurance in respect of the Vessel for reason of non-payment
of premiums for other vessels under such fleet cover or of premiums
for such other insurances and shall undertake to issue a separate
policy in respect of the Vessel if and when so requested by the
Mortgagee;
	 
	 	(iv)	 	Renewals
	 
	 	 	 	at least fourteen (14) days before the relevant policies, contracts or
entries expire, to notify the Mortgagee in writing of the names of the
brokers and/or the war risks and protection and indemnity risks
associations proposed to be employed by the Mortgagor for the purposes
of the renewal of such insurances (subject to the Mortgagee’s approval
of such brokers and/or associations) and of the amounts in which such
insurances are proposed to be renewed and the risks to be covered and,
(subject to compliance with any requirements of the Mortgagee pursuant
to this clause 6.1(a)), to renew (or procure the renewal of)
such Insurances at least ten (10) days before the relevant policies,
contracts or entries expire and to procure that such brokers and (as the
case may be) such associations will at least seven (7) days before such
expiry confirm such renewals in writing to the Mortgagee;
	 
	 	(v)	 	Payments
	 
	 	 	 	punctually to pay all premiums, calls, contributions or other sums
payable in respect of the Insurances and to produce all relevant
receipts or other evidence if and when so required by

 

13

	 	 	 	the Mortgagee;
	 
	 	(vi)	 	Guarantees, indemnities
	 
	 	 	 	to arrange for the execution of such guarantees or indemnities as may
from time to time be required by or in connection with any protection
and indemnity or war risks association or required by or in connection
with a usual marine risks policy (including excess risks and war risks);
	 
	 	(vii)	 	Loss payable clause, notice of assignment
	 
	 	 	 	to procure that the interest of the Mortgagee shall be duly
endorsed upon all slips, cover notes, policies, certificates of entry or
other instruments of insurance issued or to be issued in connection with
the Insurances by means of a loss payable and notice of cancellation
clause and a notice of assignment (signed by the Mortgagor) in such
forms as from time to time required by the Mortgagee;
	 
	 	(viii)	 	Instruments of insurance
	 
	 	 	 	to procure that all instruments of the Insurances shall be deposited
with the approved brokers and that such brokers shall (if so required by
the Mortgagee) furnish the Mortgagee with pro forma copies thereof and a
letter or letters of undertaking in such form as may from time to time
be required by the Mortgagee;
	 
	 	(ix)	 	Letter(s) of undertaking
	 
	 	 	 	to procure that the protection and indemnity and/or war risks
associations wherein the Vessel is entered shall (if so required by the
Mortgagee) furnish the Mortgagee with a letter or letters of undertaking
in such form as may from time to time be required by the Mortgagee;
	 
	 	(x)	 	Use of the Vessel
	 
	 	 	 	not to employ the Vessel or suffer the Vessel to be employed otherwise
than in conformity with the terms of the instruments of the Insurances
(including any warranties express or implied

 

14

	 	 	 	therein)without first obtaining the consent to such employment of the
insurers and complying with such requirements as to extra premium or
otherwise as the insurers may prescribe;
	 
	 	(xi)	 	Reimbursement
	 
	 	 	 	to reimburse to the Mortgagee on demand any costs or expenses incurred
by the Mortgagee in obtaining (if and when so required by the Mortgagee)
reports from an independent marine insurance broker appointed by the
Mortgagee as to the adequacy of the insurances effected or proposed to
be effected pursuant to this clause 6 and procure that there is
delivered to such broker any and all such information in relation to
such insurances as such broker may require;
	 
	 	(xii)	 	No consent, acts or omissions
	 
	 	 	 	not to make, do, consent or agree to any act or omission which would or
might render any instrument of insurance invalid, void, voidable or
unenforceable or render any sum paid thereunder repayable in whole or in
part;
	 
	 	(xiii)	 	Co-operation with collecting insurance moneys
	 
	 	 	 	to do all things necessary and provide all documents, evidence and
information to enable the Mortgagee to collect or recover any moneys
which shall at any time become due in respect of the Insurances;
	 
	 	(xiv)	 	Application insurance moneys
	 
	 	 	 	to apply such sums receivable in respect of the Insurances other than in
respect of a Total Loss and any major casualty (that is to say any
casualty the claim in respect of which exceeds the Major Casualty Amount
inclusive of any deductible) which shall be payable to the Mortgagee as
are paid to the Mortgagor for the purpose of making good the loss and
fully repairing all damage in respect whereof the insurance moneys shall
have been received;

 

15

	 	(xv)	 	Voyage declaration
	 
	 	 	 	to make all such quarterly or other voyage declaration as may from time
to time be required by the protection and indemnity risks association to
maintain cover for trading (including, without limitation, trading to
the United States of America and Exclusive Economic Zone (as defined in
the United States Oil Pollution Act 1990))

	 	 	 	PROVIDED ALWAYS THAT the Mortgagee shall be entitled to review the requirements
of this clause 6.1(a) from time to time in order to take account of
significant changes in circumstances after the date of this Mortgage (such
changes in circumstances include, without limitation, changes in the availability
or the cost of insurance coverage). The Mortgagee may notify the Mortgagor in
writing from time to time of any proposed modification to the requirements of
this clause 6.1(a) which it deems appropriate in the circumstances, and
such modification shall take effect on and from the date it is notified in
writing to the Mortgagor as an amendment to this clause 6.1(a) and shall
bind the Mortgagor accordingly;
	 
	 	(b)	 	Name and Registration
	 
	 	 	 	not to change the name of the Vessel and to keep the Vessel registered with full
registration as a Marshall Island ship in the Republic of the Marshall Islands at
the Port of Majuro in the name of the Mortgagor and not do or suffer to be done
anything, or omit to do anything, the doing or omission of which could or might
result in the Vessel being required to be registered otherwise than as a Marshall
Islands ship in the Republic of Marshall Islands at the Port of Majuro and not to
do or suffer to be done anything, or omit to do anything, the doing or omission
of which could or might result in such registration being forfeited, terminated
or imperilled and not to register the Vessel or permit its registration under any
other name, flag or at any other port or with any other numbers without the prior
written consent of the Mortgagee and to procure the renewal of such registration
of the Vessel as a Marshall Islands ship with full registration at least one
month before the same shall expire;
	 
	 	(c)	 	Operator

	 	(i)	 	to comply and to procure that the Operator will comply
with,

 

16

	 	 	 	and ensure that the Vessel and the Operator at all times comply with,
the requirements of the ISM Code;
	 
	 	(ii)	 	immediately to inform and to procure that the Operator
will inform the Mortgagee if there is any threatened or actual withdrawal,
suspension, cancellation or modifaction of its or the Operator’s DOC or the
Vessel’s SMC; and
	 
	 	(iii)	 	promptly to inform and to procure that the Operator will
promptly inform the Mortgagee upon the issue to the Mortgagor or the
Operator of a DOC and to the Vessel of a SMC;

	 	(d)	 	Employment
	 
	 	 	 	not knowingly to employ the Vessel or suffer its employment in any trade or
business which is forbidden by international law or is otherwise illegal or in
carrying illegal or prohibited goods or in any manner whatsoever which may render
the Vessel or its cargo liable to condemnation in a Prize Court or to penalty,
destruction, seizure or confiscation and in the event of any major political
confrontation or hostilities (whether or not war shall have been formally
declared) or during any civil war or insurrection, not to carry or permit to be
carried on or in the Vessel any cargo that is or may be declared contraband of
war or that may render the Vessel or its cargo liable to penalty, destruction,
seizure, or confiscation unless special war risks policies previously approved by
the Mortgagee shall have been effected prior to undertaking any such risk and to
deliver the signed cover notes in respect thereof forthwith to the Mortgagee;
	 
	 	(e)	 	Encumbrances, sale or other disposal

	 	(i)	 	not without the previous consent in writing of the
Mortgagee to create or suffer the creation of any Security Interest on or in
respect of the Vessel to or in favour of any entity or individual other than
the Mortgagee;
	 
	 	(ii)	 	not without the previous consent in writing of the
Mortgagee (and then only subject to such terms as the Mortgagee may impose)
to sell agree to sell transfer or abandon or otherwise dispose of the Vessel
or any share or interest therein;

 

17

	 	(f)	 	Prevention of and release from arrest
	 
	 	 	 	to pay and discharge all debts and liabilities which may give rise to maritime
statutory or possessory liens on the Vessel or to claims enforceable by actions
in rem against the Vessel or similar process so as to keep her free from arrest
or detention and in the event of arrest or detention of the Vessel being
threatened or effected forthwith to notify the Mortgagee thereof and to take all
steps and to make all payments necessary to obtain the release of the Vessel from
such arrest or detention within thirty days from receiving notice thereof;
	 
	 	(g)	 	Repair and Class

	 	(i)	 	to maintain the Vessel in her present class and to comply
with the provisions of all regulations and requirements (statutory or
otherwise) from time to time applicable to the Vessel and to comply with all
class recommendations of its classification society in accordance with their
terms; and
	 
	 	(ii)	 	to keep the Vessel in good and efficient state of repair
and procure that all repairs to or replacement of any damaged, worn or lost
parts or equipment are effected in such manner (both as regards workmanship
and quality of materials) as not to diminish the value of the Vessel;

	 	(h)	 	Surveys
	 
	 	 	 	to submit the Vessel to such periodical or other surveys as may be required for
classification purposes and if so required to supply to the Mortgagee copies of
all survey reports issued in respect thereof;
	 
	 	(i)	 	Inspections
	 
	 	 	 	to permit the Mortgagee to inspect the condition of the Vessel at all reasonable
times and to give the Mortgagee sufficient notice whenever practicable of
dry-dockings, surveys and major repairs so as to enable the Mortgagee’s surveyors
or other entity or individual appointed by it to attend thereat and if so
required to supply to the Mortgagee copies of survey reports on the Vessel;

 

18

	 	(j)	 	Modification, Removal of Parts, Equipment owned by third parties
	 
	 	 	 	not without the prior written consent of the Mortgagee to:

	 	(i)	 	make any modification to the Vessel in consequence of
which her structure, type or performance characteristics could or might
materially be altered or her value materially reduced; or
	 
	 	(ii)	 	remove any material part of the Vessel or any equipment
the value of which is such that its removal from the Vessel would materially
reduce the value of the Vessel without replacing the same with equivalent
parts or equipment owned by the Mortgagor free from encumbrances; or
	 
	 	(iii)	 	install on the Vessel any equipment owned by a third
party which cannot be removed without causing damage to the structure or
fabric of the Vessel and not to permit any of the foregoing by any third
party;

	 	(k)	 	Chartering
	 
	 	 	 	not without the prior written consent of the Mortgagee, which shall not
unreasonably be withheld, to:

	 	(a)	 	let the Vessel on demise charter for any period; or
	 
	 	(b)	 	let the Vessel on time or consecutive voyage charter or
otherwise dispose of the Vessel, except for a time or consecutive voyage
charter agreement for a period which does not exceed or which by virtue of
any optional extensions therein contained is not likely to exceed six (6)
months’ duration; or
	 
	 	(c)	 	charter the Vessel on terms whereby more than three (3)
months’ hire is payable in advance;

	 	(l)	 	Information
	 
	 	 	 	to supply to the Mortgagee on request full information regarding the Vessel, her
employment, position and engagements, particulars of all towages and salvages and
copies of all charters and other contracts concerning the Vessel;

 

19

	 	(m)	 	Notification of certain events
	 
	 	 	 	to notify the Mortgagee forthwith by letter or in case of urgency by telefax of
any accident to the Vessel involving repairs the cost whereof is likely to exceed
the Major Casualty Amount, of any occurrence whereby the Vessel has or is likely
to become a Total Loss, of any actual or threatened arrest, detention, seizure,
confiscation or requisition of the Vessel, of any requirement of insurers,
classification society or any competent authority which is not immediately
carried out and of any petition or notice or meeting to consider any resolution
to dissolve wind-up or liquidate the Mortgagor;
	 
	 	(n)	 	Reimbursement
	 
	 	 	 	to pay to the Mortgagee on demand all moneys whatsoever which the Mortgagee shall
or may expend be put to or become liable for in or about the protection
maintenance or enforcement of the security created by this Mortgage and the other
Security Documents or in or about the exercise by the Mortgagee of any of the
powers vested in it hereunder or thereunder and to pay interest thereon at the
default rate as per the Financial Agreement;
	 
	 	(o)	 	Costs
	 
	 	 	 	to pay on demand to the Mortgagee (or as it may direct) the amount of all
investigation and legal expenses of any kind whatsoever stamp duties (if any)
registration fees and any other charges incurred by the Mortgagee in connection
with the preparation completion registration and discharge of the Security
Documents or otherwise in connection with the Outstanding Indebtedness and the
security therefor and to pay interest thereon at the default rate as per the
Financial Agreement;
	 
	 	(p)	 	Manager
	 
	 	 	 	not without the previous consent in writing of the Mortgagee (and then only on
and subject to such terms as the Mortgagee may impose) to appoint a manager of
the Vessel other than the Manager;
	 
	 	(q)	 	Repairers’ liens
	 
	 	 	 	not without the previous consent in writing of the Mortgagee to put the

 

20

	 	 	 	Vessel into the possession of any entity or individual for the purpose of work
being done upon her in an amount exceeding or likely to exceed the Major Casualty
Amount, unless such entity or individual shall first have given to the Mortgagee
and in terms satisfactory to it a written undertaking not to exercise any lien on
the Vessel or her Earnings for the cost of such work or otherwise;
	 
	 	(r)	 	Payment of outgoings and evidence of payment
	 
	 	 	 	promptly to pay all tolls dues and other outgoings whatsoever in respect of the
Vessel and her Earnings and Insurances and to keep proper books of account in
respect of the Vessel and her Earnings and as and when the Mortgagee may so
require to make such books available for inspection on behalf of the Mortgagee
and furnish satisfactory evidence that the wages allotments the premiums for
social insurances and pension contributions of the master and crew are being
regularly paid and that all deductions from crew’s wages in respect of Marshall
Islands tax liability are being properly accounted for and that the master has no
claim for disbursements other than those incurred by him in the ordinary course
of trading on the voyage then in progress;
	 
	 	(s)	 	Notice on board Vessel
	 
	 	 	 	to carry a certified copy of this Mortgage with the Vessel’s papers on board and
exhibit it on demand to any person having business with the Vessel or to any
representative of the Mortgagee and to place and keep prominently displayed in
the chartroom and in the master’s cabin of the Vessel a notice, printed in plain
type of such size that the paragraph of reading matter shall cover a space not
less than six inches wide by nine inches high, framed, reading as follows:
	 
	 	 	 	“NOTICE OF MORTGAGE

This Vessel is covered by a FIRST PREFERRED

SHIP MORTGAGE in favour of HOLLANDSCHE BANK-UNIE N.V. under the authority of
Chapter 3 of the Maritime Act 1990 of the Republic of the Marshall Islands (as
amended). Under the terms of said Mortgage, neither the Owner, any charterer nor
the Master of the Vessel nor any other person has any right, power or authority
to create, incur or permit to be imposed upon this vessel any lien whatsoever
other than for crew’s wages or salvage.”; and

 

21

	 	(t)	 	Libel
	 
	 	 	 	if a libel be filed against the Vessel or the Vessel be otherwise attached,
levied upon or taken into custody by virtue of any legal proceedings in any
Court, to promptly notify the Mortgagee thereof by telex or fax confirmed by a
letter at its office as herein referred to and within thirty (30) days cause the
Vessel to be released and all liens thereon to be discharged except for this
Mortgage and promptly notify the Mortgagee within 48 (forty-eight) hours after is
has become known to the Mortgagor of any average or salvage incurred by the
Vessel.

	6.2	 	Environmental Matters
	 
	 	 	The Mortgagor hereby further covenants with the Mortgagee that throughout the Security
Period and unless the Mortgagee shall have otherwise agreed in writing it will:

	 	(a)	 	comply, or procure compliance with, all Environmental Laws and
Environmental Approvals relating to the Vessel, its operation or management and the
business of the Mortgagor from time to time;
	 
	 	(b)	 	notify the Mortgagee forthwith upon:

	 	(i)	 	any Environmental Claim being made against the Mortgagor,
the Manager or otherwise in connection with the Vessel; and
	 
	 	(ii)	 	any Environmental Incident occurring; and

	 	(c)	 	keep the Mortgagee advised, in writing on such regular basis and in such
detail as the Mortgagee shall require, of the Mortgagor’s response to any such
Environmental Claim or Environmental Incident.

	7.	 	 Powers of Mortgagee to protect security and remedy defaults
	 
	7.1	 	The Mortgagee shall without prejudice to its other rights and powers under this Mortgage and
the other Security Documents be entitled (but not bound) at any time and as often as may be
necessary to take any such action as it may in its discretion think fit for the purpose of
protecting or maintaining the security created by this Mortgage (including, without
limitation, such action as is referred to in clause 7.2) and each and every expense,
liability, or loss (including, without limitation, legal fees) so incurred by the Mortgagee in
or

 

22

	 	 	about the protection or maintenance of the said security together with default interest as
per the Financial Agreement payable thereon shall be repayable to it by the Mortgagor on
demand.

	7.2	 	Without prejudice to the generality of clause 7.1:

	 	(a)	 	if the Mortgagor does not comply with the provisions of clause
6.1(a) the Mortgagee shall be entitled (but not bound) to effect or to replace
and renew and thereafter to maintain the Insurances in such manner as in its
discretion it may think fit and to require that all policies, contracts and other
records relating to the Insurances (including details of any correspondence
concerning outstanding claims) be forthwith delivered to such brokers as the
Mortgagee may nominate and to collect, recover, compromise and give a good discharge
for all claims then outstanding or thereafter arising under the Insurances or any of
them and to take over or institute (if necessary using the name of the Mortgagor) all
such proceedings in connection therewith as the Mortgagee in its absolute discretion
may think fit and to permit the brokers through whom the collection or recovery is
effected to charge the usual brokerage therefor; and
	 
	 	(b)	 	if the Mortgagor does not comply with the provisions of clauses 6.1(g),
6.1(h) and 6.1(i) or any of them the Mortgagee shall be entitled (but not bound)
to arrange for the carrying out of such repairs to and/or surveys of the Vessel as it
deems expedient or necessary; and
	 
	 	(c)	 	if the Mortgagor does not comply with the provisions of clauses 6.1(f)
and 6.1(r) or any of them the Mortgagee shall be entitled (but not bound) to pay
and discharge all such debts, damages and liabilities and all such tolls, dues,
taxes, assessments, charges, fines, penalties and other outgoings as are therein
mentioned and/or to take any such measures as it deems expedient or necessary for the
purpose of securing the release of the Vessel.

	8.	 	 Events of Default
	 
	 	 	Upon the happening of any of the following events the Outstanding Indebtedness shall
immediately become due and payable to the Mortgagee without notice and without the
necessity of any Court declaration to the effect that an Event of Default has taken place:

 

23

	 	(a)	 	Non-payment
	 
	 	 	 	any of the Security Parties shall fail to pay on the due date (or before the
expiry of any grace period applicable thereto) any sum due under any Security
Document; or
	 
	 	(b)	 	Misrepresentation
	 
	 	 	 	any representation or warranty made by any of the Security Parties in any
Security Document or any notice, certificate or statement made or delivered
hereunder or thereunder is or proves to have been incorrect in any material
respect when made, or if replaced at any time during the continuance of this
Mortgage with reference to the facts subsisting at such time, would no longer be
correct and accurate in all material respects; or
	 
	 	(c)	 	Other obligations
	 
	 	 	 	any of the Security Parties defaults in the due performance and observance of any
of the terms, undertakings or conditions of — or the due compliance with its
obligations under — any Security Document and, if and only if such default other
than set out under clause 8(a) is capable of remedy, such default is not
remedied within 30 (thirty) days; or
	 
	 	(d)	 	Cross-default
	 
	 	 	 	any loan, debt, guarantee or other obligation constituting indebtedness of any of
the Security Parties becomes due prior to its specified maturity by reason of
default (unless such default is caused solely by the Vessel becoming a Total
Loss) or is not paid when due or any of the Security Parties is otherwise in
material breach of or default under any agreement, deed or mortgage under or
pursuant to which such indebtedness was incurred unless in any such case the
non-payment, breach or default is remedied within 30 (thirty) days; or
	 
	 	(e)	 	Distress
	 
	 	 	 	a distress or other execution is levied or sued out upon or against any part of
the property of any of the Security Parties and is not discharged within 30
(thirty) days of having been so levied or sued out; or

 

24

	 	(f)	 	Insolvency
	 
	 	 	 	any of the Security Parties suspends or threatens to suspend its operations or
transfers or disposes of all or a substantial part of its undertakings or assets
or transfers its business to another country or ceases to pursue its corporate
objects or changes its corporate statute in any material way; or
	 
	 	(g)	 	any of the Security Parties (i) is unable or admits in writing its
inability to pay its lawful debts as they mature, or (ii) makes a general assignment
or pledge for the benefit of or a composition with its creditors; or
	 
	 	(h)	 	an application is made to, or any proceedings are commenced in or any order
or judgement is given by any court for the liquidation, winding-up, reorganisation or
reconstruction (where, in the opinion of the Mortgagee, such reorganisation or
reconstruction might prejudice the Mortgagee’s position hereunder or under any of the
Security Documents) of any of the Security Parties or for the appointment of a
receiver, trustee, liquidator, administrator or administrative receiver or similar
officer of any of the Security Parties or any part of its assets; or
	 
	 	(i)	 	any of the Security Parties is adjudicated bankrupt or insolvent or files a
voluntary petition in bankruptcy or insolvency; or
	 
	 	(j)	 	Authorisation
	 
	 	 	 	any authorisation, approval, consent, licence, exemption, registration,
notification or other requirement of any governmental or public body necessary
for the validity, enforceability or legality of any Security Document or the
performance thereof is not being obtained or, if obtained, ceases for any reason
to be in full force and effect; or
	 
	 	(k)	 	Total Loss, change ownership or registration of the Vessel
	 
	 	 	 	the Vessel becomes Total Loss, there is any change in the ownership of the Vessel
or the Vessel ceases to be registered under Marshall Islands flag; or

 

25

	 	(l)	 	Change shareholder; material change of directorship or management
	 
	 	 	 	without the prior written consent of the Mortgagee there is after the date hereof
any change in the shareholding in or any material change in the directorship or
management of any of the Security Parties; or
	 
	 	(m)	 	Breach or termination charterparty
	 
	 	 	 	any of the Security Parties defaults in the performance of any charterparty of
the Vessel in any material way or any charterparty of the Vessel terminates for
any reason other than the due performance in accordance with its terms or as a
result of a Total Loss; or
	 
	 	(n)	 	Unenforceability
	 
	 	 	 	any of the Mortgagee’s rights or powers of enforcement against or in respect of
the Vessel under any Security Document becomes unenforceable; or
	 
	 	(o)	 	Unlawfulness
	 
	 	 	 	the due performance in accordance with its terms of any Security Document becomes
illegal or impossible under the law of the country of incorporation of any party
thereto; or
	 
	 	(p)	 	Change of law and governmental measure
	 
	 	 	 	the law or its interpretation changes or a governmental measure is taken which
affects or may affect any of the Security Documents, and/or the underlying value
thereof, and the parties to such documents and the Mortgagee shall not have
reached within a reasonable period a written agreement adjusting the relevant
provisions and/or securities, on such a basis that the position of the Mortgagee
is not detrimentally affected; or
	 
	 	(q)	 	Material Adverse Change
	 
	 	 	 	a Material Adverse Change occurs, or any events or circumstances arise which, in
the reasonable opinion of the Mortgagee, give grounds for belief that a Material
Adverse Change will occur; unless such events or circumstances are capable of
remedy and are remedied

 

26

	 	 	 	within 30 (thirty) days of the Mortgagee giving notice to any of the Security
Parties; or
	 
	 	(r)	 	Other events of default
	 
	 	 	 	if the Outstanding Indebtedness becomes immediately due and payable to the
Mortgagee in accordance with the provisions of the Financial Agreement or any of
the other Security Documents.

	9.	 	Enforceability and Mortgagee’s powers
	 
	 	 	Upon the happening of any Event of Default the Mortgagee shall become forthwith entitled
to enforce the security created by this Mortgage without prior notice and in any manner
available to it and in such sequence as the Mortgagee may in its absolute discretion
prefer and when it may see fit to put into force and to exercise all or any of the rights
powers and remedies conferred upon mortgagees by law and/or possessed by it as mortgagee
and chargee of the Vessel by virtue of this Mortgage and in particular (without limiting
the generality of the foregoing):

	 	(a)	 	to take possession of the Vessel;
	 
	 	(b)	 	to require that all policies contracts, certificates of entry and other
records relating to the Insurances (including details of and correspondence
concerning outstanding claims) be forthwith delivered to such brokers as the
Mortgagee may nominate;
	 
	 	(c)	 	to collect, recover, compromise and give a good discharge for all claims
then outstanding or thereafter arising under the Insurances or any of them or in
respect of the Earnings or any Requisition Compensation and to take over or institute
(if necessary using the name of the Mortgagor) all such proceedings in connection
therewith as the Mortgagee in its absolute discretion thinks fit and to permit the
brokers through whom collection or recovery is effected to charge the usual brokerage
therefor;
	 
	 	(d)	 	to discharge compound release or compromise claims against the Mortgagor in
respect of the Vessel which have given or may give rise to any charge or lien on the
Vessel or which are or may be enforceable by proceedings against the Vessel;
	 
	 	(e)	 	to terminate any charterparty in respect of the Vessel without being

 

27

	 	 	 	responsible for any loss thereby occurred;
	 
	 	(f)	 	to sell the Vessel or any share therein with or without prior notice to the
Mortgagor and with or without the benefit of any charterparty or other contract for
her employment by public auction or private contract at such place and upon such
terms as the Mortgagee in its absolute discretion may determine with power to
postpone any such sale and without being answerable for any loss occasioned by such
sale or resulting from postponement thereof;
	 
	 	(g)	 	to manage, insure, maintain and repair the Vessel and to employ or lay up
the Vessel in such manner and for such period as the Mortgagee in its absolute
discretion deems expedient and for the purposes aforesaid the Mortgagee shall be
entitled to do all acts and things incidental or conducive thereto and in particular
to enter into such arrangement respecting the Vessel her insurance management
maintenance repair classification and employment in all respects as if the Mortgagee
was the owner of the Vessel and without being responsible for any loss thereby
incurred;
	 
	 	(h)	 	to recover from the Mortgagor on demand any such losses as may be incurred
by the Mortgagee in or about the exercise of the power vested in the Mortgagee under
sub-clause (g) of this clause with interest thereon at the default rate as
per the Financial Agreement from the date when such losses were incurred by the
Mortgagee until the date of payment whether before or after any relevant judgment;
	 
	 	(i)	 	to recover from the Mortgagor on demand all expenses payments and
disbursements incurred by the Mortgagee in or about or incidental to the exercise by
it of any of the powers aforesaid together with interest thereon at the default rate
as per the Financial Agreement from the date when such expenses payments or
disbursements were incurred by the Mortgagee until the date of payment whether before
or after any relevant judgment

	 	 	PROVIDED ALWAYS that (i) the Mortgagee shall not be liable as mortgagee in possession in
respect of the Vessel to account or be liable for any loss upon realisation or for any
neglect or default of any nature whatsoever in connection therewith for which a mortgagee
in possession may be liable as such and (ii) upon any sale of the Vessel or any share
therein by the Mortgagee pursuant to sub-clause (f) of this clause the purchaser
shall not be bound to see or enquire whether the Mortgagee’s power of sale has arisen in
the manner herein

 

28

	 	 	provided and the sale shall be deemed to be within the power of the Mortgagee and the
receipt of the Mortgagee for the purchase money shall effectively discharge the purchaser
who shall not be concerned with the manner of application of the proceeds of sale or be in
any way answerable therefor.
	 
	10.	 	 Application of Moneys
	 
	 	 	Upon the happening of any Event of Default the Mortgagee shall become forthwith entitled
as and when it may see fit to apply any amounts received by it from the Mortgagor and the
Mortgagee shall similarly be entitled to apply any amounts received by it in respect of:

	 	(a)	 	sale of the Vessel or any share therein;
	 
	 	(b)	 	recovery under the Insurances;
	 
	 	(c)	 	any Earnings or moneys received pursuant to the provisions of clause
9.(g);
	 
	 	(d)	 	any Requisition Compensation,

	 	 	in the manner as specified in the Financial Agreement.
	 
	11.	 	 Omissions or Delay
	 
	 	 	No delay, indulgence or omission of the Mortgagee to exercise any right power or remedy
vested in it under the Security Documents or any of them shall in any way prejudice or
impair such right power or remedy or be construed as a waiver of or as acquiescence in any
default by the Mortgagor and in event of the Mortgagee at any time agreeing to waive any
such right power or remedy such waiver shall be revocable by the Mortgagee at any time and
the right power or remedy shall thereafter be again exercisable as though there had been
no such waiver.
	 
	12.	 	 Delegation of Powers
	 
	 	 	The Mortgagee shall be entitled at any time and as often as may be expedient to delegate
all or any of the powers and discretions vested in it by the Security Documents or any of
them (including the powers vested in it by virtue of clause 7.2(a) and clause
14) in such manner upon such terms and to such entities or individuals as the
Mortgagee in its absolute discretion may think fit.

 

29

	13.	 	 Indemnity
	 
	13.1	 	The Mortgagor hereby agrees and covenants to indemnify the Mortgagee against all losses
actions claims expenses demands obligations and liabilities whatsoever and whensoever arising
which the Mortgagee may incur in respect of, in relation to or in connection with the Vessel
or otherwise, howsoever, in relation to or in connection with any of the matters dealt with in
the Security Documents or any of them.
	 
	13.2	 	The Mortgagor hereby agrees and undertakes to indemnify the Mortgagee on demand against all
losses, actions, claims, expenses, demands, obligations and liabilities sustained or incurred
as result of or in connection with any Environmental Claim being made against the Mortgagee or
otherwise howsoever arising out of any Environmental Incident.
	 
	14.	 	 Power of Attorney
	 
	14.1	 	The Mortgagor, by way of security and in order more fully to secure the performance of the
Mortgagor’s obligations under this Mortgage, hereby irrevocably appoints the Mortgagee as its
attorney during the Security Period for the purposes of:

	 	(a)	 	doing in its name all acts and executing, signing and (if required)
registering in its name all documents which the Mortgagor itself could do, execute,
sign or register in relation to the Vessel (including without limitation,
transferring title to the Vessel to a third party and deleting the Vessel from the
Marshall Islands Ships Registry); provided, however, that such power shall not be
exercisable by or on behalf of the Mortgagee until this Mortgage shall have become
immediately enforceable pursuant to clause 9; and
	 
	 	(b)	 	executing, signing, perfecting, doing and (if required) registering every
such further assurance document, act or thing as is referred to in clause 15.

	14.2	 	The exercise of such power as is referred to in clause 14.1(a) by or on behalf of the
Mortgagee shall not put any entity or individual dealing with the Mortgagee upon any enquiry
as to whether this Mortgage has become enforceable nor shall such entity or individual be in
any way affected by notice that this Mortgage has not become enforceable and, in relation to
both clauses 14.1(a) and 14.1(b), the exercise by the Mortgagee of such power shall be
conclusive evidence of its right to exercise the same.

 

30

	15.	 	 Further Assurance
	 
	 	 	The Mortgagor hereby further covenants at its own expense from time to time to execute,
sign, perfect, do and (if required) register any such further assurance, document, act or
thing as in the opinion of the Mortgagee may be necessary or desirable for the purpose of
more effectually mortgaging and charging the Vessel or perfecting the security constituted
or intended to be constituted by the Security Documents.
	 
	16.	 	 Discharge amount; maturity date
	 
	 	 	For the purpose of recording this First Preferred Mortgage as required by Chapter 3 of the
Maritime Act, 1990 of the Marshall Islands (as amended), the total amount of this Mortgage
is USD 3,700,000.00 (three million seven hundred thousand United States Dollars) together
with interest thereon, fees, commissions and performance of mortgage covenants, and the
date of maturity is the 31st day of December 2015, and the discharge amount is the same as
the total amount.
	 
	17.	 	 Partial Invalidity
	 
	 	 	If at any time any one or more of the provisions in this Mortgage is or becomes invalid,
illegal or unenforceable in any respect under any law or regulation, the validity,
legality and enforceability of the remaining provisions of this Mortgage shall not be in
any way affected or impaired thereby.
	 
	18.	 	 Notices
	 
	18.1	 	Any notice or other communication under or in connection with this Mortgage shall be in
writing and delivered by hand or sent by facsimile, by courier, or by registered mail to:
	 
	 	 	the Mortgagor:

 - ADVENTURE TWO S.A.

 - c/o FREE BULKERS S.A.

 - Akti Miaouli 93

 - Piraeus 185 382

 - Greece

 - telephone: +30 210 4528770

 - fax:          
 +30 210 4291100

 

31

	 	 	the Mortgagee:

 - HOLLANDSCHE BANK-UNIE N.V.

 - Coolsingel 104

 - 3011 AG Rotterdam

 - the Netherlands

or

 - P.O. Box 249

 - 3000 AE Rotterdam

 - the Netherlands

 - telephone: +31 10 2820282

 - fax:
           +31 10 2820399.

	18.2	 	Any such notice or other communication shall be deemed to have been duly given or made as
follows:

	 	(a)	 	if sent by personal delivery, upon delivery at the address of the relevant
party;
	 
	 	(b)	 	if sent by courier service or registered mail three (3) Business Days after
the date of dispatch; and
	 
	 	(c)	 	if sent by facsimile, when dispatched.

	 	 	Any communication by facsimile sent by the Mortgagor to the Mortgagee shall be confirmed
by letter if so required by the Mortgagee.
	 
	19.	 	 Law and jurisdiction
	 
	19.1	 	This Mortgage shall be governed by and construed in accordance with the laws of the Marshall
Islands.
	 
	19.2	 	Subject to clause 19.3, the courts of Rotterdam, the Netherlands shall have exclusive
jurisdiction in relation to all matters which may arise out of or connection with this
Mortgage with the exclusion of any other court of law.
	 
	19.3	 	For the exclusive benefit of the Mortgagee the Mortgagor agrees that the Mortgagee reserves
the right to commence proceedings in relation to any matter which arises out of or in
connection with this Mortgage in the courts of any place in the Netherlands other than
Rotterdam or any country other than the Netherlands and which have jurisdiction to that
matter.

 

32

	19.4	 	In this clause 19 “proceedings” means proceedings of any kind, including an
application for a provisional or protective measure.
	 
	19.5	 	The Mortgagor hereby agrees that any writ, judgment or other notice of process shall be
sufficiently and effectively served on it, if served on it at the address specified in
clause 18.1.

IN WITNESS whereof the Mortgagor has caused this Mortgage to be duly executed the day and year
first written.

	 	 	 	 	 
	SIGNED

	 	 	)	 
	by
/s/ [ILLEGIBLE]    

	 	 	)	 
	as attorney-in-fact for

	 	 	)	 
	ADVENTURE TWO S.A.

	 	 	)	 
	in the presence of:

	 	 	)Deed of Assignment dated October 24, 2005

 

Exhibit 4.23

DEED OF ASSIGNMENT

between

ADVENTURE TWO S.A.

as assignor

and

HOLLANDSCHE BANK-UNIE N.V

as assignee

DATED 24 OCTOBER 2005

relating to

m.v. “FREE DESTINY”

NAUTADUTILH N.V.

ROTTERDAM

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	Clause	 	Heading	 	Page	 
	1.
	 	Interpretation
	 	2	 
	2.
	 	Representations and warranties
	 	4	 
	3.
	 	Assignment
	 	5	 
	4.
	 	Covenants
	 	6	 
	5.
	 	Continuing Security
	 	7	 
	6.
	 	Powers of Assignee
	 	8	 
	7.
	 	Redemption
	 	9	 
	8.
	 	Loss payable and notice of cancellation clause
	 	10	 
	9.
	 	Miscellaneous
	 	10	 
	10.
	 	Power of Attorney
	 	11	 
	11.
	 	Further assurance
	 	11	 
	12.
	 	Indemnity
	 	11	 
	13.
	 	Notices
	 	12	 
	14.
	 	Law and jurisdiction
	 	12	 
	schedule A1: FORM OF LOSS PAYABLE AND NOTICE OF CANCELLATION CLAUSE
	 	13	 
	schedule A2: FORM OF LOSS PAYABLE AND NOTICE OF CANCELLATION CLAUSE
(P. & I.)
	 	15	 
	schedule B: FORM OF NOTICE OF INSURANCE ASSIGNMENT
	 	16	 
	schedule C: FORM OF LETTER OF UNDERTAKING TO BE DELIVERED BY BROKERS AND/OR UNDERWRITERS AND/OR INSURERS
	 	17	 
	schedule D: FORM OF LETTER OF UNDERTAKING TO BE GIVEN BY P & I CLUB
	 	22	 

 

 

 1

THIS DEED OF ASSIGNMENT is made the 24th day of October 2005

BETWEEN:

	1.	 	ADVENTURE TWO S.A., a company incorporated and existing under the laws of the Marshall
Islands, having its registered office at Ajeltake Road, Ajeltake Island, Majuro, Marshall
Islands MH96960 (the “Assignor”);

and

	2.	 	HOLLANDSCHE BANK-UNIE N.V., a company incorporated and existing under the laws of the
Netherlands, having its corporate seat at Amsterdam, the Netherlands, acting herein through
its branch office at Coolsingel 104, 3011 AG Rotterdam, the Netherlands (the
“Assignee”)

WHEREAS:

	(1)	 	the Assignor is the registered owner of the vessel “FREE DESTINY” (the “Vessel”)
registered in the Marshall Island Ships Register;
	 
	(2)	 	by, and subject to and upon the terms and conditions of (i) a credit agreement signed by the
Assignee on the 23rd day of September 2005 and signed by the Assignor on the 26th day of
September 2005 and in which Adventure Three S.A. assumed joint and several liability towards
the Assignee for all sums which Assignor will owe to the Assignee under the credit agreement
from time to time and (ii) a short-term loan agreement dated the 26th day of September 2005
and made between the Assignor and the Assignee (as the same may be amended, supplemented or
varied from time to time together with the therein referred to HBU General Credit Provisions
dated January 1999 the “Financial Agreement”, the Assignee agreed to make available to
the Assignor by way of an overdraft facility the amount of USD 3,700,000.00 (three million
seven hundred thousand United States Dollars) (the “ Loan”);
	 
	(3)	 	pursuant to the Financial Agreement the Assignor has executed in favour of the Assignee a
first preferred mortgage (the “Mortgage”) over the Vessel dated 24 October 2005, which
Mortgage has been or will be registered against the Vessel as security for the payment to the
Assignee of the Outstanding Indebtedness (as hereinafter defined);
	 
	(4)	 	it is a condition precedent for the Assignee advancing the Loan to the Assignor that the
Assignor inter alia shall execute this Deed together with the Assignee;

 

2

	(5)	 	this Deed is supplemental to the Financial Agreement, the other Security Documents (as
hereinafter defined) and the security thereby created.

NOW THIS DEED WITNESSES as follows:

1.    Interpretation

	1.1	 	In this Deed unless the context otherwise requires:
	 
	 	 	“Assigned Property” means collectively:

	 	(i)	 	the Earnings;
	 
	 	(ii)	 	the Insurances; and
	 
	 	(iii)	 	the Requisition Compensation;

“Earnings” means all moneys whatsoever from time to time due or payable actually
or contingently to the Assignor arising out of the use or operation of the Vessel,
including without limitation all freight, hire, charter and passage moneys, moneys arising
under any contract or arrangement with any operator, income arising under pooling
arrangements, compensation payable to the Assignor as a result of, or otherwise in
connection with, the requisition of the Vessel for hire, remuneration for salvage and
towage services, demurrage and detention moneys, and damages for breach and all payments
for, or otherwise in connection with any variation or termination of any charterparty,
contract or other agreement in respect of, or otherwise in connection with, the employment
of the Vessel;

“Event of Default” means any of the events specified and referred to in the
Financial Agreement and/or the Mortgage;

“Insurances” means all policies and contracts of insurance, including without
limitation all entries of the Vessel in a protection and indemnity or war risks
association which are from time to time in place or taken out or entered into by or for
the benefit of the Assignor in respect of, or otherwise in connection with the Vessel
and/or the Earnings or any part thereof and all benefits thereof, including without
limitation all claims of whatsoever nature and all return of premiums;

“Loss Payable Clause” means any of the loss payable clauses set out in the
schedules A1 and A2 hereto;

“Outstanding Indebtedness” means (a) the aggregate of all sums of money actual or
contingent, present or future due by the Assignor to the Assignee

 

3

under or in connection with the Security Documents or any of them and (b) all costs and
expenses incurred in connection with the Security Documents, including any taxes payable
by the Assignee (other than on net profit), as well as any reasonable costs and expenses
incurred by the Assignee in connection with the Assignor’s failure to comply with or
fulfil any obligation under the Security Documents at the time and in the manner required,
including collection charges, disbursements, fees of legal consultants and other experts
and costs of proceedings, irrespective against whom brought;

“Requisition Compensation” means all moneys or other compensation payable by
reason of requisition for title or other compulsory acquisition of the Vessel otherwise
than by requisition for hire;

“Security Documents” means the Financial Agreement, the Mortgage, this Deed and
any other such documents as may be executed from time to time to secure and/or regulate
the Outstanding Indebtedness;

“Security Interest” means a mortgage, charge (whether fixed or floating), pledge,
lien, hypothecation, assignment or other security interest or arrangement of any kind
whatsoever;

“Security Parties” means the Assignor and Adventure Three S.A. of Majuro, Marshall
Islands;

“Security Period” means the period commencing on the date of this Deed and
terminating on the date upon which all moneys payable or to become payable from time to
time pursuant to the terms of the Financial Agreement, this Deed and/or any of the other
Security Documents shall have been paid and discharged in full.

	1.2	 	In this Deed:

	 	(a)	 	clause headings are inserted for convenience of reference only and shall be
ignored in the interpretation of this Deed;
	 
	 	(b)	 	unless the context otherwise requires, words denoting the singular number
shall include the plural and vice versa;
	 
	 	(c)	 	references to clauses and schedules shall be construed as references to
clauses of and schedules to this Deed;
	 
	 	(d)	 	an “entity” shall be construed to include any firm, company,
association, partnership (whether or not having separate legal

 

4

	 	 	 	personality), institution, government (local, national or supranational), state,
agency or sub division thereof or international organisation;
	 
	 	(e)	 	reference to any document including this Deed shall be construed as
reference to such document as amended supplemented or varied from time to time;
	 
	 	(f)	 	words and expressions defined in the Financial Agreement shall, unless it
is stated otherwise herein, have the same meaning when used in this Deed; and
	 
	 	(g)	 	the Assignee, the Assignor, the Security Parties and any other entity or
individual shall include their respective successors in title, estates and, in the
event of an assignment permitted under this Deed, assignees.

	1.3	 	This Deed shall be read together with the Financial Agreement but in case of any conflict
between the two instruments the provisions of this Deed shall prevail.

2.   Representations and warranties

The Assignor hereby represents and warrants to the Assignee that:

	 	(a)	 	it is fully entitled to enter into this Deed and further to agree and
perform the terms and conditions hereof and that such execution and performance will
not cause the Assignor to be in breach of any agreement to which it is a party;
	 
	 	(b)	 	the Insurances are in full force and effect and enforceable in accordance
with their respective terms;
	 
	 	(c)	 	the Assignor is not in default in respect of any of the Insurances and
there is no action, suit or proceeding pending or threatened by or against the
Assignor in connection with or arising from any of the Insurances;
	 
	 	(d)	 	the Assignor is exclusively entitled to any and all benefits of the
Insurances and to exercise any and all rights in respect thereof; and
	 
	 	(e)	 	the Assigned Property is not subject to any Security Interest (save as
constituted by the Security Documents or otherwise permitted by the terms thereof).

 

5

3.    Assignment

	3.1	 	By way of security for payment of the Outstanding Indebtedness and the performance of the
obligations under the Security Documents by the Assignor, the Assignor with full title
guarantee hereby assigns and agrees to assign absolutely to the Assignee all its
rights, title and interest in and to the Assigned Property and all the benefits and interest
present and future therein
	 
	 	 	PROVIDED HOWEVER that:

	 	(a)	 	the Earnings shall be paid to the Assignor until such time as the Assignee
shall direct to the contrary whereupon the Assignor shall forthwith, and the Assignee
may at any time thereafter, instruct the entities and the individuals from whom the
Earnings are then receivable or payable to pay the same to the Assignee or as it may
direct and any Earnings then in the hands of the Assignor’s brokers or other agents
shall be deemed to have been received by them for the use and on behalf of the
Assignee;
	 
	 	(b)	 	unless and until an Event of Default shall occur (whereupon all insurance
recoveries shall be receivable by the Assignee and applied in accordance with
clause 3.2):

	 	(i)	 	any moneys payable under the Insurances shall be paid in
accordance with the terms of the relevant Loss Payable Clause and the
Assignee will not in the meantime give any notification to the contrary to
the insurers as contemplated by the Loss Payable Clause; and
	 
	 	(ii)	 	any insurance moneys received by the Assignee in respect
of major casualty (that is to say any casualty the claim in respect of which
exceeds USD 100,000.00 (one hundred thousand United States Dollars)
inclusive of any deductible or franchise shall be paid over to the Assignor
or to whom it shall direct upon the Assignor furnishing evidence
satisfactory to the Assignee that all loss and damage resulting from such
casualty has been properly made good and repaired, and that all repair
accounts and other liabilities whatsoever in connection with the casualty
have been fully paid and discharged by the Assignor.

 

6

	3.2	 	All moneys received by the Assignee in respect of the Assigned Property shall be applied in
the manner specified in the Financial Agreement.
	 
	3.3	 	In the event that on application in accordance with clause 3.2 the moneys so applied
are insufficient to pay in full the whole of the Outstanding Indebtedness, the Assignee shall
be entitled to collect the shortfall from the Assignor or any other entity or individual
liable for the time being therefor.

4.   Covenants

The Assignor hereby irrevocably and unconditionally covenants to the Assignee that:

	 	(a)	 	it will not hereafter during the Security Period create or suffer the
creation of any Security Interest on or in respect of all or any part of the Assigned
Property to anyone other than the Assignee to the effect that the assignment created
by this Deed shall constitute a first preferred charge in favour of the Assignee;
	 
	 	(b)	 	in the event that it receives payment of any moneys hereby assigned save as
provided in the loss payable and notice of cancellation clause hereinafter mentioned
it will forthwith pay over the same to the Assignee and until paid over such moneys
will be held on trust for the Assignee by it;
	 
	 	(c)	 	it will throughout the Security Period maintain the Insurances in full
force and effect and not change the identity of the insurers or the terms of cover
provided by the Insurances without the prior written consent of the Assignee;
	 
	 	(d)	 	it will do or permit to be done each and every act or thing which the
Assignee may from time to time require to be done for the purpose of enforcing the
Assignee’s rights under this Deed and will allow its name to be used as and when
required by the Assignee for that purpose;
	 
	 	(e)	 	it will from time to time upon the written request of the Assignee give
written notice (in such form as the Assignee shall reasonably require) to the
entities and individuals from whom any part of the Assigned Property is or may be
due, of the assignment herein contained and it will procure that the interest of the
Assignee in the Insurances shall be endorsed on the instruments of insurance from
time to time in

 

7

	 	 	 	connection with such of the Insurances as are placed with the approved brokers
accepted by the Assignee by means of a Notice of Assignment of Insurances signed
by the Assignor) in the form set out in schedule B;

	 	(f)	 	it will pay all expenses and costs at the times and in the manner specified
in this Deed and/or the Financial Agreement as the case may be;
	 
	 	(g)	 	it will perform the covenants and undertakings in relation to the
Insurances set forth in clause 6.1(a) of the Mortgage and such covenants and
undertakings shall be deemed to be, mutatis mutandis, set out and repeated in full
herein.

5.   Continuing Security

It is declared that:

	 	(a)	 	the security created by this Deed shall be held by the Assignee as a
continuing security for the payment of the Outstanding Indebtedness and the
performance and observance of and compliance with all of the covenants, terms and
conditions contained in the Financial Agreement, this Deed and the other Security
Documents, express or implied, and that the security so created shall not be
satisfied by any intermediate payment or satisfaction of any part of the amount
hereby and thereby secured (or by any settlement of accounts between the Assignor or
any other entity or individual who may be liable to the Assignee in respect of the
Outstanding Indebtedness or any part thereof and the Assignee);
	 
	 	(b)	 	the security so created shall be in addition to, and shall not in any way
prejudice or affect and may be enforced by the Assignee without prior recourse to the
securities created by the other Security Documents or by any other security now or
hereafter held by the Assignee and shall not in any way be prejudiced or affected
thereby or by the invalidity or unenforceability thereof, or by the Assignee
releasing, modifying or refraining from perfecting or enforcing any of the same, or
granting time or indulgence or compounding with any entity or individual liable
thereto;
	 
	 	(c)	 	all the rights, remedies and powers vested in the Assignee hereunder shall
be an addition to and not a limitation of any and every other right, power or remedy
vested in the Assignee under the Financial

 

8

	 	 	 	Agreement, this Deed and the other Security Documents, or otherwise or at law and
that all the powers so vested in the Assignee may be exercised from time to time
and as often as the Assignee may deem expedient;

	 	(d)	 	the Assignee shall not be obliged to make any enquiry as to the nature or
sufficiency of any payment received by it under the Mortgage, this Deed, the
Financial Agreement and/or the other Security Documents or to make any claim or take
any action to collect any moneys hereby assigned or to enforce any rights or benefits
hereby assigned to the Assignee or to which the Assignee may at any time be entitled
under the Mortgage and/or this Deed;
	 
	 	(e)	 	the Assignor shall remain liable to perform all the obligations assumed by
it in relation to the Assigned Property and the Assignee shall be under no obligation
of any kind whatsoever in respect thereof or be under any liability whatsoever in the
event of any failure by the Assignor to perform its obligations in respect thereof;
and
	 
	 	(f)	 	notwithstanding that this Deed is expressed to be supplemental to the
Mortgage and to the securities thereby created it shall continue in full force and
effect after any discharge of the Mortgage.

6.    Powers of Assignee

	6.1	 	The Assignee shall, without prejudice to its other rights, powers and remedies hereunder, be
entitled (but not bound) at any time, and as often as may be necessary, to take any such
action as it may in its discretion think fit for the purpose of protecting or maintaining the
security created by this Deed and all expenses attributable thereto shall be payable by the
Assignor on demand.
	 
	6.2	 	Without prejudice to the generality of clause 6.1 and the powers and remedies vested
in the Assignee by virtue of this Deed and the provisions of the Mortgage:

	 	(a)	 	if the Assignor fails to comply with the insurance provisions contained in
the Mortgage, the Assignee shall become forthwith entitled (but not bound) to effect
and thereafter maintain all such insurances on the Vessel as in its discretion it may
think fit in order to procure the compliance with such provisions or alternatively,
to require the Vessel (at the Assignor’s risk) to remain in, or to proceed to and
remain in a port designated by the Assignee until such provisions are fully

 

9

	 	 	 	complied with;
	 
	 	(b)	 	at any time after the occurrence of an Event of Default the Assignee shall
become forthwith entitled (but not bound):

	 	(i)	 	to require that all policies, contracts, certificates of
entry and other records relating to the Insurances (including details of and
correspondence concerning outstanding claims) be delivered forthwith to such
adjusters and/or brokers and/or other insurers as the Assignee may nominate;
	 
	 	(ii)	 	to collect, recover, compromise and give a good discharge
for, all claims then outstanding or thereafter arising under or in respect
of the Assigned Property or any part thereof, and to take over or institute
(if necessary using the name of the Assignor) all such proceedings in
connection therewith as the Assignee in its absolute discretion thinks fit
and, in the case of the Insurances, to permit any brokers through whom
collection or recovery is effected to charge the usual brokerage therefor;
	 
	 	(iii)	 	to discharge, compound, release or compromise claims in
respect of the Assigned Property or any part thereof which have given or may
give rise to any charge or lien or other claim on the Vessel, the Assigned
Property or any part thereof or which are or may be enforceable by
proceedings against the Vessel, the Assigned Property or any part thereof;
and
	 
	 	(iv)	 	to recover from the Assignor on demand all expenses
incurred or paid by the Assignee in connection with the exercise of the
powers (or any of them) referred to in this clause 6.2.

	6.3	 	The Assignor covenants and undertakes with the Assignee to do or permit to be done each and
every act or thing which the Assignee may from time to time require to be done for the purpose
of enforcing the Assignee’s rights under this Deed and to allow its name to be used as and
when required by the Assignee for that purpose.

7.   Redemption

Upon payment and discharge in full to the satisfaction of the Assignee of the Outstanding
Indebtedness, the Assignee shall, at the request and cost of the Assignor, re-assign the
Assigned Property to the Assignor or as it shall direct.

 

10

8.   Loss payable and notice of cancellation clause

The Assignor shall procure that all policies and entries relating to the Insurances shall
contain loss payable and notice of cancellation clauses substantially in the form of
schedules A1 and A2, or otherwise acceptable to the Assignee and the Assignor
shall further, upon written request of the Assignee, execute and deliver to the Assignee
or procure the execution and delivery to the Assignee of such further instruments and
documents as the Assignee may deem desirable for the purpose of obtaining the full benefit
of the assignment created by this Deed and of the rights and powers herein granted which
includes the arrangement of letters of undertaking as shown in schedules C and D.

9.   Miscellaneous

	9.1	 	No delay or omission on the part of the Assignee to exercise any right or power vested in it
under this Deed shall impair such right or power or be construed as a waiver thereof, nor
shall any single or partial exercise by the Assignee of any right or power nor the
discontinuance, abandonment or adverse determination of any proceedings taken by the Assignee
to enforce any right or power, preclude any other or further exercise thereof nor shall the
giving by the Assignee of any consent to any act which by the terms of this Deed requires such
consent prejudice the right of the Assignee to withhold its consent to the doing of any other
similar act.
	 
	9.2	 	The Assignee shall be entitled, at any time and as often as may be expedient, to delegate all
or any of the rights and powers vested in it by this Deed (including the power vested in it by
virtue of clause 6) in such manner, upon such terms and to such entities and
individuals as the Assignee in its absolute discretion may think fit.
	 
	9.3	 	If any provision of this Deed is prohibited, invalid, illegal or unenforceable in any
jurisdiction, such prohibition, invalidity, illegality or unenforceability shall not affect or
impair howsoever the remaining provisions thereof or affect the validity, legality or
enforceability of such provision in any other jurisdiction but where the provisions of the
laws of such jurisdiction may be waived they are hereby waived to the full extent permitted by
such laws to the end that this Deed shall be valid, binding and enforceable in accordance with
its terms.

 

11

10.   Power of Attorney

	10.1	 	The Assignor, by way of security and in order more fully to secure the performance of the
Assignor’s obligations under this Deed, hereby irrevocably appoints the Assignee as its
attorney generally for and in the name and on behalf of the Assignor to execute, seal and
deliver and otherwise perfect and do all such deeds, notices, assurances, agreements,
instruments, acts and things which may be required for the full exercise of all or any of the
rights, powers or remedies conferred hereby which may be deemed proper in connection with all
or any of the purposes aforesaid. The power hereby conferred shall be a general power of
attorney and the Assignor ratifies and confirms, and agrees to ratify and confirm, any deed,
assurance, agreement, instrument, act or thing which the Assignee may execute or do pursuant
thereto PROVIDED ALWAYS that such power shall not be exercisable by or on behalf of the
Assignee until the Outstanding Indebtedness shall have become due and payable on demand to the
Assignee in accordance with the provisions of the Financial Agreement.
	 
	10.2	 	The exercise of such power by or on behalf of the Assignee shall not oblige any entity or
individual dealing with the Assignee to make any enquiry as to whether the Outstanding
Indebtedness has become due and payable nor shall such entity or individual be in any way
affected by notice that the Outstanding Indebtedness has not become so due and payable and the
exercise by or on behalf of the Assignee shall be conclusive evidence of its right to exercise
the same.

11.   Further assurance

The Assignor hereby further covenants at its own expense from time to time to execute,
sign, perfect, do and (if required) register every such further assurance, document, act
or thing as in the opinion of the Assignee may be necessary or desirable for the purpose
of more effectually assigning the Assigned Property or perfecting the security constituted
or intended to be constituted by the Security Documents.

12.   Indemnity

The Assignor hereby agrees and covenants to indemnify the Assignee against all losses
actions claims expenses demands obligations and liabilities whatsoever and whensoever
arising which the Assignee may incur in respect of, in relation to or in connection with
the Assigned Property or otherwise,

 

12

howsoever, in relation to or in connection with any of the matters dealt with in the
Security Documents or any of them.

13.   Notices

The provisions of clause 18 of the Mortgage shall apply in relation to every notice,
request, demand or other communication under this Deed.

14.   Law and jurisdiction

	14.1	 	This Deed shall be governed by and construed in accordance with the laws of England.
	 
	14.2	 	Subject to clause 14.3, the courts of Rotterdam, the Netherlands shall have exclusive
jurisdiction in relation to all matters which may arise out of or in connection with this Deed
with the exclusion of any other court of law.
	 
	14.3	 	For the exclusive benefit of the Assignee, the Assignee reserves the right to commence
proceedings in relation to any matter which arises out of or in connection with this Deed in
the courts of any place in the Netherlands other than Rotterdam or any country other than the
Netherlands and which have jurisdiction to that matter.
	 
	14.4	 	In this clause 14 “proceedings” means proceedings of any kind, including an
application for a provisional or protective measure.
	 
	14.5	 	The Assignor hereby agrees that any writ, judgment or other notice of process shall be
sufficiently and effectively served on it, if served on it at the address specified in clause
18.1 of the Mortgage.

IN WITNESS whereof the parties hereto have caused this Deed to be duly executed the day and year
first herein before written.

	 	 	 	 	 	 	 
	Signed as a Deed

	 	 	)	 	 	 
	by
/s/ [ILLEGIBLE]      

	 	 	)	 	 	 
	as attorney-in-fact for

	 	 	)	 	 	 
	ADVENTURE TWO S.A.

	 	 	)	 	 	 
	 
	 	 	 	 	 	 
	Signed as a Deed

	 	 	)	 	 	 
	by /s/ [ILLEGIBLE]      

	 	 	)	 	 	 
	as attorney-in-fact for

	 	 	)	 	 	 
	HOLLANDSCHE BANK-UNIE N.V.

	 	 	)	 	 	 

 

13

schedule A1: FORM OF LOSS PAYABLE AND NOTICE OF CANCELLATION CLAUSE

	 	 	 
	INSURED:

	 	ADVENTURE TWO S.A.
	VESSEL :

	 	“FREE DESTINY”

It is noted that by an Assignment in writing dated 24 October 2005 and made between (i) the Insured
and (ii) HOLLANDSCHE BANK-UNIE N.V., having its corporate seat at Amsterdam, the Netherlands,
acting through its branch office at Coolsingel 104, 3011 AG Rotterdam, the Netherlands (the
“Assignee”) the Insured assigned absolutely unto the Assignee this policy and all benefits
thereof including all claims of whatsoever nature (including return of premiums) thereunder and
including the right to negotiate and settle at any time whether any claim is a claim in respect of
a total or constructive or arranged or agreed or compromised total loss (“Total Loss”); and
that

	(i)	 	claims hereunder in respect of a Total Loss shall be paid in full to the Assignee or as the
Assignee may direct; and
	 
	(ii)	 	all other losses hereunder shall be paid to the Assignee except that claims (or the aggregate
of claims) in respect of any one accident not exceeding USD 100,000 (one hundred thousand
United States Dollars) including any deductible or franchise shall be paid to the Insured,
unless and until the (Insurer(s)) (Underwriter(s)) receive notice from the Assignee to the
contrary, whereupon all such insurance proceeds shall be paid directly to the Assignee for
distribution by it firstly to itself and/or to its order.

Notwithstanding anything contained herein to the contrary, however, in cases where a surety has
paid or is liable to pay any claims covered under the provisions of the collision and/or salvage
clauses in the policies on hull and machinery the proceeds under such provisions shall be payable
directly to the surety to the necessary extent.

It is further noted and expressly undertaken that:

	(a)	 	in the event of non-payment of premiums or calls when due, the (Insurer(s)) (Underwriter(s))
will notify the Assignee immediately of such non-payment and will not exercise any right of
cancellation which they may have by reason of such non-payment without giving fourteen (14)
days’ prior written notice of such cancellation to the Assignee and a reasonable opportunity
of paying any balance of such premiums or calls which may be in default; and
	 
	(b)	 	the (Insurer(s)) (Underwriter(s)) will not effect any material alteration or

 

14

termination or expiry of any of the insurances without giving to the Assignee
fourteen (14) days’ prior written notice of such alteration or termination or expiry.

	 	 	 	 	 
	 

ADVENTURE TWO S.A.

	 	 

HOLLANDSCHE BANK-UNIE N.V.
	 	 
	(Assignor)

	 	(Assignee)	 	 

 

15

schedule A2: FORM OF LOSS PAYABLE AND NOTICE OF CANCELLATION CLAUSE (P. & I.)

	 	 	 
	INSURED:

	 	ADVENTURE TWO S.A.
	VESSEL :

	 	“FREE DESTINY”

It is noted that by an Assignment in writing dated 24 October 2005 and made between (i) the Insured
and (ii) HOLLANDSCHE BANK-UNIE N.V., having its corporate seat at Amsterdam, the Netherlands,
acting through its branch office at Coolsingel 104, 3011 AG Rotterdam, the Netherlands (the
“Assignee”), the Insured assigned absolutely unto the Assignee this policy and all benefits
thereof including all claims of whatsoever nature (including return of premiums) thereunder; and
that until the Assignee notifies to the contrary claims receivable thereunder shall be paid to:

(i) the entity or individual to whom was incurred the liability to which such sum relates; or

(ii) the Insured in reimbursement to it of moneys expended in satisfaction of such liability.

It is further noted and expressly undertaken that:

	(a)	 	in the event of non-payment of premiums or calls when due, the Insurer(s)/Underwriter(s) will
notify the Assignee immediately of such non-payment and will not exercise any right of
cancellation which they may have by reason of such non-payment without giving fourteen (14)
days’ prior written notice of such cancellation to the Assignee and a reasonable opportunity
of paying any balance of such premiums or calls which may be in default; and
	 
	(b)	 	the Insurer(s)/Underwriter(s) will not effect any material alteration or termination or
expiry of any of the insurances without giving to the Assignee fourteen (14) days’ prior
written notice of such alteration or termination or expiry.

	 	 	 	 	 
	 

ADVENTURE TWO S.A.

	 	 

HOLLANDSCHE BANK-UNIE N.V.
	 	 
	(Assignor)

	 	(Assignee)	 	 

 

16

schedule B: FORM OF NOTICE OF INSURANCE ASSIGNMENT

(for attachment by way of endorsement to

all policies, contracts and cover notes)

TAKE NOTICE:

THAT by a Deed of Assignment in writing bearing even date herewith and made between us as owner of
the Marshall Islands flag m.v. “FREE DESTINY” (the “Vessel”) and HOLLANDSCHE BANK-UNIE
N.V., having its corporate seat at Amsterdam, the Netherlands, acting through its branch office at
Coolsingel 104, 3011 AG Rotterdam, the Netherlands (the “Assignee”), we have assigned to
the Assignee all our rights, title, interest and benefits in and to all insurances effected or to
be effected in respect of the Vessel, including the insurances constituted by the policy or entry
certificate whereon this notice is endorsed.

DATED 24 October 2005.

For and on behalf of

ADVENTURE TWO S.A.

	 	 	 
	 

Name:

	 	 
	Title:
	 	 

 

17

schedule C: FORM OF LETTER OF UNDERTAKING TO BE DELIVERED BY BROKERS AND/OR UNDERWRITERS AND/OR INSURERS

	 	 	 
	To:

	 	HOLLANDSCHE BANK-UNIE N.V.
	 

	 	Coolsingel 104
	 

	 	3011 AG Rotterdam
	 

	 	the Netherlands

Dated: [...]

Dear Sirs,

Re: “FREE DESTINY” (the “Vessel”)

We confirm that we have effected insurances for the account of ADVENTURE TWO S.A. of Majuro,
Marshall Islands (the “Assignor”) as set out in Appendix “A” attached.

Pursuant to instructions received from the Assignor, and in consideration of your approving our
appointment as [Brokers / Underwriters / Insurers] in connection with the insurances covered by this
letter, we hereby undertake:

	[1.	 	to hold the Insurance Slips or Contracts, the Policies when issued, and any renewals of such
Policies or new Policies or any Policies substituted (with your consent) therefor and the
benefit of the insurances thereunder to your order in accordance with the terms of the Loss
Payable Clause set out in Appendix “B” attached; and]
	 
	2.	 	to arrange for the [said] Loss Payable Clause [set out in Appendix “B” attached] to be
included in and/or endorsed on the Policies when issued; and
	 
	3.	 	to have endorsed on each and every Policy as and when the same is issued a Notice of
Assignment in the form of Appendix “C” hereto dated and signed by the Assignor and
acknowledged by [Underwriters/us] in accordance with Market practice; and
	 
	4.	 	to advise you immediately we cease to be the [Brokers/Underwriters/Insurers] for the Assignor
or in the event of any material changes which may be made to the terms of the insurances and
following an application received from you not later than one month before expiry of the
insurances to notify you within fourteen (14) days of the receipt of such application in the
event of our not having received notice of renewal instructions from the Assignor and/or its
Agents, and in the event of our receiving instructions to renew to advise you

 

18

	 	 	promptly of the details thereof.

Our above undertakings are given subject to our lien on the Policies for premiums and subject to
our right of cancellation on default in payment of such premiums but we undertake to advise you
immediately if any premiums are not paid to us by due date and not to exercise such rights of
cancellation without giving you fourteen (14) days’ notice in writing, either by letter, telex or
cable, and a reasonable opportunity of paying any premiums outstanding.

Notwithstanding the terms of the said Loss Payable Clause and the said Notice of Assignment, unless
and until we receive notice from you to the contrary, we shall be empowered to arrange for a
collision and/or salvage guarantee to be given in the event of bail being required in order to
prevent the arrest of the Vessel or to secure the release of the Vessel from arrest following a
casualty. Where a guarantee has been given as aforesaid and the guarantor has paid any sum under
the guarantee in respect of such claim, there shall be payable directly to the guarantor out of the
proceeds of the said Policies a sum equal to the sum so paid.

* [Finally, it is understood that all claims shall be collected through us, as Brokers].

Yours faithfully,

 

* Delete if letter is being given by underwriters and not brokers.

 

19

Appendix “A”

(Insert details of the insurance terms)

 

20

Appendix “B”

(Insert copy of the Loss Payable Clause)

 

21

Appendix “C”

(Insert copy of the Notice of Insurance Assignment)

 

22

schedule D: FORM OF LETTER OF UNDERTAKING TO BE GIVEN BY P & I CLUB

	 	 	 
	To:

	 	HOLLANDSCHE BANK-UNIE N.V. (the “Bank”)
	 

	 	Coolsingel 104
	 

	 	3011 AG Rotterdam
	 

	 	the Netherlands

Dated [...]

Dear Sirs,

m.v. “FREE DESTINY” (the “Vessel”)

We note you have taken an assignment by ADVENTURE TWO S.A. of Majuro, Marshall Islands (the
“Assignor”) of the insurances on the Vessel. So far as this Association is concerned, the
Managers do not consent to such assignment for the purposes of Rule                     , other
than to give efficacy to the Loss Payable Clause set out below and subject always to the
Association’s rights under Rule                     .

We do confirm however that the Vessel is entered in this Association for Protection and Indemnity
risk on the terms and conditions set out or to be set out in the Certificate of Entry. Furthermore,
in consideration of your agreeing to the entry or continuing entry of the ship in this Association,
the Managers agree that:

	(a)	 	the Assignor shall not cease to be insured by the Association in respect of the Vessel by
reason of such assignment (see Rule                     ); and
	 
	(b)	 	notwithstanding that the Vessel has been mortgaged to you and that no undertaking or
guarantee has been given to the Association to pay all contributions due in respect of the
Vessel, the Assignor does not cease to be insured by reason of the operation of Rule                    .

It is further agreed that the following Loss Payable Clause will be included in the Certificate of
Entry:

“Payment of any recovery the Assignor is entitled to make out of the funds of the Association in
respect of any liability, costs or expenses incurred by it shall be made to the Assignor or to its
order unless and until the Association receives notice from the Bank that the Assignor is in
default under the mortgage, in which event all recoveries shall thereafter be paid to you for
distribution by the Bank to itself and/or to its order provided always that no liability whatsoever
shall attach to the Association its

 

23

Managers or their agents for failure to comply with the latter obligation until after the expiry of
two clear business days from the receipt of such notice”.

The Association undertakes:

	(a)	 	to inform you if the Association gives the Assignor notice under Rule   that
its insurances in the Association in respect of such ship is to cease at the end of the then
current policy year;
	 
	(b)	 	to give 14 days’ notice of the Association’s intention to cancel the insurance of the
Assignor by reason of his failure to pay when due and demanded any sum due from him to the
Association; and
	 
	(c)	 	to advise you promptly if the Vessel ceases to be entered in the Association.

Yours faithfully,

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