THIS FIRST PREFERRED MORTGAGE is made and given this 15th day of March,
2000 by STAVANGER SUN LTD., a company organized and existing under the laws of
the Cayman Islands, and qualified as a foreign maritime entity under the laws of
the Republic of the Xxxxxxxx Islands (the "Owner"), as mortgagor, in favor of
CHRISTIANIA BANK OG KREDITKASSE ASA, a banking corporation organized and
existing under the laws of the Kingdom of Norway, in its capacity as security
trustee (the "Mortgagee"), as mortgagee.
W H E R E A S : -
A. The Owner is the sole owner of the whole of the vessel GENMAR SUN (ex
STAVANGER SUN) (the "Vessel"), Official No. 1439, of 50,272 gross registered
tons and 23,376 net registered tons and registered and documented in the name of
the Owner under the laws and flag of the Republic of the Xxxxxxxx Islands at the
Port of Majuro.
B. Pursuant to a senior facility agreement, dated October 30, 1997, made
by and among, the Owner and Boss Ltd., a company organized and existing under
the laws of the Cayman Islands ("Boss") (the Owner and Boss being herein
collectively called the "Borrowers"), as borrowers, Christiania Bank og
Kreditkasse ASA (herein in such capacity, the "Initial Bank"), as lenders, and
Christiania Bank og Kreditkasse ASA, as agent (in its capacity as agent, the
"Agent") and security trustee (in its capacity as security trustee, the
"Security Trustee"), for the Initial Bank and its transferees and assigns, as
amended by four amendment agreements, dated May 8, 1998, December 27, 1999,
February 17, 2000 and the date hereof, respectively, the Initial Bank having
assigned and transferred a portion of its interest in said facility agreement to
Skandinaviska Enskilda Xxxxxx XX (publ) ("XX Xxxxxx") and Union Bank of Norway
("UBN") (the Initial Bank, XX Xxxxxx and UBN being herein collectively called
the "Lenders") pursuant to two transfer certificates, dated November 27, 1997
and November 28, 1997, respectively (said facility agreement, as so amended,
assigned and transferred, being herein called the "Facility Agreement"), a copy
of which is attached hereto as Exhibit A, the Lenders, in accordance with the
terms of the Facility Agreement, have heretofore loaned to the Borrowers, on a
joint and several basis, the aggregate original principal amount of U.S.
$30,000,000 (the "Loan"), of which original principal amount U.S. $23,600,000
remains outstanding on the date hereof, the present outstanding principal amount
of said loans being repayable in eleven
consecutive quarterly installments, commencing April 27, 2000 and ending October
27, 2002, each of the first three of such quarterly installments to be in the
principal amount of U.S. $400,000, each of the next four of such quarterly
installments to be in the principal amount of U.S. $1,300,000, each of the next
three of such quarterly installments to be in the principal amount of U.S.
$1,400,000 and the last such quarterly installment to be in the principal amount
of U.S. $13,000,000.
C. Pursuant to the terms of the Facility Agreement the Loan shall bear
interest at the rate per annum equal to the aggregate of (i) LIBOR (as defined
in the Facility Agreement) and (ii) the Margin (as defined in the Facility
Agreement) (the "Interest Rate"), payable as provided therein; default interest
thereon shall be payable by the Borrowers at the rate per annum of one percent
(1%) above the Interest Rate (the "Default Rate").
D. Pursuant to an ISDA master agreement dated October 22, 1997 (the
"ISDA Master Agreement") and Confirmation thereto (the ISDA Master Agreement and
said Confirmation being herein called the "Swap Agreement"), the forms of which
are attached hereto as Exhibit B, between the Borrowers, on the one part, and
Christiania Bank og Kreditkasse ASA (in such capacity, the "Swap Counterparty"),
as swap counterparty, on the other part, the Swap Counterparty agreed to make
available to the Borrowers an interest rate swap facility in relation to the
Loan.
E. The Owner has agreed to mortgage the Vessel to the Mortgagee to
secure not only the Loan, but also the repayment of the Owner's obligations
under the ISDA Master Agreement and the payment of interest thereon and of all
other sums of money from time to time owing to the Swap Counterparty under the
ISDA Master Agreement up to the amount of U.S. $1,100,000 (the "Contingent
Sum").
F. Pursuant to a trust deed dated October 30, 1997 (the "Trust Deed")
made by and among, INTER ALIOS, the Borrowers, the Lenders, the Agent and the
Security Trustee, the Security Trustee agreed, INTER ALIA, to receive, hold,
administer and enforce this Mortgage on behalf of the Lenders and the Swap
Counterparty.
G. The Owner, in order to secure the repayment of the Outstanding
Indebtedness (as that term is defined in sub-clause 1.1 hereof) and to secure
the performance and observance
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of and compliance with all the covenants, terms and conditions in the Facility
Agreement, the Swap Agreement and this Mortgage contained, expressed or implied,
to be performed, observed and complied with by and on the part of the Owner, has
duly authorized the execution and delivery of this First Preferred Mortgage
under and pursuant to Chapter III of the Maritime Xxx 0000 of the Republic of
the Xxxxxxxx Islands, as amended.
NOW, THEREFORE, THIS MORTGAGE WITNESSETH:
1. DEFINITIONS
In this Mortgage, unless the context otherwise requires:
1.1 "Outstanding Indebtedness" means the Loan, the Contingent Sum,
interest thereon and all other sums of money owing to the
Lenders and/or the Swap Counterparty by the Owner from time to
time under or in connection with the Facility Agreement, the
Swap Agreement and this Mortgage;
1.2 "the Vessel" means the whole of the vessel described in Recital
(A) hereof and includes all her engines, machinery, boats,
boilers, masts, rigging, anchors, chains, cables, apparel,
tackle, outfit, spare gear, fuel, consumable or other stores,
belongings, freights and appurtenances, whether on board or
ashore, whether now owned or hereafter acquired, and all
additions, improvements and replacements hereafter made in or to
the said Vessel, or any part thereof, except such equipment or
stores which, when placed aboard the Vessel, do not become the
property of the Owner and except that it is not intended that
this Mortgage shall include property other than the Vessel and
it shall not include property other than the Vessel as the term
"vessel" is used in Section 71(2) of Chapter 3 of the Maritime
Xxx 0000 of the Republic of the Xxxxxxxx Islands, as amended;
and
2. SECURITY
In consideration of the premises and of other good and valuable
consideration, the receipt and adequacy whereof are hereby acknowledged, and in
order to secure the payment of the Outstanding Indebtedness in the specific
manner set forth in this Mortgage, the Swap Agreement and the Facility
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Agreement, the Owner has granted, conveyed and mortgaged and does by these
presents grant, convey and mortgage to and in favor of the Mortgagee, its
successors and assigns, the whole of the Vessel TO HAVE AND TO HOLD the same
unto the Mortgagee, its successors and assigns, forever, upon the terms set
forth in this Mortgage for the enforcement of the payment of the Outstanding
Indebtedness and to secure the performance and observance of and compliance with
the covenants, terms and conditions in this Mortgage, the Swap Agreement and the
Facility Agreement contained, PROVIDED, HOWEVER, and the terms of this Mortgage
are such that, this Mortgage shall be discharged, canceled and have no further
effect when there shall be no further amounts payable to the Lenders and/or the
Swap Counterparty in respect of the Outstanding Indebtedness and the Owner shall
have complied with all of the covenants, terms and conditions in this Mortgage,
the Swap Agreement and the Facility Agreement contained.
3. DECLARATION OF INDEBTEDNESS
The Owner hereby covenants and agrees to pay the Outstanding
Indebtedness to the Mortgagee, the Lenders and/or the Swap Counterparty or their
successors and assigns.
4. CONTINUING SECURITY
It is declared and agreed that the security created by this Mortgage
shall be held by the Mortgagee as a continuing security for the payment of the
Outstanding Indebtedness and that the security so created shall not be satisfied
by any intermediate payment or satisfaction of any part of the amount hereby
secured.
5. INSURANCE AND MAINTENANCE OF THE VESSEL
The Owner covenants and agrees, unless the Mortgagee has given its prior
written consent to the contrary:
(i) to insure and keep the Vessel insured or procure that the Vessel
is kept insured at no expense to the Mortgagee, the Lenders or
Swap Counterparty at all times and for as long as the Vessel is
subject to this Mortgage, against such risks, including, but not
limited to, Hull and Machinery, Hull Interest, Loss of Hire,
Freight Interest, Protection & Indemnity (including
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satisfactory (in the sole opinion of the Mortgagee) cover for
pollution liability) and War Risk insurances, in such amounts,
on such terms and with such insurers as the Mortgagee may
reasonably require, and to register and maintain the
registration of the Mortgagee's interest in all insurance
policies with such insurers;
(ii) to ensure that the insurance value of the Vessel covers the
actual risks to which the Vessel is from time to time exposed,
but, except with respect to P&I and Loss of Hire insurance, such
insurance shall at all times be in an amount at least equal to
the higher of the Fair Market Value of the Vessel and one
hundred twenty percent (120%) of the then outstanding amount of
the Outstanding Indebtedness upon such terms and with such
deductibles as shall from time to time be approved by the
Mortgagee;
(iii) to deliver an annual certificate to the Mortgagee from the
insurance broker(s) through whom the insurances relevant to the
Vessel have been placed evidencing that the insurances referred
to in subclause (i) above have been taken out in respect of the
Vessel and that such insurances are in full force and effect;
(iv) at the request of the Mortgagee, to obtain (at the Owner's
expense) Mortgagee Interest Insurance and, if so requested by
the Mortgagee, Extended Mortgagee Interest - Additional Perils
(Pollution Cover) Insurance relevant to the Vessel in the form
and substance satisfactory to the Mortgagee;
(v) to reimburse the Mortgagee, from time to time, for all costs and
expenses incurred by the Mortgagee in its procurement of a
Mortgagee's Interest Policy in respect of its interest in the
Vessel (including Additional Perils (Pollution) coverage);
(vi) to keep and to cause to be kept the Vessel in a good and
efficient state of repair so that the Vessel is classed and
maintained in the highest class with American Bureau of Shipping
or another classification society acceptable to the Mortgagee,
and to comply with the provisions of
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all laws, regulations and requirements (statutory or otherwise)
from time to time applicable to vessels registered under the
flag of the Republic of the Xxxxxxxx Islands, and at all times
to maintain the approval of the Vessel by all oil company
majors, 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 and to permit the
Mortgagee, at the cost of the Mortgagee, by surveyors or other
persons appointed by it in its behalf to board the Vessel at all
reasonable times for the purpose of inspecting her condition or
for the purpose of satisfying itself in regard to proposed or
executed repairs and to afford all proper facilities for such
inspections, provided that such inspections will cause no undue
delay to the Vessel;
(vii) not to employ the Vessel or suffer her employment in any trade
or business which is forbidden by the laws of the Republic of
the Xxxxxxxx Islands or is otherwise illicit or in carrying
illicit or prohibited goods or in any manner whatsoever which
may render her liable to condemnation in a Prize Court or to
destruction, seizure or confiscation of the Vessel and, in the
event of hostilities in any part of the world (whether war be
declared or not), not to employ the Vessel or suffer her
employment in carrying any contraband goods or to enter or trade
to any zone which is declared a war zone by any government or by
the Vessel's War Risks insurers, unless necessary extra War
Risks insurance cover has been obtained for the Vessel;
(viii) not to change the registration of the Vessel from the laws and
flag of the Republic of the Xxxxxxxx Islands without the prior
written consent of the Mortgagee;
(ix) to maintain its qualification in good standing as a foreign
maritime entity in the Republic of the Xxxxxxxx Islands;
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(x) not to sell, agree to sell, abandon or otherwise dispose of the
Vessel or any interest therein or to suffer the disposition of
any thereof;
(xi) to pay to the Mortgagee, the Lenders and/or the Swap
Counterparty, as the case may be, on demand, all moneys
(including reasonable fees of counsel) whatsoever which the
Mortgagee, the Lenders and/or the Swap Counterparty shall or may
expend, be put to or become liable for, in or about the
protection, maintenance or enforcement of the security created
by this Mortgage or in or about the exercise by the Mortgagee,
the Lenders and/or the Swap Counterparty of any of the powers
vested in it hereunder, under the Facility Agreement or under
the Swap Agreement and to pay interest thereon at the applicable
Default Rate from the date such demand for payment is made;
(xii) to immediately notify the Mortgagee of:
(a) any accident to the Vessel involving repairs the cost
whereof will or is likely to exceed the sum of U.S.
$500,000 (or the equivalent in any other currency);
(b) any occurrence in consequence whereof the Vessel has
become or is likely to become a total loss;
(c) any arrest of the Vessel or the exercise or purported
exercise of any lien on the Vessel or the earnings of
the Vessel;
(d) any requisition for title or other compulsory
acquisition of the Vessel otherwise than by requisition
for hire;
(e) any capture, seizure, arrest, detention or confiscation
of the Vessel by any government or by persons acting or
purporting to act on behalf of any government; and
(f) any material interruption in the operation of the
Vessel, including, but not limited to an Off-Hire period
of five days or more, and the financial implications of
such interruption;
7
(xiii) not bring the Vessel in any yard for repairs (other than
for the purpose of ordinary drydockings at regular
intervals), the costs of which might exceed U.S.
$500,000 (or the equivalent thereof in any other
currency), in addition to normal drydocking expenses, or
permit any major change or structural alteration to be
made to the Vessel;
(xiv) not to create, incur or permit to be placed or imposed
or continued upon the Vessel any lien whatsoever other
than for Master's and crew's wages, salvage compensation
and disbursements arising by operation of law and the
lien of this Mortgage;
(xv) to comply with all declaration and reporting
requirements imposed by the Protection and Indemnity
club or insurers including, without limitation, the
quarterly declarations required by the U.S. Oil
Pollution Clause 20/2/91, and to insure payment of all
premiums required to maintain in force the maximum U.S.
Oil Pollution Cover;
(xvi) not in any material way change, amend, negotiate, cancel
or terminate the Initial or Subsequent Management
Agreement (as such terms are defined in the Facility
Agreement) covering the Vessel without the prior written
consent of the Mortgagee; and
(xvii) to place or to cause to be placed and at all times and
places to retain or to cause to be retained a properly
certified copy of this Mortgage on board the Vessel with
her papers and cause this Mortgage to be exhibited to
any and all persons having business with the Vessel
which might give rise to any lien thereon, other than
liens permitted under the preceding Clause 5(xiv)
hereof, and to any representative of the Mortgagee on
demand; and to place and keep or to cause to be placed
and kept prominently displayed in the chart room and in
the Master's cabin of the Vessel a framed printed notice
in plain type in English of such size that the paragraph
of reading matter shall cover a space not less than
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six (6) inches wide by nine (9) inches high, reading as
follows:
"NOTICE OF MORTGAGE
This Vessel is covered by a First Preferred Mortgage to
Christiania Bank og Kreditkasse ASA, as security trustee, under
the authority of Chapter III of the Maritime Xxx 0000 of the
Republic of the Xxxxxxxx Islands, as amended. Under the terms of
the said First Preferred Mortgage, neither the Owner nor any
charterer nor the Master nor any officer or agent of this Vessel
nor any other person has any right, power or authority to
create, incur or permit to be imposed upon this Vessel any lien
whatsoever other than for crew's wages or salvage."
6. AUTHORITY OF THE MORTGAGEE
Without prejudice to any other rights of the Mortgagee hereunder:
9
(i) in the event that the provisions of Clause 5(i) hereof or any of
them shall not be complied with, the Mortgagee shall be at
liberty to effect and thereafter to replace, maintain and renew
all such insurances relating to the Vessel as in its sole
discretion it may think fit;
(ii) in the event that the provisions of Clause 5(vi) hereof shall
not be complied with, the Mortgagee shall be at liberty to
arrange for the carrying out of such repairs and/or surveys as
it deems expedient or necessary; and
(iii) any and all expenses incurred by the Mortgagee (including
reasonable fees of counsel) in respect of its performance under
the foregoing sub-clauses (i) and (ii) shall be paid by the
Owner on demand, with interest thereon at the Default Rate from
the date when such expenses were paid by the Mortgagee.
7. EVENTS OF DEFAULT
(B) Each of the following events shall constitute an Event of
Default:
(i) an Event of Default (as defined in the Facility
Agreement) shall occur and be continuing;
(ii) failure to pay when due the Outstanding Indebtedness or
any portion thereof; and
(iii) a default by the Owner in the due and punctual
observance of any of the covenants in this Mortgage and
such default if capable of remedy is not remedied within
ten (10) business days after notice from the Mortgagee
to the Owner requesting action to remedy such default.
The remedy period of ten (10) business days shall not
apply to the Owner's obligations according to Clauses
5(i), (ii), (iv) and (xv) hereof.
(B) If any Event of Default shall happen, the Mortgagee, shall be
entitled:
(i) to demand payment by written notice to the Owner of the
Outstanding Indebtedness, whereupon such payment by the
Owner to the Mortgagee, the
10
Lenders and/or the Swap Counterparty shall be
immediately due and payable, anything contained in the
Facility Agreement, the Swap Agreement or this Mortgage
to the contrary notwithstanding and without prejudice to
any other rights and remedies of the Mortgagee, the
Lenders or the Swap Counterparty under the Facility
Agreement, the Swap Agreement or this Mortgage;
(ii) to exercise all the rights and remedies in foreclosure
and otherwise given to mortgagees by any applicable law,
including those under the provisions of Chapter III of
the Maritime Xxx 0000 of the Republic of the Xxxxxxxx
Islands, as amended;
(iii) to take possession of the Vessel, wherever the same may
be, without prior demand and without legal process (when
permissible under applicable law);
(iv) to require that all policies, contracts, and other
records in respect of the insurances relating to the
Vessel (including details of and correspondence
concerning outstanding claims) be forthwith delivered to
such adjusters, brokers or other insurers as the
Mortgagee may nominate;
(v) to collect, recover, compromise and give a good
discharge for all claims then outstanding or thereafter
arising under the insurances relating to the Vessel or
any of them and to take over or institute (if necessary
using the name of the Owner) all such proceedings in
connection therewith as the Mortgagee in its absolute
discretion thinks fit and to permit the brokers through
whom collection or recovery is effected to charge the
usual brokerage therefor;
(vi) to discharge, compound, release or compromise claims
against the Owner 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;
(vii) to take appropriate judicial proceedings for the
foreclosure of this Mortgage and/or for the enforcement
of the Mortgagee's, the Lenders' and
11
the Swap Counterparty's rights under the Facility
Agreement, the Swap Agreement, this Mortgage or
otherwise; and to recover judgment for any amount due by
the Owner under this Mortgage; and
(viii) to sell the Vessel or any interest therein with or
without the benefit of any charterparty by public
auction at home or abroad, or by private sale upon at
least ten (10) business days prior written notice to the
Owner and upon such terms as the Mortgagee in its
absolute discretion may determine, with power to
postpone any such sale and in the absence of negligence
or willful neglect without being answerable for any loss
occasioned by such sale or resulting from postponement
thereof.
8. APPLICATION OF PROCEEDS
The proceeds of any sale made either under the power of sale hereby
granted to the Mortgagee or under a judgment or decree in any judicial
proceedings for the foreclosure of this Mortgage or for the enforcement of any
remedy granted to the Mortgagee hereunder, or any net earnings arising from the
management, charter or other use of the Vessel by the Mortgagee under any of the
powers herein contained or by law provided, or the proceeds of any and all
insurances relating to the Vessel and any claims for damages on account of the
Vessel or the Owner of any nature whatsoever or any requisition compensation,
shall be applied as follows:
FIRST: To the payment of all costs and expenses (together with
interest thereon at the Default Rate) of the Mortgagee, the Lenders and the Swap
Counterparty, including the reasonable compensation of their agents and
attorneys, by reason of any sale, retaking, management or operation of the
Vessel and all other sums payable to the Mortgagee, the Lenders and the Swap
Counterparty hereunder by reason of any expenses or liabilities incurred or
advances made by them for the protection, maintenance and enforcement of the
security or of any of their rights hereunder or in the pursuit of any remedy
hereby conferred; and at the option of the Mortgagee, the Lenders and/or the
Swap Counterparty to the payment of all taxes, assessments or liens claiming
priority over the lien of this Mortgage;
SECOND: To the payment in full of the Outstanding Indebtedness
if then due and payable; and
12
THIRD: Any surplus thereafter remaining, to the Owner or the
Owner's successors in interest and assigns or to whomsoever may be entitled
thereto.
In the event that the proceeds are insufficient to pay the
amounts specified in paragraphs "First" and "Second" above, the Mortgagee, the
Lenders and/or the Swap Counterparty shall be entitled to collect the balance
from the Owner or any other person liable therefor.
9. DELEGATION
The Mortgagee, the Lenders and the Swap Counterparty shall be
entitled at any time and as often as may be expedient to delegate all or any of
the powers and discretions vested in them by this Mortgage (including the power
vested in the Mortgagee by virtue of Clause 10 hereof) in such manner and upon
such terms and to such persons as the Mortgagee, the Lenders and/or the Swap
Counterparty in their absolute discretion may think fit.
10. POWER OF ATTORNEY
The Owner hereby irrevocably appoints the Mortgagee as its
attorney-in-fact to do in its name or in the name of the Owner all acts which
the Owner, or its successors or assigns, could do in relation to the Vessel,
including without limitation, to execute and deliver charters and a xxxx of sale
with respect to the Vessel,
PROVIDED, HOWEVER, that such power shall not be exercisable by
or on behalf of the Mortgagee unless and until any Event of Default stipulated
in Clause 7(A) hereof shall occur.
11. RECORDATION
For the purpose of recording this First Preferred Mortgage as
required under Section 302 the Maritime Xxx 0000 of the Republic of the Xxxxxxxx
Islands, as amended, the total amount is U.S. $24,700,000 (of which U.S.
$23,600,000 represents the Loan and U.S. $1,100,000 represents the Contingent
Sum), and interest and performance of mortgage covenants. The date of maturity
with respect to the debt secured by this Mortgate is October 27, 2002. The
discharge amount is the same as the total amount. For property other than the
Vessel if any should be
13
determined to be covered by this Mortgage, the discharge amount is 0.01% of the
total amount.
12. NOTICES
Notices and other communications required or permitted by this
Mortgage shall, until further notice in writing of a change therein, be in
writing delivered personally or mailed (airmailed, if international) by
registered or certified mail, with proof of delivery requested, telexed or
telefaxed as follows:
If to the Owner: Stavanger Sun Ltd.
c/o General Maritime III Corporation
000 Xxxxx Xxxxxx
Xxx Xxxx, X.X. 00000
Attn.: Xxxxx X. Xxxxxxxxxxxxx, Director
Telefax No.: x(000) 000-0000
If to the Mortgagee: Christiania Bank of Kreditkasse ASA
X.X. Xxx 0000 Xxxxxxx
0000 Xxxx 0,
Xxxxxx
Attn: Shipping/Energy/Transportation
Telefax No.: x000-00-00-00-00-00
Every notice or demand shall, except so far as otherwise expressly provided by
this Mortgage, be deemed to have been received, in the case of letter, on the
date of delivery to the recipient thereof, and in the case of a telefax
transmission, on the date and at the time of dispatch thereof (provided that if
the date of dispatch is not a business day in the locality of the
14
party to whom such notice or demand is sent it shall be deemed to have been
received on the next following business day in such locality).
IN WITNESS WHEREOF, the Owner has executed this Mortgage by its
duly authorized representative on the day and year first above written.
Signed, sealed and delivered
as a Deed by STAVANGER SUN LTD.
By:
---------------------------------------
Name: Xxxxxxxxxxx X. Xxxxxxxxxxxxx
Title: Attorney-in-Fact
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ACKNOWLEDGMENT OF MORTGAGE
STATE OF NEW YORK )
: ss.
COUNTY OF NEW YORK)
On the 15th day of March, in the year 2000, before me, the
undersigned, a Notary Public in and for said State, personally appeared
Xxxxxxxxxxx X. Xxxxxxxxxxxxx, personally known to me or proved to me on the
basis of satisfactory evidence to be the individual whose name is subscribed to
the within instrument and acknowledged to me that he executed the same in his
capacity, and that by his signature on the instrument, the individual, or the
person upon behalf of which the individual acted, executed the instrument.
Notary Public
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