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EXHIBIT 4(ii)(g)(1)
PREFERRED SHIP MORTGAGE
Vessel Name: MS PATRIOT
Official Number: 1103207
Name and Address of OCEANIC SHIP CO. 100%
Shipowner: c/o American Classic Voyages, Co.
2 North Riverside Plaza
Suite 200
Chicago, IL 60606
Attn: General Counsel
Name and Address of HAL ANTILLEN N.V., 100%
Mortgagee: c/o Holland America Line-Westours Inc.
300 Elliott Ave. West
Seattle, WA 98119 U.S.A.
Attn: General Counsel
Date of Mortgage: October 18, 2000
Amount of Mortgage: $84,500,000.00 excluding interest, expenses
and fees, as contemplated by 46
U.S.C.ss.31321(b)(3)
THIS PREFERRED SHIP MORTGAGE (the "Mortgage") is made effective as of
the 18th day of October, 2000, by OCEANIC SHIP CO., a Delaware corporation (the
"Shipowner"), in favor of HAL ANTILLEN N.V., a Netherlands Antilles corporation
(the "Mortgagee").
RECITALS:
A. Shipowner is the sole owner of the whole of the vessel MS PATRIOT,
Official Number 1103207 (the "Vessel") which vessel is duly documented in the
name of Shipowner under the laws and flag of the United States of America.
B. Mortgagee has made a loan to Shipowner in the principal amount of
Eighty-Four Million, Five Hundred Thousand Dollars (the "Loan") which loan is
evidenced by a promissory note, dated October 18, 2000, in the amount of the
Loan, payable to the order of Mortgagee (the "Note"). A Copy of the form of the
Note is attached hereto and incorporated herein as Exhibit A.
C. In consideration of Mortgagee having agreed to advance the Loan,
Shipowner has agreed to execute and deliver this Mortgage to Mortgagee for
purposes of securing payment to Mortgagee of the sums payable by Shipowner under
the Note and the performance of Shipowner of its obligations thereunder in
accordance with the terms thereof and of this Mortgage.
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NOW THEREFORE, THIS MORTGAGE WITNESSETH:
That in consideration of the premises and of the credit extended by
Mortgagee to Shipowner as above recited and of other good and valuable
consideration, the receipt whereof is hereby acknowledged, and in order to
secure the payment of the Loan evidenced by the Note and the payment of all such
other sums as may hereafter become secured by this Mortgage in accordance with
the terms hereof (the "Obligations"), and to secure the performance and
observance of and compliance with the covenants, terms and conditions herein and
in the Note, Shipowner does by these presents grant, convey, mortgage, pledge,
assign, transfer, set over and confirm the whole of the Vessel unto Mortgagee
and its successors and permitted assigns, together with all of the Earnings (as
hereafter defined) of the Vessel and all of Shipowner's right, title and
interest in and to the boilers, engines, machinery, masts, spars, sails,
rigging, boats, anchors, nets, chains, cables, tackle, apparel, furniture,
fittings, navigation equipment, propulsion equipment, fuel, lubricating and
other oils, consumables and other stores and equipment and all other
appurtenances to the Vessel appertaining or belonging, whether now owned or
hereafter acquired, whether on board or not, and all additions, improvements and
replacements hereafter made in or to the Vessel, or any part thereof, or in or
to the equipment and appurtenances aforesaid and including Shipowner's rights
under any leases in connection therewith, all of which property shall, including
the Earnings, be deemed to be included in the term "Vessel" as used in this
Mortgage.
As further security for the satisfaction of the Obligations, Shipowner
does also grant, convey, mortgage, pledge, assign, transfer, set over and
confirm to Mortgagee absolutely all rights and interests of every kind which now
or at any later time it has to, or in connection with, the Insurances and
Requisition Compensation (as such terms are hereafter defined).
This Mortgage is granted in order to secure the payment of all sums
payable by Shipowner under the Note and the performance by Shipowner of all
obligations thereunder in accordance with the terms thereof and of this
Mortgage, whether now existing or hereafter created. For purposes of filing and
recording this Mortgage as required by the provisions of Chapter 313 of Title 46
of the United States Code, as amended, the total amount of this Mortgage is
Eighty-Four Million, Five Hundred Thousand Dollars (US$84,500,000), plus
interest, fees, expenses, and performance of mortgage covenants. The discharge
amount is the same as the total amount.
TO HAVE AND TO HOLD the same unto Mortgagee and its successors and
assigns, as trustee, upon the terms herein set forth for the enforcement of the
payment of the Obligations and all interest thereon and to secure the
performance and observance of and compliance with the covenants, terms and
conditions in this Mortgage and in the Note contained;
PROVIDED, these presents are upon the condition that if Shipowner or
its successors or assigns shall pay or cause to be paid to the holders of the
Obligations, the principal of the indebtedness aforesaid and interest thereon as
and when the same shall become due and payable in accordance with the terms of
this Mortgage and of the Note, and all other such sums as may hereafter become
secured by this Mortgage in accordance with the terms hereof, and Shipowner
shall perform, observe and comply with all the covenants, terms and conditions
in the Note and in this Mortgage, expressed or implied, to be performed, then
these presents and the rights hereunder shall cease, determine and be void,
otherwise to be and remain in full force and effect.
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IT IS HEREBY COVENANTED, DECLARED AND AGREED that the Vessel is to be
held subject to the further covenants, conditions, provisions, terms and uses
hereinafter set forth.
ARTICLE 1
COVENANTS OF SHIPOWNER
Shipowner covenants and agrees with Mortgagee as follows;
SECTION 1.1 DEFINITIONS. In this Mortgage, unless the contrary
intention appears:
"affiliate" means a person controlled by, controlling or under common
control with another person with "control" for these purposes meaning ownership,
beneficial or otherwise, of 51% or more of the voting or owner equity.
"AMCV" refers to American Classic Voyages Co., a Delaware corporation.
"asset" includes every kind of property, asset, interest or right,
including any present, future or contingent right to any revenues or other
payment.
"company" includes, without limitation, any partnership, joint venture,
corporation, sole proprietorship or unincorporated association.
"Default Rate" means the Reference Rate plus two percent (2.0%).
"Earnings" means all hire, earnings, ticket receipts, issues, revenues,
income and profits of the Vessel, return premiums, salvage awards and
recoveries, recoveries general average or other amounts due and owing as a
consequence of the operation or ownership of the Vessel.
"Environmental Approvals" means all approvals, licenses, permits,
exemptions or authorizations required under applicable Environmental Laws in
connection with the ownership and operation of the Vessel.
"Environmental Claim" means (i) any claim by, or directive from, any
governmental, judicial or other regulatory authority having jurisdiction over
Shipowner alleging breach of, or non-compliance with, any Environmental Laws or
Environmental Approvals or otherwise howsoever relating to or arising out of an
Environmental Incident, or (ii) any claim by any other third party howsoever
relating to or arising out of an Environmental Incident (and, in each such case,
"claim" shall mean a claim for damages, clean-up costs, compliance, remedial
action or otherwise).
"Environmental Incident" means (i) any release of Environmentally
Sensitive Material from the Vessel, (ii) any incident resulting from a collision
between the Vessel and another vessel or some other incident of navigation or
operation in which Environmentally Sensitive Material is released from a vessel
other than the Vessel and , in either case, where the Vessel, Shipowner or the
approved manager of the Vessel is at fault or otherwise liable (in whole or in
part), or (iii) any incident in which Environmentally Sensitive Material is
released from a vessel other than the Vessel and where the Vessel is arrested as
a result and/or where Shipowner or the approved manager of the Vessel are at
fault or otherwise liable.
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"Environmental Laws" means all laws relating to pollution, protection
of the environment, prevention and cleanup of environmental pollution, and the
regulation of shipowners and vessels with respect to environmental matters
(including, without limitation, the United States Oil Pollution Act of 1990, the
United States Clean Water Act and the United States Resource Conservation and
Recovery Act).
"Environmentally Sensitive Material" means oil, oil products, any other
substance which is polluting, toxic or hazardous or any substance the release of
which into the environment is regulated, prohibited or penalized by or pursuant
to any Environmental Law.
"Event of Default" shall have the meaning given in Section 2.1 below.
"excess risks" means the proportion of the claims for general average,
salvage and salvage charges not recoverable under the hull and machinery
policies in respect of the Vessel in consequence of her insured value being less
than the value at which the Vessel is assessed for the purpose of such claims.
"expense" means any kind of cost, charge or expense (including all
reasonable attorneys' fees, costs and expenses including at or before trial and
on appeal) and any applicable value added, sales or other tax thereon.
"Insurances" means all policies and contracts of insurance (which
expression includes all entries of the Vessel in a protection and indemnity or
war risks association) which are from time to time taken out or entered into in
respect of the Vessel or her Earnings or otherwise howsoever in connection with
the Vessel or her Earnings.
"law" includes all statutes, rules, regulations, treaties,
requirements, conventions, directives, decisions and other pronouncements having
the force of law of any governmental or other regulatory authority.
"liability" includes every kind of debt or liability, present or
future, certain or contingent, whether incurred as principal, surety or
otherwise.
"Major Casualty" means any casualty to the Vessel in respect whereof
the claim or the aggregate of the claims against all insurers, before adjustment
for any relevant franchise or deductible, exceeds Three Million, Two Hundred
Fifty Thousand Dollars ($3,250,000) or the equivalent in any other currency.
"Outstanding Loan" means, as of any given time, the outstanding
principal balance of the Loan together with all accrued and unpaid interest
thereon.
"Permitted Lien" shall have the meaning given in Section 1.7(b) below.
"person" includes any individual, company, authority, political
subdivision, international organization or other entity.
"protection and indemnity risks" means the usual risks covered by a
protection and indemnity
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association managed in London including pollution risks and the proportion (if
any) of any sums payable to any other person or persons in case of collision
which are not recoverable under the hull and machinery policies by reason of the
incorporation therein of Clause 8 of the Institute Time Clauses (Hulls)
(1/11/1995) or the Institute Amending Running Down Clause (I/ 1 0/7 1) or any
equivalent provision.
"Receiver" means any receiver and/or manager (or joint receivers and/or
managers) appointed under Section 2.6.
"Reference Rate" has the meaning set forth in the Note.
"Requisition Compensation" includes all moneys or other compensation
payable by reason of requisition of title or for hire or other compulsory
acquisition of the Vessel.
"Security Interest" means (a) a mortgage, charge (whether fixed or
floating) or pledge, any maritime or other lien, encumbrance or any other
security interest of any kind, maritime or non-maritime including, without
limitation, claims of or liability to possession or forfeiture, or (b) the
rights of the plaintiff under an action in rem in which the Vessel has been
arrested or a writ has been issued or similar step taken.
"tax" includes any present or future tax, duty, impost, levy or charge
or any kind which is imposed by any governmental authority and includes all
related penalties, interest and fines.
"Total Loss" means:
(a) actual, constructive, compromised, agreed or arranged total
loss of the Vessel;
(b) any expropriation, confiscation, requisition or compulsory
acquisition of the Vessel, whether for full consideration, a consideration less
than her proper value, a nominal consideration or without any consideration,
which is effected by any government or official authority or by any person or
persons claiming to be or to represent a government or official authority,
excluding a requisition for hire for a fixed period not exceeding the final
maturity of the Note, including any extension of such final maturity;
(c) any arrest, capture, seizure, or detention of the Vessel
(including any hijacking or theft) unless she is within 30 days (90 days in the
case in hijacking or theft) redelivered to Shipowner's full control.
"Total Loss Date" means:
(a) in the case of an actual Total Loss of the Vessel, the date on
which it occurred or, if that is unknown, the date when the Vessel was last
heard of;
(b) in the case of a constructive, compromised, agreed or arranged
Total Loss of the Vessel, the earliest of:
(i) the date on which a notice of abandonment is given to
the insurers; and
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(ii) the date of any compromise, arrangement or agreement
made by or on behalf of Shipowner with the Vessel's
insurers in which the insurers agree to treat the
Vessel as a Total Loss; and
(c) in the case of any other type of Total Loss, on the date (or
the most likely date) on which it appears to Mortgagee that the event
constituting the Total Loss occurred.
"war risks" includes the risk of mines and all risks excluded by Clause
23 of the Institute Time Clauses (Hulls) (10/1/83).
SECTION 1.2 PERFORMANCE OF OBLIGATIONS/VALID MORTGAGE. Shipowner will
pay the indebtedness evidenced by the Note and this Mortgage with interest
pursuant to the terms of the Note and this Mortgage, and shall observe, perform
and comply with each and every one of the covenants, terms and conditions herein
and in the Note on its part to be observed, performed or complied with.
Shipowner will comply with and satisfy in all material respects the provisions
of Chapter 313 of Title 46 of the United States Code, as amended, and execute
and deliver all other documents and take all other actions Mortgagee reasonably
deems necessary in order to establish, perfect and maintain this Mortgage as a
valid, enforceable, and duly perfected preferred mortgage thereunder upon the
Vessel and upon all renewals, improvements and replacements made in or to the
same. Shipowner shall remain liable to perform all its respective obligations
connected with the Vessel, it being agreed that Mortgagee shall not, in any
circumstances, have or incur any obligation of any kind in connection with the
Vessel except to the extent expressly provided herein, including upon the
exercise of Mortgagee's remedies hereunder and other than as required by 46 CFR
ss.ss. 221.17 and 221.19.
SECTION 1.3 VESSEL DOCUMENTATION. Shipowner represents, warrants and
covenants that:
(a) it is now, and shall remain during the life of this Mortgage,
a citizen of the United States as defined in 46 U.S.C. ss.
12102(a) and under Section 2 of the Shipping Act, 1916, as
amended;
(b) it will keep the Vessel documented in its name as a United
States of America ship and will not do or allow to be done
anything whereby such documentation may be forfeited or
imperiled; and
(c) it will not without the previous consent in writing of
Mortgagee change the name of the Vessel or change or transfer
the flag of the Vessel.
SECTION 1.4 REPRESENTATIONS AND WARRANTIES. Shipowner represents,
warrants and covenants to Mortgagee as follows.
(a) Shipowner is duly incorporated and validly existing and in
good standing under the laws of the State of Delaware and shall so remain during
the life of this Mortgage;
(b) Shipowner has the corporate capacity, and has taken all
corporate action and obtained all consents of its directors and shareholders
necessary for it to execute and comply with this Mortgage and the Note;
(c) all consents, governmental or otherwise, required to enable
Mortgagee to execute this
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Mortgage and the Note and comply with the terms hereof and thereof have been
obtained, remain valid and in full force and effect and are not subject to
revocation;
(d) this Mortgage and the Note constitute Shipowner's legal, valid
and binding obligations enforceable against Shipowner in accordance with their
respective terms except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
transfer or similar laws affecting the enforcement of creditors' rights
generally and by general equitable principles; and
(e) the execution by Shipowner of the Note and this Mortgage and
its compliance with the terms thereof and hereof will not involve or lead to a
contravention, breach or default of or under the constitutional documents of
Shipowner or any contractual or other obligation or restriction which is binding
on Shipowner or any of its assets.
SECTION 1.5 OWNERSHIP AND SECURITY INTERESTS; MORTGAGEE'S RIGHT TO
PROTECTION.
(a) Shipowner represents and warrants that it lawfully owns and is
lawfully possessed of the Vessel free from all Security Interests including,
without limitation, claims of or liability to possession, forfeiture or penalty,
except (a) the lien of this Mortgage, and (b) the Permitted Liens. Except as
otherwise provided herein, Shipowner warrants and shall defend title to and
possession of the Vessel and to every part thereof for the benefit of Mortgagee
against the claims and demands of all persons whomsoever.
(b) Mortgagee shall be entitled to take any action which it may
reasonably think necessary for the purpose of protecting or maintaining the
security created by this Mortgage except that Mortgagee, prior to taking any
such action, shall give Shipowner a reasonable opportunity to perform same.
Without limiting the generality of the foregoing, to effectuate the foregoing
Mortgagee may:
(i) effect, replace and renew any Insurances required
hereby;
(ii) arrange for the carrying out of such surveys and/or
repairs of the Vessel as are required hereby; and
(iii) discharge any liabilities charged on the Vessel, or
otherwise relating to or affecting her, which, if unpaid, may become a
Security Interest on the Vessel, and/or take any measures which
Mortgagee may deem reasonably necessary for the purpose of securing her
release therefrom. Notwithstanding the above, no liability shall be
discharged if (i) Shipowner shall contest such liability in good faith
through appropriate proceedings, (ii) Shipowner sets aside with
Mortgagee adequate reserves reasonably acceptable to Mortgagee in
accordance with generally accepted accounting principles, or otherwise
obtains a protection and indemnity club letter of assurance reasonably
acceptable to Mortgagee, with respect to any such liability so
contested, and (iii) the non-discharge thereof does not in any way
hinder the operation or trading of the Vessel or impair Shipowner's
ownership of the Vessel or the rights of Mortgagee under this Mortgage.
SECTION 1.6 NOTICE OF MORTGAGE. Shipowner will place, and at all times
will retain, a properly certified copy of this Mortgage on board the Vessel with
her papers and will cause such certified copy and such papers to be exhibited to
any and all persons having business therewith which
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might give rise to any Security Interest thereon other than Permitted Liens, and
to any representative of Mortgagee; and will place and keep prominently
displayed in the chart room and in the Master's cabin of the Vessel a framed
printed notice in plain type of such size that the paragraph of reading matter
shall cover a space not less than 6 inches wide by 9 inches high, and reading as
follows:
"NOTICE OF MORTGAGE
This Vessel is owned by OCEANIC SHIP CO., a Delaware
corporation, and is covered by a Preferred Ship Mortgage in
favor of HAL ANTILLEN N.V., a Netherlands Antilles
corporation, under authority of Chapter 313 of Title 46 of the
United States Code, as amended. Under the terms of said
Mortgage, neither the owner, any charterer, the Master of this
Vessel, any operator nor any other person has the right, power
or authority to create, incur or permit to be imposed upon
this Vessel any lien whatsoever other than liens expressly
permitted thereby."
SECTION 1.7 DISCHARGE OF SECURITY INTERESTS.
(a) Except for the lien of this Mortgage and Permitted Liens,
Shipowner will not create or suffer to be continued any Security Interest on the
Vessel and in due course and in any event within thirty (30) days after the same
becomes due and payable will pay or cause to be discharged all claims or demands
which, if not paid or discharged, might result in the creation of a Security
Interest on the Vessel and will cause the Vessel to be released or discharged
from each such Security Interest. Similarly, if a Security Interest is filed
against the Vessel or if the Vessel is otherwise attached, levied upon, or taken
into custody or detained by any proceeding in any court or tribunal or by any
government or other authority, Shipowner will promptly notify Mortgagee thereof
and will, within fourteen (14) days of said event, cause the Vessel to be
released and all Security Interests thereon other than that of this Mortgage and
the Permitted Liens, to be discharged. Notwithstanding the above, no Security
Interest need be discharged if (i) Shipowner shall contest such Security
Interest in good faith through appropriate proceedings, (ii) Shipowner sets
aside with Mortgagee adequate reserves reasonably acceptable to Mortgagee in
accordance with generally accepted accounting principles, or otherwise obtains a
protection and indemnity club letter of assurance reasonably acceptable to
Mortgagee, with respect to any such Security Interest so contested, and (iii)
the non-discharge thereof does not in any way hinder the operation or trading of
the Vessel or impair Shipowner's ownership of the Vessel or the rights of
Mortgagee under this Mortgage.
(b) As used in this Mortgage, "Permitted Liens" means:
(i) liens for crew wages (including wages of the Master
to the extent provided by 46 U.S.C. ss. 11112) accrued for not more
than thirty (30) days;
(ii) liens for taxes, assessments, governmental charges,
fines and penalties not at the time delinquent;
(iii) liens incurred in the ordinary course of trading the
Vessel not exceeding $1,500,000 at any time outstanding;
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(iv) liens created by or through Mortgagee prior to the
date of this Mortgage but only until such time as Mortgagee has
discharged same;
(v) liens to which Mortgagee has given its prior written
consent.
Nothing in this Section 1.7(b) shall be deemed a waiver of the preferred lien
status of this Mortgage or of Mortgagee's rights under Sections 1.7(a) and 1.8.
(c) Shipowner shall not without the previous consent in writing of
Mortgagee (not to be unreasonably withheld) put the Vessel into the possession
of any person for the purpose of work being done upon her in an amount exceeding
or likely to exceed Three Million, Two Hundred Fifty Thousand Dollars
($3,250,000) (or the equivalent in any other currency) unless such person shall
first have given to Mortgagee and in terms reasonably satisfactory to it a
written undertaking not to exercise any lien on the Vessel or her Insurances for
the cost of such work. In lieu of providing such undertaking, Shipowner may
instead provide Mortgagee with an opinion of counsel, from a law firm and in
form and substance reasonably satisfactory to Mortgagee, that any such lien
would not have priority over the lien of this Mortgage.
SECTION 1.8 ARREST OF VESSEL. If the Vessel is attached or arrested,
Shipowner shall promptly notify Mortgagee by telephone, facsimile transmission,
telex or telegraph, confirmed by letter, and shall, if the Vessel is attached or
arrested, within fourteen (14) days cause the Vessel to be released and all
Security Interests thereon other than the lien of this Mortgage and the
Permitted Liens to be discharged, and shall promptly notify Mortgagee concerning
such release and discharge; provided, however, any Permitted Liens that have
resulted in the libel, complaint, attachment or arrest must also be discharged
forthwith. Notwithstanding the above, no Security Interest need be discharged if
(i) Shipowner shall contest such Security Interest in good faith through
appropriate proceedings, (ii) Shipowner sets aside with Mortgagee adequate
reserves reasonably acceptable to Mortgagee in accordance with generally
accepted accounting principles, or otherwise obtains a protection and indemnity
club letter of assurance reasonably acceptable to Mortgagee, with respect to any
such Security Interest so contested, and (iii) the non-discharge thereof does
not in any way hinder the operation or trading of the Vessel or impair
Shipowner's ownership of the Vessel or the rights of Mortgagee under this
Mortgage. Upon any unreasonable delay by Shipowner to act promptly and
appropriately with respect thereto, Shipowner authorizes and empowers Mortgagee
to appear in the name of Shipowner in any court of any country or other
jurisdiction where an action is pending against the Vessel because of or on
account of any alleged Security Interest thereon from which it has not been so
released, and to take such actions as to it as Mortgagee may deem proper towards
the defense of such action, the purchase or discharge of such alleged Security
Interest, or the release of the Vessel, including, without limitation, posting
adequate security therefor. All reasonable expenditures made or incurred by
Mortgagee for the purpose of such defense, purchase or discharge shall be a debt
due from Shipowner to Mortgagee and shall be secured by the lien of this
Mortgage, and shall bear interest at a rate per annum equal from time to time to
the Default Rate.
SECTION 1.9 MAINTENANCE AND OPERATION OF VESSEL. Shipowner covenants
and agrees to:
(a) maintain and preserve the Vessel in good running order and repair,
so that the Vessel shall be, in so far as due diligence can make her so, tight,
staunch, strong and well and sufficiently tackled, appareled, furnished,
equipped and in every respect seaworthy and in good operating condition;
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(b) maintain and preserve the Vessel consistent with first-class
ship-ownership and management practice and so as to maintain her present class
(namely "LR 100 A1 LMC" Passenger Ship at Lloyds Register of Shipping) or an
equivalent class with American Bureau of Shipping or another classification
society approved by Mortgagee, which approval shall not be unreasonably
withheld, free of recommendations and qualifications affecting class save those
notified to and approved in writing by Mortgagee and so as to comply with all
applicable laws from time to time applicable to vessels documented under the
laws and flag of the United States of America. Mortgagee shall not withhold its
approval as to those recommendations or qualifications affecting class which do
not prevent the Vessel from remaining in normal passenger service so long as
Shipowner executes an undertaking, in form and substance satisfactory to
Mortgagee, to take such actions as are necessary to remove same at the Vessel's
next scheduled drydock or wetdock but in no event subsequent to a sale of the
Vessel pursuant to Section 2.2;
(c) not make any modification to the Vessel which would, or would be
reasonably likely to, materially alter the structure, type or performance
characteristics of the Vessel or materially reduce the value of the Vessel;
(d) procure that all repairs to or replacement of any damaged, worn or
lost parts or equipment be effected in such manner (both as regards workmanship
and quality of materials) as to not materially diminish the value of the Vessel;
(e) not remove any material part of, or item of equipment installed on,
the Vessel unless the part or item so removed is no longer required for the
operation of the Vessel or is forthwith replaced by a suitable part or item
which is in the same condition as or better condition than the part or item
removed, is free from any Security Interest in favor of any person other than
Mortgagee (and other than Permitted Liens) and becomes an installation on the
Vessel and the property of Shipowner and subject to the lien constituted by this
Mortgage;
(f) submit the Vessel regularly to such periodical or other surveys as
may be required for classification purposes and supply to Mortgagee copies of
all survey reports issued in respect thereof;
(g) permit Mortgagee by surveyors or other persons appointed by it for
that purpose to board the Vessel at all reasonable times and on reasonable prior
notice, for the purpose of inspecting her condition or papers or for the purpose
of satisfying themselves in regard to proposed or executed repairs and to afford
all proper facilities for such inspections, provided Mortgagee does not
materially interfere with the schedule or operation of the Vessel;
(h) promptly furnish to Mortgagee copies of all such information in the
possession or under the control of Shipowner or any of its affiliates, as
Mortgagee may from time to time reasonably require regarding the Vessel, her
employment, position and engagements, particulars of all towages and salvages
and, upon Mortgagee's request in writing, copies of all charters and other
contracts for her employment or otherwise howsoever concerning her;
(i) notify Mortgagee forthwith of:
(i) any casualty to the Vessel which is or is likely to
be a Major Casualty;
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(ii) any occurrence in consequence whereof the Vessel has
become or is, by the passing of time or otherwise, likely to become a
Total Loss;
(iii) any requirement or recommendation made by any insurer
or classification society or by any competent authority affecting class
or which would or would be reasonably likely to materially affect the
operation of the Vessel;
(iv) any arrest of the Vessel or the exercise or purported
exercise of any Security Interest on the Vessel or her Insurances or
any requisition of the Vessel;
(v) any intended drydocking or wetdocking of the Vessel;
(vi) an incident of salvage or general average with
respect to the Vessel;
(vii) any Environmental Claim being or made against
Shipowner or otherwise in connection with the Vessel; or
(viii) any Environmental Incident occurring,
(j) keep proper books of account in respect of the Vessel and
as and when Mortgagee may so reasonably require make such books available for
inspection on behalf of Mortgagee at reasonable times and on reasonable notice,
and furnish satisfactory evidence that the wages and allotments and the
insurance and pension contributions of the Master and crew are being regularly
paid and that all deductions from crew's wages in respect of tax and/or social
security 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;
(k) comply in all material respects, or procure such compliance,
with all Environmental Laws and Environmental Approvals relating to the Vessel,
its operation or management and the business of Shipowner from time to time; and
(l) keep Mortgagee advised, in writing on such regular basis and
in such detail as Mortgagee shall reasonably require, of Shipowner's response to
every Environmental Claim and Environmental Incident.
SECTION 1.10 LEGAL COMPLIANCE. Shipowner will cause the Vessel and its
operations to comply at all times and in all material respects with (i) all laws
of the United States applicable to the Vessel, as in effect from time to time,
and (ii) all laws applicable to the Vessel and its operation in all trades and
locations in which it operates or is located from time to time; and the Vessel
shall have on board as and when required thereby valid certificates of
inspection and all other certificates evidencing compliance therewith. The
Vessel shall not engage in any unlawful trade or violate or be operated in
violation of any applicable law, or carry any passenger, cargo, or other matter
that will expose it to penalty, forfeiture or capture. Shipowner shall obtain
and file all certificates of financial responsibility legally required in all
jurisdictions in which the Vessel is located from time to time. Shipowner shall
prepare and file all environmental pollution prevention and contingency plans
and other matters required under all applicable Environmental Laws. Shipowner
shall ensure that all reasonable precautions are taken to ensure that no illegal
drugs or drug paraphernalia are used or kept on board the Vessel. Without
limiting the generality of the foregoing, Shipowner shall take all
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reasonable precautions to prevent any infringements of the Anti-Drug Abuse Act
of 1986 of the United States of America (as the same may be amended and/or
re-enacted from time to time hereafter) or any similar legislation applicable to
the Vessel in any jurisdiction in which the Vessel shall trade. For this
purpose, Shipowner shall enter into such sea carrier initiative agreement with
the United States Customs Service as shall be reasonably satisfactory to
Mortgagee where such agreement is required by the laws of the United States or
such agreement is recommended by the United States Customs Service, and shall
otherwise comply with the zero tolerance anti-drug policy of the United States
Government.
SECTION 1.11 LOCATION OF VESSEL. Without limiting the right of
Shipowner to perform work on the Vessel in accordance with the requirements of
this Mortgage, the Vessel shall not be abandoned, deactivated or laid up in any
port or place. Without the prior written consent of Mortgagee, the Vessel shall
not depart the United States of America, the Exclusive Economic Zone surrounding
it, or Canada, except for nonstop voyages between points therein.
SECTION 1.12. INSURANCES
(a) Shipowner will at its own expense insure the Vessel and keep the
same insured (in lawful money of the United States) for hull and machinery (fire
and usual marine risks, including excess risks), general mortgagee's interest,
and against protection and indemnity risks and war risks. Such insurances shall
be in form, in amounts, and with deductibles generally insured against by, and
otherwise generally consistent with, the practices of prudent operators of
luxury cruise ships, and with reputable and financially sound insurance
companies, brokers, underwriters, funds, mutual insurance associations and
clubs. Shipowner shall reimburse Mortgagee within ten (10) days of demand for
any costs or expenses reasonably incurred by Mortgagee in obtaining reports from
time to time (but not more than once per year) from an independent marine
insurance broker as to the compliance with this Section of the Insurances
effected or proposed to be effected by Shipowner pursuant to this Section 1.12.
Shipowner shall promptly deliver to such broker any and all such information in
relation to the said Insurances as such broker may reasonably require.
(b) Unless Mortgagee shall object in its reasonable discretion, the
protection and indemnity, hull and machinery and mortgagee's interest insurance
required by this Section 1.12 may be on the American Institute forms current at
the time such insurance takes effect with deductibles or franchises no higher
than the following: Hull and Machinery; All claims, each accident or occurrence
- - $750,000.
(c) Protection and indemnity insurance in respect to the Vessel shall
be by unlimited entry in an insurance association or placed with brokers or
underwriters reasonably acceptable to Mortgagee and shall include pollution
liabilities (including coverage for third party claims, statutory and
governmental cleanup liabilities, penalties and fines in the minimum amount of
$500,000,000 for any one occurrence), and full passenger liability cover, with
deductibles or franchises no higher than $200,000.
(d) For the purposes of insurance against Total Loss, the Vessel shall
be insured for and valued at an amount of at least equal to the full commercial
value of the Vessel but in no event less than the lower of $120,000,000 or 120%
of the Outstanding Loan. For purposes of broker's reports and opinions, the
broker giving the same may rely on a statement as to the full commercial value
of the Vessel and the gross tonnage of the Vessel as furnished annually by
Shipowner to such broker
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and Mortgagee at the time insurance is negotiated with underwriters or insurance
providers.
(e) All insurance other than protection and indemnity insurance shall
be taken out in the names of Shipowner and Mortgagee as their respective
interests may appear; the policies or certificates shall provide that there
shall be no recourse against Mortgagee for payment of premiums, contributions or
calls; and all insurance shall provide for at least ten (10) days' prior notice
to be given to Mortgagee by the underwriters or other insurance providers in
event of cancellation or any material change in coverage. Protection and
indemnity insurance cover notes shall indicate the interest of Mortgagee.
Shipowner shall pay all premiums, calls, contributions or other sums owing on
such insurance before they become delinquent and shall produce all relevant
receipts when so required by Mortgagee.
(f) The interest of 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 clause reflecting the terms of Section 1.17 and a notice of assignment
(signed by Shipowner) each in such form as shall from time to time be reasonably
approved in writing by Mortgagee. Copies of all such slips and other items above
referred to shall be provided by Shipowner to Mortgagee promptly upon request.
(g) Shipowner shall, upon request, authorize the brokers to provide
Mortgagee with all such information that is available to them regarding the
Insurances as Mortgagee may reasonably require. Shipowner shall, upon request
from Mortgagee, ensure that the brokers furnish Mortgagee with a letter or
letters or undertaking in such form as may from time to time be reasonably
required by Mortgagee, such letter or letters to include undertakings by the
brokers that:
(i) they will hold the instruments of insurance, and the
benefit of the Insurances thereunder, to the order of Mortgagee in
accordance with the terms of the loss payable clause referred to in
Section 1.12(f);
(ii) they will have endorsed on each and every policy as and
when the same is issued the loss payable clause and the notice of
assignment referred to in Section 1.12(f);
(iii) they will advise Mortgagee within ten (10) days of any
material changes which may be made to the terms of the Insurances and
notify Mortgagee, not less than ten (10) days prior to the expiry or
cancellation of the said insurance, in the event of their not having
received notice of renewal instructions from Shipowner and/or its
agents;
(iv) they will not set off against any sum recoverable in
respect of a claim against the Vessel under the Insurances any premiums
or other amounts due to the brokers or any other person in respect of
any other vessel nor cancel the Insurances as to Mortgagee by reason of
non-payment of such premiums or other amounts prior to giving the
requisite notice provided for above; and
(v) they will not permit any assured or loss payee to be added
to any policy without obtaining the prior written consent of Mortgagee.
(h) All hull and machinery and mortgagee's interest insurance policies
or certificates shall provide that losses thereunder shall be payable to
Mortgagee, and all insurance proceeds received by
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Mortgagee or Shipowner shall be distributed, as provided below in Section 1.17.
(i) Shipowner shall not, without the prior written consent of Mortgagee
(not to be unreasonably withheld), settle, compromise or abandon any claim under
the Insurances for a Total Loss or for a Major Casualty.
(j) Shipowner agrees that it will not do any act, or voluntarily suffer
or permit any act to be done, whereby any insurance required hereunder shall or
may be invalidated, voided, suspended, impaired or defeated and will not suffer
or permit the Vessel to engage in any voyage or to carry any cargo not permitted
under the policies of insurance in effect, without first covering the Vessel
with insurance required by this Mortgage for such voyage or the carriage of such
cargo.
(k) In the event that any claim or lien is asserted against the Vessel
for loss, damage or expense which is covered by insurance hereunder, and it is
necessary for Shipowner to obtain a bond or supply other security to prevent the
arrest of the Vessel or to release the Vessel from arrest on account of such
claim or lien, Mortgagee may, in its sole discretion, and upon notice to
Shipowner, assign to any person executing a surety or guarantee bond or other
agreement to save or release the Vessel from such arrest, all right, title and
interest of Mortgagee in and to said insurance covering said loss, damage or
expense, as collateral security to indemnify such person against liability under
said bond or agreement.
(l) At least thirty days before the relevant policies or contracts
expire, Shipowner shall renew the expiring Insurances, and upon the renewal of
the said Insurances, ensure that the brokers and/or the war risks and protection
and indemnity risks associations with which any such renewal is effected shall
notify Mortgagee in writing of the terms and conditions of such renewal.
(m) Shipowner shall obtain and maintain a Certificate of Financial
Responsibility as required by the United States Oil Pollution Act of 1990 and
make all such quarterly or other voyage declarations as may from time to time be
required by the protection and indemnity risks association in order to maintain
cover for trading to the United States of America and Exclusive Economic Zone
(as defined in the said United States Oil Pollution Act of 1990) and promptly
deliver to Mortgagee copies of all such declarations.
SECTION 1.13 REQUISITION. Shipowner agrees that in the event of the
requisition of title to or use (but only if the period of use exceeds 180 days)
of the Vessel, all amounts which are owed or payable as compensation for the
Vessel or for its use are hereby assigned to and shall be paid over to Mortgagee
to be applied toward payment of the Obligations and all sums otherwise owing
under or secured by this Mortgage, whether or not the same are then due and
payable, in which event the balance shall be applied as provided in Section 2.9,
and to that end Shipowner agrees to execute and deliver all other and further
instruments reasonably requested by Mortgagee. Mortgagee is hereby irrevocably
and individually appointed Shipowner's attorney-in-fact coupled with an interest
to execute all such instruments which Shipowner is required to execute and
deliver in this Section 1.13 but fails to execute and deliver promptly on
request.
SECTION 1.14 TRANSFER/CHARTER OF VESSEL. Shipowner will not sell,
mortgage, transfer, assign, convey, transfer or demise charter the Vessel,
without the prior written consent of Mortgagee, and any such written consent to
any one such event shall not be construed to be a waiver of this provision with
respect to any subsequent proposed sale, mortgage, transfer, assignment,
conveyance
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or demise charter. Any such sale, mortgage, transfer, assignment, conveyance or
demise charter of the Vessel shall be subject to the provisions of this Mortgage
and the lien it creates. Mortgagee shall not withhold its consent in the event
of a proposed sale, assignment, conveyance, transfer or demise charter to an
affiliate of Shipowner so long as both Shipowner and the vendee, assignee,
transferee or charterer (as the case may be) remain liable for the Obligations
and for the performance and observance of and compliance with the covenants,
terms and conditions in this Mortgage. Shipowner shall not let the Vessel by any
time or consecutive voyage charter(s) for a term which exceeds, or which by
virtue of any optional extensions therein contained is likely to exceed, six
months' duration. Shipowner shall not let the Vessel on terms whereby more than
two months' hire (or the equivalent) is payable in advance. Shipowner shall not
let the Vessel otherwise than on bona fide arm's length terms. Shipowner shall
not appoint a manager of the Vessel other than one approved by Mortgagee in
writing, which approval shall not be unreasonably withheld. Forthwith upon being
required so to do by Mortgagee, Shipowner shall enter into an assignment to
Mortgagee, as further security for the Obligations, of the benefit, but not the
burden, of any letting of the Vessel whether or not Mortgagee's consent thereof
is required under this Section 1.14.
SECTION 1.15 BONDS. Shipowner warrants that all surety bonds or other
undertakings or instruments required by any applicable law to secure the payment
of wages or the payment of any other sum in respect to the operation of the
Vessel shall be obtained, effective and filed in the required amounts and in
accordance with applicable law. In the event that any such bond, undertaking or
instrument has not been obtained or is at any time not in effect as required by
any applicable law, then, after notice to Shipowner and a reasonable opportunity
for Shipowner to obtain the bond, undertaking or instrument, Mortgagee may
obtain the same, and the expense thereof shall be paid forthwith to Mortgagee
after notice of such expense has been given and, together with interest thereon
at the Default Rate, shall be added to the sums secured hereby as of the date
notice is given that such expense has been incurred. Shipowner shall use its
best efforts to ensure that all such surety bonds and all parties liable on or
in respect of them, by guaranty or otherwise, waive the right to be subrogated
to the rights against the Vessel, if any, of those who receive funds or who are
paid out of the proceeds of such surety bonds or other undertakings.
SECTION 1.16 NO SET-OFF OR TAX DEDUCTION
(a) All amounts due from Shipowner under this Mortgage and the
Note shall be paid (i) without any form of set-off, counterclaim, cross-claim or
condition, and (ii) free and clear of any tax deduction except a tax deduction
which Shipowner is required by law to make. In this Section, "tax deduction"
means any deduction or withholding for or on account of any present or future
tax.
(b) If Shipowner is required by law to make a tax deduction
from any payment:
(i) it shall notify Mortgagee as soon as it becomes aware
of the requirement; and
(ii) it shall pay the tax deducted to the appropriate
taxation authority promptly, and in any event before any fine or
penalty arises.
(c) Within one (1) month after making the payment referred to in
(b)(ii) above in this Section, Shipowner shall deliver to Mortgagee documentary
evidence satisfactory to Mortgagee that the tax concerned has been paid to the
appropriate taxation authority.
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SECTION 1.17. RECEIPTS OF INSURANCES
(a) The policies or certificates of the Insurances may provide that,
unless the underwriters or insurance providers shall have been otherwise
instructed by notice in writing from Mortgagee that an Event of Default shall
have occurred and is continuing, and Mortgagee agrees that during any period in
which an Event of Default is not continuing, sums recoverable in respect of
Insurances shall be payable as follows (and Mortgagee and Shipowner shall take
all necessary actions to cause such payments to be so made):
(i) any loss under any insurance on the Vessel with respect to
protection and indemnity or collision liability risks may be paid
directly to the person to whom any liability covered by such insurance
has been incurred, or to Shipowner to reimburse it for any loss, damage
or expense incurred by it and covered by such insurance, provided that
in the latter event the underwriter or insurance provider shall have
first received evidence that the liability insured against has been
discharged;
(ii) in the case of any loss (other than a loss covered by
subparagraph (i) above in this subsection (a) or by subsection (e) of
this Section 1.17 or a loss involving a Major Casualty) under any
insurance with respect to the Vessel involving any damage to the Vessel
or liability of the Vessel, the underwriters or insurance providers may
pay directly for the repair, salvage, liability or other charges
involved, or may pay same directly to Shipowner which shall apply it in
making good the loss and/or satisfying the liability, and fully
repairing all damage in respect of which that insurance money was
received; and
(iii) in the case of any loss involving a Major Casualty
(other than a loss covered by subparagraph (i) above in this subsection
(a) or by subsection (e) of this Section 1.17) the underwriters or
insurance providers shall make payments of the proceeds of Insurances
from time to time to Mortgagee which shall, in turn and from time to
time as requested by Shipowner, pay same to Shipowner so long as
Shipowner is in compliance with the Repair Guidelines (as defined
below).
(b) No payment shall be made to or retained by Shipowner if there shall
have occurred and be continuing an Event of Default, and payment of proceeds of
insurances in such case shall be paid to Mortgagee and applied against the
Obligations or, at Mortgagee's option, paid to Shipowner to reimburse Shipowner
for costs and expenses incurred in repairing the Vessel from such casualty.
(c) Any loss which is paid to Mortgagee but which should have been
paid, in accordance with the provisions of this Section, directly to Shipowner,
shall be paid by Mortgagee to or as directed by Shipowner, but only if there
shall not have occurred any Event of Default. Any loss which is paid to
Shipowner but which should have been paid, in accordance with the provisions of
this Section, directly to Mortgagee, shall be paid by Shipowner to or as
directed by Mortgagee.
(d) As used above, "compliance with the Repair Guidelines" shall mean
in respect of a Major Casualty, each of the following shall have occurred or
been satisfied in Mortgagee's discretion, to be reasonably exercised;
(i) the plans and specifications, cost breakdown, construction
contract,
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construction schedule and contractors for the work of repair or
reconstruction of the Vessel must all be reasonably acceptable to
Mortgagee, and the work on the Vessel must be carried out in accordance
therewith;
(ii) Mortgagee must receive evidence reasonably satisfactory
to it that after repair or reconstruction, the Vessel would be in
substantially similar condition as existed prior to the Major Casualty
(or as Mortgagee shall otherwise reasonably approve);
(iii) the proceeds of the Insurances must be sufficient in
Mortgagee's reasonable determination to pay for the total cost of
repair or reconstruction, or Shipowner must provide its own funds
prorata with proceeds of the Insurances to ensure that such aggregate
funds are sufficient for the completion of the repair or
reconstruction; and
(iv) Shipowner shall obtain customary lien waivers from
contractors in connection with such repair or construction, such
waivers to be reasonably satisfactory to Mortgagee.
(e) In the event of a Total Loss, all amounts payable therefor from
insurance required hereunder shall be paid to Mortgagee and shall be applied
against the Obligations in accordance with Section 2.9 below.
ARTICLE 2
EVENTS OF DEFAULT AND REMEDIES
SECTION 2.1 EVENTS OF DEFAULT. The occurrence of any of the following
events shall constitute an "Event of Default" hereunder:
(a) default in the payment of the whole or any part of the principal of
the Loan when the same shall become due and payable, whether at maturity, by
acceleration or otherwise;
(b) default in the payment of any other of the Obligations or any
interest thereon when and as the same shall become due and payable as provided
in the Note and this Mortgage, whether at maturity, by acceleration or
otherwise, and such default shall continue for at least five (5) business days;
or
(c) default in the due and punctual observance and performance of any
provision of Sections 1.3, 1.7, 1.8, 1.11, 1.12, 1.14 or 3.4 hereof; or
(d) default in the due observance or performance of any of the other
covenants and conditions herein required to be kept and performed by Shipowner
and continuance of such default for thirty (30) days after notice of default is
received from Mortgagee; or
(e) Shipowner or AMCV shall (i) file a petition seeking relief for
itself under Title 11 of the United States Code, as now constituted or hereafter
amended, or (ii) fail to timely controvert a petition filed against it seeking
relief under Title 11 of the United States Code, as now constituted or hereafter
amended; or
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(f) an order for relief shall be entered against Shipowner or AMCV
under Title 11 of the United States Code, as now constituted or hereafter
amended, which order is not vacated, stayed or dismissed within 90 days; or
(g) the appointment of a receiver, liquidator, or custodian of
Shipowner or AMCV or a substantial part of Shipowner's or AMCV's property which
remains undismissed or not vacated for 90 days;
(h) upon the expiration of 120 days after the filing of any involuntary
petition against Shipowner or AMCV seeking any of the relief specified in
subsection (e) or (f) above without the petition being vacated, discharged or
dismissed prior to that time; or
(i) Shipowner or AMCV shall (i) make a general assignment for the
benefit of its creditors, or (ii) consent to the appointment of or taking
possession by a receiver, liquidator, or custodian of all or a substantial part
of its property, or (iii) admits its insolvency or inability to pay its debts as
they become due, or (iv) fail generally to pay its debts as they become due.
SECTION 2.2 CONSEQUENCES OF DEFAULT. If any Event of Default shall
occur and be continuing, then in any such case and at any time thereafter
Mortgagee may exercise all rights, powers, privileges and remedies hereunder or
otherwise existing or arising by agreement, at law, or in equity, in admiralty,
or otherwise (including, without limitation, the exercise of all powers
possessed by it as mortgagee, chargee and assignee of the Vessel, Insurances and
Requisition Compensation conferred by the law of any country or territory the
courts of which have or claim any jurisdiction in respect of Shipowner, the
Vessel, the Insurances or Requisition Compensation), and without limiting the
foregoing, Mortgagee shall have the right to:
(a) declare the Loan and any of the other Obligations to be due and
payable immediately, and upon such declaration the entire unpaid principal of
and interest on the Loan and the other Obligations to date of declaration shall
become and be immediately due and payable, and thereafter shall bear interest at
the Default Rate;
(b) exercise all the rights and remedies in foreclosure and otherwise
given to mortgagees by the provisions of Chapter 313 of Title 46 of the United
States Code, as at any time amended, subject to 46 CFR ss.ss. 221.17 and 221.19;
(c) bring suit at law, in equity or in admiralty, as it may deem
advisable, to recover judgment for any and all amounts due under the
Obligations, or otherwise hereunder, and collect the same out of any and all
property of Shipowner whether covered by this Mortgage or not;
(d) take the Vessel, wherever the same may be, without legal process
and remove the Vessel to any port or place selected by Mortgagee. To the extent
permitted by law, Shipowner or any other person in possession shall, forthwith
upon demand of Mortgagee, and at Shipowner's expense, surrender possession of
the Vessel as demanded by Mortgagee, and Mortgagee may hold, lay up, charter,
operate, or otherwise use the Vessel, subject always to 46 CFR ss.ss. 221.17 and
221.19, for such time and upon such terms as it may deem to be for its best
advantage, accounting for the net profits, if any, arising from such use and
charging upon all receipts from such use or from the sale of the Vessel by court
proceedings or pursuant to subsection (e) below, all reasonable costs, charges,
damages, losses or other expenses incurred by reason of such use or sale;
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(e) sell the Vessel in compliance with applicable law at a properly
conducted public sale at any place and at such time as Mortgagee may reasonably
specify, and in such manner as Mortgagee may reasonably deem advisable, free
from all claims by Shipowner, after first giving notice of the time and place of
sale with a general description of the property in the following manner: (i) by
publishing such notice for not less than ten (10) days in The Wall Street
Journal or The Journal of Commerce and in such other newspaper(s), if any, as
may be required by the court or court rules; (ii) by mailing (and facsimile
transmission or delivering) a similar notice to Shipowner at least ten (10) days
prior to the scheduled date of the sale; and (iii) by posting notice of sale on
the Vessel;
(f) require that all policies and other documents relating to the
Insurances (including details of and correspondence concerning outstanding
claims) be forthwith delivered to or to the order of Mortgagee;
(g) collect, recover and give a good discharge for any monies or claims
forming part of, or arising in relation to, the Vessel, the Insurances or the
Requisition Compensation, and to permit any brokers through whom collection or
recovery is effected to charge the usual brokerage therefor;
(h) to take over or commence or defend (if necessary using the name of
Shipowner) any claims or proceedings relating to, or affecting, the Vessel, the
Insurances or the Requisition Compensation which Mortgagee may think fit and to
abandon, release or settle in any way any such claims or proceedings; and/or
(j) to enter into any other transaction or arrangement of any kind not
described above or to do anything in relation to the Vessel, the Insurances or
the Requisition Compensation which Mortgagee acting reasonably may think fit.
In the event of an order for relief with respect to Shipowner under the United
States Bankruptcy Code, as amended, the entire, aggregate unpaid principal
balance of the Loan, all accrued and unpaid interest with respect to the Loan,
and all other amounts payable with respect to the Loan or under this Mortgage,
the Note and the other documents, instruments, agreements, and certificates
delivered thereunder relating to the Loan or other Obligations, automatically
shall become and be due and payable, without presentment, demand, protest,
notice of nonpayment, notice of dishonor or any notice of any kind, all of which
are hereby expressly waived by Shipowner.
SECTION 2.3 SALE OF VESSEL. A sale of the Vessel made in pursuance of
this Mortgage, whether under the power of sale hereby granted or any judicial
proceedings, shall operate to divest all right, title and interest of any nature
whatsoever of Shipowner therein and thereto. Nevertheless, the Vessel shall not
be sold to any parties who are not lawfully entitled to acquire it. No purchaser
shall be bound to inquire whether notice has been given or whether any default
has occurred, or as to the propriety of the sale, or as to the application of
the proceeds thereof. In case of such sale, Mortgagee shall be entitled, for the
purpose of making settlement or payment for the property purchased, to use and
apply the Obligations in order that there may be credited against the amount
remaining due and unpaid thereon the sums payable out of the net proceeds of
such sale to the holder of the Obligations after allowing for the costs and
expense of sale and other charges. Such purchaser shall be credited, on account
of such purchase price, with the net proceeds that shall have been credited upon
the Obligations. At such sale, Mortgagee or any holder of the Obligations may
bid for and purchase such
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property, and upon compliance with the terms of sale may hold, retain and
dispose of such property, subject always to 46 CFR ss.ss. 221.17 and 221.19,
without further accountability therefor. Mortgagee shall not have any liability
to Shipowner in connection with any disposition of the Vessel hereunder, nor
shall Shipowner be entitled to any set-off, counterclaim, or recoupment with
respect to any claim of such a liability. Shipowner shall have no liability to
Mortgagee for any failure of Mortgagee to comply with 46 CFR ss.ss. 221.17 and
221.19.
SECTION 2.4 CONVEYANCE. Mortgagee is hereby appointed Shipowner's
attorney-in-fact coupled with an interest to execute and deliver to any
purchaser aforesaid, and shall be vested with full power and authority to make,
in the name and on behalf of Shipowner, good conveyance of the title to the
Vessel to any person lawfully entitled to hold such title. In the event of a
sale of the Vessel under any power herein contained, Shipowner shall, if and
when required by Mortgagee, execute such form of conveyance of the Vessel as
Mortgagee may direct, and Mortgagee is hereby irrevocably appointed Shipowner's
attorney-in-fact coupled with an interest to execute such form upon Shipowner's
failure to do so forthwith upon request.
SECTION 2.5 EARNINGS OF VESSEL. Mortgagee is hereby appointed
attorney-in-fact of Shipowner upon the occurrence of any Event of Default that
is continuing to act in the name of Shipowner to demand, collect, receive,
compromise and sue for, so far as may be permitted by law, all Earnings and all
amounts due from underwriters under any insurance thereon as payment of losses
or otherwise, and all other sums due or to become due at the time of the
occurrence of any Event of Default that is continuing, or in respect of any
insurance thereon from any person whomsoever, and, to the extent permitted by
applicable law, to make, give and execute in the name of Shipowner acquittances,
receipts, releases or other discharges for the same, whether under seal or
otherwise, and to endorse and accept in the name of Shipowner all checks, notes,
drafts, warrants, agreements and all other instruments in writing with respect
to the foregoing. Notwithstanding the foregoing, so long as Shipowner has not
received notice from Mortgagee that an Event of Default has occurred and is
continuing, Shipowner shall be entitled to collect and retain all Earnings.
Mortgagee agrees to return to Shipowner any misdirected payment not relating to
the Vessel which Mortgagee receives.
SECTION 2.6 RECEIVER/MANAGER. Whenever any right to enter and take
possession of the Vessel accrues to Mortgagee, it may require Shipowner to
deliver, and Shipowner shall on demand, at its own cost and expense, deliver, to
Mortgagee the Vessel as demanded. If any legal proceedings shall be taken to
enforce any right under this Mortgage, Mortgagee shall be entitled as a matter
of right to request a court of competent jurisdiction to appoint a Receiver of
the Vessel. In the event of such appointment:
(a) all liabilities, costs and other expenses reasonably incurred by
the Receiver shall be for the account of Shipowner but shall first be paid from
Earnings to the extent of the Earnings;
(b) Mortgagee may exercise any of the powers conferred by this Mortgage
while a Receiver is in office and is acting;
(c) an appointment of such Receiver shall be by action of such court;
(d) the remuneration of such Receiver shall be fixed by such court;
(e) to the fullest extent permitted by law, such Receiver shall be
Shipowner's agent (in
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relation to Shipowner's rights and interests in the Vessel) provided that,
unless such court provides otherwise, Shipowner shall be responsible, to the
exclusion of any liability on the part of Mortgagee, for the Receiver's
remuneration and for its contracts, acts and defaults both in its capacity and
as Shipowner's agent;
(f) the Receiver shall have all the powers conferred by Section 2.2 as
if the reference to Mortgagee in Section 2.2 were a reference to the Receiver;
(g) Shipowner irrevocably and by way of security irrevocably appoints
such Receiver its attorney on its behalf and in its name or otherwise to execute
or sign any document and do any act or thing which such Receiver considers
necessary or desirable with a view to or in connection with any exercise or
proposed exercise of any of its powers;
(h) if approved by such court, such Receiver may delegate to any person
or persons any of the powers (including any discretionary authority) conferred
on it and may do so on terms authorizing successive sub-delegations;
(i) in the case of joint Receivers any of the powers (including any
discretionary authority) conferred by such court or this Mortgage or by general
law may be exercised by any one or more of them, unless their appointment
specifically states the contrary;
(j) if approved by such court, Mortgagee may remove such Receiver, with
or without appointing another Receiver. Such a removal may be effected by a
document signed by any of Mortgagee's officers;
(k) if approved by such court, Mortgagee may appoint a Receiver to
replace a Receiver who has resigned or for any other reason ceased to hold
office; and
(l) such Receiver shall account to the court for any monies received by
it and, with the approval of the court, shall be entitled to retain out of any
such monies received by it such amounts in respect of its expenses (or to cover
estimated future expenses) as is approved by such court.
SECTION 2.7 EXPENSES. Shipowner covenants that upon the occurrence of
any Event of Default that is continuing, then, upon written demand of Mortgagee,
Shipowner will pay to Mortgagee the whole amount due and payable on the
Obligations; and in case Shipowner shall fail to pay the same forthwith upon
such demand, Mortgagee shall be entitled to recover judgment for the whole
amount so due and unpaid, together with the reasonable costs and expenses of
collection, including a reasonable compensation to the attorneys of Mortgagee
plus any necessary advances, expenses and liabilities made or incurred by them.
All monies collected by Mortgagee under this Section 2.7 shall be applied by
Mortgagee in accordance with the provisions of Section 2.9 hereof.
SECTION 2.8 CUMULATIVE REMEDIES. Each and every power and remedy herein
given to Mortgagee shall be cumulative and shall be in addition to every other
power and remedy herein given or now or hereafter existing at law, in equity, in
admiralty or by statute, and each and every power and remedy whether herein
given or otherwise existing may be exercised from time to time and as often and
in such order as may be deemed expedient by Mortgagee, and the exercise or the
beginning of the exercise of any power or remedy shall not be construed to be a
waiver of the right to exercise at the same time or thereafter any other power
or remedy. No delay or omission by Mortgagee or by the
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holder of the Obligations in the exercise of any right or power or in the
pursuance of any remedy accruing upon any default or Event of Default shall
impair any such right, power or remedy or be construed to be a waiver of any
such default or Event of Default or to be an acquiescence therein; nor shall the
acceptance by Mortgagee of any security or of any payment of or on account of
any part of the Obligations maturing after any default or Event of Default or of
any payment on account of any past default be construed to be a waiver of any
right to take advantage of any future Event of Default or of any past Event of
Default not completely cured thereby.
SECTION 2.9 APPLICATION OF PROCEEDS. The proceeds of a sale of the
Vessel, insurance pertaining to the Vessel, and all other sums received by
Mortgagee pursuant to or under the provisions of this Mortgage or in any
proceedings hereunder, including Earnings received by Mortgagee, the application
of which has not otherwise been specifically provided for, shall, except as
otherwise provided by law, be applied as follows:
FIRST: To the payment of all reasonable expenses, including
the expenses of any sale, the expenses of any retaking, attorneys' fees, court
costs, and other expenses incurred by Mortgagee in the protection of its rights,
powers, and privileges or the pursuance of its remedies, with interest thereon
at the Default Rate;
SECOND: To the payment of all amounts as required by law or
otherwise at Mortgagee's sole option, to the payment of or to provide adequate
indemnity against Security Interests known to Mortgagee and having or claiming
priority over the lien of this Mortgage;
THIRD: To the payment of the Loan and the payment of the other
Obligations and all other sums evidenced by the Note or evidenced or secured
hereby from time to time and not already paid pursuant to the foregoing
subsection, whether due or not, owed to Mortgagee, together with interest
thereon at the Default Rate;
FOURTH: To the payment of all amounts secured by means of
preferred mortgage or other Security Interests in and to the Vessel in favor of
Mortgagee that is or are junior in priority to this Mortgage, allocated amongst
such secured obligations as Mortgagee may choose, in its sole discretion, and,
at Mortgagee's sole option to the payment of or to provide adequate indemnity
against Security Interests known to Mortgagee and having or claiming priority
over the lien of such junior preferred mortgage(s); and
FIFTH: To the payment of any surplus thereafter remaining to
Shipowner or to whomsoever else may be entitled thereto.
SECTION 2.10 POSSESSION OF VESSEL. Until the occurrence of any Event of
Default that is continuing, Shipowner shall be suffered and permitted to retain
actual possession and use of the Vessel.
SECTION 2.11 NO REQUIREMENT TO COMMENCE PROCEEDINGS AGAINST SHIPOWNER.
Mortgagee will not need to commence any proceedings under, or enforce any
Security Interest created by, any other agreement or by law before commencing
proceedings under, or enforcing any Security Interest created by, this Mortgage.
SECTION 2.12 SUSPENSE ACCOUNT. Mortgagee, for the purpose of claiming
or proving in a
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bankruptcy of Shipowner or any other person, may place any sum received or
recovered from Shipowner under or by virtue of this Mortgage or any Security
Interest connected with it in a separate suspense or other nominal account
without applying it in satisfaction of the Obligations.
ARTICLE 3
SUNDRY PROVISIONS
SECTION 3.1 AMOUNT OF MORTGAGE. For purposes of filing and recording
this Mortgage as required by the provisions of Chapter 313 of Title 46 of the
United States Code, as amended, the total amount of this Mortgage is $84,500,000
and No/100 Dollars, plus interest, fees, expenses and performance of mortgage
covenants. The discharge amount is the same as the total amount.
SECTION 3.2 AMENDMENTS. No waiver, termination, amendment or other
modification of any provision of this Mortgage, and no consent to any departure
by Shipowner from any provision thereof, shall in any event be effective unless
the same shall be in writing and signed by Mortgagee and Shipowner, and then
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which it is given; provided that no such consent,
waiver, termination, amendment or other modification, unless in writing and
signed by Mortgagee shall affect the rights or duties of Mortgagee under this
Mortgage.
SECTION 3.3 SUCCESSORS AND ASSIGNS. All covenants, promises,
stipulations and agreements of Shipowner in this Mortgage shall bind Shipowner
and its successors and assigns and all persons claiming by, through or under it
and shall inure to the benefit of Mortgagee and its successors and permitted
assigns and all persons claiming by, through or under it. Shipowner recognizes
that Mortgagee may, consistent with applicable law, assign or otherwise transfer
its rights under the Note and/or this Mortgage. Any such assignment or transfer
shall only be made to or for the benefit of an affiliate of Mortgagee except
that if, during the continuation of an Event of Default, Mortgagee shall
reasonably determine that it is necessary or desirable to assign or otherwise
transfer its rights under the Note and/or this Mortgage to a citizen of the
United States as defined in the Shipping Act, 1916, as amended, it may do so
even if such citizen is not an affiliate of Mortgagee.
SECTION 3.4 REIMBURSEMENT. Shipowner shall reimburse Mortgagee on
demand for all reasonable attorneys' fees the payment of which is otherwise
secured hereby, and for all reasonable expenses and fees which Mortgagee may
incur from time to time in providing insurance coverage, in discharging the
Vessel from arrest or the like, or providing security therefor, salvage, general
average and tort claim expenses, for Security Interests, for mortgage recording
and duplication expenses and fees, in providing repairs, moving the Vessel and
for such other matters as Shipowner is obligated herein to provide, but fails to
provide, all to the extent provided for herein. Such obligation of Shipowner to
reimburse Mortgagee shall be an additional indebtedness due from Shipowner and
secured by this Mortgage, and shall accrue interest at the Default Rate from the
date of notice that such amount is due or is unpaid. Mortgagee, though
privileged to do, shall be under no obligation to Shipowner to make any such
expenditures, nor shall the making thereof relieve Shipowner of any default in
that respect.
SECTION 3.5 NOTICES. Any notice, demand, consent, authorization,
approval, instruction, waiver or other communication pursuant to the terms of
this Mortgage shall only be valid if in writing and in English (unless otherwise
specified) and shall be mailed by certified mail, return receipt
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requested (with first class postage prepaid) or sent or delivered to each party
by facsimile or courier service at the address or facsimile number set forth
below, or at such other address as shall be designated by such party in a
written notice to the other parties. Except as otherwise specified all notices
sent by certified mail, if duly given, shall be effective three (3) "Business
Days" (being a day other than Saturday, Sunday or other day on which banks are
authorized or obligated to close in Chicago, Illinois or Seattle, Washington)
after deposit into the mails, all notices sent by a nationally recognized
courier service, if duly given, shall be effective one Business Day after
delivery to such courier service, and all other notices and communications if
duly given or made shall be effective upon receipt. For purposes of this clause,
the addresses are as follows:
If to Shipowner: OCEANIC SHIP CO.
c/o American Classic Voyages Co.
Two North Riverside Plaza
Suite 200
Chicago, Illinois 60606
Attn: General Counsel
(312) 466-6151 (fax)
If to Mortgagee: HAL Antillen N.V.
c/o Holland America Line-Westours Inc.
300 Elliott Ave. West
Seattle, Washington 98119
Attn: General Counsel
(206) 284-8332 (fax)
Shipowner or Mortgagee may change their address by giving notice of such change
in the manner stated above. The provisions relating to the delivery or sending
of copies of notices is for convenience only and failure to send a copy of any
notice shall not invalidate that notice.
SECTION 3.6 AGENTS. Wherever and whenever herein any right, power or
authority is granted or given to Mortgagee, such right, power or authority may
be exercised in all cases by Mortgagee or such agent or agents as it may
appoint, and the act or acts of such agent or agents when taken shall constitute
the act of Mortgagee; provided, that any such agent shall be a citizen of the
United States as defined in the Shipping Act, 1916, as amended, as that Act may
require. Shipowner acknowledges that any such agent is the agent of Mortgagee
entitled to act on behalf of Mortgagee.
SECTION 3.7 DISCHARGE OF MORTGAGE. Mortgagee, upon payment of all
principal and interest and of all sums otherwise due under the Note and this
Mortgage, shall, at the expense of Shipowner, forthwith cause this Mortgage to
be discharged and transfer or release to Shipowner all insurance policies and
other documents relating to the Vessel.
SECTION 3.8 NO LIABILITY OF LENDER OR RECEIVER. Absent gross
negligence, neither Mortgagee nor any Receiver shall be obliged to check the
nature or sufficiency of any payment received by it under this Mortgage or the
Note or to preserve, exercise or enforce any right forming part of, or relating
to, the Vessel.
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SECTION 3.9 FURTHER ASSURANCES.
(a) Shipowner shall execute and deliver to Mortgagee (or as it may
direct) any assignment, mortgage, power of attorney, proxy or other document as
Mortgagee may, in any particular case, reasonably specify, and/or shall effect
any registration or notarization, give any notice or take any other step, which
Mortgagee may, by notice to Shipowner, reasonably specify for any of the
purposes described in subsection (b) of this Section or for any similar or
related purpose.
(b) The purposes referred to in subsection (a) of this Section are
to:
(i) validly and effectively to create the Security
Interest and rights intended to be created by or pursuant to this
Mortgage;
(ii) create a specific mortgage or assignment of any
particular asset contemplated by this Mortgage;
(iii) protect the priority in any jurisdiction of any
Security Interest which is created, or intended to be created, by or
pursuant to this Mortgage;
(iv) enable or assist Mortgagee or a Receiver to sell or
otherwise deal with the Vessel, Insurances or Requisition Compensation,
to transfer title to, or grant any interest or right relating to, the
Vessel, Insurances or Requisition Compensation or otherwise to
exercise, during the continuance of an Event of Default, any power or
right which is referred to in Section 2.2; and
(v) enable or assist Mortgagee to enter into any
transaction to commence, defend or conduct any proceedings and/or to
take any other action relating to the Vessel, the Insurances or the
Requisition Compensation in any country or under the law of any
country, to the extent Mortgagee is entitled to do so pursuant to the
terms of this Mortgage.
(c) Mortgagee may specify the terms of any document to be executed
by Shipowner under this Section and those terms may include any covenants,
powers and provisions consistent with this Mortgage which Mortgagee reasonably
considers appropriate to protect its or a Receiver's interests.
(d) Shipowner shall comply with a notice under this Section by the
date reasonably specified in the notice.
(e) At the same time as Shipowner delivers to Mortgagee any
document executed under this Section, Shipowner shall also deliver to Mortgagee
a certificate signed by the Secretary of Shipowner which shall:
(i) set out the text of a resolution of Shipowner's
directors specifically authorizing the execution of the document
specified by Mortgagee; and
(ii) state that either the resolution was duly passed at a
meeting of the directors validly convened and held throughout which a
quorum of directors entitled to vote on the resolution was present or
that the resolution has been signed by all the directors and is valid
under Shipowner's articles of incorporation or other constitutional
documents.
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SECTION 3.10 POWER OF ATTORNEY. For the purpose of securing Mortgagee's
interest in the Vessel, Insurances and Requisition Compensation and the due and
punctual performance of its obligations to Mortgagee under this Mortgage and the
Note, Shipowner irrevocably and by way of security appoints Mortgagee its
attorney, on behalf of Shipowner and in its name or otherwise, with full power
of substitution, to execute, sign or deliver any document and do any act or
thing which Shipowner is obliged to do under this Mortgage, it being agreed that
such power of attorney is coupled with an interest and shall only be operative
during the continuance of an Event of Default.
SECTION 3.11 GOVERNING LAW. To the extent not governed by the laws of
the United States, this Mortgage shall be governed by and construed in
accordance with the laws of the State of Washington, without regard to its
conflicts of law rules, it being the intent that the substantive laws of
Washington shall always apply. Nothing in this Section shall exclude or limit
any right which the Mortgagee may have with regard to the bringing of
proceedings, the service of process, the recognition or enforcement of a
judgment or any similar or related matter in any jurisdiction.
SECTION 3.12 CONSENT TO JURISDICTION/AGENT FOR SERVICE OF PROCESS.
Shipowner hereby irrevocably submits to the non-exclusive jurisdiction of any
state or federal court sitting in Seattle, King County, Washington, in any
action or proceeding brought to enforce or otherwise arising out of or relating
to this Mortgage and irrevocably waives to the fullest extent permitted by law
any objection which it may now or hereafter have to the laying of venue in any
such action or proceeding in any such forum, and hereby further irrevocably
waives any claim that any such forum is an inconvenient forum. Shipowner agrees
that a final judgment in any such action or proceeding shall be conclusive and
may be enforced in any other jurisdiction by suit on the judgment or in any
other manner provided by law. Nothing herein shall impair the right of Mortgagee
to bring any action or proceeding against Shipowner or its property in the
courts of any other jurisdiction. The Shipowner irrevocably appoints The
Prentice-Hall Corporation System, Inc. for the time being presently at 1013
Centre Road, Wilmington, Delaware 19805-1297 to act as its agent to receive and
accept on its behalf any process or other document relating to any proceedings
in any court which are connected with this Mortgage or the Note.
SECTION 3.13 WAIVER OF JURY TRIAL. EACH PARTY HEREBY IRREVOCABLY WAIVES
ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER
BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS
MORTGAGE, THE NOTE OR ANY OTHER AGREEMENT ENTERED INTO IN CONNECTION THEREWITH,
ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR ANY OF THE ACTIONS OF ANY PARTY
IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT THEREOF.
SECTION 3.14 COUNTERPARTS. This Mortgage may be executed simultaneously
in any number of counterparts and all such counterparts executed and delivered
each as an original will constitute but one and the same instrument.
SECTION 3.15 EXHIBITS. All exhibits referred to herein are attached
hereto and incorporated herein by this reference.
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SECTION 3.16 CAPTIONS. The captions of the articles and sections and
subsections of this Mortgage are included for convenience of reference only, and
shall not constitute a part of this Mortgage for any other purpose.
SECTION 3.17 PREFERRED STATUS. Nothing contained herein will be
construed as a waiver by Shipowner of the preferred status of this Mortgage, and
any provision which would otherwise constitute such a waiver shall to such
extent be of no force or effect.
IN WITNESS WHEREOF, Shipowner has executed this Mortgage the ___day of
October, 2000.
OCEANIC SHIP CO.
a Delaware Corporation
By
-----------------------
Its
--------------------
EXHIBITS:
Exhibit A - Note
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STATE OF )
--------------------------
) ss.
COUNTY OF )
-------------------------
On this _____ day of October, 2000, before me, a Notary Public in and
for the State of________________________________, personally appeared _________
_______________, personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person who executed this instrument, on oath
stated that he/she was authorized to execute the instrument, and acknowledged it
as the ____________________________________ of Oceanic Ship Co., to be the free
and voluntary act and deed of said corporation for the uses and purposes
mentioned in the instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal this
____ day of October, 2000.
----------------------------------------------------
NOTARY PUBLIC in and for the State of
---------------
residing at
--------------------------------
My appointment expires
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