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 NAUTADUTILH N.V. ROTTERDAM

 

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 atCoolsingel 104, 3011 AG Rotterdam, the Netherlands (the “Mortgagee”);
WHEREAS:
(1)   the Mortgagor is the sole, absolute, legal and beneficial owner of the vessel described anddefined in clause 1.1;
 
(2)   by, and subject to and upon the terms and conditions of (i) a credit agreement signed by theMortgagee on the 23rd day of September 2005 and signed by the Mortgagor on the 26th day ofSeptember 2005 and in which Adventure Three S.A. assumed joint and several liability towardsthe Mortgagee for all sums which Mortgagor will owe to the Mortgagee under the creditagreement from time to time and (ii) a short-term loan agreement dated the 26th day ofSeptember 2005 and made between the Mortgagor and the Mortgagee (as each of the same may beamended, supplemented or varied from time to time together with the therein referred to HBUGeneral Credit Provisions dated January 1999 collectively the “Financial Agreement”,copies of which are annexed hereto as Exhibit A, B and C respectively), the Mortgagee agreedto make available to the Mortgagor by way of an overdraft facility the amount of USD3,700,000.00 (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 ofthe Mortgagee a first preferred mortgage over the Vessel (as hereinafter defined) for securingthe 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 interestthereon 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 andcompliance with by the Mortgagor of all the covenants, terms and conditions contained inthe Financial Agreement and this Mortgage, has duly authorized the execution and deliveryof this First Preferred Mortgage under and pursuant to Chapter 3 of the Maritime Act, 1990of the Republic of the Marshall Islands (as amended) which is executed by the Mortgagor inconsideration 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 contemplatedherein and/or the Financial Agreement;
 
    “DOC” means a document of compliance issued to an Operator in accordance with theISM Code;
 
    “Dollars” and “USD” means the lawful currency of the United States ofAmerica;
 
    “Earnings” means all moneys whatsoever from time to time due or payable actuallyor 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 underany contract or other agreement or arrangement with any operator, income arising underpooling arrangements, compensation payable to the Mortgagor as a result of, or otherwisein connection with, the requisition of the Vessel for hire, remuneration for salvage andtowage services, demurrage and detention moneys, and all damages for breach, and allpayments for, or otherwise in connection with any variation or termination of anycharterparty, contract or other agreement or arrangement in respect of, or otherwise inconnection with the employment of the Vessel;
 
    “Environmental Claim” means:
  (a)   any and all enforcement, clean-up, removal or other governmental, judicialor regulatory action or order or claim instituted or made pursuant to anyEnvironmental 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 Managermay be liable for Environmental Claims arising from the Spill (other thanthe Environmental Claims arising and fully satisfied before the date of thisMortgage); and/or
 
  (ii)   the Vessel may be arrested or attached in connection withany 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 thepollution or protection of human health or environment (including, without limitation theUnited States Oil Pollution Act of 1990 and any comparable laws of the individual Statesof the United States of America);
 
    “Environmentally Sensitive Material” means pollutions, contaminants, toxicsubstances, oil and its products and all hazardous substances and any other substancewhose release into the environment is regulated, prohibited or penalised by or pursuant toany Environmental Law;
 
    “Event of Default” means any one of the events of default specified and referredto 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 withoutlimitation all entries of the Vessel in a protection and indemnity or war risksassociation which are from time to time in place or taken out or entered into by or forthe benefit of the Mortgagor in respect of, or otherwise in connection with, the Vesseland/or her Earnings or any part thereof and all the benefits thereof, including withoutlimitation all claims of whatsoever nature and all return of premiums;
 
    “ISM Code” means the International Safety Management Code for the Safe Operationof Ships and for Pollution Prevention (as amended, including any

 

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    regulation issued thereunder), as adopted by the Assembly of the International MaritimeOrganisation on 4 November 1993 by resolution A.741 (18) and incorporated on 19 May 1994as 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 StatesDollars) or the equivalent thereof in any other currency;
 
    “Manager” means such manager of the Vessel as approved by the Mortgagee inwriting;
 
    “Material Adverse Change” means (a) any material adverse change in the business,assets, condition (financial or otherwise), operations, performance or prospects of any ofthe Security Parties, (b) any material adverse effect on the ability of any of theSecurity Parties to perform any of its obligations under any of the Security Documents towhich it is a party or (c) any material adverse effect on the validity, binding nature, orenforceability of any of the Security Documents;
 
    “Operator” means any entity who is at any time during the Security Periodconcerned in the operation of the Vessel and falls within the definition of “Company” setout in the ISM Code;
 
    “Outstanding Indebtedness” means (a) the aggregate of all sums of money actual orcontingent, present or future due by the Mortgagor to the Mortgagee under or inconnection with the Security Documents or any of them and (b) all costs and expensesincurred in connection with the Security Documents, including any taxes payable bythe Mortgagee (other than on net profit), as well as any reasonable costs andexpenses incurred by the Mortgagee in connection with the Mortgagor’s failure tocomply with or fulfil any obligation under the Security Documents at the time and inthe manner required, including collection charges, disbursements, fees of legalconsultants and other experts and costs of proceedings, irrespective against whombrought;
 
    “Pollutant” means and includes oil and its products, any other polluting, toxic orhazardous substance and any other substance whose release into the environment isregulated or penalised by Environmental Laws;
 
    “Requisition Compensation” means all moneys or other compensation payable byreason of requisition for title or other compulsory acquisition of the Vessel

 

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    otherwise than by requisition for hire;
 
    “Security Documents” means the Financial Agreement, this Mortgage and any othersuch document as may be executed from time to time to secure and/or regulate theOutstanding Indebtedness;
 
    “Security Interest” means a mortgage, charge (whether fixed or floating), pledge,lien, hypothecation, assignment or other security interest or arrangement of any kindwhatsoever;
 
    “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 andterminating on the date upon which all moneys payable or to become payable from time totime pursuant to the terms of the Financial Agreement, this Mortgage and/or any of theother Security Documents shall have been paid and discharged in full;
 
    “SMC” means a safety management certificate issued in respect of the Vessel inaccordance with the ISM Code;
 
    “Spill” means any actual or threatened emission, spill, release or discharge of aPollutant 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 Vesselotherwise than by requisition for hire;
 
  (c)   capture seizure arrest detention or confiscation of the Vessel by anygovernment or entity or individual acting or purporting to act on behalf of anygovernment unless the Vessel be released and restored to the Mortgagor from suchcapture seizure arrest detention or confiscation within thirty (30) days after theoccurrence thereof;
    “Vessel” means the Marshall Islands flag vessel “FREE DESTINY” with OfficialNumber […], gross tonnage approximately […], net tonnage approximately […], built in[…] at […], by […] and includes her engines,

 

6

    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 hereafterrequired.
 
1.2   In clause 6.1:
 
    “excess risks” means the proportion (if any) of claims for general average andsalvage charges and under the Institute Collision Clause not recoverable in consequence ofthe value at which a vessel is assessed for the purpose of such claims exceeding herinsured value;
 
    “protection and indemnity risks” means the usual risks (including pollution and aFreight Demurrage and Defence cover) covered by a protection and indemnity associationincluding the proportion (if any) not recoverable in case of collision under the InstituteCollision Clause;
 
    “war risks” includes the risks of mines and all risks excluded from the standardform 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 ofconflict between the two instruments the provisions of the Financial Agreement shall prevailin 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 beignored in the interpretation of this Mortgage;
 
  (b)   unless the context otherwise requires, words denoting the singular numbershall include the plural and vice versa;
 
  (c)   references to clauses and schedules shall be construed as references toclauses 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 thereofor 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 totime;
 
  (f)   words and expressions defined in the Financial Agreement shall, unless itis 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 orindividual shall include their respective successors in title, estates and, in theevent 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 theterms and conditions hereof and that such granting and performance will notcause 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 ofthis Mortgage, would have required the consent of the Mortgagee under clause6.1(k) and there is no existing agreement or arrangement whereby the Earningsmay be shared with any other entity or individual;
 
  (d)   Security Interest
 
      the Vessel is not subject to any Security Interest (save as constituted by theSecurity 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 beendelivered to the Mortgagee) and has obtained and maintains a SMC (a true copy ofwhich has been delivered to the Mortgagee) in respect of the Vessel, both are infull force and effect and nothing has happened which might cause either to bewithdrawn, 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 tothe Vessel, its operation and management and the business of the Mortgagor (as nowconducted and as reasonably anticipated to be conducted in the future) have beencomplied with;
 
  (b)   no Environmental Claim has been made or threatened or is pending againstthe Mortgagor, the Manager or otherwise in connection with the Vessel and not fullysatisfied; and
 
  (c)   no Environmental Incident has occurred.
3.   Payment covenants
 
    The Mortgagor hereby covenants duly to observe and perform all its obligations under theFinancial 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 andotherwise 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 FinancialAgreement at the rate or rates from time to time applicable thereto in the manner andupon the terms set out in the Financial Agreement;
 
  (c)   to pay all other moneys payable by the Mortgagor under or in connectionwith the Security Documents or any of them at the times and in the manner thereinspecified.

 

9

4.   Charging Clause
 
4.1   In pursuance of the Financial Agreement and in consideration of the premises and by way ofsecurity for payment of the Outstanding Indebtedness and the performance of the obligationsunder the Financial Agreement, this Mortgage and the other Security Documents by theMortgagor, the Mortgagor with full title guarantee hereby mortgages and chargesand agrees to mortgage and charge to and in favour of the Mortgagee all its right, titleand interest (present and future) to and in the Vessel TO HAVE AND HOLD the same unto and infavour of the Mortgagee forever upon the terms set forth in this Mortgage to secure theOutstanding Indebtedness and further to secure the performance and observance of and thecompliance with the covenants, terms and conditions in the Financial Agreement, this Mortgageand the other Security Documents contained.
 
4.2   Notwithstanding anything to the contrary in this Mortgage it is not intended that anyprovision of this Mortgage shall waive the preferred status of this Mortgage and that if anyprovision or part thereof in this Mortgage shall be construed as waiving the preferred statusof 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 tothe Vessel and the Mortgagee shall not be under any obligation of any kind whatsoever inrespect thereof or be under any liability whatsoever in event of any failure by the Mortgagorto 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 Documentsshall be held by the Mortgagee as a continuing security for the payment of theOutstanding Indebtedness and the performance and observance of and compliance withall obligations of the Mortgagor under the Security Documents or any of them, expressor implied;
 
  (b)   the security so created shall not be satisfied by any intermediate paymentor satisfaction of any part of the Outstanding Indebtedness and shall be in additionto and shall not in any way prejudice or affect and may be enforced by the Mortgageewithout prior recourse to the

 

10

      security created by any other of the Security Documents or by any other securitynow or hereafter held by the Mortgagee and shall not in any way be prejudiced oraffected thereby or by the invalidity or unenforceability thereof or by theMortgagee releasing, modifying or refraining from perfecting or enforcing any ofthe same or granting time or indulgence or compounding with any liable entity orindividual;
 
  (c)   all the rights, remedies and powers vested in the Mortgagee under thisMortgage 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 orat law (whether Marshall Islands or otherwise) and that all the powers so vested inthe Mortgagee may be exercised from time to time and as often as the Mortgagee maydeem expedient; and
 
  (d)   the Mortgagee shall not be obliged to make any enquiry as to the nature orsufficiency of any payment received by it under this Mortgage or to make any claim orto take any action or to enforce any rights and benefits hereby assigned to theMortgagee 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 Mortgagoragainst:
  (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 defencecover);
 
  (D)   where the Vessel shall, at any timeenter waters under

 

11

      the jurisdiction of the United States of America and/or theExclusive Economic Zone (as defined in the United States OilPollution Act of 1990) and oil pollution liability risks inexcess of the cover for oil pollution liability risks includedwithin the cover for protection and indemnity risks;
      and, at the option of the Mortgagee, either (i) to effect and keepeffected, in the name and for the benefit of the Mortgagee, but at theexpense of the Mortgagor or (ii) to reimburse the Mortgagee on demandfor any and all costs incurred by it in effecting and maintaining suchinsurance in relation to the Vessel:
  (E)   a mortgagee’s interest insurance; and
 
  (F)   (where the Vessel shall, at any timeenter waters under the jurisdiction of the United States of Americaand/or the Exclusive Economic Zone (as defined in the United StatesOil Pollution Act of 1990)) an insurance against the possibleconsequences of pollution due to, without limitation, oil or anyother substance involving the Vessel including, without limitation,the risk of expropriation or sequestration of the Vessel or theimposition of any Security Interest having priority over theMortgage (“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 suchcurrency and upon such terms and through such brokers (hereinaftercalled the “approved brokers”) and with such insurancecompanies, underwriters, war risks and protection and indemnityassociations (hereinafter called the “approvedassociations”) as shall from time to time be approved inwriting by the Mortgagee PROVIDED HOWEVER that the insurancesagainst war risks and protection and indemnity risks may beeffected by the entry of the Vessel with such war risks andprotection and indemnity risks associations as shall from time totime be approved in writing by the Mortgagee and if so

 

12

      required by the Mortgagee (but without, as between the Mortgagor and theMortgagee, 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 afleet cover, to procure that the approved brokers and (as the casemay be) the approved associations shall undertake to the Mortgageethat they shall neither set off against any claims in respect ofthe Vessel any premiums due in respect of other vessels under suchfleet cover or any premiums due for other insurances, nor cancelsuch insurance in respect of the Vessel for reason of non-paymentof premiums for other vessels under such fleet cover or of premiumsfor such other insurances and shall undertake to issue a separatepolicy in respect of the Vessel if and when so requested by theMortgagee;
 
  (iv)   Renewals
 
      at least fourteen (14) days before the relevant policies, contracts orentries expire, to notify the Mortgagee in writing of the names of thebrokers and/or the war risks and protection and indemnity risksassociations proposed to be employed by the Mortgagor for the purposesof the renewal of such insurances (subject to the Mortgagee’s approvalof such brokers and/or associations) and of the amounts in which suchinsurances are proposed to be renewed and the risks to be covered and,(subject to compliance with any requirements of the Mortgagee pursuantto 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 thecase may be) such associations will at least seven (7) days before suchexpiry confirm such renewals in writing to the Mortgagee;
 
  (v)   Payments
 
      punctually to pay all premiums, calls, contributions or other sumspayable in respect of the Insurances and to produce all relevantreceipts 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 mayfrom time to time be required by or in connection with any protectionand indemnity or war risks association or required by or in connectionwith 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 dulyendorsed upon all slips, cover notes, policies, certificates of entry orother instruments of insurance issued or to be issued in connection withthe Insurances by means of a loss payable and notice of cancellationclause and a notice of assignment (signed by the Mortgagor) in suchforms as from time to time required by the Mortgagee;
 
  (viii)   Instruments of insurance
 
      to procure that all instruments of the Insurances shall be depositedwith the approved brokers and that such brokers shall (if so required bythe Mortgagee) furnish the Mortgagee with pro forma copies thereof and aletter or letters of undertaking in such form as may from time to timebe required by the Mortgagee;
 
  (ix)   Letter(s) of undertaking
 
      to procure that the protection and indemnity and/or war risksassociations wherein the Vessel is entered shall (if so required by theMortgagee) furnish the Mortgagee with a letter or letters of undertakingin 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 otherwisethan in conformity with the terms of the instruments of the Insurances(including any warranties express or implied

 

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      therein)without first obtaining the consent to such employment of theinsurers and complying with such requirements as to extra premium orotherwise as the insurers may prescribe;
 
  (xi)   Reimbursement
 
      to reimburse to the Mortgagee on demand any costs or expenses incurredby the Mortgagee in obtaining (if and when so required by the Mortgagee)reports from an independent marine insurance broker appointed by theMortgagee as to the adequacy of the insurances effected or proposed tobe effected pursuant to this clause 6 and procure that there isdelivered to such broker any and all such information in relation tosuch 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 ormight render any instrument of insurance invalid, void, voidable orunenforceable or render any sum paid thereunder repayable in whole or inpart;
 
  (xiii)   Co-operation with collecting insurance moneys
 
      to do all things necessary and provide all documents, evidence andinformation to enable the Mortgagee to collect or recover any moneyswhich 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 inrespect of a Total Loss and any major casualty (that is to say anycasualty the claim in respect of which exceeds the Major Casualty Amountinclusive of any deductible) which shall be payable to the Mortgagee asare paid to the Mortgagor for the purpose of making good the loss andfully repairing all damage in respect whereof the insurance moneys shallhave been received;

 

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  (xv)   Voyage declaration
 
      to make all such quarterly or other voyage declaration as may from timeto time be required by the protection and indemnity risks association tomaintain cover for trading (including, without limitation, trading tothe United States of America and Exclusive Economic Zone (as defined inthe United States Oil Pollution Act 1990))
      PROVIDED ALWAYS THAT the Mortgagee shall be entitled to review the requirementsof this clause 6.1(a) from time to time in order to take account ofsignificant changes in circumstances after the date of this Mortgage (suchchanges in circumstances include, without limitation, changes in the availabilityor the cost of insurance coverage). The Mortgagee may notify the Mortgagor inwriting from time to time of any proposed modification to the requirements ofthis clause 6.1(a) which it deems appropriate in the circumstances, andsuch modification shall take effect on and from the date it is notified inwriting to the Mortgagor as an amendment to this clause 6.1(a) and shallbind the Mortgagor accordingly;
 
  (b)   Name and Registration
 
      not to change the name of the Vessel and to keep the Vessel registered with fullregistration as a Marshall Island ship in the Republic of the Marshall Islands atthe Port of Majuro in the name of the Mortgagor and not do or suffer to be doneanything, or omit to do anything, the doing or omission of which could or mightresult in the Vessel being required to be registered otherwise than as a MarshallIslands ship in the Republic of Marshall Islands at the Port of Majuro and not todo or suffer to be done anything, or omit to do anything, the doing or omissionof which could or might result in such registration being forfeited, terminatedor imperilled and not to register the Vessel or permit its registration under anyother name, flag or at any other port or with any other numbers without the priorwritten consent of the Mortgagee and to procure the renewal of such registrationof the Vessel as a Marshall Islands ship with full registration at least onemonth before the same shall expire;
 
  (c)   Operator
  (i)   to comply and to procure that the Operator will complywith,

 

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      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 Operatorwill inform the Mortgagee if there is any threatened or actual withdrawal,suspension, cancellation or modifaction of its or the Operator’s DOC or theVessel’s SMC; and
 
  (iii)   promptly to inform and to procure that the Operator willpromptly inform the Mortgagee upon the issue to the Mortgagor or theOperator 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 orbusiness which is forbidden by international law or is otherwise illegal or incarrying illegal or prohibited goods or in any manner whatsoever which may renderthe 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 politicalconfrontation or hostilities (whether or not war shall have been formallydeclared) or during any civil war or insurrection, not to carry or permit to becarried on or in the Vessel any cargo that is or may be declared contraband ofwar or that may render the Vessel or its cargo liable to penalty, destruction,seizure, or confiscation unless special war risks policies previously approved bythe Mortgagee shall have been effected prior to undertaking any such risk and todeliver 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 theMortgagee to create or suffer the creation of any Security Interest on or inrespect of the Vessel to or in favour of any entity or individual other thanthe Mortgagee;
 
  (ii)   not without the previous consent in writing of theMortgagee (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 Vesselor any share or interest therein;

 

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  (f)   Prevention of and release from arrest
 
      to pay and discharge all debts and liabilities which may give rise to maritimestatutory or possessory liens on the Vessel or to claims enforceable by actionsin rem against the Vessel or similar process so as to keep her free from arrestor detention and in the event of arrest or detention of the Vessel beingthreatened or effected forthwith to notify the Mortgagee thereof and to take allsteps and to make all payments necessary to obtain the release of the Vessel fromsuch 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 complywith the provisions of all regulations and requirements (statutory orotherwise) from time to time applicable to the Vessel and to comply with allclass recommendations of its classification society in accordance with theirterms; and
 
  (ii)   to keep the Vessel in good and efficient state of repairand procure that all repairs to or replacement of any damaged, worn or lostparts or equipment are effected in such manner (both as regards workmanshipand 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 forclassification purposes and if so required to supply to the Mortgagee copies ofall survey reports issued in respect thereof;
 
  (i)   Inspections
 
      to permit the Mortgagee to inspect the condition of the Vessel at all reasonabletimes and to give the Mortgagee sufficient notice whenever practicable ofdry-dockings, surveys and major repairs so as to enable the Mortgagee’s surveyorsor other entity or individual appointed by it to attend thereat and if sorequired to supply to the Mortgagee copies of survey reports on the Vessel;

 

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  (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 ofwhich her structure, type or performance characteristics could or mightmaterially be altered or her value materially reduced; or
 
  (ii)   remove any material part of the Vessel or any equipmentthe value of which is such that its removal from the Vessel would materiallyreduce the value of the Vessel without replacing the same with equivalentparts or equipment owned by the Mortgagor free from encumbrances; or
 
  (iii)   install on the Vessel any equipment owned by a thirdparty which cannot be removed without causing damage to the structure orfabric of the Vessel and not to permit any of the foregoing by any thirdparty;
  (k)   Chartering
 
      not without the prior written consent of the Mortgagee, which shall notunreasonably be withheld, to:
  (a)   let the Vessel on demise charter for any period; or
 
  (b)   let the Vessel on time or consecutive voyage charter orotherwise dispose of the Vessel, except for a time or consecutive voyagecharter agreement for a period which does not exceed or which by virtue ofany 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, heremployment, position and engagements, particulars of all towages and salvages andcopies of all charters and other contracts concerning the Vessel;

 

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  (m)   Notification of certain events
 
      to notify the Mortgagee forthwith by letter or in case of urgency by telefax ofany accident to the Vessel involving repairs the cost whereof is likely to exceedthe Major Casualty Amount, of any occurrence whereby the Vessel has or is likelyto 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 immediatelycarried out and of any petition or notice or meeting to consider any resolutionto dissolve wind-up or liquidate the Mortgagor;
 
  (n)   Reimbursement
 
      to pay to the Mortgagee on demand all moneys whatsoever which the Mortgagee shallor may expend be put to or become liable for in or about the protectionmaintenance or enforcement of the security created by this Mortgage and the otherSecurity Documents or in or about the exercise by the Mortgagee of any of thepowers vested in it hereunder or thereunder and to pay interest thereon at thedefault rate as per the Financial Agreement;
 
  (o)   Costs
 
      to pay on demand to the Mortgagee (or as it may direct) the amount of allinvestigation and legal expenses of any kind whatsoever stamp duties (if any)registration fees and any other charges incurred by the Mortgagee in connectionwith the preparation completion registration and discharge of the SecurityDocuments or otherwise in connection with the Outstanding Indebtedness and thesecurity therefor and to pay interest thereon at the default rate as per theFinancial Agreement;
 
  (p)   Manager
 
      not without the previous consent in writing of the Mortgagee (and then only onand subject to such terms as the Mortgagee may impose) to appoint a manager ofthe 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 workbeing done upon her in an amount exceeding or likely to exceed the Major CasualtyAmount, unless such entity or individual shall first have given to the Mortgageeand in terms satisfactory to it a written undertaking not to exercise any lien onthe 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 theVessel and her Earnings and Insurances and to keep proper books of account inrespect of the Vessel and her Earnings and as and when the Mortgagee may sorequire to make such books available for inspection on behalf of the Mortgageeand furnish satisfactory evidence that the wages allotments the premiums forsocial insurances and pension contributions of the master and crew are beingregularly paid and that all deductions from crew’s wages in respect of MarshallIslands tax liability are being properly accounted for and that the master has noclaim for disbursements other than those incurred by him in the ordinary courseof 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 andexhibit it on demand to any person having business with the Vessel or to anyrepresentative of the Mortgagee and to place and keep prominently displayed inthe chartroom and in the master’s cabin of the Vessel a notice, printed in plaintype of such size that the paragraph of reading matter shall cover a space notless 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 ofChapter 3 of the Maritime Act 1990 of the Republic of the Marshall Islands (asamended). Under the terms of said Mortgage, neither the Owner, any charterer northe Master of the Vessel nor any other person has any right, power or authorityto create, incur or permit to be imposed upon this vessel any lien whatsoeverother than for crew’s wages or salvage.”; and


 

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  (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 anyCourt, to promptly notify the Mortgagee thereof by telex or fax confirmed by aletter at its office as herein referred to and within thirty (30) days cause theVessel to be released and all liens thereon to be discharged except for thisMortgage and promptly notify the Mortgagee within 48 (forty-eight) hours after ishas become known to the Mortgagor of any average or salvage incurred by theVessel.
6.2   Environmental Matters
 
    The Mortgagor hereby further covenants with the Mortgagee that throughout the SecurityPeriod and unless the Mortgagee shall have otherwise agreed in writing it will:
  (a)   comply, or procure compliance with, all Environmental Laws andEnvironmental Approvals relating to the Vessel, its operation or management and thebusiness 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 suchdetail as the Mortgagee shall require, of the Mortgagor’s response to any suchEnvironmental 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 andthe other Security Documents be entitled (but not bound) at any time and as often as may benecessary to take any such action as it may in its discretion think fit for the purpose ofprotecting or maintaining the security created by this Mortgage (including, withoutlimitation, 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 inor

 

22

    about the protection or maintenance of the said security together with default interest asper the Financial Agreement payable thereon shall be repayable to it by the Mortgagor ondemand.
7.2   Without prejudice to the generality of clause 7.1:
  (a)   if the Mortgagor does not comply with the provisions of clause6.1(a) the Mortgagee shall be entitled (but not bound) to effect or to replaceand renew and thereafter to maintain the Insurances in such manner as in itsdiscretion it may think fit and to require that all policies, contracts and otherrecords relating to the Insurances (including details of any correspondenceconcerning outstanding claims) be forthwith delivered to such brokers as theMortgagee may nominate and to collect, recover, compromise and give a good dischargefor all claims then outstanding or thereafter arising under the Insurances or any ofthem and to take over or institute (if necessary using the name of the Mortgagor) allsuch proceedings in connection therewith as the Mortgagee in its absolute discretionmay think fit and to permit the brokers through whom the collection or recovery iseffected 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 itdeems 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 payand discharge all such debts, damages and liabilities and all such tolls, dues,taxes, assessments, charges, fines, penalties and other outgoings as are thereinmentioned and/or to take any such measures as it deems expedient or necessary for thepurpose of securing the release of the Vessel.
8.   Events of Default
 
    Upon the happening of any of the following events the Outstanding Indebtedness shallimmediately become due and payable to the Mortgagee without notice and without thenecessity of any Court declaration to the effect that an Event of Default has taken place:

 

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  (a)   Non-payment
 
      any of the Security Parties shall fail to pay on the due date (or before theexpiry of any grace period applicable thereto) any sum due under any SecurityDocument; or
 
  (b)   Misrepresentation
 
      any representation or warranty made by any of the Security Parties in anySecurity Document or any notice, certificate or statement made or deliveredhereunder or thereunder is or proves to have been incorrect in any materialrespect when made, or if replaced at any time during the continuance of thisMortgage with reference to the facts subsisting at such time, would no longer becorrect and accurate in all material respects; or
 
  (c)   Other obligations
 
      any of the Security Parties defaults in the due performance and observance of anyof the terms, undertakings or conditions of — or the due compliance with itsobligations under — any Security Document and, if and only if such default otherthan set out under clause 8(a) is capable of remedy, such default is notremedied within 30 (thirty) days; or
 
  (d)   Cross-default
 
      any loan, debt, guarantee or other obligation constituting indebtedness of any ofthe Security Parties becomes due prior to its specified maturity by reason ofdefault (unless such default is caused solely by the Vessel becoming a TotalLoss) or is not paid when due or any of the Security Parties is otherwise inmaterial breach of or default under any agreement, deed or mortgage under orpursuant to which such indebtedness was incurred unless in any such case thenon-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 ofthe property of any of the Security Parties and is not discharged within 30(thirty) days of having been so levied or sued out; or

 

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  (f)   Insolvency
 
      any of the Security Parties suspends or threatens to suspend its operations ortransfers or disposes of all or a substantial part of its undertakings or assetsor transfers its business to another country or ceases to pursue its corporateobjects or changes its corporate statute in any material way; or
 
  (g)   any of the Security Parties (i) is unable or admits in writing itsinability to pay its lawful debts as they mature, or (ii) makes a general assignmentor 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 orderor judgement is given by any court for the liquidation, winding-up, reorganisation orreconstruction (where, in the opinion of the Mortgagee, such reorganisation orreconstruction might prejudice the Mortgagee’s position hereunder or under any of theSecurity Documents) of any of the Security Parties or for the appointment of areceiver, trustee, liquidator, administrator or administrative receiver or similarofficer 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 avoluntary 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 necessaryfor the validity, enforceability or legality of any Security Document or theperformance thereof is not being obtained or, if obtained, ceases for any reasonto 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 Vesselor the Vessel ceases to be registered under Marshall Islands flag; or

 

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

 

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      within 30 (thirty) days of the Mortgagee giving notice to any of the SecurityParties; or
 
  (r)   Other events of default
 
      if the Outstanding Indebtedness becomes immediately due and payable to theMortgagee in accordance with the provisions of the Financial Agreement or any ofthe other Security Documents.
9.   Enforceability and Mortgagee’s powers
 
    Upon the happening of any Event of Default the Mortgagee shall become forthwith entitledto enforce the security created by this Mortgage without prior notice and in any manneravailable to it and in such sequence as the Mortgagee may in its absolute discretionprefer and when it may see fit to put into force and to exercise all or any of the rightspowers and remedies conferred upon mortgagees by law and/or possessed by it as mortgageeand chargee of the Vessel by virtue of this Mortgage and in particular (without limitingthe generality of the foregoing):
  (a)   to take possession of the Vessel;
 
  (b)   to require that all policies contracts, certificates of entry and otherrecords relating to the Insurances (including details of and correspondenceconcerning outstanding claims) be forthwith delivered to such brokers as theMortgagee may nominate;
 
  (c)   to collect, recover, compromise and give a good discharge for all claimsthen outstanding or thereafter arising under the Insurances or any of them or inrespect 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 connectiontherewith as the Mortgagee in its absolute discretion thinks fit and to permit thebrokers through whom collection or recovery is effected to charge the usual brokeragetherefor;
 
  (d)   to discharge compound release or compromise claims against the Mortgagor inrespect of the Vessel which have given or may give rise to any charge or lien on theVessel or which are or may be enforceable by proceedings against the Vessel;
 
  (e)   to terminate any charterparty in respect of the Vessel without being

 

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      responsible for any loss thereby occurred;
 
  (f)   to sell the Vessel or any share therein with or without prior notice to theMortgagor and with or without the benefit of any charterparty or other contract forher employment by public auction or private contract at such place and upon suchterms as the Mortgagee in its absolute discretion may determine with power topostpone any such sale and without being answerable for any loss occasioned by suchsale or resulting from postponement thereof;
 
  (g)   to manage, insure, maintain and repair the Vessel and to employ or lay upthe Vessel in such manner and for such period as the Mortgagee in its absolutediscretion deems expedient and for the purposes aforesaid the Mortgagee shall beentitled to do all acts and things incidental or conducive thereto and in particularto enter into such arrangement respecting the Vessel her insurance managementmaintenance repair classification and employment in all respects as if the Mortgageewas the owner of the Vessel and without being responsible for any loss therebyincurred;
 
  (h)   to recover from the Mortgagor on demand any such losses as may be incurredby the Mortgagee in or about the exercise of the power vested in the Mortgagee undersub-clause (g) of this clause with interest thereon at the default rate asper the Financial Agreement from the date when such losses were incurred by theMortgagee until the date of payment whether before or after any relevant judgment;
 
  (i)   to recover from the Mortgagor on demand all expenses payments anddisbursements incurred by the Mortgagee in or about or incidental to the exercise byit of any of the powers aforesaid together with interest thereon at the default rateas per the Financial Agreement from the date when such expenses payments ordisbursements were incurred by the Mortgagee until the date of payment whether beforeor after any relevant judgment
    PROVIDED ALWAYS that (i) the Mortgagee shall not be liable as mortgagee in possession inrespect of the Vessel to account or be liable for any loss upon realisation or for anyneglect or default of any nature whatsoever in connection therewith for which a mortgageein possession may be liable as such and (ii) upon any sale of the Vessel or any sharetherein by the Mortgagee pursuant to sub-clause (f) of this clause the purchasershall not be bound to see or enquire whether the Mortgagee’s power of sale has arisen inthe manner herein

 

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    provided and the sale shall be deemed to be within the power of the Mortgagee and thereceipt of the Mortgagee for the purchase money shall effectively discharge the purchaserwho shall not be concerned with the manner of application of the proceeds of sale or be inany way answerable therefor.
 
10.   Application of Moneys
 
    Upon the happening of any Event of Default the Mortgagee shall become forthwith entitledas and when it may see fit to apply any amounts received by it from the Mortgagor and theMortgagee 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 clause9.(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 remedyvested in it under the Security Documents or any of them shall in any way prejudice orimpair such right power or remedy or be construed as a waiver of or as acquiescence in anydefault by the Mortgagor and in event of the Mortgagee at any time agreeing to waive anysuch right power or remedy such waiver shall be revocable by the Mortgagee at any time andthe right power or remedy shall thereafter be again exercisable as though there had beenno such waiver.
 
12.   Delegation of Powers
 
    The Mortgagee shall be entitled at any time and as often as may be expedient to delegateall or any of the powers and discretions vested in it by the Security Documents or any ofthem (including the powers vested in it by virtue of clause 7.2(a) and clause14) in such manner upon such terms and to such entities or individuals as theMortgagee in its absolute discretion may think fit.

 

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13.   Indemnity
 
13.1   The Mortgagor hereby agrees and covenants to indemnify the Mortgagee against all lossesactions claims expenses demands obligations and liabilities whatsoever and whensoever arisingwhich the Mortgagee may incur in respect of, in relation to or in connection with the Vesselor otherwise, howsoever, in relation to or in connection with any of the matters dealt with inthe Security Documents or any of them.
 
13.2   The Mortgagor hereby agrees and undertakes to indemnify the Mortgagee on demand against alllosses, actions, claims, expenses, demands, obligations and liabilities sustained or incurredas result of or in connection with any Environmental Claim being made against the Mortgagee orotherwise 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 theMortgagor’s obligations under this Mortgage, hereby irrevocably appoints the Mortgagee as itsattorney 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 theMarshall Islands Ships Registry); provided, however, that such power shall not beexercisable by or on behalf of the Mortgagee until this Mortgage shall have becomeimmediately enforceable pursuant to clause 9; and
 
  (b)   executing, signing, perfecting, doing and (if required) registering everysuch 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 theMortgagee shall not put any entity or individual dealing with the Mortgagee upon any enquiryas to whether this Mortgage has become enforceable nor shall such entity or individual be inany way affected by notice that this Mortgage has not become enforceable and, in relation toboth clauses 14.1(a) and 14.1(b), the exercise by the Mortgagee of such power shall beconclusive evidence of its right to exercise the same.

 

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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 orthing as in the opinion of the Mortgagee may be necessary or desirable for the purpose ofmore effectually mortgaging and charging the Vessel or perfecting the security constitutedor 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 theMaritime Act, 1990 of the Marshall Islands (as amended), the total amount of this Mortgageis USD 3,700,000.00 (three million seven hundred thousand United States Dollars) togetherwith interest thereon, fees, commissions and performance of mortgage covenants, and thedate of maturity is the 31st day of December 2015, and the discharge amount is the same asthe 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 inany way affected or impaired thereby.
 
18.   Notices
 
18.1   Any notice or other communication under or in connection with this Mortgage shall be inwriting 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







 

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    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 asfollows:
  (a)   if sent by personal delivery, upon delivery at the address of the relevantparty;
 
  (b)   if sent by courier service or registered mail three (3) Business Days afterthe date of dispatch; and
 
  (c)   if sent by facsimile, when dispatched.
    Any communication by facsimile sent by the Mortgagor to the Mortgagee shall be confirmedby 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 MarshallIslands.
 
19.2   Subject to clause 19.3, the courts of Rotterdam, the Netherlands shall have exclusivejurisdiction in relation to all matters which may arise out of or connection with thisMortgage with the exclusion of any other court of law.
 
19.3   For the exclusive benefit of the Mortgagee the Mortgagor agrees that the Mortgagee reservesthe right to commence proceedings in relation to any matter which arises out of or inconnection with this Mortgage in the courts of any place in the Netherlands other thanRotterdam or any country other than the Netherlands and which have jurisdiction to thatmatter.

 

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19.4   In this clause 19 “proceedings” means proceedings of any kind, including anapplication for a provisional or protective measure.
 
19.5   The Mortgagor hereby agrees that any writ, judgment or other notice of process shall besufficiently and effectively served on it, if served on it at the address specified inclause 18.1.
IN WITNESS whereof the Mortgagor has caused this Mortgage to be duly executed the day and yearfirst written.
         
SIGNED
    )  
by/s/ [ILLEGIBLE]    
    )  
as attorney-in-fact for
    )  
ADVENTURE TWO S.A.
    )  
in the presence of:
    )