EXHIBIT 10.5
Dated 4th August 2004
ADVENTURE TWO S.A.
to
CORNER BANCA S.A.
FIRST PREFERRED MARSHALL ISLANDS VESSEL MORTGAGE
M/V "FREE DESTINY"
OFFICIAL NO. 2077
1
THIS FIRST PREFERRED MORTGAGE is made this 4th day of August 2004 by ADVENTURE
TWO S.A., a corporation incorporated under the laws of the Republic of the
Marshall Islands, whose registered office is at Trust Company Complex, Ajeltake
Road, Ajeltake Island, Majuro, Marshall Islands MH 96960 (hereinafter called the
"Shipowner") in favour of CORNER BANCA S.A. a company organized and existing
under the laws of the Republic of Switzerland with an address at Via Canova 16,
Lugano, Switzerland (hereinafter called the "Mortgagee")
WHEREAS
A) The Borrower is the absolute owner of motor vessel "Free Destiny"
presently flying under the Flag of the Marshall Islands, hereinafter
called "the Vessel", described as below:
IDENTIFICATION OF THE VESSEL
Name "FREE DESTINY"
Flag Marshall Islands
Built on 1982
IMO/Official Number No. 8128157 /2077
Gross tonnage 16282 tons
Net tonnage 9377 tons
Class notation Lloyds Register, +100 Al + LMC UMS
B) By a loan agreement dated May 21st 2004 (the "Loan Agreement") - a copy of
which is attached hereto as Exhibit 1 and made an integral part hereof -
made between the Mortgagee and the Shipowner, the Mortgagee agreed to
advance to the Shipowner a Loan in the maximum amount of Five Million
United States Dollars, (USD 5,000,000) (hereinafter "the Loan"). Word and
expressions shall, unless the contract otherwise requires, have the same
meaning ascribed to them in the Loan Agreement.
C) To secure the repayment of the Loan and interest thereon and the
performance and observance of all the agreements, covenants and provisions
contained therein, this mortgage and in the Security Documents, the
Shipowner has duly authorized the execution and delivery of this First
Preferred Mortgage.
NOW THEREFORE, in consideration of the promises and in order to secure the
repayment of the Loan and interest thereon in accordance with its terms:
1 THE SHIPOWNER, in accordance with the provision of Section 302 of
the Marshall Islands Maritime Act, 1990 as amended, and otherwise
comply with satisfy all the requirements and formalities established
by the said Maritime Act and any other pertinent legislation of the
Republic of the Marshall Islands to perfect this Mortgage as a valid
and enforceable First and Preferred lien upon the Vessel and to
furnish to the Mortgagee from time to time such proofs as the
Mortgagee may reasonably request for its satisfaction with respect
to Owner's compliance with the provisions of this sub-clause, hereby
Executes and Constitutes a First Preferred Naval Mortgage on the
whole of the Vessel in favor of the Mortgagee TOGETHER WITH all the
engines, machinery, masts, boats, anchors, cables, chains, rigging,
tackle, apparel, furniture, fittings and equipment and all other
appurtenances to the Vessel thereunto appartaining 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 her equipment and
appurtenances aforesaid (excepting only such equipment placed on the
Vessel which under the terms of any charterparty relating thereto
does not become the property of the Shipowner) TO HAVE AND TO HOLD
ALL AND SINGULAR the above mortgaged and described property unto the
Mortgagee for its own use and benefit forever upon the terms herein
set forth for the enforcement of the repayment of the Loan and
interest thereon, and to secure the performance and observance of
and compliance with the covenants terms and conditions in the Loan
Agreement, this Mortgage and the other Security Documents contained
expressed or implied PROVIDED HOWEVER and the condition of these
presents in such that if the Shipowner its successors or assigns
shall have repaid the Loan ad interest thereon in accordance with
its provisions and shall have performed observed and complied with
all the covenants terms and conditions in the Loan Agreement, this
Mortgage and the other Security Documents contained expressed or
implied to be performed observed or complied with these presents and
the rights hereunder shall cease terminate and be void but shall
otherwise remain in full force and effect.
2 THE SHIPOWNER for itself, its successors and assignee HEREBY
COVENANTS AND AGREES with the Mortgagee and its respective
successors and assignee that the Vessel and all the appurtenances
thereto appertaining or belonging and all improvements and
replacements hereafter made in or to the Vessel or any part thereof
are to be held by the Mortgagee subject to the covenants conditions
provisions terms and uses hereinafter set forth.
3 THE SHIPOWNER HEREBY COVENANTS AND AGREES with the Mortgagee at all
times to perform and observe ALL AND SINGULAR the covenants,
conditions and agreements in the Loan Agreement, this Mortgage and
the Security Documents contained expressed or implied.
4 THE SHIPOWNER at its own expense when and so long as this Mortgage
shall be outstanding covenants as follows:
(i) to insure the Vessel and keep the Vessel insured in the
Shipowner's name in United States Dollars (or such other
currency as the Mortgagee and in such amount and upon such
terms as shall from time to time be required
or approved in writing by the mortgagee and in particular but
without prejudice to the generality of the foregoing
(a) the insurance's shall be placed through such brokers
and/or with such insurance offices companies
underwriters war risks and protection and indemnity
associations or clubs in the United States or the United
Kingdom or in such other country and under such policies
as shall be approved in writing by the Mortgagee such
consent not to be unreasonably withheld and given
promptly
(b) the Vessel shall be insured and kept insured in the
Shipowner's name against marine risks including all
risks customarily and usually covered by prudent
shipowners under policies containg the ordinary
conditions applicable to similar vessels including
collision clause and cover against risks of civil
commotion
(c) the Vessel shall be insured and kept insured in the
Shipowner's name against war risks (including risks of
mines) and any other risk excepted by the "Free of
Capture and Seizure" clause in marine policies of
insurance
(d) if required by the Mortgagee the Shipowner shall insure
and kept insured the Vessel in the Shipowner's name for
an amount to be approved by the Mortgage against excess
risks that is to say the proportion of claims for
general average and salvage charges and under the
running-down clause not recoverable in consequence of
the value at which the Vessel is assessed for the
purpose of such claims exceeding the insured value
(e) the Vessel shall be entered and kept entered in the
Shipowner's name for its full value and tonnage in a
protection and indemnity association in respect of such
matters or risks as are not covered by the ordinary
conditions of normal risks policies port risks
insurances may be taken out thereon by the Shipowner
under the forms of port risks policies approved by the
Mortgagee
(ii) to give notice forthwith of any assignment of insurances to
the relevant brokers, insurance, officers, companies,
underwriters, war risks and protection and indemnity
associations or clubs in such form as may be approved by the
Mortgagee
(iii) to execute and deliver all such documents and do all such
things as may be necessary to confer upon the Mortgagee a
legal tide to the insurances and procure that the interests of
the Mortgagee is at all times endorsed or noted upon all
slips, cover notes, policies, certificates of entry or other
instruments issued in connection with the Policies and procure
(i) that the following loss payable clause shall be endorsed
upon both the hull machinery and equipment and war risks
policies:
" It is noted that by an Assignment in writing dated
August____2004 the Shipowner, Adventure Two SA, Majuro,
Marshall Islands has assigned
absolutely to Corner Banca SA of Switzerland, all the
Shipowner's interests in this Policy and all benefits hereof
including all claims of whatsoever nature hereunder. Claims
hereunder payable in respect of an actual or constructive or
agreed or arranged or compromised total loss or requisition
for title or other compulsory requisition of the Vessel and
claims hereunder payable in respect of a mayor casualty that
is to say any casualty in respect whereof the claim or the
aggregate of the claim exceeds Five Hundred thousand United
States Dollars (USD500'000.--) shall be payable to the
Mortgagee. Subject thereto all other claims, unless and until
the Underwriters have received notice from the Mortgagee of a
default under the Mortgage in which event all claims under
this Policy of Insurance shall be payable direct to the
Mortgagee, shall be released directly for the repair salvage
or other charges involved or to the Shipowner as reimbursement
if they have fully repaired the damage and paid all of the
salvage or other charges"
AND (ii) that the following loss payable clause shall be
endorsed upon the protection and indemnity certificate of
entry:
1 It is noted that Corner Banca S.A. are interested as
first mortgagee in the subject matter of this insurance
up to the amount recorded under Clause 24 of the
Mortgage.,
2 Claims hereunder for all losses shall be paid direct to
the Shipowner unless and until the first Mortgagee shall
have given notice in writing that the Shipowner's are in
default under the First Preferred Naval Mortgage on the
Vessel whereafter such claims shall be payable to the
Mortgagee up to the amount recorded under Clause 24 of
the Mortgage
(iv) to procure that the relevant brokers and any protection and
indemnity association in which the Vessel may from time to
time be entered undertake:
(a) to hold to the order of the Mortgagee the originals of
all policies contracts binders insurance slips cover
notes and certificates of entry whatsoever relating to
the Vessel and deliver certified copies thereof to the
Mortgagee on request and
(b) to advise the Mortgagee promptly:
1 if any insurance office, company underwriter,
association or club cancels any of insurance,
2 of any variation in the terms of any of the
insurances or any default in the payment of any
premium call or contribution or failure to renew
any of the insurances at least Fourteen (14) days
before the expiry thereof and
(c) not to assert any lien in respect of unpaid premiums
except insofar as such premiums relate only to the
insurances in respect of the Vessel and not to any other
Vessels.
(v) Punctually to pay all premiums calls contributions or other
sums payable in respect of the Policies and each of them and
to produce all relevant receipts when so required by the
Mortgagee,
(vi) to renew each of the insurances at least Fourteen (14) days
before the expire thereof and procure that the relevant
brokers shall promptly confirm in writing to the Morgagee as
and when each such renewal is effected,
(vii) to arrange for the execution of such guarantees as may from
time to time be required by any protection and indemnity or
war risks association,
(viii) to procure that each of the insurances shall contain or be
accompanied by a waiver as against the Mortgagee of any and
all premium for which the Mortgagee might otherwise be or
become liable as a named assured loss payee or otherwise and
shall provide for duplicates of all notices given by the
insurers to the Shipowner to be sent at the same time to the
Mortgagee,
(ix) to furnish the Mortgagee from time to time on request with
full information about all insurances maintained on the Vessel
and names of the offices companies underwriters associations
or clubs with which such insurance is placed,
(x) to furnish the Mortgagee at such intervals as the Mortgagee
shall specify with a detailed report signed by an independent
firm of marine insurance brokers appointed by the Shipowner
and approved by the Mortgagee detailing the insurances
maintained on the Vessel and stating the opinion of such firm
as the adequacy thereof
(xi) promptly to furnish the Mortgagee with full information
regarding any casualties or other accidents or damage to the
Vessel involving an amount in excess of USD500'000.-- or the
equivalent in any other currency and give the Mortgagee short
details regarding any causalities or other accidents or damage
to the Vessel involving an amount of less than USD500'000.--
or the equivalent in any other currency
(xii) not to agree to any material variation in the terms of any one
or more of the insurances without prior written approval of
the Mortgagee nor to do any act or voluntarily suffer or
permit any act to be done whereby any insurance shall or may
be invalid void avoidable suspended defeated or unforceable
and not to suffer or permit the Vessel to engage in any voyage
or to carry any cargo not permitted under any one or more of
the insurances without first giving written notice to the
Mortgagee obtaining the consent of the insurers concerned and
complying with such requirements as to payment of extra
premium or otherwise as insurers
may impose and as may be approved by the Mortgagee such
approval not to be unreasonably withheld and be given promptly
(xiii) not without the prior written consent of the Mortgagee to
settle compromise or abandon any claim in respect of one or
more of the insurances other than a claim of less than
USD500'000.-- arising out of a total loss of the Vessel
(xiv) to apply or procure the appliance of all such sums receivable
in respect of the insurances as are paid to the Shipowner or
in accordance with the Shipowner's instructions for the
purpose of making good the lose and fully repairing all damage
in respect whereof the insurance moneys shall have been
received
(xv) that in the event of the Shipowner failing to insure or
maintain insured the Vessel or in entering and keeping the
Vessel entered in a protection and indemnity and/or war risks
association as hereinbefore provided the Mortgagee may (but
shall not be bound to) insure the Vessel or enter the Vessel
in such manner and to such extent as the Mortgagee in its
discretion thinks fit and in such case the cost of all such
insurances and entries together with the premiums calls and
contributions payable in respect thereof with interest thereon
at the rate calculated in accordance with the above mentioned
LOAN AGREEMENT shall be paid on demand by the Shipowner to the
Mortgagee and shall be added to amounts secured by this
Mortgage,
(xvi) to do all such things whatsoever and prepare execute and
deliver all such documents whatsoever to enable the Mortgagee
to collect and recover any moneys which may become due in
respect of the insurances and for that purpose (but without
limitation) to permit the Mortgagee if necessary to sue in the
name of the Shipowner.
5 THE SHIPOWNER HEREBY COVENANTS AND AGREES with the Mortgagee as
follows:
(a) At all time to carry on board the Vessel a duly certified copy
of this Mortgage (which shall form a part of the Vessel's
documents) and to cause the same to be shown to any person
having business with the Vessel which might create or imply
any commitment or encumbrance whatsoever on the Vessel and to
place and maintain in a conspicuous place in the navigation
room and in the cabin of the master of the Vessel a printed
notice in the following form:
"NOTICE OF MORTGAGE"
This vessel is mortgaged by a First Preferred Mortgage to
Corner Banca S.A., pursuant to the provisions of Chapter 3 of
the Marshall Islands Maritime Act of 1990 as amended. Under
the terms of the said Mortgage, neither the Shipowner, nor any
charterer or the master of this Vessel has any power, right or
authority whatever to create, incur or permit to be
(i) to put and keep the Vessel her equipment and machinery
at all times in a state of good running order and
repair, so that the Vessel shall be so far 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
and to put and keep the Vessel in such a condition as
will entitle her to the highest classification and
rating for vessels of the same age and type with Lloyds
Classification Society of like standing and to make her
strictly comply with the requirements of any laws
regulations or requirements for the time being of the
Republic of the Marshall Islands or the maritime
authorities thereof or of the Vessel's Classification
Society and of any country province colony or dependency
where the Vessel may operate or trade and to procure
that all repairs to or replacements of any damaged worn
or lost parts or equipment be effected in such manner
(both as regards workmanship and quality of materials)
as not to diminish the value of the Vessel
(ii) to furnish the Mortgagee on request with a statement by
Lloyds Register or such other classification society as
is acceptable to the Mortgagee that such classification
is maintained and to furnish the Mortgagee from time to
time and upon demand with all such documents as the
Mortgagee may require concerning the classification of
the Vessel,
(iii) not to make or permit to be made any substantial change
in structure type or speed of the vessel or any change
in her rig without first receiving written approval
thereof from the Mortgagee,
(iv) to submit the Vessel regularly to such periodical or
other surveys as may be required for classification
purpose and if so required to supply to the Mortgagee
copies of all surveys or reports issued in respect
thereof,
(f) (i) to permit the Mortgagee and such other persons
appointed by it to board the Vessel to have full and
complete access to the Vessel to view the state and
condition thereof and her cargo and papers, to ascertain
whether the Vessel is being properly repaired and
maintained. In the event deficiencies are found which
evidence the failure in keeping her in such good state
or repair and in such working order and condition as
mentioned in sub clause (d) of this Clause 5 (without
prejudice however to any of the Mortgagee's rights under
this Mortgage) to effect such repairs as shall in its
reasonable opinion be necessary and the Shipowner will
on demand repay to the Mortgagee every sum of money
expended for the above purpose with interest as
hereinafter mentioned,
(ii) to deliver to the Mortgagee on demand copies of any and
all documents relating to the Vessel her employment
position and engagements particulars of all towages and
salvages and copies of
all charters and other contracts for her employment or
otherwise howsoever concerning her
(g) (i) to pay and discharge or cause to be paid and discharged
when due and payable from time to time all debts damages
and liabilities whatsoever which may have given or may
give rise to maritime or possessory liens on or claims
enforceable against the Vessel and all taxes assessments
governmental charges fines and penalties legally imposed
on the Vessel or any income therefrom,
(ii) except the Mortgage constituted pursuant hereto not to
create or suffer to be continued any lien other than a
lien for crews wages encumbrances security interest or
charge on the Vessel or any income therefrom and in due
course and in any event within Fifteen (15) days after
the same becomes due and payable to pay or cause to be
discharged or make adequate provision for the payment or
discharge of all claims or demands which if not paid or
discharged might in admiralty in equity or at law or
pursuant to any statute in any jurisdiction to which the
Vessel may at time be subject have equality with
priority to or preference over the lien of this Mortgage
and to cause the Vessel to be released or discharged
from such lien encumbrance security interest or charge,
(h) promptly to furnish the Mortgagee from time to time and at any
time with copies of all such accounts financial statements
reports and such other financial information concerning the
Shipowner as the Mortgagee may reasonably request
(i) promptly to notify the Mortgagee thereof by telex confirmed by
letter addressed to the Mortgagee at its address aforesaid or
such other address as the Mortgagee may from time to time
direct in writing to the Shipowner in the event of the Vessel
being arrested or detained by any court or tribunal or by any
government or other authority or in the event of any accident
bottomry average salvage any assistance by third persons or
any loss of classification in respect of the Vessel or if the
Vessel is subject to any legal proceedings for a sum higher
than USD500'000.-- or the equivalent from time to time in any
other currency
(j) to deliver at least forty eight (48) hours prior notice in
writing to the Mortgagee of any intention to put the Vessel
into the possession of any person for the purpose of work
being done upon her in an amount exceeding or which might
exceed USD500'000.-- or the equivalent in any other currency
and concurrently to notify such person that the prior written
consent of the Mortgagee is pre-requisite to the commencement
of such work
(k) whilst moneys remain outstanding under this Mortgage not to
sell or otherwise dispose of the Vessel or any shares therein,
mortgage, charge, pledge, transfer, abandon or hypothecate the
Vessel or any freight or hire moneys thereof to any person or
company, nor to suffer the creation of any such sale disposal
mortgage, charge, pledge, transfer, abandonment or
hypothecation of the Vessel nor do or permit any act or thing
whereby the Vessel shall or may lose her existence or due
registration as a Marshall Islands ship without the prior
written consent of the Mortgagee as aforesaid to any sale
mortgage or transfer and any such sale, mortgage or transfer
of the Vessel shall be subject to the provisions of this
Mortgage and to the lien it creates
(l) not to cause or permit the Vessel to be operated or employed
in any manner contrary to International Law or to any
applicable law including but without limitation the laws of
Switzerland and the Republic of the Marshall Islands nor to
violate any law or carry any cargo that will expose the Vessel
to penalty, forfeiture, capture, detention, destruction nor to
abandon the Vessel in a foreign port nor to do or suffer or
permit to be done anything which can or may injuriously affect
the registration or enrollment of the Vessel under the laws
and regulations of the Republic of the Marshall Islands and at
all times to keep the Vessel duly documented thereunder
(m) (i) during hostilities (whether or not a state of war shall
have been formally declared) between any two or more
nations or in which the United Nations Organization may
be involved or during any civil war not to employ or
permit the Vessel to be employed in any manner in
carrying any goods that shall or may be declared to be
contraband of war unless prior to such employment
special war risks policies effected with such
underwriters as the Mortgagee may approve and in all
respects to the satisfaction of the Mortgagee shall have
been effected signed and delivered to the Mortgagee
(ii) not without the prior written approval of the Mortgagee
upon such terms as the Mortgagee may require with
particular reference to war risks insurance to enter
areas of hostility or threatened hostility
(n) not to employ the Vessel:
(i) on demise charter without the prior written consent of
the Mortgagee which consent shall not be unreasonably
withheld provided that such consent may be withheld
unless the demise charterer agrees on terms satisfactory
to the Mortgagee to subordinate its rights under the
demise charter to her rights of the Mortgagee, hereunder
or
(ii) on time charter for any period without the prior written
consent of the Mortgagee or
(iii) at a rate below the market rate prevailing at the time
when the Vessel is fixed or on terms whereby more than
Two (2) months hire is payable in advance without the
written consent of the Mortgagee
(o) at all times retain a copy of this Mortgage and of any
assignment of this Mortgage by the Mortgagee (if requested by
any assignee) certified by the appropriate authorities of the
Republic of the Marshall Islands and by any other relevant
authorities with the Vessel's papers on board the Vessel and
any other certificates or other documents required by law and
to cause each such certified copy and master for the time
being of the Vessel and to be exhibited on demand to any
persons having business with the Vessel or to any
representative of the Mortgagee,
(p) promptly on demand by the Mortgagee to use its best endeavors
to assist the Mortgagee in or in connection with the due
execution and recording of this Mortgage and protection and
enforcement of the Mortgagee's security and in connection with
any act matter or thing reasonably or properly made done or
executed or to be made done or executed by the Mortgagee its
agents or servants in about the matters described in this
Mortgage.
6 PROVIDED the Shipowner fully repays the Loan together with interest,
costs and expenses pertaining thereto, fulfils all its obligations
under the Security Documents, the Mortgagee undertakes to discharge
the Mortgage on the Vessel, upon the request of the Shipowner. All
costs and expenses incurred in respect of the discharge of the
Mortgage will be borne by the Shipowner.
7 THE MORTGAGEE shall without prejudice to its other rights and powers
hereunder be entitled (but not bound) at any time and as often as
may be necessary to take any such action and make all such
expenditure as it may in its sole and absolute discretion think
necessary or desirable for the purpose of preserving maintaining and
/or protecting the security created by this mortgage and each and
every expense for liability so incurred by the Mortgagee in or about
the preservation maintenance and/or protection of the security
(including but without limitation expense or liability incurred in
the maintenance of any insurance in respect of the Vessel the
discharge of any liens taxes dues assessments governmental charges
fines and penalties lawfully imposed in respect thereof repairs
and/or surveys effected thereon and in all such other matters for
which the Shipowner is responsible under the terms hereof but falls
to provide including any legal fees in connection therewith) shall
be repayable to the Mortgagee by the Shipowner on demand together
with interest thereon at the Default Rate from the date whereon such
expense or liability was incurred by the Mortgagee until the date of
judgment or payment. Such obligation of the Shipowner to reimburse
the Mortgagee shall be an additional indebtedness due from the
Shipowner secured by this Mortgage. The Mortgagee though privileged
so to do shall be under no obligation to the Shipowner to take any
such action to make expenditure or to incur any such liability as
aforesaid nor shall the taking making or incurring thereof relieve
the Shipowner of any default in that respect.
8 IN CASE any one or more of the following events herein termed
"Events of Default" shall happen
(a) the Shipowner fails to pay:
(i) on the due date any amount of principal or interest, or
any portion thereof, which may be payable under the Loan
Agreement, or
(ii) within five (5) business days of the due date of any
other amount or five (5) business days from the date of
demand any amount not payable on a fixed date, which may
be payable by the owner under the Loan Agreement or this
Mortgage,
(b) the Shipowner fails to comply with any provision of the Loan
Agreement or this Mortgage and such failure continues
unremedied for a period of fourteen (14) business days
commencing from the date on which notice of such failure is
provided by the Mortgagee to the Shipowner, unless the Loan
Agreement or this Mortgage provides otherwise,
(c) the country of the flag of the Vessel, or any country in which
the Vessel may be registered (whether it may be the country in
which the Vessel may have a dual registration under bare boat
charter) becomes involved in hostilities whether war be
declared or not or in civil war or in the event of occupation
of such country by any other power in such country by
unconstitutional means unless arrangements satisfactory to the
Mortgagee have been made for the registration of the Vessel in
another jurisdiction or
(d) anything is done or suffered or omitted to be done by the
Shipowner which in the reasonable opinion of the Mortgagee
imperils the security created by this Mortgage, or
(e) any event occurs which would entitle any subsequent mortgagee
to enforce its mortgage over the Vessel.
Then and in each and every such case the Mortgagee shall have the right to
(i) without notice or further demand, as and when it may see fit, to
put into force and exercise all the powers possessed by it as the
Mortgagee of the Vessel pursuant to Chapter 3 of the Marshall
Islands Act 1990 as amended and in particular but without limitation
(a) to take possession of the Vessel
(b) to require that all contracts and other records relating to
the Policies (including details of and correspondence
concerning outstanding claims) be forthwith delivered to such
brokers as the Mortgagee may nominate
(c) to collect recover compromise and give a good discharge for
all claims then outstanding or thereafter arising under any
one or more of the Policies and to take over or institute all
such proceedings in connection therewith as the Mortgagee in
its absolute discretion thinks fit and to permit the brokers
through whom collection or recovery is effected to charge and
retain the usual brokerage therefor
(d) to discharge compound release or compromise claims against the
Shipowner in respect of the Vessel which have given or may
give rise to any charge or lien on the Vessel or which are or
may be enforceable by proceedings against the Vessel
(e) to sell the Vessel or any share therein with prior notice to
the Shipowner as provided for in the law with or without the
benefit of any charterparty or other subsisting contract for
the employment of the Vessel by public auction or private
contract at any place in the world with or without
advertisement for cash or on credit and upon such terms as the
Mortgagee in its absolute discretion may determinate with
power to postpone any such sale and without being answerable
for any loss occasioned by such sale or resulting from
postponement thereof
(f) pending the sale of the Vessel to manage, insure, maintain and
repair the Vessel and to hold, lay-up, lease, employ,
charter,operate or otherwise use the Vessel in such manner and
for such period as the Mortgagee in its absolute discretion
deems expedient, accounting only for the net profits after
deducting operating costs and debit service (if any) of such
use and for such purpose. For the purposes aforesaid the
Mortgagee shall be entitled to do all acts and things
whatsoever incidental or conductive thereto including entering
into arrangements and contracts of whatsoever nature in
respect of the Vessel, her insurance,management, maintenance,
repair, classification and employment and generally to do and
cause to be done all such acts and things whatsoever and to
make all such arrangements whatsoever in respect of the Vessel
or the working of the same in all respects as if the
Mortgagee, as the owner of the Vessel and without being
responsible for any loss and damage thereby incurred
(g) to recover from the Shipowner on demand any loss whatsoever
which may be incurred by the Mortgagee in or about or in
connection with the exercise of the powers vested in the
Mortgagee under sub-clause (f) above with interest thereon at
the Default Rate from the date when such losses were incurred
by the Mortgagee until the date of full payment both before
and after judgment
(h) to recover from the Shipowner on demand all expenses, payments
and disbursements whatsoever incurred by the Mortgagee in or
about or in connection with the exercise by it of any of the
powers aforesaid together with interest thereon at the Default
Rate
PROVIDED ALWAYS that any sale of the Vessel by the Mortgagee pursuant to
sub-clause (i) (e) above shall operate to divest all the legal and
beneficial interest whatsoever of the Shipowner in the Vessel and shall
bar the Shipowner its successors and assignees and all persons claiming by
through or under them. No purchaser shall be bound to enquire whether the
Mortgagee's power of sale has arisen in the manner herein provided and the
sale shall be deemed to be within the power of the Mortgagee and the
receipt of the Mortgagee for the purchase money shall effectively
discharge the purchaser who shall not be concerned with the manner of
application of the proceeds of sale or be in any way answerable therefor.
Upon any such public sale by
the Mortgagee pursuant to sub-clause (i) (e) above the Mortgagee may bid
for the purchase of the Vessel and set-off the purchase price against all
sums whatsoever due to it under and by virtue of this Mortgage provided
that such purchase price shall not be less than the price offered by any
bona fide third party
9 FROM and after the occurrence of an Event of Default all moneys
received by the Mortgagee in respect of:
(i) sale of the Vessel or any share therein
(ii) recovery under and by virtue of the insurances of the Vessel
(iii) any and all moneys paid by any governmental authority as
compensation in the event of the requisition of the Vessel for
title or other compulsory acquisition of the Vessel by such
governmental authority (otherwise than requisition for hire)
(iv) the freight hire or other earnings of the Vessel
shall be applied in accordance with the Loan Agreement
10 (a) EACH and every power and remedy conferred on the Mortgagee
hereunder shall be cumulative and in addition to every other
power and remedy now or hereafter existing at law in equity in
admiralty or by statute. Each and every other power and remedy
may be exercised from time to time and as often and in such
order may be deemed expedient by the Mortgagee. The exercise
or the beginning of the exercise of any power or remedy shall
not be construed to be waiver of the right to exercise at the
same time or thereafter any other power or remedy. No delay or
omission by the Mortgagee in the exercise of any right of
power or in the pursuance of any remedy shall impair any such
right power or remedy or be construed to be a waiver of any
default on the part of the Shipowner or to be acquiescence
therein
(b) The Mortgagee may from time to time and at any time waive
unconditionally or on such terms and conditions as may seem
expedient any of the covenants conditions and obligations on
the part of the Shipowner contained herein or any breach
therefor by the Shipowner. Every such waiver or other
indulgence granted to the Shipowner by the Mortgagee shall be
deemed to have been made without prejudice to its rights and
powers as Mortgagee of the Vessel hereunder or otherwise
howsoever which shall at all times thereafter remain
exercisable whenever the Mortgagee shall think fit and as if
such waiver had not been made and shall not otherwise alter or
affect the obligations of the Shipowner hereunder
11 IT IS declared and agreed that the security created by this Mortgage
shall be held by the Mortgagee as a continuing security for the
repayment of the Loan and payment of interest thereon and of all
other moneys expressed to be secured by this Mortgage and that the
security so created shall not be satisfied by any intermediate
payment or satisfaction of any part of the said debt and that the
security so created shall be in addition to and shall not in any way
be prejudiced or affected by any collateral or other security now
held or hereafter taken by the Mortgagee for all or any part of the
moneys hereby secured or by any variation in the terms or
termination of any such security
12 THE MORTGAGEE shall be entitled at any time and as often as may be
expedient to delegate all or any of the powers and discretion vested
in it hereunder in such manner upon such terms and conditions
(including the power to sub-delegate) and such persons as the
Mortgagee in its absolute discretion may think fit
13 THE MORTGAGEE and every receiver attorney manager agent or other
person appointed by the Mortgagee hereunder shall be entitled to be
indemnified out of the security created hereby in respect of all
claims costs liabilities obligations and expenses whatsoever
incurred by any one or more of them in relation to or in connection
with the Vessel and the execution of any powers authorities or
discretion vested in any one or more of them hereunder
14 THE SHIPOWNER hereby irrevocably appoints the Mortgagee and its
attorneys as its true and lawful attorney with full power to act
alone and with full power of substitution until the due discharge of
this Mortgage in accordance with the laws of the Republic of the
Marshall Islands for the purpose of doing in its name any and all
acts whatsoever which the Shipowner itself could do in connection
with the property hereby mortgaged including but without limitation:
(a) Doing all further acts required by the Mortgagee under clause
5 (d) (ii) hereunder including executing, sealing, delivering
and registering all documents required thereunder
(b) Applying for receiving and taking possession of the Vessel
(c) Making any transfer of the Vessel provided for herein
including the execution, sealing, and delivery of any covenant
assignment or other instrument of transfer or further document
required to complete perfect or validate the same. The
Shipowner hereby ratifies and confirms that its said attorneys
shall lawfully do by virtue hereof PROVIDED THAT save in case
of the aforesaid powers shall not be exercisable by or on
behalf of the Mortgagee until an Event of Default has occurred
but the exercise of such powers by the Mortgagee shall not put
any person dealing with the Mortgagee upon any enquiry as to
whether an Event of Default has occurred nor shall such person
be in any way affected by notice to the contrary and exercise
by the Mortgagee of this power in all circumstances shall be
conclusive evidence of its right to exercise the same
15 (a) ALL demands, notices or other communications required to be
given under this Deed of Mortgage shall be in writing and may
be given or sent and delivered as follows:
- to the Shipowner, in the attention of the
President/Director of the Shipowner, Mr. George D
Gourdornichalis, and Mr I. Varouxakis and Mr. E.
Gourdormichalis c/o Free Ships S.A., 93 Akti Miaouli,
18538 Piraeus, Greece
- to the Mortgagee, to Corner Banca SA, Via Canova 16,
P.O. 2835, 6901 Lugano, Switzerland,,
or to such other address or addresses as the Shipowner may
from time to time notify the Mortgagee in writing, (or as may
be indicated from time to time in the Mortgagee's applicable
"General Conditions") and shall be deemed to have been
received by the Shipowner on the date of dispatch if sent by
cable or telex and five (5) days after having been posted if
sent by post
(b) For service of legal process the Shipowner appoints the
Process Agent or such other person or persons as the Shipowner
may with the prior approval of the Mortgagee appoint in their
place as its agent and agrees to consider any legal process or
demand or notice being made or served on the said agent as
binding upon the Shipowner
16 A certificate submitted by the Mortgagee to the Public Registry
Office of the Marshall Islands as to the amount due or to become due
from the Shipowner to the Mortgagee under this Mortgage shall in the
absence of manifest error be conclusive and binding on the Shipowner
for all purposes
17 (a) The obligations on the part of the Shipowner contained herein
shall bind the Shipowner and its successors and permitted
assignees and the rights of the Mortgagee shall inure to the
benefit of its successors and assigns whether so expressed or
not
(b) The Shipowner hereby undertakes to cooperate fully and to
execute all such documents as are necessary for the purpose of
ensuring that any assignee of the Mortgagee receives the full
benefit of all the rights of the Mortgagee and the covenants
of the Shipowner hereunder
18 THE SHIPOWNER hereby agrees that any legal action or proceedings
arising out of or in connection with this Mortgage may be brought in
the courts of any state wherein the Vessel may for the time be found
and hereby submits itself to each and every such jurisdiction. Such
submission shall not limit the right of the Mortgagee to commence
any proceeding whatsoever relating to or in connection with this
Mortgage in whatsoever jurisdiction it shall deem fit
19 ANY provision hereof prohibited by or unlawful or unforceable under
any applicable law of any jurisdiction shall as to such jurisdiction
be ineffective without modifying the remaining provisions of this
Mortgage. Where however the provisions of any such applicable law
may be waived they are hereby waived by the Shipowner and the
Mortgagee to the full extent permitted by law with the object that
this Mortgage shall be deemed to be a valid binding agreement
enforceable in accordance with its terms
20 THIS Mortgage may be executed in any number of counterparts each of
which shall be an original but such counterparts shall together
constitute but one and the same instrument
21 THE English text of this Mortgage is the authentic text and in the
event of any differences arising on translation, recourse shall be
held to the English text.
22 THE provisions of this Mortgage and all rights and obligations
hereunder shall be governed by and construed in accordance with the
laws of the Republic of the Marshall Islands.
23 EXCHANGE RATE INDEMNITY
23.01 ANY payment or payments made to or for the account of the
Mortgagee in connection with this Mortgage or any of the other
Security Documents in a currency (the currency in which the
relevant payment is made being hereinafter referred to as the
"Relevant Currency") other than the currency in which such
payment or payments should be made pursuant to the terms
hereof (such currency being herein called the "Agreed
Currency") pursuant to a judgment or other order of a court
or tribunal of any jurisdiction or any enforcement proceedings
in connection with this Mortgage or any of the other Security
Documents shall only constitute a discharge to the Shipowner
to the extent of the amount of the Agreed Currency which the
Mortgagee is able at the most favorable rate reasonably
available to it for the purchase of such Agreed Currency with
the relevant Currency at or about 11 a.m., on the date or
dates of receipt by the Mortgagee of such payments in the
relevant Currency (or, in the case of any such date which is
not an Exchange Business Day), to purchase in London or such
other foreign exchange market as the Mortgagee may select with
the amount or amounts of the Relevant Currency so received by
the Mortgagee on such date or dates. If:
(i) the amount of the Agreed Currency which Mortgagee is so
able to purchase at the rate aforesaid falls short of
the amount of the Agreed Currency due under this
Mortgage or any of the other Security Documents, or
(ii) any condition imposed in relation to the conversion of
any amount paid in the Relevant Currency into the Agreed
Currency including, without prejudice to the generality
thereof, any condition imposed by any authority
exercising powers under any applicable exchange control
legislation reduces the amount in the Agreed Currency
which the Mortgagee receives for the amount of such
payment in the Relevant Currency below that amount which
it would have received if such condition had not been
imposed;
the Shipowner shall indemnify and hold the Mortgagee harmless
against any loss damage costs and/or expenses arising as a
result. For the purpose of this Clause, "Exchange Business
Day" means a day on which the relevant office of the Mortgagee
is open for business and on which the foreign exchange market
in London or such other foreign exchange market as the
Mortgagee may select is open for dealings between the Relevant
Currency and the Agreed Currency.
23.02 The above indemnity shall constitute a separate and
independent obligation from the other obligations contained in
this Mortgage and/or any of the Security Documents, shall give
rise to a separate and independent cause of action and shall
apply irrespective of any indulgence granted by the Mortgagee
from time to time and shall continue in full force and effect
notwithstanding any judgment or order for a liquidated sum or
sums in respect of amounts due under this Mortgage and/or
under any of the other Security Documents and/or under any
such judgment or order.
24 RECORDATION
For the purposes of recording this First Mortgage as required under
Section 302 of the Marshall Islands Maritime Act, 1990, as amended, the
total amount is United States Dollars five million (US$ 5,000,000.00) and
interest thereon, fees, commission, expenses, and performance of mortgage
covenants.
The date of maturity shall be February 2008.
- The Discharge amount is the same of the total amount.
25 IN THE EVENT that there is any conflict between the terms and
conditions of the Loan Agreement and this Mortgage, the terms and
conditions of the Loan Agreement shall prevail.
IN WITNESS WHEREOF Adventure Two S.A., Majuro, Marshall Islands, has caused this
First Preferred Mortgage to be executed by its duly authorised signatory on the
day and year first above written.
For and on behalf of
ADVENTURE TWO S.A.
/s/ George D. Gourdomichalis
- -----------------------------------------
George D. Gourdomichalis
Director/Attorney in Fact
ACKNOWLEDGEMENT
- ---------------
CITY OF PIRAEUS )
:ss.
HELLENIC REPUBLIC )
On this 4th day of August 2004, before me personally appeared George D.
Gourdomichalis, to me known, who being by me duly sworn deposes and says that he
resides at 93, Akti Miaouli street, 185 38 Piraeus, Greece, that he is duly
authorised attorney-in-fact of ADVENTURE TWO S.A., the corporation described in
and which executed the foregoing instrument and that he signed his name thereto
pursuant to authority granted to him by the Board of Directors of said
corporation.
/s/ Capt. J. E. Giannopoulos
------------------------------------------
Marshall Islands Special Agent (or Notary)
Capt. J. E. Giannopoulos
Special Agent
Date: 21st May 2004
Shipping Company
ADVENTURE TWO SA
-----------------------
As Borrower
- and -
The Financial Institution
CORNER BANCA SA
-----------------------
As Lenders
MV FREE DESTINY
-----------------------
LOAN FACILITY AGREEMENT
-----------------------
1
This loan agreement is made the 21st day of May 2004 between:
ADVENTURE TWO S.A., a company having its registered office at Majuro, Marshall
Islands, incorporated under the laws of the Republic of The Marshall Islands,
hereinafter called "the Borrower" and
Corner Banca SA, a banking corporation incorporated and existing under the laws
of Switzerland, acting through its office at Via Canova 16, 6900 Lugano,
Switzerland, hereinafter called "the Lender".
WHEREAS
A) The Borrower has requested the Lender to make available a loan facility of
United States Dollars Five Million (USD 5'000'000.--), hereinafter called
the "Loan", to be used by the Borrower for the purpose of partially
financing the purchase price of m/v "M TRADER" of GRT 16'282, NRT 9'377,
length 184.61 metres, breadth 22.97 metres, built in 1982, having IMO
Nr.8128157, presently registered in the Ownership of Karmaton Finance,
Bahamas the "Sellers", which will be purchased by the Borrower according
to the terms and conditions of a Memorandum of Agreement dated 30th March
2004, hereinafter called the "M.O.A.", and will be registered in the
Ownership of the Borrower under the Flag of Marshall Islands , Port of
Registry Majuro under the name of "FREE DESTINY".
B) the Lender agrees under the terms and conditions set forth hereinafter to
make the Loan available to the Borrower.
On the drawdown date, the Borrower shall pay to the Lender USD 25'000.--
by way of front-end fee.
NOW THIS LOAN AGREEMENT WITNESSETH as follows:
In consideration of the Loan granted by the Lender to the Borrower, the Borrower
hereby covenants with the Lender that:
The Borrower will repay the loan in 14 (fourteen) quarterly instalments as
follows:
No. 8 (eight) quarterly instalments of USD 425'000. --each (the first
subsequently, starting 3 months after the drawdown and the last, 24 months after
the drawdown date subsequently, no. 6 (six) quarterly instalments of USD
266'667.--(the first after 27 months of the drawdown date and the last after 42
months of the drawdown date.
C) The Borrower has the right to make extraordinary repayments:
i) for any portion of the loan in multiples of USD 100'000.--starting
from the settlement of the 5th instalment with 10 days notice.
ii) for the totality of the loan, with 10 banking days notice. In such a
case will be applied the 1% breakage commission on the outstanding
loan amount and shall be immediately paid by the Borrower to the
Lender.
2
Those extraordinary repayment shall take place on a interest date
(the meaning of "interest rate" will be hereunder clarified) only
except in the case of Sale of the vessel.
D) The Borrower will pay to the Lender interest on the Loan, to be adjusted
every 3 months, on Libor rate fixed at 12 a.m (London time), plus a 1,75%
margin, the "Interest Rate".
Interests is to be paid quarterly in arrears, on June 30th, September
30th, December 31st, March 31st , with the first payment becoming due on
the 30th day of June 2004. Postal, telegraphic, telephonic expenses, taxes
dues and stamp duties to be borne by the Borrower. The interest rate will
be set, for the first time on the day of drawdown of the loan.
Interest shall be calculated on the basis of a three hundred and sixty
(360) days year and the actual number of days elapsed.
LIBOR as previously stated, means the arithmetic (rounded up to the
nearest one sixteenth of a percent) of the rates at which the Bank was
being offered by prime banks Dollars deposits in an amount equal to the
amount of the Loan in the London Inter Bank Market at or about 11.00 a.m.
(London Time) two Business Days before the commencement of an Interest
Period.
a) Interest Period: the Borrower shall pay interest on the Loan in respect of
each period of three (3) calendar months (the "interest Period") on the
last day of such interest Period (the "Interest Date"). The first Interest
Period shall commence on the drawdown Date and shall end three months
later.
Successively the Borrower shall pay interest on the Loan in respect of
each period of three (3) calendar months (the "Interest Period") on the
last day of such Interest Period (the "Interest Date")
If any Interest Date should fall on a day which is not a banking day of
the relevant month, that Interest Date shall be postponed to the next
succeeding day which is a banking day .
As used herein the term "banking day" shall mean a day on which banks are
open for business in such place at which any act is to be made under this
Agreement, as determinated by the "Association Cambiste International" of
Paris.
b) In the event of default by the Borrower in the payment on the due date of
any sum (including interest thereon) payable pursuant to the terms of this
Loan, the Borrower will pay to the Lender interest thereon from the date
of such default up to the date of actual payment, at a rate of 1% above
the Interest Rate, the "Default Rate")
c) The Borrower undertakes to make all payments due at the domicile of the
Lender, net without any deduction whatsoever.
3
All payments (whether of principal interest or otherwise) to be made by
the Borrower to the Lender hereunder or under the First Preferred Naval
Mortgage shall be made free and clear and without deduction of any taxes,
levies, imposts, duties, charges, fees, deductions, withholdings,
restrictions or conditions of any nature. If at any time any applicable
law requires the Borrower to make any such deduction or withholding from
any such payment, the sum due from the Borrower in respect of such payment
shall be increased to the extent necessary to ensure that, after the
making of such deduction or withholding, the Bank receives a net sum equal
to the sum which it would have received had no such deduction or
withholding been required to be made. In addition the Borrower will
provide the Bank with the relevant tax receipts.
d) The Borrower will on demand pay to the Lender all sums of money which now
are or hereafter shall be due to the Lender in respect of any insurance
premium, registration consular or other dues, taxes, costs and other
moneys which the Lender may incur in connection with said Vessel for
repair and maintenance to keep her in class and flag, as well as for any
action taken to avoid or to remedy any default of the Borrower.
e) The Borrower undertakes to supply the Lender within 90 days of the end of
each of its fiscal or financial year with a copy of its annual financial
statements.
f) The Borrower will pay the costs, fees and expenses of the Lender including
but not limited to the proper legal costs and disbursements of the
Lender's lawyers, reasonably and properly incurred in connection with the
negotiation, preparation, execution, registration and stamping (if any) of
this Agreement and the First Preferred Naval Mortgage and of the carrying
out of all the transactions hereby or thereby contemplated whether such
transactions are completed or not and also the fees and disbursements of
the Lender's lawyers, accountants, surveyors, or other experts for any
advice or services which the Lender may deem necessary or expedient to
obtain in connection with the carrying out of this Agreement or the First
Preferred Naval Mortgage and the maintenance or enforcement of the
security thereby given, and shall pay all stamp and other duties and taxes
(if any ) to which this Agreement or the First Preferred Naval Mortgage
may be subject and indemnify the Lender in full for and against all costs,
expenses and liabilities with respect to or resulting from any delay in
paying or omission to pay any such duties or taxes.
g) The Borrower covenants and agrees with the Lender that throughout the Loan
period the Vessel:
- shall be classed Lloyd Register Al, or with anyone of the member of the
International Association of Classification Societies (IACS), however,
even in this case should be accepted by the Lender, free from any
overdue recommendation affecting the maintenance of the highest class,
- shall comply with the requirements of IMO International Safety
Management Code at all times and retain on board the Ship Safety
Management Certificate;
- shall be kept insured with companies accepted by the Lender against
fire, protection and indemnity, war and sabotage risks and any such
other dangers, for
4
an amount not less than 120% of the outstanding Loan and under such
conditions as the Lender shall deem to be required as well as in such
form as shall be satisfactory to the Lender.
h) the outstanding principal amount of the Loan shall not exceed the 65% of
the independently appraised market value of the Vessel from time to time.
For the purposes of this sub-clause the Borrower shall supply or procure
the supply to the Lender (at no cost to the Lender) with a valuation
certificate for the Vessel at such times during the Loan Period as the
Lender may from time to time in writing request. Such valuation
certificates shall be given by a shipbroker nominated by the Lender from a
list of mutually agreed first class shipbrokers and such valuation will be
made on the basis of a cash sale (free from all encumbrances) from prompt
delivery at arm's length between a willing seller and a buyer but taking
into account any existing charter in respect of the Vessel. The Borrower
agrees to accept such valuation and shall supply such information
concerning the Vessel to any shipbroker appointed in order that they may
make their valuation.
If the principal amount of the Loan shall at any time exceed 65% of the
independently appraised market value of the Vessel the Borrower shall
forthwith upon being requested in writing by the Lender either itself make
up the shortfall by one or a combination of any of the following:
(i) deposit with the Lender into a collateral interest-bearing deposit
account, which shall be charged to the Lender a sum sufficient to
meet such shortfall;
(ii) provide such other security as may be acceptable to the Lender.
2) SECURITY DOCUMENTS:
As security for the due and punctual payment of the Loan and
interest thereon and expense and any other costs and the fulfilment
of the covenants on the part of the Borrower herein or in any of the
security documents contained, the Borrower shall provide the Lender
with the following security documents, hereinafter called together
the "Security Documents:-".
a) duly registered a First Preferred Naval Mortgage over the Vessel in
favour of the Lender and in the form of the draft attached hereto as
Exhibit 1.
b) First Priority General Assignment of the Earnings, the Insurances
and Requisition Compensation of the Vessel to be granted in favour
of the Lender, In the form of the Notice of Assignment and Loss
Payable Close attached hereto as Exhibit 2.
c) Pledge in favour the Lender of shares equal to 100% of the present
and future capital of the Borrower.
d) Personal Guarantees in favour of the Lender to be granted by Mr
George Gourdomichalis, Mr Ion Varouxakis and Efstathios D
Gourdmichalis guaranteeing the Borrower's obligations under this
Agreement, in the form of the draft attached hereto as Exibit 3.
e) Specific Time Charter assignment between the Borrower and ESTC of
Panama;
5
f) Deed of Assignment of Credits as Exhibit 4;
g) Deed of Pledge as Exibit 5;
The Borrower undertakes to execute, sign, perfect and do, and will procure the
execution, signing, perfecting and doing by each of the other security parties
of, any and every such further assurance, document, act or thing as in the
reasonable opinion of the Lender may be necessary or desirable for perfecting
the security contemplated or constituted by the Security Documents.
3) CONDITIONS PRECEDENT AND SUBSEQUENT:
Before the Bank shall have any obligation to advance any part of the
Loan, the Borrower shall deliver or cause to be delivered to or to the
order of the Bank the following documents and evidence:
a) Evidence of incorporation - Such evidence as the Bank may
reasonably require that the Borrower was duly incorporated in its
country of incorporation and remains in existence and, where
appropriate, in good standing, with power to enter into, and
perform its obligations under this Agreement.
b) Corporate Authorities - A copy, certified by a director or the
secretary of the Borrower in question as true, complete, accurate
and neither amended nor revoked, of a resolution of the directors,
where appropriate, with signed waivers of notice of any directors'
or shareholders' meetings approving and authorising or ratifying
the execution of, those of the Security Documents to which that
Security Party is or is intended to be a party and all matters
incidental thereto.
c) Power of attorney The notarially attested and legalised power of
attorney of the Borrower under which any documents are to be
executed or transactions undertaken by the Borrower.
d) Evidence of Ownership Certificate of ownership and encumbrance (or
equivalent) issued by the Registrar of Ships (or equivalent
official) at the Vessel's existing port of registry confirming that
the Vessel is owned by the Borrower and free of registered
Encumbrances.
e) Evidence of Insurance Evidence that the Vessel is, or will from the
delivery date insured in the manner required by the Mortgage and
that letters of undertaking will be issued in favour of the Bank.
f) Certificate of Class A certificate of Class for hull and machinery
confirming that the Vessel is classed with the highest class
applicable to vessels of her type with Lloyd's Register of shipping
or such other classification society as may be acceptable to the
Bank.
6
g) Security Documents The Security Documents together with all
notices and other documents required by any of them, duly executed
and, in the case of the Mortgage, registered with first priority
through the Registrar of Ships (or equivalent official) at the
Vessel's port of registry.
h) Vessel documents Photocopies, certified as true, accurate and
complete by a director or the secretary of the Borrower, of:
- An invoice issued by the seller, evidencing the purchase
price of the Vessel pursuant to the MOA dated 30th March
2004;
- The protocol of delivery and acceptance evidencing the
unconditional physical delivery of the Vessel to the
Borrower pursuant to the MOA;
- Any charterparty or other contract of employment of the
Vessel which will be in force on the Drawdown Date;
- The Vessel's Survey Status;
- The Vessel's SMC and;
- The Company's DOC;
In each case together with all addenda, amendments or supplements.
4) THERE SHALL BE AN EVENT OF DEFAULT IF:
(i) the Borrower fails to pay any sum due from it under this Agreement
and/or any Security Documents at the time, in the currency and in the
manner specified herein or therein; or
(ii) any representation or statement made the Borrower in this Agreement
or in any of the Security Documents is or proves to have been incorrect or
misleading when made; or
(iii) the Borrower fails to observe and perform or comply with any or more
of the covenants, terms or obligations contained in this Agreement and/or
in any of the Security Documents relating to the insurances of the Vessel;
or
(iv) the Borrower fails duly to perform or comply with any other
obligation expressed to be assumed by it in this Agreement and/or in any
of the Security Documents and such failure is not remedied within fifteen
(15) days after the Lender has given notice thereof to the Borrower; or
(v) the Borrower is unable to pay its debts as they fall due, commences
negotiations with anyone or more of its creditors with a view to the
general readjustment or rescheduling of its indebtedness or makes a
general assignment for the benefit of or a composition with its creditors;
or
(vi) the Borrower takes any corporate action or other steps are taken or
legal proceedings are started for its winding-up, dissolution,
administration, merger, or re-organization or for the appointment of a
receiver, administrator, administrative receiver, trustee or similar
officer of it or of any or all of its revenues and assets; or
7
(vii) by or under the authority of any government (a) the management of
the Borrower or the Vessel is wholly or partially displaced or the
authority of any of them in the conduct of its business is wholly or
partially curtailed, or (b) all or a majority of the issued shares of the
Borrower or the whole or any part of its revenues or assets is seized,
nationalized, expropriated or compulsorily acquired; or
(viii) the Borrower ceases to carry on the business it carries on at the
date hereof or it enters into any unrelated business; or
(ix) the Borrower repudiates this Agreement and/or any of the Security
Documents or does or causes to be done any act or thing evidencing an
intention to repudiate this Agreement and/or any of the Security
Documents; or
(x) at any time any act, condition or thing required to be done, fulfilled
or performed in order
(a) to enable the Borrower lawfully to enter into, exercise its rights
under and perform the obligations expressed to be assumed by it in
this Agreement and the Security Documents,
(b) to ensure that the obligations expressed to be assumed by the
Borrower in this Agreement and the Security Documents are legal,
valid and binding or
(c) to make this Agreement and the Security Documents admissible in
evidence in any pertinent jurisdiction, is not done, fulfilled or
performed; or
(xi) at any time it is or becomes unlawful for the Borrower to perform or
comply with any or all of its obligations under this Agreement and the
Security Documents or any of the obligations of the Borrower there under
are not or cease to be legal, valid and binding; or
(xii) the Vessel is sold or mortgaged to a third party, without the prior
written consent of the Lender or becomes a total loss unless the
circumstances thereof give rise to an insurance claim in at least the
required insurance amount (as specified in the General Assignment of
Earnings and Insurances) or if the Vessel is abandoned or arrested and not
released within fifteen (15) days or the Borrower, without the prior
written consent of the Lender changes or consents to the change of the
flag or registration of the Vessel or any distress, sequestration or
execution is levied or enforced over all or any of the assets of the
Borrower; or
(xiii) any license, authorization, consent or approval at any time
necessary to enable the Borrower to comply with its obligations under this
Agreement and the Security Documents or to enable the operation of the
Vessel is revoked or withheld or modified or is otherwise not granted or
fails to remain in full force and effect or if any exchange control or
other law or regulation shall exist which would make any transaction under
this Agreement and the Security Documents, or the continuation thereof,
unlawful or would prevent the performance by the Borrower of any term of
this Agreement and/or any of the Security Documents; or
(xiv) any material adverse change in the financial condition or operations
or results of operations or results of operations business, properties or
prospects of the
8
Borrower occurs which would, in the reasonable opinion of the Lender be
detrimental to the interest of the Lender as lender or materially impair
the ability of the Borrower to perform or comply with its obligations
under this Agreement and the Security Documents;
then, and in any such case and at any time thereafter, the Lender shall by
written notice to the Borrower:
(a) declare the Loan to be immediately due and payable (whereupon the
same shall become so payable together with accrued interest thereon
and any other sums then owed by the Borrower under this Agreement
and/or any of the Security Documents) or declare the Loan to be due
and payable on demand of the Lender; and/or
(b) declare that any undrawn portion of the Loan shall be cancelled,
whereupon the same shall be cancelled; and/or
(c) the Lender may forthwith enforce al its rights under this Agreement
and the Security Documents.
If pursuant to this clause the Lender declares the Loan to be due and
payable on demand of the Lender, then, and at any time thereafter, the
Lender may be written notice to the Borrower call for repayment of the
Loan on such date as it may specify in such notice (whereupon the same
shall become due and payable on such date together with accrued interest
thereon and any other sums then owed by the Borrower under this Agreement
and the Security Documents) or withdrawn its declaration, with effect from
such date as it may specify in such notice, without prejudice to reinstate
such notification.
5) In the event of sale of the vessel, the Borrower shall immediately repay
to the Lender, in full, the remaining outstanding loan plus interest and
expenses.
6) The Board of Directors of the Borrower have to be agreed by the Lender and
any decision that may involve the Borrower and the Vessel other than in
the normal course of business has to be previously submitted to the Lender
for the approval.
7) Until total repayment of the Loan, the relevant money flow will be
collected in the Borrower's Operating Account with Corner Banca SA and,
provided no event of default has occurred, applied in the following order:
(a) by payment on a current basis of the normal expenses and overheads
incurred in operating the Vessel; and
(b) the surplus, if any, in payment to the Borrower or whomsoever is
entitled thereto.
From and after the occurrence of an Event of Default, all moneys credited
to the Operating account and all sums whatsoever received by or on behalf
of the Bank under this Loan Agreement and/or pursuant to the First
Preferred Naval Mortgage or otherwise howsoever in connection with the
Outstanding Indebtedness will be applied in the following manner in such
order as the Bank considers appropriate:
9
(i) in or towards satisfaction of all sums due hereunder and under the
First Preferred Naval Mortgage other than principal of or interest
on the Loan;
(ii) in or towards satisfaction of interest accrued on the Loan;
(iii) in or towards satisfaction of the Loan (whether or not then due and
payable);
(iv) in retention by the Bank of such sums as the Bank considers
appropriate by way of security for the outstanding indebtedness, and
(v) the remainder, if any, in payment to the Borrower or such other
person as may for time being entitled thereto.
8) The Borrower declares that the general conditions of the Lender of which
the Borrower has received a copy, form an integral part of this Agreement.
9) This Agreement shall be governed by, and construed in accordance with the
Laws of Switzerland. The Borrower hereby irrevocably agrees for the
benefit of the Lender, that the Competent Court of Lugano shall have
non-exclusive jurisdiction to hear and determine any suit, action or
proceedings, and to settle any disputes which may arise out for or in
connection with this Agreement and, for such purposes, irrevocably submits
to the jurisdiction of such court and the Lender and the Borrower, by
their respective consents and agreements given or made hereby, do hereby
waive trial by jury in any action, proceeding or counterclaim brought by
any party on any matter whatsoever arising out of or in any way connected
with this Agreement and the securities, and the transactions completed
hereby.
10) The Borrower irrevocably waives any objection which it might now or
hereafter have to the courts referred to in this clause being nominated as
the forum to hear and determine any suit, action or proceeding, and to
settle any disputes, which may arise out of or in connection with this
Agreement and or the Security Documents and agrees not to claim that any
such court is not a convenient or appropriate forum.
The submission to the jurisdiction of the courts referred to hereinabove
shall not (and shall not be construed so as so) limit the right of the
Lender to take proceedings against the Borrower in any other court of
competent jurisdiction nor shall the taking of proceedings in any one or
more jurisdictions preclude the taking of proceedings in any other
jurisdiction, whether concurrently or not.
11) The Borrower hereby consents generally in respect of any legal action or
proceeding arising out of or in connection with this Agreement to the
giving of any relief or the issue of any process in connection with such
action or proceeding including, without limitation, the making,
enforcement or execution against any property whatsoever (irrespective of
its use or intended use) of any order or judgement which may be made or
given in such action or proceeding.
10
IN WITNESS WHEREOF each of Adventure Two SA, Majuro, Marshall Islands, and
Corner Banca SA, Lugano, Switzerland has caused this Loan Agreement to be
executed by its duly authorised signatory on the day and year first above
written.
ADVENTURE TWO SA CORNER BANCA SA
/s/ George D. Gourdomichalis /s/ Dr. Luca Rossi
- ---------------------------- ---------------------------
George D. Gourdomichalis Dr. Luca Rossi
(Director) (Manager)
/s/ Ion Varouxakis /s/ Dr. Antonio Tufano
- ---------------------------- ---------------------------
Ion Varouxakis Dr. Antonio Tufano
(Director) (Attorney)
11
EXHIBIT 1
First Preferred Naval Mortgage
12
THIS FIRST PREFERRED MORTGAGE is made this_____________day of May 2004
by ADVENTURE TWO S.A., a corporation incorporated under the laws of the Republic
of the Marshall Islands, whose registered office is at Trust Company Complex,
Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960 (hereinafter
called the "Shipowner") in favor of CORNER BANCA SA a company organized and
existing under the laws of the Republic of Switzerland with an address at Via
Canova 16, Lugano, Switzerland (hereinafter called the "Mortgagee")
WHEREAS
A) The Shipowner is the absolute owner of m/v. "Free Destiny" presently
flying under the Flag of the Marshall Islands, hereinafter called "the
Vessel", described as below:
IDENTIFICATION OF THE VESSEL
Name "FREE DESTINY"
Flag Marshall Islands
Built in 1982
IMO/Official Number No. 8128157
Gross tonnage 16282 tons
Net tonnage 9377 tons
Class notation Lloyds Register, +100 A1 + LMC UMS
B) By a loan agreement dated May 21st 2004 (the "Loan Agreement") - a copy
of which is attached hereto as Exhibit 1 and made an integral part hereof
- made between the Mortagagee and the Shipowner, the Mortagagee agreed to
advance to the Shipowner a Loan in the maximum amount of Five Million
United States Dollars, (USD 5,000,000) (hereinafter "the Loan"). Word
and expressions shall, unless the contract otherwise requires, have the
same meaning ascribed to them in the Loan Agreement.
C) To secure the repayment of the Loan and interest thereon and the
performance and observance of all the agreements, covenants and provisions
contained therein, this mortgage and in the Security Documents, the
Shipowner has duly authorized the execution and delivery of this First
Preferred Naval Mortgage.
NOW THEREFORE,:
1 NOW THEREFORE, in consideration of the premises and of other good
and valuable consideration, the adequacy and receipt whereof are
hereby acknowledged, and in order to secure the repayment of the
Loan and interest thereon and the performance and observance of and
compliance with the covenants, terms and conditions in the Loan
Agreement and this Mortgage contained, THE SHIPOWNER
1
hereby grants, conveys and mortgages to and in favor of the
Mortgagee all of the Shipowner's right, title and interest in and to
the whole of the Vessel TOGETHER WITH all the engines, machinery,
masts, boats, anchors, cables, chains, rigging, tackle, apparel,
furniture, fittings and equipment and all other appurtenances to the
Vessel thereunto appartaining 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 her equipment and appurtenances
aforesaid (excepting only such equipment placed on the Vessel which
under the terms of any charterparty relating thereto does not become
the property of the Shipowner) TO HAVE AND TO HOLD ALL AND SINGULAR
the above mortgaged and described property unto the Mortgagee for
its own use and benefit forever upon the terms herein set forth for
the enforcement of the repayment of the Loan and interest thereon,
and to secure the performance and observance of and compliance with
the covenants terms and conditions in the Loan Agreement, this
Mortgage and the other Security Documents contained expressed or
implied PROVIDED HOWEVER and the condition of these presents in such
that if the Shipowner its successors or assigns shall have repaid
the Loan ad interest thereon in accordance with its provisions and
shall have performed observed and complied with all the covenants
terms and conditions in the Loan Agreement, this Mortgage and the
other Security Documents contained expressed or implied to be
performed observed or complied with these presents and the rights
hereunder shall cease terminate and be void but shall otherwise
remain in full force and effect.
2 THE SHIPOWNER for itself, its successors and assignee HEREBY
COVENANTS AND AGREES with the Mortgagee and its respective
successors and assigns that the Vessel and all the appurtenances
thereto appertaining or belonging and all improvements and
replacements hereafter made in or to the Vessel or any part thereof
are to be held by the Mortgagee subject to the covenants conditions
provisions terms and uses hereinafter set forth.
3 THE SHIPOWNER HEREBY COVENANTS AND AGREES with the Mortgagee at all
times to perform and observe ALL AND SINGULAR the covenants,
conditions and agreements in the Loan Agreement, this Mortgage and
the Security Documents contained expressed or implied.
4 THE SHIPOWNER at its own expense when and so long as this Mortgage
shall be outstanding covenants as follows:
(i) to insure the Vessel and keep the Vessel insured in the
Shipowner's name in United States Dollars (or such other
currency as the Mortgagee and in such amount and upon such
terms as shall from time to time be required or approved in
writing by the mortgagee and in particular but without
prejudice to the generality of the foregoing
(a) the insurance's shall be placed through such brokers
and/or with such insurance offices companies
underwriters war risks and protection and indemnity
associations or clubs in the United States or the United
Kingdom or in such other country and under
2
such policies as shall be approved in writing by the
Mortgagee such consent not to be unreasonably withheld
and given promptly
(b) the Vessel shall be insured and kept insured in the
Shipowner's name against marine risks including all
risks customarily and usually covered by prudent
shipowners under policies containg the ordinary
conditions applicable to similar vessels including
collision clause and cover against risks of civil
commotion
(c) the Vessel shall be insured and kept insured in the
Shipowner's name against war risks (including risks of
mines) and any other risk excepted by the "Free of
Capture and Seizure" clause in marine policies of
insurance
(d) if required by the Mortgagee the Shipowner shall insure
and kept insured the Vessel in the Shipowner's name for
an amount to be approved by the Mortgage against excess
risks that is to say the proportion of claims for
general average and salvage charges and under the
running-down clause not recoverable in consequence of
the value at which the Vessel is assessed for the
purpose of such claims exceeding the insured value
(e) the Vessel shall be entered and kept entered in the
Shipowner's name for its full value and tonnage in a
protection and indemnity association in respect of such
matters or risks as are not covered by the ordinary
conditions of normal risks policies port risks
insurances may be taken out thereon by the Shipowner
under the forms of port risks policies approved by the
Mortgagee
(ii) to give notice forthwith of any assignment of insurances to
the relevant brokers, insurance, officers, companies,
underwriters, war risks and protection and indemnity
associations or clubs in such form as may be approved by the
Mortgagee
(iii) to execute and deliver all such documents and do all such
things as may be necessary to confer upon the Mortgagee a
legal title to the insurances and procure that the interests
of the Mortgagee is at all times endorsed or noted upon all
slips, cover notes, policies, certificates of entry or other
instruments issued in connection with the Policies and procure
(i) that the following loss payable clause shall be endorsed
upon both the hull machinery and equipment and war risks
policies:
"It is noted that by an Assignment in writing dated
May___2004 the Shipowner, Adventure Two SA, Majuro, Marshall
Islands has assigned absolutely to Corner Banca SA of
Switzerland, all the Shipowner's interests in this Policy and
all benefits hereof including all claims of whatsoever nature
hereunder. Claims hereunder payable in respect of an actual or
constructive or agreed or arranged or compromised total loss
or requisition for title or other compulsory requisition of
the Vessel and claims hereunder payable in respect of a mayor
casualty that is to say any casualty in respect whereof the
claim or the aggregate of the claim
3
exceeds Five Hundred thousand United States Dollars
(USD500'000.--) shall be payable to the Mortgagee. Subject
thereto all other claims, unless and until the Underwriters
have received notice from the Mortgagee of a default under the
Mortgage in which event all claims under this Policy of
Insurance shall be payable direct to the Mortgagee, shall be
released directly for the repair salvage or other charges
involved or to the Shipowner as reimbursement if they have
fully repaired the damage and paid all of the salvage or other
charges"
AND (ii) that the following loss payable clause shall be
endorsed upon the protection and indemnity certificate of
entry:
1 It is noted that Corner Banca SA are interested as first
mortgagee in the subject matter of this insurance up to
the amount recorded under Clause 24 of the Mortgage.,
2 Claims hereunder for all losses shall be paid direct to
the Shipowner unless and until the first Mortgagee shall
have given notice in writing that the Shipowner's are in
default under the First Preferred Naval Mortgage on the
Vessel whereafter such claims shall be payable to the
Mortgagee up to the amount recorded under Clause 24 of
the Mortgage
(iv) to procure that the relevant brokers and any protection and
indemnity association in which the Vessel may from time to
time be entered undertake:
(a) to hold to the order of the Mortgagee the originals of
all policies contracts binders insurance slips cover
notes and certificates of entry whatsoever relating to
the Vessel and deliver certified copies thereof to the
Mortgagee on request and
(b) to advise the Mortgagee promptly:
1 if any insurance office, company underwriter,
association or club cancels any of insurance,
2 of any variation in the terms of any of the
insurances or any default in the payment of any
premium call or contribution or failure to renew
any of the insurances at least Fourteen (14) days
before the expiry thereof and
(c) not to assert any lien in respect of unpaid premiums
except insofar as such premiums relate only to the
insurances in respect of the Vessel and not to any other
Vessels.
(v) Punctually to pay all premiums calls contributions or other
sums payable in respect of the Policies and each of them and
to produce all relevant receipts when so required by the
Mortgagee,
4
(vi) to renew each of the insurances at least Fourteen (14) days
before the expire thereof and procure that the relevant
brokers shall promptly confirm in writing to the Morgagee as
and when each such renewal is effected,
(vii) to arrange for the execution of such guarantees as may from
time to time be required by any protection and indemnity or
war risks association,
(viii) to procure that each of the insurances shall contain or be
accompanied by a waiver as against the Mortgagee of any and
all premium for which the Mortgagee might otherwise be or
become liable as a named assured loss payee or otherwise and
shall provide for duplicates of all notices given by the
insurers to the Shipowner to be sent at the same time to the
Mortgagee,
(ix) to furnish the Mortgagee from time to time on request with
full information about all insurances maintained on the Vessel
and names of the offices companies underwriters associations
or clubs with which such insurance is placed,
(x) to furnish the Mortgagee at such intervals as the Mortgagee
shall specify with a detailed report signed by an independent
firm of marine insurance brokers appointed by the Shipowner
and improved by the Mortgagee detailing the insurances
maintained on the Vessel and stating the opinion of such firm
as the adequacy thereof
(xi) promptly to furnish the Mortgagee with full information
regarding any casualties or other accidents or damage to the
Vessel involving an amount in excess of USD500'000.-- or the
equivalent in any other currency and give the Mortgagee short
details regarding any causalities or other accidents or damage
to the Vessel involving an amount of less than USD500'000.--
or the equivalent in any other currency
(xii) not to agree to any material variation in the terms of any one
or more of the insurances without prior written approval of
the Mortgagee nor to do any act or voluntarily suffer or
permit any act to be done whereby any insurance shall or may
be invalid void avoidable suspended defeated or unforceable
and not to suffer or permit the Vessel to engage in any voyage
or to carry any cargo not permitted under any one or more of
the insurances without first giving written notice to the
Mortgagee obtaining the consent of the insurers concerned and
complying with such requirements as to payment of extra
premium or otherwise as insurers may impose and as may be
approved by the Mortgagee such approval not to be unreasonably
withheld and be given promptly
(xiii) not without the prior written consent of the Mortgagee to
settle compromise or abandon any claim in respect of one or
more of the insurances other than a claim of less than
USD500'000.-- arising out of a total loss of the Vessel
5
(xiv) to apply or procure the appliance of all such sums receivable
in respect of the insurances as are paid to the Shipowner or
in accordance with the Shipowner's instructions for the
purpose of making good the lose and fully repairing all damage
in respect whereof the insurance moneys shall have been
received
(xv) that in the event of the Shipowner failing to insure or
maintain insured the Vessel or in entering and keeping the
Vessel entered in a protection and indemnity and/or war risks
association as hereinbefore provided the Mortgagee may (but
shall not be bound to) insure the Vessel or enter the Vessel
in such manner and to such extent as the Mortgagee in its
discretion thinks fit and in such case the cost of all such
insurances and entries together with the premiums calls and
contributions payable in respect thereof with interest thereon
at the rate calculated in accordance with the above mentioned
Loan Agreement shall be paid on demand by the Shipowner to the
Mortgagee and shall be added to amounts secured by this
Mortgage,
(xvi) to do all such things whatsoever and prepare execute and
deliver all such documents whatsoever to enable the Mortgagee
to collect and recover any moneys which may become due in
respect of the insurances and for that purpose (but without
limitation) to permit the Mortgagee if necessary to sue in the
name of the Shipowner.
5 THE SHIPOWNER HEREBY COVENANTS AND AGREES with the Mortgagee as
follows:
(a) THE SHIPOWNER, in accordance with the provisions of Section
302 of the Marshall Islands Maritime Act, 1990 as amended, and
otherwise shall comply with satisfy all the requirements and
formalities established by the said Maritime Act and any other
pertinent legislation of the Republic of the Marshall Islands
to perfect this Mortgage as a valid and enforceable First and
Preferred lien upon the Vessel and to furnish to the Mortgagee
from time to time such proofs as the Mortgagee may reasonably
request for its satisfaction with respect to the Shipowner's
compliance with the provisions of this sub-clause.
(b) At all time to carry on board the Vessel a duly certified copy
of this Mortgage (which shall form a part of the Vessel's
documents) and to cause the same to be shown to any person
having business with the Vessel which might create or imply
any commitment or encumbrance whatsoever on the Vessel and to
place and maintain in a conspicuous place in the navigation
room and in the cabin of the master of the Vessel a printed
notice in the following form:
"NOTICE OF MORTGAGE"
This vessel is mortgaged by a First Preferred Ship Mortgage to
Corner Banca SA, pursuant to the provisions of Chapter 3 of
the Marshall Islands Maritime Act of 1990 as amended. Under
the terms of the said Mortgage, neither the Shipowner, nor any
charterer or the master of this Vessel has
6
any power, right or authority whatever to create, incur or
permit to be imposed on this Vessel any lien or encumbrance
except for crew's wages and salvage.
(c) the Shipowner was duly incorporated and is now validly
existing and in good standing as a corporation with limited
liability under the laws of the Republic of Marshall Islands
and shall so remain during the life of this Mortgage. It is
duly authorized to mortgage the Vessel. All corporate action
necessary and required by law for the execution and delivery
of this Mortgage has been duly and effectively taken and this
Mortgage in the hands of the holders thereof is and will be a
valid and enforceable obligation of the Shipowner in
accordance with its terms.
(d) The Shipowner is the sole and absolute owner and is lawfully
possessed of the whole of the Vessel free from all liens and
encumbrances whatsoever except this Mortgage and will warrant
and defend the title and possession thereto and to every part
thereof for the benefit of the Mortgagee against the claims
and demands of all persons whomsoever
(e) (i) at its expense and no cost to the Mortgagee to comply
with and satisfy all of the provisions of any applicable
governmental and exchange control regulations in
connection with this Mortgage or any amendment or
variation for the time being thereof to comply with and
satisfy any other applicable law or regulation in order
to maintain the permanent registry of the Vessel as a
Marshall Islands Ship under the Laws and Flag of the
Republic of the Marshall Islands and to establish and
maintain this Mortgage under the said laws as a First
Preferred Ship Mortgage upon the Vessel and upon all
renewals replacements and improvements made in or to the
same and not to do or suffer to be done anything whereby
the due and permanent registration of the Vessel under
the laws and flag of the Republic of the Marshall
Islands may be forfeited or imperiled
(ii) in the event that this Mortgage or any provision hereof
shall be deemed invalidated in whole or in part by
reason of any present or future law or any decision of
any authoritative court or if the documents at any time
held by the Mortgagee be deemed by the Mortgagee for any
reason insufficient to carry out the true intent and
spirit of this Mortgage then from time to time the
Shipowner will do, sign, seal, execute, deliver and
register or procure the doing, signing, sealing,
execution, delivery and registration at its expense and
at no cost to the Mortgagee of all such other further
acts assurances and documents whatsoever as in the
opinion of the Mortgagee may be required more
effectually to mortgage the Vessel as security for
payment of the amounts outstanding under the Loan
Agreement as herein provided and the performance of
terms and provisions of this Mortgage or to perfect the
security constituted hereby
(f) at all times and without cost or expenses to the Mortgagee:
7
(i) to put and keep the Vessel her equipment and machinery
at all times in a state of good running order and
repair, so that the Vessel shall be so far 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
and to put and keep the Vessel in such a condition as
will entitle her to the highest classification and
rating for vessels of the same age and type with Lloyds
Classification Society of like standing and to make her
strictly comply with the requirements of any laws
regulations or requirements for the time being of the
Republic of the Marshall Islands or the maritime
authorities thereof or of the Vessel's Classification
Society and of any country province colony or dependency
where the Vessel may operate or trade and to procure
that all repairs to or replacements of any damaged worn
or lost parts or equipment be effected in such manner
(both as regards workmanship and quality of materials)
as not to diminish the value of the Vessel
(ii) to furnish the Mortgagee on request with a statement by
Lloyds Register or such other classification society as
is acceptable to the Mortgagee that such classification
is maintained and to furnish the Mortgagee from time to
time and upon demand with all such documents as the
Mortgagee may require concerning the classification of
the Vessel,
(iii) not to make or permit to be made any substantial change
in structure type or speed of the vessel or any change
in her rig without first receiving written approval
thereof from the Mortgagee,
(iv) to submit the Vessel regularly to such periodical or
other surveys as may be required for classification
purpose and if so required to supply to the Mortgagee
copies of all surveys or reports issued in respect
thereof,
(g) (i) to permit the Mortgagee and such other persons appointed
by it to board the Vessel to have full and complete
access to the Vessel to view the state and condition
thereof and her cargo and papers, to ascertain whether
the Vessel is being properly repaired and maintained. In
the event deficiencies are found which evidence the
failure in keeping her in such good state or repair and
in such working order and condition as mentioned in sub
clause (d) of this Clause 5 (without prejudice however
to any of the Mortgagee's rights under this Mortgage) to
effect such repairs as shall in its reasonable opinion
be necessary and the Shipowner will on demand repay to
the Mortgagee every sum of money expended for the above
purpose with interest as hereinafter mentioned,
(ii) to deliver to the Mortgagee on demand copies of any and
all documents relating to the Vessel her employment
position and
8
engagements particulars of all towages and salvages and
copies of all charters and other contracts for her
employment or otherwise howsoever concerning her
(h) (i) to pay and discharge or cause to be paid and discharged
when due and payable from time to time all debts damages
and liabilities whatsoever which may have given or may
give rise to maritime or possessory liens on or claims
enforceable against the Vessel and all taxes assessments
governmental charges fines and penalties legally imposed
on the Vessel or any income therefrom,
(ii) except the Mortgage constituted pursuant hereto not to
create or suffer to be continued any lien other than a
lien for crews wages encumbrances security interest or
charge on the Vessel or any income therefrom and in due
course and in any event within Fifteen (15) days after
the same becomes due and payable to pay or cause to be
discharged or make adequate provision for the payment or
discharge of all claims or demands which if not paid or
discharged might in admiralty in equity or at law or
pursuant to any statute in any jurisdiction to which the
Vessel may at time be subject have equality with
priority to or preference over the lien of this Mortgage
and to cause the Vessel to be released or discharged
from such lien encumbrance security interest or charge,
(i) promptly to furnish the Mortgagee from time to time and at any
time with copies of all such accounts financial statements
reports and such other financial information concerning the
Shipowner as the Mortgagee may reasonably request
(j) promptly to notify the Mortgagee thereof by telex confirmed by
letter addressed to the Mortgagee at its address aforesaid or
such other address as the Mortgagee may from time to time
direct in writing to the Shipowner in the event of the Vessel
being arrested or detained by any court or tribunal or by any
government or other authority or in the event of any accident
bottomry average salvage any assistance by third persons or
any loss of classification in respect of the Vessel or if the
Vessel is subject to any legal proceedings for a sum higher
than USD500'000.-- or the equivalent from time to time in any
other currency
(k) to deliver at least forty eight (48) hours prior notice in
writing to the Mortgagee of any intention to put the Vessel
into the possession of any person for the purpose of work
being done upon her in an amount exceeding or which might
exceed USD500'000.-- or the equivalent in any other currency
and concurrently to notify such person that the prior written
consent of the Mortgagee is pre-requisite to the commencement
of such work
(l) whilst moneys remain outstanding under this Mortgage not to
sell or otherwise dispose of the Vessel or any shares therein,
mortgage, charge, pledge, transfer, abandon or hypothecate the
Vessel or any freight or hire moneys thereof to any person or
company, nor to suffer the creation of
9
any such sale disposal mortgage, charge, pledge, transfer,
abandonment or hypothecation of the Vessel nor do or permit
any act or thing whereby the Vessel shall or may lose her
existence or due registration as a Marshall Islands ship
without the prior written consent of the Mortgagee as
aforesaid to any sale mortgage or transfer and any such sale,
mortgage or transfer of the Vessel shall be subject to the
provisions of this Mortgage and to the lien it creates
(m) not to cause or permit the Vessel to be operated or employed
in any manner contrary to International Law or to any
applicable law including but without limitation the laws of
Switzerland and the Republic of the Marshall Islands nor to
violate any law or carry any cargo that will expose the Vessel
to penalty, forfeiture, capture, detention, destruction nor to
abandon the Vessel in a foreign port nor to do or suffer or
permit to be done anything which can or may injuriously affect
the registration or enrollment of the Vessel under the laws
and regulations of the Republic of the Marshall Islands and at
all times to keep the Vessel duly documented thereunder
(n) (i) during hostilities (whether or not a state of war shall
have been formally declared) between any two or more
nations or in which the United Nations Organization may
be involved or during any civil war not to employ or
permit the Vessel to be employed in any manner in
carrying any goods that shall or may be declared to be
contraband of war unless prior to such employment
special war risks policies effected with such
underwriters as the Mortgagee may approve and in all
respects to the satisfaction of the Mortgagee shall have
been effected signed and delivered to the Mortgagee
(ii) not without the prior written approval of the Mortgagee
upon such terms as the Mortgagee may require with
particular reference to war risks insurance to enter
areas of hostility or threatened hostility
(o) not to employ the Vessel:
(i) on demise charter without the prior written consent of
the Mortgagee which consent shall not be unreasonably
withheld provided that such consent may be withheld
unless the demise charterer agrees on terms satisfactory
to the Mortgagee to subordinate its rights under the
demise charter to her rights of the Mortgagee, hereunder
or
(ii) on time charter for any period without the prior written
consent of the Mortgagee or
(iii) at a rate below the market rate prevailing at the time
when the Vessel is fixed or on terms whereby more than
Two (2) months hire is payable in advance without the
written consent of the Mortgagee
10
(p) at all times retain a copy of this Mortgage and of any
assignment of this Mortgage by the Mortgagee (if requested by
any assignee) certified by the appropriate authorities of the
Republic of the Marshall Islands and by any other relevant
authorities with the Vessel's papers on board the Vessel and
any other certificates or other documents required by law and
to cause each such certified copy and master for the time
being of the Vessel and to be exhibited on demand to any
persons having business with the Vessel or to any
representative of the Mortgagee,
(q) promptly on demand by the Mortgagee to use its best endeavors
to assist the Mortgagee in or in connection with the due
execution and recording of this Mortgage and protection and
enforcement of the Mortgagee's security and in connection with
any act matter or thing reasonably or properly made done or
executed or to be made done or executed by the Mortgagee its
agents or servants in about the matters described in this
Mortgage.
6 PROVIDED the Shipowner fully repays the Loan together with interest,
costs and expenses pertaining thereto, fulfils all its obligations
under the Security Documents, the Mortgagee undertakes to discharge
the Mortgage on the Vessel, upon the request of the Shipowner. All
costs and expenses incurred in respect of the discharge of the
Mortgage will be borne by the Shipowner.
7 THE MORTGAGEE shall without prejudice to its other rights and powers
hereunder be entitled (but not bound) at any time and as often as
may be necessary to take any such action and make all such
expenditure as it may in its sole and absolute discretion think
necessary or desirable for the purpose of preserving maintaining and
/or protecting the security created by this mortgage and each and
every expense for liability so incurred by the Mortgagee in or about
the preservation maintenance and/or protection of the security
(including but without limitation expense or liability incurred in
the maintenance of any insurance in respect of the Vessel the
discharge of any liens taxes dues assessments governmental charges
fines and penalties lawfully imposed in respect thereof repairs
and/or surveys effected thereon and in all such other matters for
which the Shipowner is responsible under the terms hereof but falls
to provide including any legal fees in connection therewith) shall
be repayable to the Mortgagee by the Shipowner on demand together
with interest thereon at the Default Rate from the date whereon such
expense or liability was incurred by the Mortgagee until the date of
judgment or payment. Such obligation of the Shipowner to reimburse
the Mortgagee shall be an additional indebtedness due from the
Shipowner secured by this Mortgage. The Mortgagee though privileged
so to do shall be under no obligation to the Shipowner to take any
such action to make expenditure or to incur any such liability as
aforesaid nor shall the taking making or incurring thereof relieve
the Shipowner of any default in that respect.
8 IN CASE any one or more of the following events herein termed
"Events of Default" shall happen
11
(a) the Shipowner fails to pay:
(i) on the due date any amount of principal or interest, or
any portion thereof, which may be payable under the Loan
Agreement, or
(ii) within five (5) business days of the due date of any
other amount or five (5) business days from the date of
demand any amount not payable on a fixed date, which may
be payable by the Ship-owner under the Loan Agreement or
this Mortgage,
(b) the Shipowner fails to comply with any provision of the Loan
Agreement or this Mortgage and such failure continues
unremedied for a period of fourteen (14) business days
commencing from the date on which notice of such failure is
provided by the Mortgagee to the Shipowner, unless the Loan
Agreement or this Mortgage provides otherwise,
(c) the country of the flag of the Vessel, or any country in which
the Vessel may be registered (whether it may be the country in
which the Vessel may have a dual registration under bare boat
charter) becomes involved in hostilities whether war be
declared or not or in civil war or in the event of occupation
of such country by any other power in such country by
unconstitutional means unless arrangements satisfactory to the
Mortgagee have been made for the registration of the Vessel in
another jurisdiction or
(d) anything is done or suffered or omitted to be done by the
Shipowner which in the reasonable opinion of the Mortgagee
imperils the security created by this Mortgage, or
(e) any event occurs which would entitle any subsequent mortgagee
to enforce its mortgage over the Vessel.
Then and in each and every such case the Mortgagee shall have the right to
to put into force and exercise all the powers possessed by it as the
Mortgagee of the Vessel pursuant to Chapter 3 of the Marshall
Islands Act 1990 as amended, and without notice or further demand,
as and when it may see fit, in particular but without limitation
(a) to take possession of the Vessel
(b) to require that all contracts and other records relating to
the Policies (including details of and correspondence
concerning outstanding claims) be forthwith delivered to such
brokers as the Mortgagee may nominate
(c) to collect recover compromise and give a good discharge for
all claims then outstanding or thereafter arising under any
one or more of the Policies and to take over or institute all
such proceedings in connection therewith as the Mortgagee in
its absolute discretion thinks fit and to
12
permit the brokers through whom collection or recovery is
effected to charge and retain the usual brokerage therefor
(d) to discharge compound release or compromise claims against the
Shipowner in respect of the Vessel which have given or may
give rise to any charge or lien on the Vessel or which are or
may be enforceable by proceedings against the Vessel
(e) to sell the Vessel or any share therein with prior notice to
the Shipowner as provided for in the law with or without the
benefit of any charterparty or other subsisting contract for
the employment of the Vessel by public auction or private
contract at any place in the world with or without
advertisement for cash or on credit and upon such terms as the
Mortgagee in its absolute discretion may determinate with
power to postpone any such sale and without being answerable
for any loss occasioned by such sale or resulting from
postponement thereof
(f) pending the sale of the Vessel to manage, insure, maintain and
repair the Vessel and to hold, lay-up, lease, employ, charter,
operate or otherwise use the Vessel in such manner and for
such period as the Mortgagee in its absolute discretion deems
expedient, accounting only for the net profits after deducting
operating costs and debit service (if any) of such use and for
such purpose. For the purposes aforesaid the Mortgagee shall
be entitled to do all acts and things whatsoever incidental or
conductive thereto including entering into arrangements and
contracts of whatsoever nature in respect of the Vessel, her
insurance,management, maintenance, repair, classification and
employment and generally to do and cause to be done all such
acts and things whatsoever and to make all such arrangements
whatsoever in respect of the Vessel or the working of the same
in all respects as if the Mortgagee, as the owner of the
Vessel and without being responsible for any loss and damage
thereby incurred
(g) to recover from the Shipowner on demand any loss whatsoever
which may be incurred by the Mortgagee in or about or in
connection with the exercise of the powers vested in the
Mortgagee under sub-clause (f) above with interest thereon at
the Default Rate from the date when such losses were incurred
by the Mortgagee until the date of full payment both before
and after judgment
(h) to recover from the Shipowner on demand all expenses, payments
and disbursements whatsoever incurred by the Mortgagee in or
about or in connection with the exercise by it of any of the
powers aforesaid together with interest thereon at the Default
Rate
PROVIDED ALWAYS that any sale of the Vessel by the Mortgagee pursuant to
sub-clause (i) (e) above shall operate to divest all the legal and
beneficial interest whatsoever of the Shipowner in the Vessel and shall
bar the Shipowner its successors and assignees and all persons claiming by
through or under them. No purchaser shall be bound to enquire whether the
Mortgagee's power of sale has arisen in the manner herein provided and the
sale shall be deemed to be within the power of the Mortgagee and the
receipt of the Mortgagee for the purchase money shall effectively
discharge
13
the purchaser who shall not be concerned with the manner of application of
the proceeds of sale or be in any way answerable therefor. Upon any such
public sale by the Mortgagee pursuant to sub-clause (i) (e) above the
Mortgagee may bid for the purchase of the Vessel and set-off the purchase
price against all sums whatsoever due to it under and by virtue of this
Mortgage provided that such purchase price shall not be less than the
price offered by any bona fide third party
9 FROM and after the occurrence of an Event of Default all moneys
received by the Mortgagee in respect of:
(i) sale of the Vessel or any share therein
(ii) recovery under and by virtue of the insurances of the Vessel
(iii) any and all moneys paid by any governmental authority as
compensation in the event of the requisition of the Vessel for
tide or other compulsory acquisition of the Vessel by such
governmental authority (otherwise than requisition for hire)
(iv) the freight hire or other earnings of the Vessel shall be
applied in accordance with the Loan Agreement
10 (a) EACH and every power and remedy conferred on the Mortgagee
hereunder shall be cumulative and in addition to every other
power and remedy now or hereafter existing at law in equity in
admiralty or by statute. Each and every other power and remedy
may be exercised from time to time and as often and in such
order may be deemed expedient by the Mortgagee. The exercise
or the beginning of the exercise of any power or remedy shall
not be construed to be waiver of the right to exercise at the
same time or thereafter any other power or remedy. No delay or
omission by the Mortgagee in the exercise of any right of
power or in the pursuance of any remedy shall impair any such
right power or remedy or be construed to be a waiver of any
default on the part of the Shipowner or to be acquiescence
therein
(b) The Mortgagee may from time to time and at any time waive
unconditionally or on such terms and conditions as may seem
expedient any of the covenants conditions and obligations on
the part of the Shipowner contained herein or any breach
therefor by the Shipowner. Every such waiver or other
indulgence granted to the Shipowner by the Mortgagee shall be
deemed to have been made without prejudice to its rights and
powers as Mortgagee of the Vessel hereunder or otherwise
howsoever which shall at all times thereafter remain
exercisable whenever the Mortgagee shall think fit and as if
such waiver had not been made and shall not otherwise alter or
affect me obligations of the Shipowner hereunder
11 IT IS declared and agreed that the security created by this Mortgage
shall be held by the Mortgagee as a continuing security for the
repayment of the Loan and payment of interest thereon and of all
other moneys expressed to be secured by
14
this Mortgage and that the security so created shall not be
satisfied by any intermediate payment or satisfaction of any part of
the said debt and that the security so created shall be in addition
to and shall not in any way be prejudiced or affected by any
collateral or other security now held or hereafter taken by the
Mortgagee for all or any part of the moneys hereby secured or by any
variation in the terms or termination of any such security
12 THE MORTGAGEE shall be entitled at any time and as often as may be
expedient to delegate all or any of the powers and discretion vested
in it hereunder in such manner upon such terms and conditions
(including the power to sub-delegate) and such persons as the
Mortgagee in its absolute discretion may think fit
13 THE MORTGAGEE and every receiver attorney manager agent or other
person appointed by the Mortgagee hereunder shall be entitled to be
indemnified out of the security created hereby in respect of all
claims costs liabilities obligations and expenses whatsoever
incurred by any one or more of them in relation to or in connection
with the Vessel and the execution of any powers authorities or
discretion vested in any one or more of them hereunder
14 THE SHIPOWNER hereby irrevocably appoints the Mortgagee and its
attorneys as its true and lawful attorney with full power to act
alone and with full power of substitution until the due discharge of
this Mortgage in accordance with the laws of the Republic of the
Marshall Islands for the purpose of doing in its name any and all
acts whatsoever which the Shipowner itself could do in connection
with the property hereby mortgaged including but without limitation:
(a) doing all further acts required by the Mortgagee under clause
5 (e) (ii) hereunder including executing, sealing, delivering
and registering all documents required thereunder
(b) applying for receiving and taking possession of the Vessel
(c) making any transfer of the Vessel provided for herein
including the execution, sealing, and delivery of any covenant
assignment or other instrument of transfer or further document
required to complete perfect or validate the same. The
Shipowner hereby ratifies and confirms that its said attorneys
shall lawfully do by virtue hereof PROVIDED THAT save in case
of the aforesaid powers shall not be exercisable by or on
behalf of the Mortgagee until an Event of Default has occurred
but the exercise of such powers by the Mortgagee shall not put
any person dealing with the Mortgagee upon any enquiry as to
whether an Event of Default has occurred nor shall such person
be in any way affected by notice to the contrary and exercise
by the Mortgagee of this power in all circumstances shall be
conclusive evidence of its right to exercise the same
15 (a) ALL demands, notices or other communications required to be
given under this Mortgage shall be in writing and may be given
or sent and delivered as follows:
- to the Shipowner, in person of the present
President/Director of the Company, Mr George D
Gourdornichaalis, Mr Ion Varouxakis and and
15
Mr. E Gourdormichalis c/o Free Ships SA, 93 Akti
Miaouli, 18538 Piraeus, Greece
- to the Mortgagee, to Corner Banca SA, Via Canova 16,
P.O. 2835, 6901 Lugano, Switzerland,,
or to such other address or addresses as the Shipowner may
from time to time notify the Mortgagee in writing, (or as may
be indicated from time to time in the Mortgagee's applicable
"General Conditions") and shall be deemed to have been
received by the Shipowner on the date of dispatch if sent by
cable or telex and five (5) days after having been posted if
sent by post
(b) For service of legal process the Shipowner appoints the
Process Agent or such other person or persons as the Shipowner
may with the prior approval of the Mortgagee appoint in their
place as its agent and agrees to consider any legal process or
demand or notice being made or served on the said agent as
binding upon the Shipowner
16 A certificate submitted by the Mortgagee to the Public
Registry Office of the Marshall Islands as to the amount due
or to become due from the Shipowner to the Mortgagee under
this Mortgage shall in the absence of manifest error be
conclusive and binding on the Shipowner for all purposes
17 (a) The obligations on the part of the Shipowner contained herein
shall bind the Shipowner and its successors and permitted
assignees and the rights of the Mortgagee shall inure to the
benefit of its successors and assigns whether so expressed or
not
(b) The Shipowner hereby undertakes to cooperate fully and to
execute all such documents as are necessary for the purpose of
ensuring that any assignee of the Mortgagee receives the full
benefit of all the rights of the Mortgagee and the covenants
of the Shipowner hereunder
18 THE SHIPOWNER hereby agrees that any legal action or proceedings
arising out of or in connection with this Mortgage may be brought in
the courts of any state wherein the Vessel may for the time be found
and hereby submits itself to each and every such jurisdiction. Such
submission shall not limit the right of the Mortgagee to commence
any proceeding whatsoever relating to or in connection with this
Mortgage in whatsoever jurisdiction it shall deem fit
19 ANY provision hereof prohibited by or unlawful or unforceable under
any applicable law of any jurisdiction shall as to such jurisdiction
be ineffective without modifying the remaining provisions of this
Mortgage. Where however the provisions of any such applicable law
may be waived they are hereby waived by the Shipowner and the
Mortgagee to the full extent permitted by law with the object that
this Mortgage shall be deemed to be a valid binding agreement
enforceable in accordance with its terms
16
20 THIS Mortgage may be executed in any number of counterparts each of
which shall be an original but such counterparts shall together
constitute but one and the same instrument
21 THE English text of this Mortgage is the authentic text and in the
event of any differences arising on translation, recourse shall be
held to the English text.
22 THE provisions of this Mortgage and all rights and obligations
hereunder shall be governed by and construed in accordance with the
laws of the Republic of the Marshall Islands.
23 EXCHANGE RATE INDEMNITY
23.01 ANY payment or payments made to or for the account of the
Mortgagee in connection with this Mortgage or any of the other
Security Documents in a currency (the currency in which the
relevant payment is made being hereinafter referred to as the
"Relevant Currency") other than the currency in which such
payment or payments should be made pursuant to the terms
hereof (such currency being herein called the "Agreed
Currency") pursuant to a judgment or other order of a court or
tribunal of any jurisdiction or any enforcement proceedings in
connection with this Mortgage or any of the other Security
Documents shall only constitute a discharge to the Shipowner
to the extent of the amount of the Agreed Currency which the
Mortgagee is able at the most favorable rate reasonably
available to it for the purchase of such Agreed Currency with
the relevant Currency at or about 11 a.m., on the date or
dates of receipt by the Mortgagee of such payments in the
relevant Currency (or, in the case of any such date which is
not an Exchange Business Day), to purchase in London or such
other foreign exchange market as the Mortgagee may select with
the amount or amounts of the Relevant Currency so received by
the Mortgagee on such date or dates. If:
(i) the amount of the Agreed Currency which Mortgagee is so
able to purchase at the rate aforesaid falls short of
the amount of the Agreed Currency due under this
Mortgage or any of the other Security Documents, or
(ii) any condition imposed in relation to the conversion of
any amount paid in the Relevant Currency into the Agreed
Currency including, without prejudice to the generality
thereof, any condition imposed by any authority
exercising powers under any applicable exchange control
legislation reduces the amount in the Agreed Currency
which the Mortgagee receives for the amount of such
payment in the Relevant Currency below that amount which
it would have received if such condition had not been
imposed;
the Shipowner shall indemnify and hold the Mortgagee harmless
against any loss damage costs and/or expenses arising as a
result. For the purpose of this Clause, "Exchange Business
Day" means a day on which the relevant office of the Mortgagee
is open for business and on which the foreign exchange market
in London or such other foreign exchange market
17
as the Mortgagee may select is open for dealings between the
Relevant Currency and the Agreed Currency.
23.02 The above indemnity shall constitute a separate and
independent obligation from the other obligations contained in
this Mortgage and/or any of the Security Documents, shall give
rise to a separate and independent cause of action and shall
apply irrespective of any indulgence granted by the Mortgagee
from time to time and shall continue in full force and effect
notwithstanding any judgment or order for a liquidated sum or
sums in respect of amounts due under this Mortgage and/or
under any of the other Security Documents and/or under any
such judgment or order.
24 RECORDATION
For the purposes of recording this First Mortgage as required under
Section 302 of the Marshall Islands Maritime Act, 1990, as amended, the
total amount is United States Dollars five million (US$ _5,000,000) and
interest thereon and performance of mortgage covenants.
The date of maturity shall be December 2008.
- The Discharge amount is the same of the total amount.
25 IN THE EVENT that there is any conflict between the terms and
conditions of the Loan Agreement and this Mortgage, the terms and
conditions of the Loan Agreement shall prevail provided however,
that this Mortgage shall be governed solely by Marshall Islands law.
IN WITNESS WHEREOF Adventure Two S.A., Majuro, Marshall Islands, has
caused this First Preferred Ship Mortgage to be executed by its duly
authorised signatories on the day and year first above written.
ADVENTURE TWO S.A.
____________________________
George D. Gourdomichalis
(Director)
____________________________
Ion Varouxakis
(Director)
18
ACKNOWLEDGEMENT OF MORTGAGE
REPUBLIC OF GREECE )
}
)ss:
)
CITY OF PIRAEUS )
On this __ day of _______ 2004 before me personally appeared ___ and ________
_________ to me known who being by me duly sworn did depose and say that they
reside at ___________________________________________________________________
_________ that they are directors of ADVENTURE TWO S.A. the corporation
described in and which executed the foregoing instrument; and that each signed
his name thereto by order of the Board of Directors of said Corporation.
______________________________
Special Agent
19
EXHIBIT 2
Notice of Assignment
Loss Payable Clause
13
NOTICE OF ASSIGNMENT
(for attachment by way of endorsement to every note, contract and policy)
m/v FREE DESTINY
Take notice that we Adventure Two SA, a company having its registered office at
Majuro, Marshall Islands, a corporation incorporated under the law of Republic
of the Marshall Islands on February 5, 2004, hereinafter called the Owner of the
above mentioned vessel, have assigned to the Bank Corner Banca SA a banking
corporation incorporated and existing under the laws of Switzerland, acting
through its office at Via Canova 16, 6900 Lugano, Switzerland by an ASSIGNMENT
AGREEMENT bearing the even date herewith entered into between ourselves and the
said Bank, all insurances in respect of the vessel on the above and all moneys
to become payable hereunder or in respect thereof.
Piraeus,
BY WAY OF ENDORSEMENT
For and on behalf of
____________________________
ADVENTURE TWO SA
LOSS PAYABLE CLAUSE
The present insurance policy is binding in all effects in favour of Corner Banca
SA. of Via Canova 16, 6900 Lugano (Switzerland), hereinafter " the Bank ", with
assigned guarantees over the entirety of m/v. " FREE DESTINY " flying under the
Flag and Laws of The Republic of Marshall Islands together with the engines,
boats, masts, tackle and other appurtenances to her belonging.
And the Underwriters are obliged to:
a) not to liquidate any damage without the presence and with the consent of "
the Bank ";
b) notify to " the Bank " immediately and by registered letter, the eventual
missing payment of the insurance premium and to consider the insurance
policy in force for 15 (fifteen) days from the day the above registered
letter has been received by " the Bank " and " the Bank " is allowed but
not obliged to pay the insurance premium;
c) not to make any alterations to the present policy without previous consent
of " the Bank " and to advise the same of any events or circumstances that
may compromise the validity of the insurance policy.
Dated,
The Underwriters ADVENTURE TWO SA
______________________
EXIBIT 3
Personal Guarantee
14
Date:_________________
as Guarantor
-and-
Corner Banca SA
as Bank
PERSONAL GUARANTEE
for a secured Loan Facility
of up to U.S.$ 5'000'000.--made to
ADVENTURE TWO S.A.
THIS GUARANTEE IS MADE IN PIRAEUS on this_______________________day of May 2004.
BY :________________________(hereinafter referred to as "the Guarantor").
IN FAVOUR OF : Corner Banca S.A. a company duly incorporated under the laws of
Switzerland, having its registered office at via Canova 16, 6900 Lugano (CH)
(hereinafter referred to as " the Bank").
WHEREAS
A) Under and pursuant to the terms of a loan agreement dated_____may 2004
(the "Loan agreement") the Bank has agreed to advance to ADVENTURE TWO
S.A. of Majuro, Marshall Islands (hereinafter called "the Debtor") the
amount of U.S. Dollars five millions (U.S. $ 5'000'000.--) for the purpose
therein stated.
B) The execution and delivery of this Guarantee is one of the conditions
precedent to the Bank making or continuing the facilities to the Debtor.
NOW, therefore, the Guarantor hereby guarantees to the Bank, unreservedly and
irrevocably, the fulfillment of the Debtor's obligations, towards the Bank,
whether present or future, resulting from the Loan Agreement, where from result
or may result debts of the Debtor to the Bank, and that, consequently, by virtue
of the present Guarantee the Guarantor undertakes directly toward the Bank to
pay off the obligations of the Debtor in full, when same become due, and
conditional debts irrespective of their amount, based either of explicit
provisions of the Loan Agreement, or any normal or irregular development of the
Loan Agreement, as soon as such debts are due or shall become due, and payment
thereof shall be demanded by the Bank, together with the interest on such debts
(contractual or legal or in arreas) and any ancillary debt of the Debtor, as
well as any other costs and expenses, paid or incurred by the Bank in connection
with the debt itself and the present Guarantee.
The Guarantee provided herein is governed by the following explicitly stipulated
terms:
1. The Guarantor is hereunder responsible as principal Debtor, jointly and in
toto with the Debtor and any other guarantor/s and is consequently deprived of
the right which he may have to compel the Bank to proceed with the enforcement
of the claims of the Bank against the Debtor, prior to the Bank 's enforcement
of this Guarantee against the Guarantor, and the Guarantor hereby expressly
waives the exception of previous action (privilegium excussionis). The Guarantor
is not to raise against the Bank the non-personal objection of the Debtor.
Likewise, the Guarantor is not entitled to lodge against the Bank any
counter-claims of the Debtor against the Bank, or any claims of his own (the
Guarantor's). The Guarantor shall be liable under this Guarantee even in case of
invalidation or defectiveness of any of the obligations of the Debtor under the
Loan Agreement or in case of invalidation of the Loan Agreement, as if same were
fully valid and enforceable.
2. The duration of the Guarantee is indefinite and the guarantor's liability is
terminated only when full payment of the Debtor's obligations towards the Bank
under the Loan Agreement has been effected. The Bank is entitled to moderate at
its discretion the Loan Agreement entered into by the Bank and the Debtor or to
extend the time of fulfillment of the Debtor's obligations, or shorten such
time, or to review in whole or in part, the Loan Agreement with the Debtor. The
Bank will also be entitled to exchange other securities or guarantees granted to
the Bank by the Debtor, or guarantees granted to the Bank by other Guarantors,
return such guarantees, or waive such guarantees, or refrain from pursuing the
Bank's claims there from, or provide time limits or other facilities at the
Bank's absolute discretion. The Bank may perform any or all of
these acts without any notice to, or any consent of, the Guarantor, and without
thereby effecting in the least the liability of the Guarantor deriving from the
present Guarantee with the Bank. Consequently, the Guarantor waives all its
rights, in general, to invoke the above acts of the Bank in order to absolve
itself and, more specifically, waives all his rights under Articles 862, 863,
866,867 of the Greek Civil Code.
3. The Guarantor shall be totally responsible together with other Guarantors (if
any) who have already guarantee after the date of execution of this Guarantee,
the fulfillment of the Debtor's obligations towards the Bank under the
Guarantee.
4. Any delay or omission of the Bank to pursue its rights against the Guarantor
under this agreement shall not operate as a waiver by the Bank of such rights,
nor will the isolated or partial performance of such rights excluded the further
performance thereof or the performance of other rights. The Bank's waiver must
be evidence in writing and shall apply only on the specific rights or on the
specific case defined in such written waiver.
5. The present Guarantee shall bind the Guarantor, its assignees, and its
general or special successors, and it shall act in favour of the Bank, its
assignees and its general and special successors.
6. The Bank shall be entitled to withhold its debts to the Guarantor,
irrespective of the cause from which they originate in payment of the Bank's
overdue claims against the Guarantor under this agreement.
7. NOTICES
All notices and other communication upon either party hereto shall be deemed
duly served on the day they are delivered (in case of a letter) or received (in
the case of telex or cable) if that is a working day in the place of delivery or
receipt or, if not, on the first working day thereafter in such place, provided
that they are addressed as follows:
Guarantor: ___________
Bank: Corner Banca SA- Via Canova 16 - 6900 Lugano - Switzerland
Or at such other address as the respective party may have notified the other in
writing for this purpose.
8. LAW AND JURISDICTION
This Guarantee shall be governed by and constructed in accordance with Greek law
under the jurisdiction of the Court of Piraeus.
Signed by
________________________
EXIBIT 4
Deed of Assignment of Credits
15
DEED OF ASSIGNMENT OF CREDITS
The undersigned
ADVENTURE TWO S.A.
(hereinafter referred to as the Assignor) hereby irrevocably assigns to Corner
Bank Ltd. (hereinafter referred to as the Bank), by way of guarantee of all the
obligations, direct and indirect, which the Assignor has undertaken or may
undertake towards the Bank, for any reason or cause whatsoever (such as, for
example, advances in current account, discounting of commercial paper,
fidejussions, interest, commissions, purchase and sale of securities, charges,
etc., without exclusion or exception, with express mention that the guarantee
provided for as above shall also be extended to obligations which may already be
otherwise guaranteed), the credits specified apart, according to the separate
lists, together with all the rights which support them and with the relative
accrued and accruing interest.
The Assignor hereby represents that these credits are juridically legitimate and
undertakes every guarantee relative to the amount and to the collectability
thereof.
For the afore-said irrevocable assignment of credits, the Bank shall be entitled
to make claim upon such credits, to collect principal and interest upon
maturity, grant deferments, as well as to proceed with any formality and take
suitable measures to safeguard such credits, without the exercising of such
rights involving any liability whatsoever for the Bank.
The Assignor hereby undertakes to provide the Bank, upon request thereof, with
other guarantees in the event the margin of coverage, at the sole discretion of
the Bank, be insufficient, or if, on account of other reasons, the collection of
the assigned credits should be compromised; should any of these circumstances
arise, the Assignor hereby undertakes to inform the Bank.
The Assignor hereby undertakes to notify the relative debtors, by registered
mail, of the irrevocable assignment of their credits in favour of the Bank, to
provide the Bank with proof of such notification and to pay to the Bank any and
every sum which may be paid to the Assignor against the credits assigned
hereunder.
The Assignor hereby also authorizes the Bank to notify the relative debtors of
the irrevocable assignment of their credits, warning them to pay their debt(s)
solely into the hands of the Bank, and to receive partial or total payments from
the debtors, issuing valid receipt and giving credit thereof to the customer.
The Assignor shall immediately inform the Bank, by registered mail, of any
change of address from the current one, in the absence of which the Bank shall
deem valid and operative all communications and notifications sent to the old
address, even if they fail to arrive.
The Assignor shall bear all the costs arising out of the registration of this
Deed as well as any other accessory or consequent expense.
The Assignor acknowledges that all his relations with the Bank shall be subject
to Swiss law. He furthermore hereby acknowledges that the place of fulfilment,
the jurisdiction for enforcement and bankruptcy (if he his domiciled abroad), as
well as the exclusive jurisdiction for all proceedings shall be the place of
residence of the headquarters, of the branch or of the agency of the Bank
dealing with him, that is to say
Nonetheless he also hereby authorizes the Bank to take legal action before the
court of his domicile or before any other court whatsoever competent by
jurisdiction.
/s/ George D. Gourdomichalis
- ----------------------------
George D. Gourdomichalis
/s/ Ion G. Varouxakis
- ----------------------------
Ion G. Varouxakis
EXIBIT 5
Deed of Pledge
16
1. The undersigned
ADVENTURE TWO S.A.
domiciled at
(hereinafter referred to as the "Pledger") hereby pledges, pursuant to articles
884 et seq. of the Swiss Civil Code, in favour of
Corner Bank Ltd.
(hereinafter referred to as the "Bank"), as specified in article 2 hereof, as
guarantee of the Bank's credits vis-a-vis himself and vis-a-vis
(hereinafter referred to as the "Guaranted Debtor") all the assets
credited at present or in the future to his account(s) opened with the
Bank and all the accounts which the Bank may open in the name of the
Pledger in order to secure payment of any and all amounts the Pledger
and/or the Guaranted Debtor, in whose favour this pledge has been
constituted, may from time to time owe to the Bank, for whatever reason,
including any credit the Bank may extend to the Pledger and/or to the
Guaranted Debtor by means of overdrafts, loans, advances, guarantees,
suretyships, bills backing or similar instruments, forward foreign
exchange contracts, even after novation. Further, the Pledger pledges to
the Bank all his securities of whatever nature, all securities not
represented by a certificate (especially marketable securities with
deferred printing of the certificates), domestic and foreign bank notes,
precious metals, values and accounts of any other nature, as well as
earnings that have matured or to mature from such instruments and the
related rights attached (in particular interests, dividends, subscription
rights, bonuses) issued or to be acquired, in order to guarantee without
restrictions all the obligations of the Pledger and/or the Guaranted
Debtor vis-a-vis the Bank.
2. The aforesaid pledges shall guarantee all the Bank's credits, direct and
indirect, present and future, vis-a-vis the Pledger and/or the Guaranted
Debtor on whose behalf the pledge is provided, arising in any way or for
any reason whatsoever, such as, for example, overdraft facilities,
discounting of commercial paper, guarantees and surety-ships issued or
caused to be issued in his own interests or in the interests of third
parties, purchase and sale of securities, currency exchange operations,
documentary credits, interest, expenses and commissions etc., with no
exclusions or exceptions whatsoever, with express agree-ment that the
guarantee offered by the pledge shall also extend to any commitments that
may already be otherwise guaranteed. The registered office and the
branches of the Bank shall form a one and only corporate body; therefore
pledges provided to the registered office or to a branch shall also
guarantee credits vis-a-vis the registered office and all the branches.
3. The Pledger commits himself to handle all tasks concerning the
administration of the pledged asset(s) and to take all necessary steps to
preserve and increase its value (as: notices, monitoring of drawings,
amorti-sations, payment of premiums). The Bank may, not compulsorily, take
care of these duties at the risk and expenses of the Pledger.
4. The Bank retains all securities, statements and documents
Pledger. The Pledger gives his explicit consent to the Bank to deposit all
the pledged rights and assets with a third depository without affecting
the rights of the Bank as lienor. The deposits and sub-deposits shall
always be made at the risk and expenses of the Pledger.
5. For the pledge of registered secunties, the Pledger commits to sign every
declaration or power of attorney allowing the transfer of these securities
as a guarantee in the company's registers.
6. The Bank may, without commitment, exercise the rights belonging to the
Pledge owner against the debtors of the pledged assets and against any
third party. The Bank may represent the pledged securities at general
meetings, denounce and collect the credits and securities and, with
respect to the credits secured by a mortgage, exercise all the rights
belonging to the mortgagee. The Bank is hereby authorised by the Pledger
to address, also in the name of the Pledger, to the debtors of the
pledged securities any notification of the right of pledge that may be
necessary or which the Bank deems suitable.
7. The Pledger hereby certifies that he is the sole owner of the pledged
securities, that these securities are free of any bond, that they are
freely negotiable and that the transfer of ownership is not subject to a
consent or any prior authorisation.
8. If the Bank is of the unquestionable opinion that a reduction of the value
of the pledged assets has occurred or appears to be impending, or if the
Bank, for any reason, were to judge that the guarantees arc insufficient
or not covering its credits to the debtor any longer, the Pledger commits
himself, at any time and at the discretion of the Bank, either to provide
new guarantees suitable to the Bank or to repay the amount that the Bank
may claim.
9. If the Guaranted Debtor and/or the Pledger fail to fulfil the obligations
undertaken vis-a-vis the Bank, or, if requested, to make partial or total
repayment of a debt that has or has not yet matured (the balances of
current accounts arc considered expired at any time) or to close the
transaction guaranteed by the pledge, the Bank may, with notice to be sent
by registered letter to the address of the Pledger and without any other
formality whatsoever, realize - even by private dealings - all or a part
of whatsoever has been pledged as specified in article 1 hereof. The
Pledger hereby undertakes to fulfil without delay, at the Bank's request,
all the formalities that may be necessary for the transfer of the pledge.
10. If the Bank considers it preferable to enforce the pledge, it may, at its
discretion, proceed by way of realisation of the pledge or by way of
ordinary enforcement thereof.
11. Upon maturity of the credit, the Bank is not bound to comply solely with
the pledged rights. The Bank is entitled to take any judicial measure to
collect its credit, and the Bank shall decide, at its discretion, whether
to enforce the Pledge or chose a different form of enforcement. The
amendment or the contingent novation of the agreements, being at the
origin of the Bank's credit, will not alter nor affect the rights of the
Bank deriving from this Pledge. These rights remain guaranteed even if the
Bank agrees to a deferral in the payment, a release of the guarantees, a
discharge to the guarantors or if the Bank were to come to whatever other
agreement with its principal debtor.
12. In case of a plurality of pledges exceeding the guaranteed credit owed to
the Bank, the Bank is entitled to decide which pledged assets are to be
collected or realised first to satisfy its claims.
14. All expenses incurred now or in the future by the Bank resulting from this
Deed of Pledge will be borne by the Pledger, including the fees incurred
by the Bank as a result of judicial or extrajudicial proceedings relating
to the pledge or in view of the preservation or the realisation of the
pledged rights. The Pledger irrevocably authorises the Bank to debit him
with such costs.
15. In case of bankruptcy, death, edict, inventory, judgement, composition,
etc., of the debtor or against other joint obligors under the terms of
the Pledge, the Bank shall not be bound to fulfill the requisite
formalities to safeguard its credits such as notifications, actions,
contradictions, etc. The Pledger however, commits himself to provide for
the safeguard of his own rights and the Bank's rights. The Pledger shall
in no case avail himself of any claim or any action in the absence of
measures such as notifications, actions, contradictions, etc.
16. This Deed of Pledge shall be recognized as equal to assignment pursuant
to article 901 of the Swiss Civil Code.
17. The Pledger shall inform the Bank, by registered letter, of every change
of his address; if he fails to do so all communications and
notifications sent to the old address, even if he fails to receive them,
shall be considered valid and binding for him.
18. The Pledger acknowledges that all his relations with the Bank shall be
subject to Swiss law. He furthermore hereby acknowledges that the place of
fulfilment, the jurisdiction for enforcement and bankruptcy (if he is
domiciled abroad), as well as the exclusive jurisdiction for all
proceedings shall be the place of residence of the registered office, of
the branch or of the agency of the Bank which has a relationship with the
Pledger, that is to say:
Nonetheless he also hereby authorises the Bank to take legal action before
the court of his domicile or before any other competent court.
19 Any matter not expressly foreseen by this deed shall be governed by the
general conditions of the Bank. Each signatory declares receipt of a copy
of the general conditions and confirms acceptance thereof.
Firma / Signature /s/ Ion Varouxakis /s/ George D. Gourdomichalis
-------------------------------------------------
REPUBLIC OF THE MARSHALL ISLANDS
MARITIME OFFICE
I HEREBY CERTIFY THAT THE WITHIN IS A TRUE COPY OF THE INSTRUMENT RECEIVED FOR
RECORD AND RECORDED IN THIS OFFICE IN BOOK PH15 AT PAGE 332 ON 04 AUGUST 2004 AT
01:31 PM. EET VESSEL NAME FREE DESTINY OFFICIAL NUMBER 2077
GIVEN UNDER MY HAND AND SEAL THIS 04th
DAY OF AUGUST, 2004
/s/ J.E. GIANNOPOULOS
----------------------------------------
J.E. GIANNOPOULOS
DEPUTY COMMISSIONER OF MARITIME AFFAIRS
OF THE REPUBLIC OF THE MARSHALL ISLANDS
[SEAL]