EXHIBIT 10.2
ALMIRA ENTERPRISES, INC.
- and -
NORDBANKEN AB (PUBL)
---------------------------
SECOND NAVAL MORTGAGE
- on the -
m.v. "ENCHANTED ISLE"
---------------------------
Sinclair Roche & Temperley
Royex House
5 Aldermanbury Square
London EC2V 7LE
Tel: +44 (0)20 7452 4000
Fax: +44 (0)20 7452 4001
Ref: GFS/252680
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INDEX OF CONTENTS
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Clause Heading Page No.
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1. DEFINITIONS.................................................................................2
2. OWNER'S COVENANT TO PAY.....................................................................5
3. MORTGAGE....................................................................................6
4. OWNER'S COVENANTS AS TO INSURANCE...........................................................7
5. OWNER'S COVENANTS AS TO OPERATION & MAINTENANCE............................................12
6. EXPENSES...................................................................................17
7. PROTECTION AND MAINTENANCE OF SECURITY.....................................................18
8. EVENTS OF DEFAULT..........................................................................19
9. ENFORCEMENT OF RIGHTS......................................................................19
10. APPLICATION OF MONEYS......................................................................22
11. NO WAIVER..................................................................................22
12. POWER OF DELEGATION........................................................................22
13. POWER OF ATTORNEY..........................................................................22
14. FURTHER ASSURANCE..........................................................................23
15. WAIVER OF RIGHTS AS SURETY.................................................................23
16. AMOUNT SECURED BY MORTGAGE.................................................................25
17. NOTICES....................................................................................25
18. GOVERNING LAW, SEVERABILITY, ETC. .........................................................25
19. MISCELLANEOUS..............................................................................26
20. RECORDING OF THIS MORTGAGE.................................................................26
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THIS SECOND NAVAL MORTGAGE is made the 21st day of June 2000 by ALMIRA
ENTERPRISES, INC. a company incorporated under the laws of Panama with its
registered office at c/o Galindo Arias & Lopez, Scotia Plaza, No 18 Avenida
Federico Boyd & Calle 51, Pisas 9, 10 & 11, Panama, Republic of Panama ("the
Owner") in favour of NORDBANKEN AB (PUBL) a company incorporated under the laws
of Sweden acting through its office at Ostra Hamngatan 16, SE-405 09 Gothenburg,
Sweden ("the Mortgagee" which expression shall include its successors and
permitted assigns).
WHEREAS:-
(A) The Owner is the sole owner of the whole of the motor vessel named
"ENCHANTED ISLE" built in 1958 at Pascagoula, E.U.A. duly documented in
the name of the Owner under the laws and flag of the Republic of Panama
under Permanent Patente of Navigation Number 14087-84-E having radio
call letters in the international Code of Signals 3FMG2 with a gross
capacity in tons of 23,875 net capacity in tons of 9,568 length of
173.74 meters breadth of 25.60 meters and depth of 13.80 meters.
(B) By a loan agreement dated the 20 day of June 2000 made between (1) the
Mortgagee and (2) Commodore Holdings Limited ("the Borrower")
(hereinafter as the same may from time to time be amended, varied or
supplemented called the "Loan Agreement") the Mortgagee has agreed to
make available to the Borrower a loan of two million United States
Dollars (USD2,000,000) (the "Loan" which expression shall also mean
where the context so requires the amount thereof from time to time
outstanding) on the terms and conditions therein set forth. A copy of
the form of the Loan Agreement in the form executed is attached hereto
and forms an integral part hereof.
(C) By a guarantee and indemnity dated 20 day of June 2000 executed by the
Owner in favour of the Mortgagee (hereinafter as the same may from time
to time be amended, varied or supplemented called "the Guarantee") the
Owner has (inter alia) guaranteed the due and punctual payment of any
and all sums due and to become due from the Borrower under the Loan
Agreement. A copy of the form of the Guarantee in the form executed is
attached hereto and forms an integral part hereof.
<PAGE>
(D) The Mortgagee agreed to advance the Loan on condition that the Owner
should execute and deliver to the Mortgagee the Guarantee and such a
second priority mortgage of the Vessel as hereinafter appears.
(E) In fulfilment of the said condition and in order to secure the payment
to the Mortgagee of the Outstanding Indebtedness (as hereinafter
defined) and the performance and observance of and compliance with all
the covenants terms and conditions in this Mortgage contained expressed
or implied the Owner has duly authorised the execution and delivery of
this Mortgage and is duly permitted to give as security for the payment
of the Outstanding Indebtedness and the performance and observance of
and compliance with all the said covenants terms and conditions a
second preferred mortgage on the Vessel under and pursuant to the laws
of the Republic of Panama.
(F) By a first naval mortgage dated 14 July 1995 ("the Prior Mortgage")
executed by the Owner in favour of Effjohn International Cruise
Holdings, Inc. ("the Prior Mortgagee") the Owner has mortgaged the
Vessel in favour of the Prior Mortgagee.
NOW THIS MORTGAGE WITNESSETH AND IT IS HEREBY AGREED as follows:-
1. DEFINITIONS
(1) In this Mortgage unless the context otherwise requires any term defined
in the preamble or recitals hereto has the meaning ascribed to it
therein and:-
"Default Rate"
means interest at the rate calculated in accordance with clause 4.3 of
the Loan Agreement;
"Event of Default"
means any of the events set out in clause 8 hereof;
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"Insurances"
means all policies and contracts of insurance (which expression
includes all entries of the Vessel in a protection and indemnity or war
risks association) which are from time to time taken out or entered
into in respect of the Vessel and her earnings or otherwise howsoever
in connection with the Vessel with the exception of Mortgagees interest
insurances;
"Outstanding Indebtedness"
means the aggregate of all sums of money whatsoever now or in the
future actually or contingently due or owing to the Mortgagee under the
Security Documents or any of them;
"person"
includes any body of persons;
"Requisition Compensation"
means all moneys or other compensation whatsoever payable by reason of
the requisition for title or other compulsory acquisition of the Vessel
(otherwise than by requisition for hire) or the 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;
"Security Documents"
means the Loan Agreement, the Guarantee, this Mortgage and any other
document as may have been or may hereafter be executed to secure the
Loan;
"Security Period"
means the period commencing on the date hereof and terminating upon
discharge of the security created by the Security Documents by
irrevocable payment in full of the Outstanding Indebtedness;
"Total Loss"
means:-
(i) actual or constructive or compromised or agreed or arranged total
loss of the Vessel; or
(ii) requisition for title or other compulsory acquisition of the
Vessel otherwise than by requisition for hire; or
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(iii) 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 unless the Vessel is released and
restored to the Owner from such capture, seizure, arrest or
detention within thirty (30) days after the occurrence thereof;
and
"Vessel"
means the vessel described in Recital (A) hereto and includes her
engines, machinery, boats, tackle, outfit, spare gear, fuel, consumable
or other stores, belongings and appurtenances whether on board or
ashore and whether now owned or hereafter acquired.
(2) In clause 4.1(A) hereof:-
"excess risks"
means the proportion of claims for general average and salvage charges
and under the ordinary running down clause not recoverable in
consequence of the value at which a vessel is assessed for the purpose
of such claims exceeding her insured value;
"protection and indemnity risks"
means the usual risks covered by an English protection and indemnity
association including without limitation pollution risks (whether
relating to oil or otherwise howsoever) and the proportion not
recoverable in case of collision under the ordinary running down
clause; and
"war risks"
includes the risks of mines and all risks excluded from the standard
form of English marine policy by the free of capture and seizure
clause.
(3) This Mortgage shall be read together with the Loan Agreement.
(4) Clause headings are inserted for convenience of reference only and
shall be ignored in the interpretation of this Mortgage.
<PAGE>
2. OWNER'S COVENANT TO PAY
(1) In consideration of the premises the Owner covenants with the Mortgagee
as follows:-
(1) to guarantee repayment of the Loan to the Mortgagee at the time
and in the manner specified in clause 5 of the Loan Agreement;
(2) to guarantee payment of interest on the Loan to the Mortgagee at
the rate at the times and in the manner specified in clause 4 of
the Loan Agreement;
(3) to pay interest at the Default Rate to the Mortgagee (both before
and after any judgment) on any sum or sums payable under the
Security Documents which is not paid to the Mortgagee on the due
date;
(4) to pay each and every other sum of money that may be or become
owing to the Mortgagee under the terms of the Security Documents
or any of them at the times and in the manner specified therein;
(5) to pay to and/or indemnify the Mortgagee for such additional
amounts as may be necessary in order that all payments under this
Mortgage after deduction or withholding for or on account of all
present or future taxes (other than corporate taxes on the
overall net income of the Mortgagee) imposed by any competent
authority in any jurisdiction relative to the Owner shall be no
less than such payments would have been had there been no such
taxes; and
(6) to perform observe and comply with the obligations, covenants,
terms and conditions set out in this Mortgage.
(2) Notwithstanding anything to the contrary contained in this clause 2 the
Outstanding Indebtedness shall become immediately payable on demand
upon the happening of any Event of Default.
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3. MORTGAGE
(1) In consideration of the premises and in order to secure by this
Mortgage the repayment to the Mortgagee of the Loan plus interest at
the rate set forth in the Loan Agreement and the payment of all such
other sums as may hereafter from time to time and at any other time
form part of the Outstanding Indebtedness and to secure the performance
and observance of and compliance with the covenants terms and
conditions herein contained, the Owner in accordance with the
provisions of Chapter V Title IV of Book Second of the Code of Commerce
of the Republic of Panama and of the pertinent provisions of the Civil
Code and other legislation of the Republic of Panama hereby executes
and constitutes a Second Preferred Naval Mortgage on the whole of the
Vessel in favour of the Mortgagee, subject to the Prior Mortgage, to
have and to hold the same unto the Mortgagee its successors and assigns
forever upon the terms herein set forth, PROVIDED ONLY and the
condition of these presents is such that if the Owner its successors
and assigns shall pay or cause to be paid to the Mortgagee its
successors or assigns the Outstanding Indebtedness as and when the same
shall become due and payable in accordance with the terms of the Loan
Agreement and this Mortgage and shall observe and comply with the
covenants, terms and conditions in the Loan Agreement and this Mortgage
contained expressed or implied to be performed, observed or complied
with by and on the part of the Owner then these presents and the rights
hereunder shall cease determine and be void and the Mortgagee will, at
the request and cost of the Owner, execute a release in such form as
the Owner may reasonably require, of the security created by this
Mortgage.
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(2) 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 the performance and observance of
and compliance with all of the covenants terms and conditions contained
in the Security Documents and that the security so created shall not be
satisfied by any intermediate payment or satisfaction of any part of
the amount hereby and thereby secured 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 or hereafter held by
the Mortgagee for all or any part of the moneys hereby and thereby
secured and that every power and remedy given to the Mortgagee
hereunder shall be an addition to and not a limitation of any and every
other power or remedy vested in the Mortgagee under any of the other
Security Documents or at law and that all the powers so vested in the
Mortgagee may be exercised from time to time and as often as the
Mortgagee may deem expedient.
4. OWNER'S COVENANTS AS TO INSURANCE
(1) The Owner covenants with the Mortgagee and undertakes throughout the
Security Period:-
(1) at the Owner's expense to insure and keep the Vessel insured in
United States Dollars (or such other currency as the Mortgagee
may approve in writing) against (a) fire and usual marine risks
(including excess risks), (b) war risks, (c) protection and
indemnity risks, (d) oil pollution liability risks in excess of
the limit of cover for oil pollution liability included within
the protection and indemnity risks, (e) loss of hire and (f) any
other risks which the Mortgagee may from time to time require;
(A) to effect the Insurances (a) generally in such amounts and upon
such terms as shall from time to time be approved in writing by
the Mortgagee, through such brokers (hereinafter called "the
approved brokers") and with such insurance companies underwriters
war risks and protection and indemnity associations as shall from
time to time be approved in writing by the Mortgagee, and (b) in
particular 01. (in respect of all risks within the protection and
indemnity insurances other than oil pollution risks) in an
unlimited amount, or (if unlimited cover ceases to be available)
in the maximum amount available to the Owner for the Vessel in
the market from time to time; 02. (in respect of oil pollution
liability risks included within the protection and indemnity
insurances) in the maximum amount available to the Owner for the
Vessel in the market from time to time; and 03. (in respect of
oil pollution liability risks in excess of the limit of cover
included in the protection and indemnity insurances) in such
amount and upon such terms as the Mortgagee may from time to time
require;
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(2) to renew the Insurances at least fourteen (l4) days before the
relevant policies or contracts expire and to procure that the
approved brokers shall promptly confirm in writing to the
Mortgagee as and when each such renewal is effected;
(3) punctually to pay premiums calls contributions or other sums
payable in respect of all the Insurances and to produce all
relevant receipts when so required by the Mortgagee;
(4) to arrange for the execution of such guarantees as may from time
to time be required by a protection and indemnity or war risks
association;
(5) to procure that the interests of the Mortgagee shall be duly
endorsed upon all slips cover notes policies certificates of
entry or other instruments of insurance issued or to be issued in
connection with the Insurances and in particular, but without
limitation, if so required by the Mortgagee, (but without
liability as between the Owner and the Mortgagee for premiums or
calls) to procure that the Mortgagee be named as co-assured;
(B) to procure that all such instruments of insurance as are referred
to in sub-clause (F) above shall be deposited with the Mortgagee
(or with such other person as the Mortgagee may from time to time
direct) and that the approved brokers furnish the Mortgagee with
a letter or letters of undertaking in such form as may be
required by the Mortgagee;
(6) to procure that the protection and indemnity and/or war risks
associations wherein the Vessel is entered shall (if so required
by the Mortgagee) furnish the Mortgagee with a letter or letters
of undertaking in such form as may be required by the Mortgagee;
(7) to operate and manage the Vessel or procure that the Vessel is
operated and managed strictly in conformity with the terms of the
instruments of insurance referred to in sub-clause (F) above
(including any warranties express or implied therein) and in
particular:
<PAGE>
(1) to ensure that the Vessel's classification, structure,
operation and management are maintained strictly in
conformity with any warranty as to class, structure,
operation or management or any other provision as to class,
structure, operation or management contained in the
Insurances and to this end to submit the Vessel or cause
the Vessel to be submitted to such periodical or other
surveys as may be required by the Vessel's classification
society, salvage association or otherwise howsoever not
less than fourteen (14) days before the date upon which
such surveys fall due;
(2) promptly and fully to implement any and all requirements or
recommendations contained in any report issued upon or
following any of the surveys referred to in sub-clause (i)
above and promptly after such surveys have been carried out
to provide evidence satisfactory to the Mortgagee that this
has been done together with confirmation from the relevant
approved brokers that the Vessel complies with such of the
Insurances to which such surveys are relevant;
(3) (without prejudice to clauses 4.1(G) and (H) hereof) to
procure that the approved brokers furnish the Mortgagee
with a letter of undertaking in terms satisfactory to the
Mortgagee in which the approved brokers undertake (inter
alia) to give the Mortgagee notice of any failure by the
Owner to comply with any warranty as to the Vessel's class
or structure;
(4) to comply strictly with the requirements of any legislation
relating to pollution or protection of the environment
which may from time to time be applicable to the Vessel in
any jurisdiction in which the Vessel shall trade and in
particular (if the Vessel is to trade in the United States
of America and Exclusive Economic Zone (as defined in the
Act)) to comply strictly with the requirements of the
United States Oil Pollution Act 1990 ("the Act") and before
any such trade is commenced and during the entire period
during which such trade is carried on:-
<PAGE>
(1) to pay any additional premiums required to maintain
protection and indemnity cover for oil pollution up to
the limit available to the Owner for the Vessel in the
market;
(2) to make all such quarterly or other voyage
declarations as may from time to time be required by
the Vessel's protection and indemnity association in
order to maintain such cover, and promptly to deliver
to the Mortgagee copies of such declarations;
(3) to submit the Vessel to such additional periodic,
classification, structural or other surveys which may
be required by the Vessel's protection and indemnity
insurers to maintain cover for such trade and promptly
to deliver to the Mortgagee copies of reports made in
respect of such surveys;
(4) to implement any recommendations contained in the
reports issued following the surveys referred to in
sub-clause (c) above within the time limit specified
therein, and provide evidence satisfactory to the
Mortgagee that the protection and indemnity insurers
are satisfied that this has been done; and
(a) in addition to the foregoing (if such trade is in the
United States of America and Exclusive Economic Zone):
(01) to obtain and retain a certificate of financial
responsibility under the Act in form and
substance satisfactory to the United States Coast
Guard and to provide the Mortgagee with a copy
thereof;
(02) to procure that the protection and indemnity
insurances do not contain a US Trading Exclusion
Clause or any other provision analogous thereto
and to provide the Mortgagee with evidence that
this is so; and
<PAGE>
(03) strictly to comply with any operational or
structural regulations issued from time to time
by any relevant authorities under the Act so that
at all times the Vessel falls within the
provisions which limit strict liability under the
Act for oil pollution;
(5) before allowing the Vessel to enter or trade to any
zone which is declared a war zone or which is rendered
dangerous by reason of hostility in any part of the
world (whether war be declared or not) to effect such
special insurance cover as the Mortgagee may require;
and
(6) to notify the Mortgagee forthwith by letter or in case
of urgency by telex of any requirement or
recommendation made by any insurer or classification
society which has not been complied with prior to
fourteen (14) days before the date by which it is
required to be complied with;
(8) to apply all sums receivable in respect of the Insurances
as are paid to the Owner for the purpose of making good the
loss and fully repairing all damage in respect whereof the
insurance moneys shall have been received;
(9) not to make any alteration which would or could reasonably
be expected to have a material adverse effect on the rights
or interest of the Mortgagee to any of the terms in any of
the instruments of insurance referred to in sub-clause (F)
above which have been approved by the Mortgagee and not to
make, do, consent or agree to any act or omission which
would or might render any such instrument of insurance
invalid, void, voidable or unenforceable or render any sum
payable thereunder repayable in whole or in part;
(10) not without the prior approval of the Mortgagee to settle,
compromise or abandon any claim under the Insurances for
Total Loss or for a major casualty; and
(11) to indemnify the Mortgagee fully forthwith upon demand for
any and all costs and expenses incurred by the Mortgagee
from time to time:
<PAGE>
(1) in effecting for the benefit of the Mortgagee in such
amount, upon such terms, through such insurance
brokers and with such insurance company or underwriter
as the Mortgagee shall in its sole discretion elect
(i) a Mortgagee's interest insurance policy on the
Vessel and (ii) an insurance policy against the
possible consequences of pollution involving the
Vessel, including without limitation, the risk of
expropriation or sequestration of the Vessel, the
imposition of a lien or encumbrance of any kind having
priority over this Mortgage or a claim against the
Vessel exceeding the amount receivable in respect of
pollution under the Vessel's protection and indemnity
insurances; and
(2) in obtaining from time to time a report or reports on
the adequacy of the Insurances from an insurance
adviser appointed by the Mortgagee.
(2) The Mortgagee shall be entitled from time to time to review the terms
of clause 4.1 hereof in order to provide for changes occurring after
the date of this Mortgage in legislation or circumstances affecting the
Owner, the Vessel, the Insurances, the laws of any jurisdiction or any
other matters which the Mortgagee deems relevant, and to modify its
requirements in respect of the Insurances in the light of such changes.
Any such modification, once notified in writing by the Mortgagee to the
Owner shall be binding on the Owner and take effect as an amendment to
clause 4.1 hereof.
5. OWNER'S COVENANTS AS TO OPERATION & MAINTENANCE
(1) The Owner covenants with the Mortgagee and undertakes throughout the
Security Period:-
(1) to keep the Vessel registered as a Panamanian ship and not to do
or suffer to be done anything whereby such registration may be
forfeited or imperilled;
(2) not (without the previous consent in writing of the Mortgagee) to
make any modification to the Vessel which would result in any
substantial change in the structure type or speed of the Vessel;
<PAGE>
(3) at all times to maintain and preserve the Vessel in good working
order and repair so as to maintain the highest class available to
vessels of her type and so that the Vessel is in every respect
seaworthy and in good operating condition and to maintain and
preserve the Vessel in such good working order and condition as
to comply with the requirements of the Vessel's insurers and of
the laws, regulations and requirements (statutory or otherwise)
from time to time applicable to vessels registered under the laws
and flag of the Republic of Panama and if so required with the
requirements of the laws and government of any State colony
country province or dependency where the Vessel may trade and to
renew and replace all parts and appurtenances thereof when and as
they shall be worn out damaged lost or destroyed by others of a
similar nature and of at least equal quality;
(4) to permit the Mortgagee or to procure that the Mortgagee be
permitted by surveyors or other persons appointed by it in that
behalf to board the Vessel at all reasonable times for the
purpose of inspecting her condition and her class or other
records or for the purpose of satisfying themselves in regard to
proposed or executed repairs and to afford all proper facilities
for such inspections;
(5) to pay and discharge or to cause to be paid and discharged all
debts damages and liabilities whatsoever which have given or may
give rise to maritime or possessory liens on or claims
enforceable against the Vessel and in event of arrest of the
Vessel pursuant to legal process or in event of her detention in
exercise or purported exercise of any such lien as aforesaid to
procure the release of the Vessel from such arrest or detention
forthwith upon receiving notice thereof by providing bail or
otherwise as the circumstances may require;
<PAGE>
(6) not to employ the Vessel or suffer her employment in any trade or
business which is forbidden by international law or is otherwise
illicit or in carrying illicit or prohibited goods or in any
manner whatsoever which renders her liable to condemnation in a
Prize Court or to destruction seizure or confiscation and in
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 goods which are or may be declared
contraband or to enter or trade to any zone which is declared a
war zone or which is rendered dangerous by reason of such
hostilities unless the Mortgagee shall have first given its
consent in writing;
(7) to take all reasonable precautions to prevent any infringements
of any anti drug legislation in any jurisdiction in which the
Vessel shall trade and in particular (if the Vessel is to trade
in the United States of America) to take all reasonable
precautions to prevent any infringements of the Anti-Drug Abuse
Act of 1986 of the United States of America (as the same may be
amended and/or re-enacted from time to time hereafter) and for
this purpose to enter into a "Carrier Initiative Agreement" with
the United States' Customs Service and to procure that the same
or a similar agreement is maintained in full force and effect and
that the Owner's obligations thereunder are performed in respect
of the Vessel;
(8) to comply with all laws, regulations, conventions and agreements
whatsoever applicable to the Vessel in any jurisdiction in which
the Vessel shall trade relating to pollution or protection of the
environment howsoever;
(9) promptly to furnish to the Mortgagee all such information as it
may from time to time reasonably require regarding 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;
(C) to notify the Mortgagee forthwith by letter or in case of urgency
by telex of:-
(1) any accident to the Vessel involving repairs the cost
whereof will or is likely to exceed five hundred thousand
United States Dollars (USD500,000) (or the equivalent in
any other currency);
(2) any occurrence in consequence whereof the Vessel has become
or is likely to become a Total Loss;
(3) any requirement or recommendation made by any competent
authority which has not been complied with prior to
fourteen (14) days before the date by which it is required
to be complied with; and
<PAGE>
(4) any arrest of the Vessel or the exercise or purported
exercise of any lien on the Vessel or her earnings;
(10) promptly to pay all tolls dues and other outgoings whatsoever in
respect of the Vessel and as and when the Mortgagee may so
require to furnish satisfactory evidence that the wages and
allotments and insurance and pension contributions of the Master
and crew are being regularly paid and that all deductions from
crew's wages in respect of any tax liability are being properly
accounted for and that the Master has no claim for disbursements
other than those incurred by him in the ordinary course of
trading on the voyage then in progress;
(11) not without the previous consent of the Mortgagee in writing
(which the Mortgagee shall have full liberty to withhold) to let
the Vessel:-
(1) on demise charter for any period;
(2) by any time or consecutive voyage charter for a term which
exceeds or which by virtue of any optional extensions
therein contained is likely to exceed Thirteen (l3) months'
duration;
(3) on terms whereby more than Two (2) months' hire (or the
equivalent) is payable in advance; or
(4) below the market rate prevailing at the time when the
Vessel is fixed;
(12) (save for the Prior Mortgage in favour of the Prior Mortgagee)
not without the previous consent in writing of the Mortgagee (and
then only subject to such terms as the Mortgagee may impose) to
mortgage charge or otherwise assign the Vessel or any share
therein or to suffer the creation of any such mortgage charge or
assignment to or in favour of any person other than the
Mortgagee;
<PAGE>
(13) not without the previous consent in writing of the Mortgagee to
sell or agree to sell or otherwise dispose of the Vessel or any
share therein or change the flag of the Vessel;
(14) not to put the Vessel into the possession of any person for the
purpose of work being done upon her in an amount exceeding or
likely to exceed five hundred thousand United States Dollars
(USD500,000) (or the equivalent in any other currency) unless:-
(1) in the case of damage repairs to the Vessel, the Mortgagee
is satisfied that the cost of such repairs (other than any
deductible) is covered by the Insurances; or
(2) in the case of a scheduled drydocking the Mortgagee is
satisfied that adequate financial provision has been made
for payment in respect thereof; or
(3) the Mortgagee is satisfied that the person into whose
possession the Vessel is to be delivered has agreed to
waive any repairer's or similar possessory lien for work
carried out to the Vessel by such person;
(15) to keep proper books of account in respect of the Vessel and her
earnings and as and when required by the Mortgagee to make such
books available for inspection on behalf of the Mortgagee;
(16) to comply with all the requirements and formalities under any
applicable legislation of the Republic of Panama necessary to
perfect this Mortgage as a valid and enforceable second preferred
mortgage upon the Vessel and to furnish to the Mortgagee from
time to time such evidence as the Mortgagee may reasonably
request to satisfy itself with respect to the Owner's compliance
with the provisions of this sub-clause;
<PAGE>
(17) to place and retain a copy of this Mortgage certified by the
appropriate Panamanian 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 such
papers to be brought to the attention of the 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; and
(18) to comply, or procure that the operator of the Vessel will
comply, with the International Management Code for the Safe
Operation of Ships and for Pollution Prevention adopted by the
International Maritime Organisation (as the same may be amended
from time to time) ("the ISM Code") or any replacement of the ISM
Code and in particular, without prejudice to the generality of
the foregoing, as and when required to do so by the ISM Code and
at all times thereafter, (i) to hold, or procure that the
operator of the Vessel holds, a valid Document of Compliance
(being a document issued to a vessel operator as evidence of its
compliance with the requirements of the ISM Code) duly issued to
the Owner or the operator (as the case may be) pursuant to the
ISM Code and a valid Safety Management Certificate (being a
document issued to a vessel as evidence that the vessel operator
and its shipboard management operate in accordance with an
approved structured and documented system enabling the personnel
of that vessel operator to implement effectively the safety and
environmental protection policy of that vessel operator) duly
issued to the Vessel pursuant to the ISM Code, (ii) to provide
the Mortgagee with copies of any such Document of Compliance and
Safety Management Certificate as soon as the same are issued and
(iii) to keep, or procure that there be kept, on board the Vessel
a copy of any such Document of Compliance and the original of any
such Safety Management Certificate.
6. EXPENSES
(1) The Owner undertakes to pay to the Mortgagee on demand all moneys
whatsoever which the Mortgagee shall or may expend be put to or become
liable for in or about the protection maintenance or enforcement of the
security created by this Deed and the other Security Documents or in or
about the exercise by the Mortgagee of any of the powers vested in it
under this Deed or under any of the other Security Documents and to pay
interest thereon at the Default Rate from the date of demand until the
date of actual receipt (whether before or after any relevant judgment).
<PAGE>
(2) The Owner undertakes to pay on demand to the Mortgagee (or as it may
direct) the amount of all investigation and legal expenses of any kind
whatsoever stamp duties (if any) registration fees and any other
charges incurred by the Mortgagee in connection with the preparation
completion and registration of the Security Documents or otherwise in
connection with the Outstanding Indebtedness and the security therefor.
7. PROTECTION AND MAINTENANCE OF SECURITY
(1) 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 as it may in its absolute
discretion think fit for the purpose of protecting the security created
by this Deed and the other Security Documents and each and every
expense or liability so incurred by the Mortgagee in or about the
protection of the security shall be repayable to it by the Owner on
demand together with interest thereon at the Default Rate from the date
of demand until the date of actual receipt whether before or after any
relevant judgment.
(2) Without prejudice to the generality of the foregoing:-
(1) if the provisions of clause 4.1 hereof or any of them are not
complied with the Mortgagee shall be at liberty to effect and
thereafter to maintain all such insurances upon the Vessel as in
its discretion it may think fit;
(2) if the provisions of clause 5.1(C) and 5.1(D) hereof or any of
them are not 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
(3) if the provisions of clause 5.1(E) hereof or any of them are not
complied with the Mortgagee shall be at liberty to pay and
discharge all such debts, damages and liabilities as are therein
mentioned and/or to take any such measures as it deems expedient
or necessary for the purpose of securing the release of the
Vessel,
<PAGE>
and each and every expense or liability so incurred by the Mortgagee
shall be recoverable from the Owner as provided in clause 7.1 hereof
together with interest thereon at the Default Rate.
8. EVENTS OF DEFAULT
(1) Upon the happening of any of the following events the Mortgagee shall
cease to be under any further obligation to make the Loan available and
the Outstanding Indebtedness shall immediately become payable to the
Mortgagee on demand:-
(1) the happening of any of the events of default specified in clause
11.1 of the Loan Agreement; or
(2) anything is done or suffered or omitted to be done by the Owner
which in the reasonable opinion of the Mortgagee has imperilled
or is likely to imperil the security created by the Security
Documents.
9. ENFORCEMENT OF RIGHTS
(1) Upon the Mortgagee's demanding payment of the Outstanding Indebtedness
under clause 8 hereof interest shall accrue thereon at the Default Rate
from the date of demand until the date of payment (as well after as
before judgment) and the security created by this Mortgage shall be
enforceable so that the Mortgagee shall be entitled as and when it may
see fit (subject to the rights of the Prior Mortgagee under the Prior
Mortgage) to put into force and exercise all the powers possessed by it
as mortgagee of the Vessel and in particular:-
(1) to exercise all rights and remedies in foreclosure and otherwise
given to mortgagees by the provisions of Article 1527 of the Code
of Commerce and any other legislation or code affecting the same;
(2) to bring suit at law in equity or in admiralty as it may be
advised to recover judgment for any and all amounts due hereunder
and collect the same out of any and all property of the Owner
whether covered by this Mortgage or otherwise; (1)
<PAGE>
(3) to take and enter into possession of the Vessel wherever the same
may be without legal process and (if it has acted in good faith)
without being responsible for loss or damage and the Owner or
other person in possession forthwith upon demand of the Mortgagee
shall surrender to the Mortgagee possession of the Vessel and the
Mortgagee, without being responsible for loss or damage where it
has acted in good faith may hold lay up lease charter operate or
otherwise use the Vessel for such time and upon such terms as it
may deem to be for its best advantage and for that purpose may
employ such agents managers masters officers crews surveyors and
servants as it shall think fit and may repair and reclass the
Vessel accounting only for the net profits if any arising from
such use and charging upon all receipts from such use or from the
sale of the Vessel by court proceeds or pursuant to sub-clause
(G) below all costs expenses charges damages or losses by reason
of such use and if at any time the Mortgagee shall avail itself
of the right herein given it to take the Vessel and shall take
her the Mortgagee shall have the right to dock the Vessel for a
reasonable time at any place at the cost and expense of the
Owner;
(4) to require that all policies contracts and other records relating
to the Insurances (including details of and correspondence
concerning outstanding claims) be forthwith delivered to such
adjusters and/or brokers and/or other insurers as the Mortgagee
may nominate;
(5) to collect recover compromise and give a good discharge for all
claims then outstanding or thereafter arising under the
Insurances or any of them and to take over or institute (if
necessary using the name of the Owner) all such proceedings in
connection therewith as the Mortgagee in its absolute discretion
thinks fit and to permit any brokers through whom collection or
recovery is effected to charge the usual brokerage therefor;
(6) to discharge compound release or compromise liens and/or claims
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;
<PAGE>
(7) without being responsible for loss or damage (if it has acted in
good faith) sell the Vessel at any place and at such time as the
Mortgagee may specify and in such manner and on such terms and
conditions as the Mortgagee may deem advisable free from any
claim by the Owner in admiralty in equity at law or by statute
except that notice of sale will be given by publication in a
newspaper of general circulation in the city of Panama, Republic
of Panama, not less than twenty (20) calendar days in advance of
the sale to satisfy the requirement of notice of sale to the
Owner and the other registered mortgagees, if any, contained in
Article 1527 of the Panama Code of Commerce. Such notice shall be
necessary only in respect of the initial date of sale and should
an adjournment of the sale be deemed necessary, a new date, time
and place for the sale may be set by the Mortgagee at the time of
the adjournment without need for any further notice. In the event
that the Vessel is sold under any power contained herein the
Owner will if and when required by the Mortgagee execute such
form of conveyance of the Vessel as the Mortgagee may direct or
approve; and
(8) to manage insure maintain and repair the Vessel and to employ
sail or lay up the Vessel in such manner and for such period as
the Mortgagee in its discretion deems expedient and for the
purposes aforesaid the Mortgagee shall be entitled to do all acts
and things incidental or conducive thereto and in particular to
enter into such arrangements respecting the Vessel her insurance
management maintenance repair classification and employment in
all respects as if the Mortgagee were the owner of the Vessel and
without being responsible for any loss thereby incurred in the
absence of gross negligence or wilful default on the part of the
Mortgagee,
PROVIDED ALWAYS that upon any sale of the Vessel or any share therein
by the Mortgagee pursuant to sub-clause (G) above the purchaser shall
not be bound to see or 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 answerable therefor in any way.
<PAGE>
10. APPLICATION OF MONEYS
(1) All moneys received by the Mortgagee in respect of a sale of the Vessel
or any share therein or otherwise pursuant to the provisions of this
Mortgage and all moneys received and retained by the Mortgagee in
respect of the Insurances and Requisition Compensation pursuant to this
Mortgage shall be applied by the Mortgagee in accordance with the
relevant provisions of clause 10 of the Loan Agreement.
11. NO WAIVER
(1) No delay or omission of the Mortgagee to exercise any right or power
vested in it under the Security Documents or any of them shall impair
such right or power or be construed as a waiver of or an acquiescence
in any default by the Owner and no express waiver given by the
Mortgagee in relation to any default by the Owner or breach by the
Owner of any of its obligations under this Mortgage shall prejudice the
right of the Mortgagee under this Mortgage arising from any subsequent
default or breach (whether or not such subsequent default or breach is
of a nature different from the previous default or breach) nor shall
the giving by the Mortgagee of any consent to the doing of any act
which by the terms of this Mortgage requires the consent of the
Mortgagee prejudice the right of the Mortgagee to give or withhold as
it sees fit is consent to the doing of any other similar act.
12. POWER OF DELEGATION
(1) The Mortgagee shall be entitled at any time and as often as may be
expedient to delegate all or any of the powers and discretions vested
in it by the Security Documents or any of them (including the power
vested in it by virtue of clause 13 hereof) in such manner upon such
terms and to such persons as the Mortgagee in its absolute discretion
may think fit.
13. POWER OF ATTORNEY
<PAGE>
(1) Subject to the rights of the Prior Mortgagee under the Prior Mortgage,
the Owner irrevocably appoints the Mortgagee as its attorney for the
duration of the Security Period for the purpose of doing in its name
all acts which the Owner itself could do in relation to the Vessel,
PROVIDED HOWEVER that such power shall not be exercisable by or on
behalf of the Mortgagee unless the security created by this Mortgage
has become enforceable pursuant to clause 9 hereof.
(2) The exercise of such power by or on behalf of the Mortgagee shall not
put any person dealing with the Mortgagee upon any enquiry as to
whether the security created by this Mortgage has become enforceable
pursuant to clause 9 hereof nor shall such person be in any way
affected by notice that the security has not become enforceable and the
exercise by the Mortgagee of such power shall be conclusive evidence of
its right to exercise the same.
14. FURTHER ASSURANCE
(1) The Owner further undertakes at its own expense to execute sign perfect
do and (if required) register every such further assurance document act
or thing as in the opinion of the Mortgagee may be necessary or
desirable for the purpose of more effectually mortgaging and charging
the Vessel or perfecting the security constituted by this Mortgage or
contemplated by the other Security Documents.
15. WAIVER OF RIGHTS AS SURETY
(1) The rights of the Mortgagee under this Mortgage, the security
constituted by this Mortgage and the warranties covenants obligations
and undertakings of the Owner contained in this Mortgage and/or this
Deed shall not in any way be discharged, impaired or otherwise affected
by:-
(1) any forbearance (whether as to payment or otherwise) or any time
or other indulgence granted to any other party to any one or more
of the Security Documents ("Security Party") under or in
connection with any of the Security Documents;
(2) any amendment or variation of any of the Security Documents;
<PAGE>
(3) any failure of any of the Security Documents to be legal valid
binding and enforceable in relation to any Security Party for any
reason whatsoever;
(4) the winding-up or dissolution of any Security Party;
(5) the release (whether in whole or in part) of, or the entering
into of any compromise or composition with, any Security Party;
or
(6) any other act, omission, thing or circumstance which would or
might, but for this provision, operate to discharge, impair or
otherwise affect the same.
(2) Until the Outstanding Indebtedness has been unconditionally and
irrevocably paid and discharged in full, the Owner shall not by virtue
of any payment made hereunder or under this Mortgage on account of the
Outstanding Indebtedness or by virtue of any enforcement by the
Mortgagee of its rights under, or the security constituted by, this
Mortgage or by virtue of any relationship between or transaction
involving, the Owner and any Security Party:-
(1) exercise any rights of subrogation in relation to any rights,
security or moneys held or received or receivable by the
Mortgagee or any other person; or
(2) exercise any right of contribution from any Security Party under
any one or more of the Security Documents; or
(3) exercise any right of set-off or counterclaim against any
Security Party; or
(4) receive, claim or have the benefit of any payment, distribution,
security or indemnity from any Security Party; or
(5) unless so directed by the Mortgagee (when the Owner will prove in
accordance with such directions), claim as a creditor of any
Security Party in competition with the Mortgagee
<PAGE>
and the Owner shall hold in trust for the Mortgagee and forthwith pay
or transfer (as appropriate) to the Mortgagee any such payment
(including an amount equal to any such set-off), distribution or
benefit of such security, indemnity or claim in fact received by it.
16. AMOUNT SECURED BY MORTGAGE
(1) A certificate submitted by the Mortgagee to the Public Registry Office
in Panama or to any court of law or public authority as to the amount
due or to become due from the Owner to the Mortgagee under this
Mortgage shall in the absence of manifest error be conclusive and
binding on the Owner for all purposes.
17. NOTICES
(1) All certificates notices or demands to the Owner hereunder shall be
given in accordance with the provisions of clause 11 of the Guarantee
and all notices to the Mortgagee hereunder shall be given in accordance
with the relevant provisions of clause 18 of the Loan Agreement.
18. GOVERNING LAW, SEVERABILITY, ETC.
(1) This Mortgage shall be construed and enforceable in accordance with the
laws of the Republic of Panama.
(2) The Owner agrees that the Mortgagee shall have liberty but shall not be
obliged to take any proceedings in the courts of any country to protect
or enforce the security hereby constituted or to enforce any provisions
of the Security Documents or to recover payment of the Outstanding
Indebtedness and for the purpose of any proceeding for the enforcement
of the security created by this Mortgage and/or the other Security
Documents the Owner hereby submits to the jurisdiction of the courts of
any country of the choice of the Mortgagee.
<PAGE>
(3) If any provision in this Mortgage or any other of the Security
Documents is or becomes invalid or unenforceable under any applicable
law the provisions thereof shall in all other respects remain in full
force and effect and the provision in question shall be ineffective to
the extent (but only to the extent) of its nonconformity with the
requirement of the applicable law and if it is competent to the parties
to waive any requirements which would otherwise operate as aforesaid
those requirements are hereby waived to the extent permitted by such
law to the end that the Mortgage and the other Security Documents shall
be valid binding and enforceable in accordance with their respective
terms.
(4) Each and every power and remedy herein given to the Mortgagee shall be
cumulative and shall be in addition to every other power and remedy
herein given or now or hereafter existing at law in equity admiralty or
by statute and each and every power and remedy whether herein given or
otherwise existing may be exercised from time to time and as often and
in such order as may be deemed expedient by the Mortgagee and the
exercise or the beginning of the exercise of any power or remedy shall
not be construed to be a waiver of the right to exercise at the same
time or thereafter any other power or remedy.
19. MISCELLANEOUS
(1) 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.
(2) The English text of this Mortgage is the authentic text and in the
event of any differences arising on translation recourse shall be had
to the English text.
20. RECORDING OF THIS MORTGAGE
(1) The parties hereby confer a special power of attorney on the firm of
lawyers named Galindo Arias & Lopez of the City of Panama in the
Republic of Panama empowering such firm of lawyers to take all
necessary steps to record this instrument of mortgage and the
prohibitions contained in clauses 5.1(M) and (N) hereof and a
certificate pursuant to clause 15 hereof in the appropriate registries
in the City of Panama in accordance with the laws of the Republic of
Panama with full power of substitution in respect of the special power
of attorney herein granted.
<PAGE>
IN WITNESS whereof this Mortgage has been executed the day and year first above
written.
SIGNED SEALED and DELIVERED )
as a DEED )
by ALMIRA ENTERPRISES, INC. )
acting by )
Adam Leon Shire ) /s/ Adam Shire
its duly appointed attorney- )
in-fact )
in the presence of:- )
Richard J. Seville
/s/ Richard J. Seville
<PAGE>
ACCEPTANCE OF MORTGAGE
The Undersigned Mortgagee NORDBANKEN AB (PUBL) a corporation organised and
subsisting under the laws of Sweden DOES HEREBY ACCEPT the foregoing Mortgage
executed in its favour by Almira Enterprises, Inc. a corporation incorporated
according to the laws of Panama on the 21st day of June two thousand covering
the Panamanian flag Vessel m.v. "ENCHANTED ISLE" and does hereby accept the said
Mortgage in all respects AND AGREES to all terms and conditions of the said
Mortgage
Dated the 21st day of June two thousand .
SIGNED SEALED and DELIVERED )
as a DEED )
by NORDBANKEN AB (PUBL) )
acting by )
Gavin Le Fleming Sheperd ) /s/ Gavin Le Fleming Shepherd
its duly appointed )
attorney-in-fact )
in the presence of:- )
Richard J. Seville
/s/ Richard J. Seville
