FIRST PREFERRED MORTGAGE

FIRST PREFERRED MORTGAGE S A M P L E FIRST PREFERRED MORTGAGE (DOMINICA) This FIRST PREFERRED MORTGAGE (hereinafter called the "Mortgage") dated as of the ___ day of [ ], [200] is executed by [owner name.], a [type of company and country of incorporation] with its principal place of business at [owner’s address] (the "Owner") in favor of [bank name], a national banking association organized under the laws of the [country], with an office at [address], as Collateral Agent (hereinafter called the "Mortgagee") for the benefit of (i) on a senior basis, the Senior Creditors (as defined below) and (ii) on a basis junior only to the Senior Creditors, the Junior Creditors (as defined below). Capitalized terms which are used herein without definition and which are defined in the Credit Agreement referred to below shall have the same meanings herein as in the Credit Agreement. W H E R E A S WHEREAS, the Owner is the sole owner of the whole of the Dominica flag vessel named [name], Official No. [xxxxx] of gross tons [xxx] and net tons [xxx], (formerly registered and flagged under the laws of the [xxx, Official Number xxx) as further described in the Granting Clause of this Mortgage (the "Vessel"); and WHEREAS, the interest in the Vessel mortgaged pursuant to this Mortgage is the whole of the Vessel; and WHEREAS, [owner name], (the "Borrower"), the lenders from time to time party thereto (the "Lenders"), [bank name], as Administrative Agent, [xxxxx],as Lead Arranger and [xxx]as Syndication Agent, have entered into a Credit Agreement, dated as of [xxxx], a copy of which is attached hereto as Exhibit A (with Schedule I and the form of Notes, Letter of Credit Request and Subsidiary Guaranty attached, but without the other schedules and exhibits) and incorporated by reference herein, with the same force and effect as if fully set forth herein, providing for the making of Loans to, and the issuance of Letters of Credit for the account of, the Borrower as contemplated therein (as amended, modified or supplemented from time to time, the "Credit Agreement") with the maximum amount that may be outstanding (exclusive of interest, expenses and fees) at any one time being the principal sum of [written amount] (US$xxx,xxx,xxx.xx), which the Borrower has agreed to repay pursuant to the terms stated therein (the Lenders, the Administrative Agent, the Syndication Agent, the Lead Arranger, the Issuing Lenders and the Mortgagee are herein called the "Senior Creditors"); and WHEREAS, the Borrower and the Senior Creditors have entered into a Credit Agreement dated as of [xxxxx], a copy of which is attached hereto as Exhibit A-1 and incorporated by reference herein, with the same force and effect as if fully set forth herein; and WHEREAS, the Borrower has entered into an indenture, dated as of [xxxx] (as amended, modified or supplemented from time to time, the "Indenture"), a copy of which is attached hereto as Exhibit B (with the form of Securities, as such term is defined in the Indenture, and the form of 1 S A M P L E Note Subsidiary Guaranty attached, but without the other exhibits) and incorporated by reference herein, with the same force and effect as if fully set forth herein, pursuant to which senior secured second lien notes have been issued with [arranger name] acting as arranger (the "Arranger"), with a maximum amount that may be outstanding (exclusive of interest, expenses and fees) at any one time being the principal sum of [WRITTEN AMOUNT ($USD xxx,xxx.xxx)]which the Borrower has agreed to repay pursuant to the terms stated therein and which may be refinanced with a public or Rule 144A issue of senior secured second lien notes (as amended, modified or supplemented from time to time, the "Senior Secured Second Lien Notes"), the holders of which Senior Secured Second Lien Notes are junior in rights to the Senior Creditors with respect to the Vessel (such holders, the "Junior Creditors", and together with the Senior Creditors, the "Secured Creditors"); and WHEREAS, the maximum aggregate amount that may be outstanding (exclusive of interest, expenses and fees) at any one time under the Loans, the Letters of Credit and the Senior Secured Second Lien Notes shall be the principal sum of [WRITTEN AMOUNT ($USD xxx,xxx.xxx)];and WHEREAS, the reimbursement obligations in respect of the Letters of Credit are evidenced by the Credit Agreement and the Letter of Credit Requests referenced therein, and the Loans under the Credit Agreement are evidenced by the Credit Agreement and may be further evidenced by separate promissory notes of the Borrower in substantially the form attached to the Credit Agreement, and such Loans are due and payable in the amounts and upon the terms and conditions recited in the Credit Agreement and, if applicable, such notes, with interest as set forth in or by reference in the Credit Agreement and, if applicable, such notes; and WHEREAS, the loans and repayment obligations under the Senior Secured Second Lien Notes are evidenced by the Indenture and by separate promissory notes of the Borrower in substantially the form attached as exhibits to the Indenture, due and payable in the amounts and upon the terms and conditions therein recited, to the order of the payee therein named, with interest as set forth in or by reference in said notes; and WHEREAS, pursuant to the Subsidiary Guaranty dated as of the [xxxxx], the form of which is attached as an exhibit to the Credit Agreement, the Owner has guaranteed to the Senior Creditors the payment when due of the Loans and all other Credit Agreement Obligations; and WHEREAS, pursuant to the Note Subsidiary Guaranty dated as of the [xxxxx], the form of which is attached as an exhibit to the Indenture, the Owner has guaranteed to the Junior Creditors the payment when due of the Senior Secured Second Lien Notes and all other Junior Obligations; and WHEREAS, the Owner will obtain benefits from (i) the incurrence of Loans to, and the issuance of Letters of Credit for the account of, the Borrower under the Credit Agreement, and (ii) the issuance of the Senior Secured Second Lien Notes by the Borrower; and 2 S A M P L E WHEREAS, in order to secure the payment of the Obligations, and such additional sums as the Owner, and/or Borrower may be obligated to pay under the covenants, terms and conditions contained in the Credit Agreement, the Senior Secured Second Lien Documents, and the other Secured Debt Agreements, the Owner executed in favor of the Mortgagee a First Preferred Mortgage dated [xxxx] under and pursuant to [Reference] constituting a first priority preferred mortgage (as amended, modified or supplemented from time to time, the [XXX Mortgage] over such Vessel which Mortgage was filed at [xxxxx] PM on [date of previous recordation] at the [previous recordation location] and recorded at Book [xx], Page [xxx]; WHEREAS, pursuant to Section 75 of the Commonwealth of Dominica International Maritime Act, 2000, as amended, including, without limitation, as amended by Act No. 12 of 2000, the Mortgagee has required this Mortgage, which Mortgage is in continuation of the [current Country of] Mortgage, as a condition to giving its consent to the change of the Vessel's registry and flag to the Commonwealth of Dominica; and WHEREAS, in order to secure the payment and performance of the Obligations (as defined below), including the principal thereof and interest thereon, and such additional sums as the Owner may be obligated to pay under the agreements, covenants, terms and conditions contained in this Mortgage, and in order to secure the performance and observance of and compliance with all the agreements, covenants, terms and conditions contained in the Credit Agreement, the Senior Secured Second Lien Documents, this Mortgage and the other Secured Debt Agreements, the Owner has duly authorized the execution and delivery of this Mortgage under the Commonwealth of Dominica International Maritime Act, 2000, as amended, in favor of the Mortgagee; NOW, THEREFORE, in consideration of the premises and of the sums loaned as above recited, and of other good and valuable consideration, the receipt and adequacy whereof is hereby acknowledged, and in order to secure the payment and performance of the Obligations (as defined below), including the principal thereof and interest thereon, and such additional sums as the Owner may be obligated to pay under the agreements, covenants, terms and conditions contained in this Mortgage, and in order to secure the performance and observance of and compliance with all the agreements, covenants, terms and conditions contained in the Credit Agreement, the Senior Secured Second Lien Documents, this Mortgage and the other Secured Debt Agreements, the Owner has granted, conveyed, mortgaged, pledged, assigned, transferred, set over and confirmed and does by these presents grant, convey, mortgage, pledge, assign, transfer, set over and confirm unto the Mortgagee, its successors and assigns, all of the following described property: The whole of the Vessel together with its engines, boilers, machinery, masts, boats, anchors, cables, chains, rigging, tackle, apparel, furniture, equipment, spare parts and gear and all other appurtenances thereunto appertaining or belonging, whether now owned or hereafter acquired, whether on board or not, and any and all additions, improvements and replacements hereafter made in, on or to said vessel, or any part thereof, or in or to the equipment and appurtenances aforesaid, and all personal and fixture property of 3 S A M P L E every kind and nature arising out of, resulting from the operation of, or related to said vessel; provided that the foregoing grant shall not be construed as an assignment of any contract. TO HAVE AND TO HOLD all and singular the above mortgaged and described property unto the Mortgagee, and its successors and assigns to its, and to its successors' and assigns' own use, benefit and behoof, forever; upon the terms herein set forth for the enforcement of the payment of the Obligations in accordance with the terms of the Subsidiary Guaranty, the Credit Agreement, the other Credit Documents, the Note Subsidiary Guaranty and the Senior Secured Second Lien Documents and to secure the performance and observance of, and compliance with, all agreements, covenants, terms and conditions contained in this Mortgage; PROVIDED ONLY, and the condition of these presents is such, that if the Borrower or the Owner, or their respective successors or assigns, shall fully discharge the Obligations, including, without limitation, the irrevocable payment in full in cash of all of the indebtedness evidenced by the Credit Agreement and Senior Secured Second Lien Documents and all interest, expenses and fees thereon, and all other such sums as may hereafter become secured by this Mortgage and shall perform, observe and comply with all agreements, covenants, terms and conditions in this Mortgage, 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 otherwise shall be and remain in full force and effect. IT IS HEREBY COVENANTED, DECLARED AND AGREED that the Vessel is to be held subject to the further covenants, conditions, provisions, terms and uses hereinafter set forth: DEFINITIONS The following terms shall have the meanings herein specified. Such definitions shall be equally applicable to the singular and plural forms of the terms defined. , Arranger shall have the meaning provided in the recitals to this Mortgage. , Bankruptcy Default shall mean an Event of Default pursuant to [Sect. #] of the Credit Agreement. , Borrower shall have the meaning provided in the recitals to this Mortgage. , Class shall mean each class of Secured Creditors, i.e., whether (i) the Senior Creditors as holders of the Credit Agreement Obligations or (ii) the Junior Creditors as holders of the Junior Obligations. , Credit Agreement shall have the meaning provided in the recitals to this Mortgage. 4 S A M P L E , Credit Agreement Obligations shall have the meaning provided in the definition of Obligations in this Mortgage. , Event of Default shall mean any event described in [Sect. #] hereof or any Event of Default under, and as defined in, the Credit Agreement, the Senior Secured Second Lien Documents, or any other Secured Debt Agreement, respectively. , Indemnitee shall have the meaning provided in [Sect. #] of this Mortgage. , Indenture shall have the meaning provided in the recitals to this Mortgage. , Junior Creditors shall have the meaning provided in the recitals to this Mortgage. , Junior Obligations shall have the meaning provided in the definition of Obligations in this Mortgage. , Junior Primary Obligations shall have the meaning provided in [Sect. #] of this Mortgage. , Junior Secondary Obligations shall have the meaning provided in [Sect. #] of this Mortgage. , Lenders shall have the meaning provided in the recitals to this Mortgage. , Mortgage shall mean this Mortgage as the same may be modified, supplemented or amended from time to time in accordance with its terms. , Mortgagee shall have the meaning provided in the first paragraph of this Mortgage. , Note Subsidiary Guarantor shall mean the Subsidiaries of the Borrower party to the Note Subsidiary Guaranty. , Obligations shall mean (i) the full and prompt payment when due (whether at the stated maturity, by acceleration or otherwise) of all obligations and indebtedness (including, without limitation, indemnities, Fees and interest thereon, including interest which arises after the occurrence of a Bankruptcy Default, whether or not an allowed claim) of any of the Borrower and the Subsidiary Guarantors to the Senior Creditors, whether now existing or hereafter incurred under, arising out of, or in connection with the Credit Agreement and the other Credit Documents (including all such obligations and indebtedness of the Owner under the Subsidiary Guaranty), and the due performance and compliance by any of the Borrower and its Subsidiaries with all of the terms, conditions and agreements contained in the Credit Agreement and in such other Credit Documents (all such obligations and liabilities under this clause (i) being herein collectively called the Credit Agreement Obligations); (ii) the full 5 S A M P L E and prompt payment when due (whether at the stated maturity, by acceleration or otherwise) of all obligations and indebtedness (including, without limitation, indemnities, fees and interest thereon, including interest which arises after the occurrence of a Bankruptcy Default, whether or not an allowed claim) of any of the Borrower and the Note Subsidiary Guarantors to the Junior Creditors, whether now existing or hereafter incurred under, arising out of, or in connection with the Senior Secured Second Lien Documents (including, all such obligations and indebtedness of the Owner under the Note Subsidiary Guaranty) and the due performance and compliance by any of the Borrower and its Subsidiaries with all of the terms, conditions and agreements contained in the Senior Secured Second Lien Documents (all such obligations and liabilities under this clause (ii) being herein collectively called the Junior Obligations); (iii) any and all sums advanced by the Mortgagee in order to preserve the Vessel or preserve the lien of this Mortgage on the Vessel; (iv) in the event of any proceeding for the collection or enforcement of any indebtedness, obligations, or liabilities of any of the Borrower and the Subsidiary Guarantors or Note Subsidiary Guarantors, as the case may be, referred to in clauses (i) and (ii) above, after an Event of Default shall have occurred and be continuing, the reasonable expenses of retaking, holding, preparing for sale, charter or lease, selling or otherwise disposing of or realizing on the Vessel, or of any exercise by the Mortgagee of its rights hereunder, together with reasonable attorneys’ fees and court costs; and (v) all amounts paid by any Indemnitee as to which such Indemnitee has the right to reimbursement under [Sect. #]6 of this Mortgage; it being acknowledged and agreed that the Obligations shall include extensions of credit of the types described above, whether outstanding on the date of this Mortgage or extended from time to time after the date of this Mortgage. , Owner shall have the meaning provided in the first paragraph of this Mortgage. , Pro Rata Share shall have the meaning provided in [Sect. #]of this Mortgage. , Secured Creditors shall have the meaning provided in the recitals to this Mortgage. , Secured Debt Agreements shall mean and include this Mortgage, the Credit Agreement, the other Credit Documents and the Senior Secured Second Lien Documents. , Senior Creditors shall have the meaning provided in the recitals to this Mortgage. , Senior Primary Obligations shall have the meaning provided in [Sect. #] of this Mortgage. , Senior Secondary Obligations shall have the meaning provided in [Sect. #] of this Mortgage. , Senior Secured Second Lien Notes shall have the meaning provided in the recitals to this Mortgage. 6 S A M P L E , United States Mortgage shall have the meaning provided in the recitals to this Mortgage. , Vessel shall have the meaning provided in the recitals to this Mortgage. ARTICLE I REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE OWNER The Owner represents to, and covenants and agrees with, the Mortgagee as follows: '1.1. Performance. (a) The Owner hereby acknowledges that the Owner is indebted to the Mortgagee and agrees to observe, perform and comply with all the covenants, terms and conditions herein and in the Subsidiary Guaranty, the Note Subsidiary Guaranty, the other Credit Documents and the other Senior Secured Second Lien Documents expressed or implied, on its part to be observed, performed or complied with and will pay the Obligations including, without limitation, its indebtedness as set forth in the Credit Agreement and the Senior Secured Second Lien Documents and interest thereon in accordance with the terms thereof. (b) The Obligations hereby secured are obligations in United States of America Dollars and the terms "USD" or "US$" or "Dollars" when used shall mean United States of America Dollars. Notwithstanding fluctuations in the value or rate of Dollars in terms of gold or other currency, all payments hereunder or otherwise in respect of the obligations hereby secured shall be made in United States of America Dollars when paid, whether such payment is made before or after the due date thereof. '1.2. Corporate Authorization; Citizenship. The Owner was duly organized and is now validly existing as a limited partnership under the laws of the [xxx] with a principal place of business at [xxx]. The Owner is a duly qualified Foreign Maritime Entity under the laws of the Commonwealth of Dominica. The Owner is duly authorized to mortgage the Vessel; all corporate or partnership action of the Owner necessary for the execution and delivery of this Mortgage, the Subsidiary Guaranty, the Note Subsidiary Guaranty, the Credit Documents and the other Senior Secured Second Lien Documents to which it is a party has been duly and effectively taken; and this Mortgage, the Subsidiary Guaranty, the Note Subsidiary Guaranty, the Credit Documents and the other Senior Secured Second Lien Documents to which the Owner is a party in the hands of the holder thereof are the valid and enforceable obligations of the Owner in accordance with their terms. '1.3. Title. The Owner lawfully owns and is lawfully possessed of the Vessel, free from any lien, encumbrance, security interest or charge of any kind (except the lien of this Mortgage, liens for wages of the crew, including the Master of the Vessel relating to the current voyage, for wages of stevedores when employed directly by the Owner, operator, the Master, ship's husband, or agent of the Vessel or for general average or salvage, liens covered by valid policies of insurance held by the Mortgagee and meeting the requirements of '1.13 hereof, and liens not covered by insurance 7 S A M P L E incurred in the ordinary course of business and in existence for less than thirty days (any such lien, a "Permitted Lien")), and the Owner warrants, and will 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. The Vessel is tight, staunch and strong and well and sufficiently tackled, appareled, furnished and equipped and in all respects seaworthy, except to the extent the Vessel has been laid up in accordance with the provisions of '1.5(b) hereof. '1.4. First Preferred Mortgage. The Owner will, at its expense and at no cost to the Mortgagee, comply with and satisfy all the provisions of the Commonwealth of Dominica International Maritime Act, 2000, as amended, in order to establish, record and maintain this Mortgage as a first preferred mortgage thereunder upon the Vessel, and will do all such other acts and execute all such instruments, deeds, conveyances, mortgages and assurances as the Mortgagee shall reasonably require in order to subject the Vessel to the lien of this Mortgage as aforesaid. '1.5. Operation; Lay-Up of Vessel. (a) The Owner will at all times operate the Vessel in compliance in all respects with all governmental rules, regulations and requirements applicable to the Vessel (including without limitation, all requirements of the Commonwealth of Dominica International Maritime Act, 2000, as amended) and in compliance in all material respects with all rules, regulations and requirements of the applicable classification society, except, only with respect to the requirements of a classification society, to the extent the Vessel has been laid up in accordance with the provisions of '1.5(b) hereof. The Owner will not operate the Vessel if its class has been withdrawn or suspended. The Owner will neither cause nor permit the Vessel to be operated in any manner contrary to the applicable law or to carry any cargo that will expose the Vessel to penalty, forfeiture or capture and will not do or suffer or permit anything to be done which can or might adversely affect the documentation of the Vessel under the laws and regulations of the Commonwealth of Dominica and will at all times keep the Vessel duly documented thereunder, except that the Owner may, with the prior written consent of the Mortgagee, cause the Vessel to be documented under the laws and regulations of another jurisdiction, provided that such change in jurisdiction is permitted by the Credit Agreement, the Indenture and applicable law. (b) The Vessel may be laid up only in the reasonable business judgment of the Owner and so long as (i) the laying up of the Vessel would not have a material adverse effect on the business or assets of the Borrower and its Subsidiaries taken as a whole; (ii) the laying up of the Vessel would not result in a material diminution of the value of the Vessel; (iii) the laid up Vessel is maintained in accordance with ordinary and reasonable commercial standards for laid up vessels; and (iv) the Owner notifies the Mortgagee that the Vessel is being laid up contemporaneously with such lay-up. '1.6. Government Assessments. The Owner will pay and discharge or cause to be paid and discharged, when due and payable from time to time, all taxes, assessments, governmental charges, fines and penalties imposed on the Vessel or any income therefrom and all lawful claims which if unpaid might become a lien or charge upon the Vessel, except that it shall be entitled to contest any such taxes, assessments, governmental charges, fines and penalties in good faith, provided it obtains a bond, or an insurance underwriter's letter of undertaking or sets aside on its books adequate reserves with respect thereto. 8 S A M P L E '1.7. Permitted Liens. Neither the Owner, the Master of the Vessel, any charterer nor any other person has or shall have any right, power or authority to suffer to continue, create, incur or permit to be placed or imposed upon the Vessel any lien, encumbrance, security interest or charge whatsoever other than Permitted Liens. '1.8. Notice of Mortgage. The Owner will carry or cause to be carried a properly certified copy of this Mortgage on board the Vessel with the Vessel's documents and will cause such certified copy and the documents of the Vessel to be exhibited to any and all persons having business with the Vessel which might give rise to a maritime lien thereon or to any sale, conveyance, mortgage or lease thereof, and to any representative of the Mortgagee; and will cause to be placed and kept prominently displayed in the chart room and in the Master's cabin of the Vessel a notice, framed under glass, printed in plain type of such size that the paragraph of reading matter shall cover a space not less than six inches wide and nine inches high, reading as follows: NOTICE OF FIRST PREFERRED MORTGAGE This Vessel is owned by [xxx] and is subject to a First Preferred Mortgage in favor of [bank name], as Collateral Agent, for the benefit of itself and certain other lenders, as mortgagee, under authority of the Commonwealth of Dominica International Maritime Act, 2000, as amended. Under the terms of said Mortgage neither the owner of the Vessel, nor anyone on the owner's behalf, nor, any charterer, the Master, nor any other person has any right, power or authority to create, incur or permit to be placed or imposed upon this Vessel, any lien whatsoever, other than the lien of said Mortgage and liens for wages of crew or the Master of this Vessel arising from the current voyage, for wages of stevedores when employed directly by the Owner, operator, the Master, ship's husband, or agent of the Vessel, or for general average or salvage, including contract salvage. '1.9. Removal of Liens. If a notice of claim of lien be recorded against the Vessel, or a libel be filed against the Vessel and the Vessel is attached, levied upon or taken into custody as a result thereof, or if the Vessel is otherwise attached, levied upon or taken into custody by virtue of any proceedings in any court or tribunal, the Owner will promptly notify the Mortgagee thereof by telecopy or telex, confirmed by letter; and within seven (7) days of such recording, filing, attachment, levy, or taking, will cause a certificate of discharge to be recorded in the case of any such recording of notice of claim or will cause the Vessel to be released in the case of any such attachment, levy or other taking into custody and will cause all liens thereon relating to such recording, libel, attachment, levy or other taking into custody to be discharged and will promptly notify the Mortgagee thereof. '1.10. Maintenance of the Vessel. (a) The Owner will at all times and without cost and expense to the Mortgagee maintain and preserve or cause to be maintained and preserved the Vessel seaworthy and in good running order and repair, and will cause all equipment and parts thereof which become worn out, broken or damaged to be repaired or replaced and will keep the Vessel, or cause it to be kept, in such condition as will entitle the Vessel to the highest class and rating for 9 S A M P L E vessels of the same age and type in the classification society of standing satisfactory to the Mortgagee and which is approved by the Commonwealth of Dominica Registry)(the "Classification Society"), in class without recommendation, except if the Vessel has been laid up in accordance with the provisions of '1.5(b) hereof. The Owner will, not less frequently than annually, furnish to the Mortgagee a certificate or certificates of such society that such classification is maintained. Notwithstanding the preceding sentence, if at any time the Vessel shall fail to meet such standard, the Owner shall not be in breach of this '1.10 provided such failure is cured within the time prescribed by the American Bureau of Shipping or such other classification society for curing such condition. (b) The Owner covenants that the Vessel will at all times comply with all applicable laws, rules and regulations of the Commonwealth of Dominica and of any state or nation or territory having jurisdiction over the Vessel, including but not limited to applicable law comparable to the United States Oil Pollution Act of 1990, the United States Toxic Substances Control Act, the United States Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, and the United States Hazardous Materials Transportation Act and in each case the rules and regulations promulgated and guidance issued pursuant thereto and similar treaties, conventions, and national, state and local statutes, as they may be amended from time to time, and that the Vessel shall at all times comply with all applicable law, treaties and conventions to which the Commonwealth of Dominica is a party and the rules and regulations issued thereunder, and that the Vessel shall have on board, when required by the foregoing laws, valid certificates showing compliance therewith. (c) The Owner will not make, or permit to be made, any change in the registration documentation of the Vessel or substantial change in the structure, type or speed of the Vessel, without first receiving the written approval thereof by the Mortgagee. (d) The Owner will without cost or expense to the Mortgagee irrevocably and unconditionally instruct and authorize the Classification Society of the Vessel as follows: (i) during the continuance of an Event of Default, to send to the Mortgagee, following receipt of a written request from the Mortgagee, certified true copies of all original class records held by the Classification Society relating to the Vessel; (ii) during the continuance of an Event of Default, to allow the Mortgagee (or its agents), at any time and from time to time, to inspect the original class and related records of the Owner and the Vessel at the offices of the Classification Society and to take copies of them; and (iii) following receipt of a written request from the Mortgagee, to advise of any facts or matters which have resulted in a change, suspension, discontinuance, withdrawal or expiry of the Vessel's class under the rules or terms and conditions of the Owner's or the Vessel's membership of the Classification Society. Notwithstanding the above instructions and undertaking given for the benefit of the Mortgagee, the Owner shall continue to be responsible to the Classification Society for the performance and discharge of all its obligations and liabilities relating to or arising out of or in connection with any contract it has with the Classification Society, and nothing herein or therein 10 S A M P L E shall be construed as imposing any obligation or liability of the Mortgagee to the Classification Society or to the Owner or any third parties in respect thereof. '1.11. Access. The Owner will at all reasonable times afford the Mortgagee or its authorized representatives full and complete access to the Vessel where located, including at drydocking or survey, for the purpose of inspecting the same and its cargoes and papers and, at the request of the Mortgagee, will deliver for inspection copies of any and all contracts and documents relating to the Vessel, whether on board or not. '1.12. Sale or Other Disposition of the Vessel. (a) The Owner will not sell, other than sales permitted under the Credit Agreement and the Indenture, mortgage, transfer or demise charter the Vessel without the written consent of the Mortgagee first had and obtained, and any such written consent to any one sale, mortgage, transfer or demise charter shall not be construed to be a waiver of this provision with respect to any subsequent proposed sale, mortgage, transfer or demise charter. (b) The Owner will not charter the Vessel to, or permit the Vessel to serve under any contract of affreightment with, any Person with whom such charter or contract of affreightment would be prohibited under any applicable treaty, convention or law governing the Vessel or the Owner. (c) The Owner shall not enter into (i) any charter with any entity in excess of one year (inclusive of all extension and renewal option periods and other than such charters terminable at will by the parties thereto) or (ii) any demise or bareboat charter with any entity in excess of ninety days, without in each case providing Mortgagee a copy thereof within fifteen (15) business days of agreeing to such charter. The Owner undertakes and covenants that any charter of the Vessel shall contain a provision prohibiting the charterer and any other persons from incurring or acquiring any lien on the Vessel. '1.13. Insurance. At all times while and so long as this Mortgage shall be outstanding: (a) The Owner will, at its own expense insure the Vessel and keep the same insured (in lawful money of the United States) for hull and machinery, employer's liability, pollution liability, war risk, and against protection and indemnity risks, generally insured against by prudent companies engaged in the same or similar business, in such form, and with such financially sound and reputable insurance companies, underwriters, funds, mutual insurance associations or clubs, acceptable to the Mortgagee, as shall be declared from time to time by a firm of independent marine insurance brokers acceptable to the Mortgagee, to be necessary or advisable for the protection of the Mortgagee and in accordance with the provisions of this '1.13; provided, that the Mortgagee in the exercise of its reasonable discretion may from time to time require such other or additional insurance as is then being obtained by prudent shipowners generally. (b) The Owner will furnish to the Mortgagee, concurrently with the execution hereof and thereafter at intervals of not more than twelve (12) calendar months, a detailed report of the 11 S A M P L E terms and conditions of the insurances, including the amount and scope of coverage, deductibles, identity of underwriters and share of placement by each underwriter, signed by a firm of independent marine insurance brokers, appointed by the Owner and acceptable to the Mortgagee, with respect to the insurance carried and maintained on the Vessel together with their opinion that the insurance coverages in place and the amount thereof are prudent and reasonable taking into account existing industry practices, the operating area and operation of the Vessel and the risks associated with such operations, and that such insurance is in compliance with the provisions of this '1.13. The Owner will cause such firm to agree to advise the Mortgagee promptly of any lapse of any such insurance by expiration, failure to renew or otherwise and of any default in payment of any premium, whether for new insurance or for insurance replacing, renewing or extending existing insurance, and of any other act or omission on the part of the Owner of which it has knowledge and which might, in its opinion, invalidate or render unenforceable, or cause the lapse of or prevent the renewal or extension of, in whole or in part, any insurance on the Vessel. The Owner will furnish or cause to be furnished to the Mortgagee, from time to time, upon request, detailed information with respect to any insurance carried or maintained on the Vessel or required or approved by the Mortgagee to be carried or maintained thereon. The Owner will also cause such firm to agree to mark its records and to use its best efforts to advise the Mortgagee, at least ten (10) business days prior to the expiration date of any insurance carried pursuant to this Mortgage, that such insurance has been renewed or replaced with new insurance which complies with the provisions of this '1.13 and such advice shall be in the same detail in respect to such renewed or replacement insurance as is required in respect of insurance described in the aforesaid reports. (c) Until otherwise required by the Mortgagee, the protection and indemnity, hull and machinery and mortgagee's interest insurance required by this '1.13 may be on the American Institute or London Institute forms current at the time such insurance takes effect with deductibles or franchises no higher than the amounts set forth on Schedule 1 attached hereto and incorporated by reference herein with the same force and effect as if fully set forth herein. Protection and indemnity insurance in respect to the Vessel shall be by entry per club rules in a British or Scandinavian mutual insurance association or placed with underwriters acceptable to the Mortgagee and shall include pollution liabilities (including coverage for third party claims, statutory and governmental cleanup liabilities, penalties and fines in the minimum amount for any one occurrence of US$500,000,000) with deductibles or franchises no higher than the respective amounts set forth on Schedule 1 hereto. For the purposes of insurance against total loss, the Vessel shall be insured for and valued at an amount at least equal to the greater of (i) the fair market value of the Vessel, or (ii) the amount set forth opposite the Vessel's name on Schedule 1 hereto. For purposes of the broker's reports and opinions referred to above, the broker giving the same may rely on a statement as to the fair market value of the Vessel and the gross tonnage of the Vessel as furnished annually by the Owner to such broker and the Mortgagee at the time insurance is negotiated with underwriters. (d) All insurance shall be taken out in the names of the Owner and the Mortgagee as their respective interests may appear; the policies or certificates shall provide that there shall be no recourse against the Mortgagee for payment of premiums; all insurance shall provide for at least thirty (30) days' prior notice to be given to the Mortgagee by the underwriters in event of cancellation or any material change in coverage, except for P&I insurance, which shall provide for 12 S A M P L E at least fourteen (14) days prior notice to be given to the Mortgagee, and except for war risk coverage, which shall provide for at least seven (7) days prior notice to the Mortgagee; and the interests of the Mortgagee, the Lenders and the holders of the Senior Secured Second Lien Notes shall be continued regardless of any breach of or violation by the Owner or any other insured of any warranties, declarations or conditions contained in such insurances. (e) All hull and machinery insurance policies or certificates shall provide that losses thereunder shall be payable to the Mortgagee, and all insurance moneys received by the Mortgagee shall be distributed as provided below in this '1.13. However, the policies or certificates may provide that unless the underwriters shall have been otherwise instructed by notice in writing from the Mortgagee: (i) any loss under any insurance on the Vessel with respect to protection and indemnity or collision liability risks may be paid directly to the person to whom any liability covered by such insurance has been incurred, or to the Owner to reimburse it for any loss, damage or expense incurred by it and covered by such insurance, provided that in the latter event the underwriter shall have first received evidence that the liability insured against has been discharged; and (ii) in the case of any loss (other than a loss covered by subparagraph (i) above in this paragraph (e) or by paragraph (f) of this '1.13) under any insurance with respect to the Vessel involving any damage to the Vessel or liability of the Vessel, the underwriters may pay directly for the repair, salvage, liability or other charges involved, or, if the Owner shall have first fully repaired the damage and paid the cost thereof or discharged the liability or paid other charges and the underwriters shall have first received evidence thereof, may pay the Owner as reimbursement therefoer; provided, however, that (a) if such damage involves a loss in excess of Two Hundred and Fifty Thousand United States Dollars (US$250,000), the underwriters shall not make such payment without first obtaining the written consent of the Mortgagee, and (b) no payment shall be made to the Owner if there shall have occurred an Event of Default or an event that, with the giving of notice or the lapse of time, or both, would constitute an Event of Default. Any loss which is paid to the Mortgagee but which should have been paid, in accordance with the provisions of this paragraph, directly to the Owner, shall be paid by the Mortgagee to or as directed by the Owner, but only if there shall not have occurred any Event of Default or any event that, with the giving of notice or lapse of time, or both, would constitute an Event of Default. (f) In the event of an actual or constructive total loss or an agreed or a compromised constructive total loss of or requisition of title to or seizure, confiscation or forfeiture of the Vessel, all amounts payable therefore shall, except as otherwise provided in Section 4.02(A)(j) of the Credit Agreement, be paid to the Mortgagee and shall be applied in accordance with '2.8 of this Mortgage. (g) The Owner shall deliver to the Mortgagee the originals or certified copies of all cover notes, binders and certificates of entry in protection and indemnity associations, and all 13 S A M P L E endorsements and riders amendatory thereof in respect of insurance maintained under this Mortgage. (h) The Owner agrees that it will not do any act, or voluntarily suffer or permit any act to be done, whereby any insurance required hereunder shall or may be suspended, impaired or defeated and will not suffer or permit the Vessel to engage in any voyage or to carry any cargo not permitted under the policies of insurance in effect, without first covering the Vessel with the usual and customary insurance for such voyage or the carriage of such cargo, satisfactory in all respects, including the amount thereof, to the Mortgagee in the exercise of its reasonable discretion. (i) In the event that any claim or lien is asserted against the Vessel for loss, damage or expense which is covered by insurance hereunder, and it is necessary for the Owner to obtain a bond or supply other security to prevent the arrest of the Vessel or to release the Vessel from arrest on account of such claim or lien, the Mortgagee may, in its sole discretion, and upon notice to the Owner, assign to any person, firm or corporation executing a surety or guarantee bond or other agreement to save or release the Vessel from such arrest, all right, title and interest of the Mortgagee in and to said insurance covering said loss, damage or expense, as collateral security to indemnify such person, firm or corporation against liability under said bond or other agreement. '1.14. Reimbursement. The Owner will, upon demand therefore, pay or reimburse the Mortgagee, with interest at the rate for overdue amounts set forth in Section 1.08 of the Credit Agreement, for: (i) any and all expenses or expenditures which the Mortgagee may from time to time incur or make in connection with insurance premiums, discharge or purchase of any lien, payment of any claim in respect of the Vessel or the operation or maintenance thereof (including, without limitation any claim for services rendered or supplies furnished), libel or seizure of the Vessel, taxes, dues, assessments, governmental charges, fines and penalties, repairs, reasonable attorneys' fees and any other expenses or expenditures which the Owner is obligated herein to incur or make, but fails to incur or make; and (ii) all costs, fees and expenses suffered, incurred or made by the Mortgagee in exercising, protecting or pursuing its rights or remedies under this Mortgage (including, but not limited to, expenses of any sale or taking of the Vessel, reasonable attorneys' fees and court costs). Such obligation of the Owner to reimburse the Mortgagee shall be an additional indebtedness due from the Owner, secured by this Mortgage, and shall be payable by the Owner on demand. The Mortgagee, though privileged so to do, shall be under no obligation to the Owner or to any other person to incur or make any such expenses or expenditures, nor shall the incurring or making thereof relieve the Owner of any default in that respect. 14 S A M P L E ARTICLE II EVENTS OF DEFAULT AND REMEDIES '2.1. Events of Default. The Owner shall be in default hereunder upon the happening of any one or all of the following events or conditions: (a) any Event of Default under, and as defined in, the Credit Agreement or the Senior Secured Second Lien Documents or the other Secured Debt Agreements, respectively, shall have occurred and be continuing; or (b) default shall be made in the due and punctual observance or performance of any of the provisions of this Mortgage; or (c) any notice shall have been issued on behalf of the Commonwealth of Dominica of the seizure of the Vessel or to the effect that the Provisional or Permanent Certificate of Registry of the Vessel is subject to revocation or cancellation, for any reason whatsoever; or (d) the Owner or any charterer of the Vessel shall abandon the Vessel. If any Event of Default shall have occurred and be continuing, then and in each and every such case the Mortgagee shall have the right to: (1) Exercise all of the rights and remedies in foreclosure and otherwise given to mortgagees by the provisions of the Commonwealth of Dominica International Maritime Act, 2000, as amended, or the law of any other jurisdiction where the Vessel may be found; (2) Bring suit at law, in equity or in admiralty to recover judgment for any and all outstanding Obligations or any sum secured by this Mortgage, or otherwise, and collect the same out of any and all property of the Owner whether covered by this Mortgage or otherwise; (3) Take and enter into possession of the Vessel, at any time, wherever the same may be, without legal process and 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 may, without being responsible for loss or damage, 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 demand, collect and retain, compromise and sue for all hire, freights, earnings, issues, revenues, income, profits, return premiums, salvage awards or recoveries, recoveries in general average, and all other sums due or to become due in respect of the Vessel, including any amounts payable in respect of any insurance in connection with the Vessel, from any person whomsoever, accounting only for the net profits, if any, arising from such use of the Vessel and charging upon all receipts from the use of the Vessel or from the sale thereof by 15 S A M P L E court proceedings or pursuant to subparagraph (4) next following, 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 to take the Vessel, the Mortgagee shall have the right to dock the Vessel for a reasonable time at any dock, pier or other premises of the Owner without charge, or to dock it at any other place at the cost and expense of the Owner; (4) Take and enter into possession of the Vessel, at any time, wherever the same may be, without legal process, and if it seems desirable to the Mortgagee and without being responsible for loss or damage, sell the Vessel at public or private sale, at any place and at such time as the Mortgagee may deem advisable, free from any claim by the Owner in admiralty, in equity, at law or by statute. In the case of a public sale, the Mortgagee shall give notice of the time and place of the sale with a general description of the property in the following manner: (i) by publishing such notice for ten (10) consecutive days in a daily newspaper of general circulation published in the port of documentation and the places of sale of the Vessel; and (ii) by mailing a similar notice to the Owner at least fourteen (14) days prior to the date fixed for such sale. In the event that the Vessel shall be offered for sale by a private sale, no newspaper publication of notice shall be required, but the Mortgagee shall mail written notice of sale to the Owner at least fourteen (14) days prior to the date fixed for entering into the contract of sale. The Mortgagee may, without notice or publication, adjourn any public or private sale or cause such sale to be adjourned from time to time by announcement at the time and place fixed for sale or for entering into a contract of sale, and such sale or contract of sale may, without further notice, be made at the time and place to which the sale or contract of sale was so adjourned. The Mortgagee shall not be obligated to make any sale of the Vessel if it shall determine not to do so, regardless of the fact that notice of sale may have been given. Any sale may be conducted without bringing the Vessel to the place designated for such sale and in such manner as the Mortgagee may deem to be for the best advantage of the Mortgagee; (5) Instruct the Owner to terminate any existing management agreements affecting the Vessel, and the Owner shall, upon the giving of such instructions by the Mortgagee, immediately terminate any such management agreements and shall appoint other managers satisfactory to the Mortgagee and upon terms and conditions satisfactory to the Mortgagee; (6) Instruct the Owner to make application, if relevant, to any responsible authority for permission to sell the Vessel for purposes of foreign scrapping of the Vessel or other purposes requiring such permission, and the Owner shall, upon the giving of such instructions by the Mortgagee, immediately apply for such permission; and 16 S A M P L E (7) In addition to the rights and remedies hereunder, the Mortgagee shall have (i) the rights and remedies set forth in Section 9 of the Credit Agreement and (ii) the rights and remedies set forth in Article VI of the Indenture. '2.2. Finality of Sale. Any sale of the Vessel made in pursuance of this Mortgage, whether by exercise of the power of sale granted herein or by virtue of any judicial proceedings, shall operate to divest all right, title and interest of any nature whatsoever of the Owner therein and thereto, and shall bar the Owner, its successors and assigns, and all persons claiming by, through or under them from asserting or claiming any interest in, or title to, the Vessel. No purchaser shall be bound to inquire whether notice has been given, or whether any default has occurred, or as to the propriety of the sale, or as to the application of the proceeds thereof. In the case of any such sale, any purchaser who is the holder of any of the Obligations shall be entitled, for the purpose of making settlement or payment for the property purchased and subject to the sharing provisions set forth in '2.8 hereof, to apply the balance due under such Obligations or a part thereof as part or all of the purchase price to the extent of the amount remaining due and unpaid thereon. At any such sale, the holder of any of the Obligations may bid for and purchase such property and upon compliance with the terms of sale may hold, retain and dispose of such property without further accountability therefore. '2.3. Appointment of Attorney. (a) The Mortgagee is hereby irrevocably appointed attorney-in-fact of the Owner, with full power of substitution, upon the occurrence of any Event of Default, to make application, if relevant, to any responsible authority for permission to sell the Vessel. (b) The Mortgagee is hereby irrevocably appointed attorney-in-fact of the Owner, with full power of substitution, upon the occurrence of any Event of Default, to execute and deliver to any purchaser upon any sale of the Vessel made in pursuance of this Mortgage, whether by exercise of the power of sale granted herein or by virtue of any judicial proceedings, and is hereby vested with full power and authority to make, in the name and in behalf of the Owner, a good conveyance of the title to the Vessel when so sold. In the event of any sale of the Vessel by exercise of any power herein contained, 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. (c) The Mortgagee is hereby irrevocably appointed attorney-in-fact of the Owner, with full power of substitution, upon the occurrence of any Event of Default, in the name of the Owner to demand, collect, receive, compromise and sue for, so far as may be permitted by law, all freights, hire, earnings, issues, revenues, income and profits of the Vessel, including all amounts due from underwriters under any insurance thereon as payment of losses or as return premiums or otherwise, salvage awards and recoveries, recoveries in general average or otherwise, and all other sums due or to become due at the time of the occurrence of any Event of Default in respect of the Vessel, or in respect of any insurance thereon, from any person whomsoever, and to make, give and execute in the name of the Owner acquittance, receipts, releases or other discharges for the same, whether under seal or otherwise, to take possession of, sell or otherwise dispose of or manage or employ the 17 S A M P L E Vessel, to execute and deliver charters and a bill of sale with respect to the Vessel and to endorse and accept in the name of the Owner all checks, notes, drafts, warrants, agreements and other instruments in writing with respect to the foregoing. '2.4. Additional Rights. Whenever any right to enter and take possession of the Vessel accrues to the Mortgagee, it may require the Owner to deliver and the Owner shall on demand, at its own cost and expense, deliver the Vessel to the Mortgagee. If any legal proceedings shall be taken to enforce any right under this Mortgage, the Mortgagee shall be entitled as a matter of right to the appointment of a receiver of the Vessel and the freights, hire, earnings, issues, revenues and profits due or to become due and arising from the operation thereof. '2.5. Release of Liens. The Owner authorizes and empowers the Mortgagee or its appointees or any of them to appear in the name of the Owner, its successors and assigns, in any court of any country or nation of the world where a suit is pending against the Vessel because of or on account of any alleged lien against the Vessel from which the Vessel has not been released and to take such proceedings as to them may seem proper toward the defense of such suit, and the purchase or discharge of such lien, and all expenditures made or incurred by them for the purpose of such defense or purchase or discharge shall be a debt due from the Owner, its successors and assigns, to the Mortgagee and shall be secured by the lien of this Mortgage. '2.6. Cumulative Remedies; No Waiver. 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, in admiralty or by statute, and each and every power and remedy, whether herein given or otherwise existing, may be exercised from time to time and as often and in such order as may be deemed expedient by 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 consistent or inconsistent power or remedy. No delay or omission by the Mortgagee in the exercise of any right or power or in the prosecution of any remedy accruing upon any Event of Default shall impair any such right, power or remedy or be construed to be a waiver of any such Event of Default or to be an acquiescence therein; nor shall the acceptance by the Mortgagee of any security or of any payment maturing after any Event of Default or of any payment on account of any past default be construed to be a waiver of any right arising out of any future Event of Default or of any past Event of Default not completely cured thereby. In case the Mortgagee shall have proceeded to enforce any right, power or remedy under this Mortgage by foreclosure, entry or otherwise, and such proceedings shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Mortgagee, then, and in every such case, the Owner and the Mortgagee shall be restored to their former positions and rights hereunder with respect to the property subject or intended to be subject to this Mortgage, and all rights, remedies and powers of the Mortgagee shall continue as if no such proceedings had been taken. '2.7. Offers to Cure. If at any time after the occurrence of an Event of Default and prior to the actual sale of the Vessel by the Mortgagee or prior to commencement of any foreclosure proceedings, the Owner offers to cure completely all Events of Default and to pay all expenses and 18 S A M P L E advances to the Mortgagee consequent on such Event of Default, with interest at the rate of interest for overdue amounts set forth in Section 1.08 of the Credit Agreement, then the Mortgagee may, if it in its sole discretion so elects, accept such offer and payment and restore the Owner to its former position, but such action shall not affect any subsequent Event of Default or impair any rights consequent thereon. '2.8. Application of Proceeds. (a) In the event of any taking of the Vessel by the Mortgagee or any sale of the Vessel under any of the powers herein specified, the proceeds of any such sale and the net earnings of any charter operation or other use of the Vessel by the Mortgagee under any such power, together with any and all moneys received by the Mortgagee pursuant to or under the terms of this Mortgage or in any proceedings hereunder or with respect hereto, the application of which has not elsewhere herein been specifically provided for, shall be applied as follows: (i) first, to the payment of all amounts owing to the Mortgagee of the type described in clauses (iii) and (iv) of the definition of "Obligations" in this Mortgage; (ii) second, to the extent moneys or other proceeds remain after the application pursuant to the preceding clause (i), an amount equal to the outstanding Senior Primary Obligations shall be paid to the Senior Creditors as provided in '2.8(e) hereof, with each Senior Creditor receiving an amount equal to its outstanding Senior Primary Obligations or, if the moneys or other proceeds are insufficient to pay in full all such Senior Primary Obligations, its Pro Rata Share of the amount remaining to be distributed; (iii) third, to the extent moneys or other proceeds remain after the application pursuant to the preceding clauses (i) and (ii), an amount equal to the outstanding Junior Primary Obligations shall be paid to the Junior Creditors as provided in '2.8(e) hereof, with each Junior Creditor receiving an amount equal to its outstanding Junior Primary Obligations or, if the moneys or proceeds are insufficient to pay in full all such Junior Primary Obligations, its Pro Rata Share of the amount remaining to be distributed; (iv) fourth, to the extent moneys or other proceeds remain after the application pursuant to the preceding clauses (i) through (iii), an amount equal to the outstanding Senior Secondary Obligations shall be paid to the Senior Creditors as provided in '2.8(e) hereof, with each Senior Creditor receiving an amount equal to its outstanding Senior Secondary Obligations or, if the moneys or proceeds are insufficient to pay in full all such Senior Secondary Obligations, its Pro Rata Share of the amount remaining to be distributed; and (v) fifth, to the extent moneys or other proceeds remain after the application pursuant to the preceding clauses (i) through (iv), an amount equal to the outstanding Junior Secondary Obligations shall be paid to the Junior Creditors as provided in '2.8(e) hereof, with each Junior Creditor receiving an amount equal to its outstanding Junior Secondary Obligations or, if the moneys or proceeds are insufficient to pay in full all such Junior Secondary Obligations, its Pro Rata Share of the amount remaining to be distributed; and 19 S A M P L E (vi) sixth, to the extent moneys or other proceeds remain after the applications pursuant to preceding clauses (i) through (v), inclusive, and following the termination of this Mortgage pursuant to '3.1 hereof, to the Owner or to whomever may be lawfully entitled to receive such surplus. (b) For purposes of this Mortgage (A) "Pro Rata Share" shall mean, (i) when calculating a Senior Creditor’s portion of any distribution or amount, that amount (expressed as a percentage) equal to a fraction the numerator of which is the then unpaid amount of such Senior Creditor’s Senior Primary Obligations or Senior Secondary Obligations, as the case may be, and the denominator of which is the then outstanding amount of all Senior Primary Obligations or Senior Secondary Obligations, as the case may be; and (ii) when calculating a Junior Creditor’s portion of any distribution or amount, that amount (expressed as a percentage) equal to a fraction the numerator of which is the then unpaid amount of such Junior Creditor’s Junior Primary Obligations or Junior Secondary Obligations, as the case may be, and the denominator of which is the then outstanding amount of all Junior Primary Obligations or Junior Secondary Obligations, as the case may be, (B) ‘Senior Primary Obligations’ shall mean with respect to the Credit Agreement Obligations (i) all principal of, and interest on, all Loans and all Unpaid Drawings and (ii) all Fees, (C) ‘Junior Primary Obligations’ shall mean all amounts due under the Senior Secured Second Lien Documents (other than indemnities, fees (including, without limitation, attorneys fees) and similar obligations and liabilities), (D) ‘Senior Secondary Obligations’ shall mean all Credit Agreement Obligations other than Senior Primary Obligations and (E) ‘Junior Secondary Obligations’ shall mean all Junior Obligations other than Junior Primary Obligations. (c) When payments to Secured Creditors are based upon their respective Pro Rata Shares, the amounts received by such Secured Creditors hereunder shall be applied (for purposes of making determinations under this '2.8 only) (i) first, to their Senior Primary Obligations or Junior Primary Obligations, as the case may be, and (ii) second, to their Senior Secondary Obligations or Junior Secondary Obligations, as the case may be. If any payment to any Secured Creditor of its Pro Rata Share of any distribution would result in overpayment to such Secured Creditor, such excess amount shall instead be distributed in respect of the unpaid Senior Primary Obligations or Junior Primary Obligations, as the case may be, or Senior Secondary Obligations or Junior Secondary Obligations, as the case may be, of the other Secured Creditors of such Class, with each such Secured Creditor whose Senior Primary Obligations or Junior Primary Obligations, as the case may be, or Senior Secondary Obligations or Junior Secondary Obligations, as the case may be, have not been paid in full to receive an amount equal to such excess amount multiplied by a fraction the numerator of which is the unpaid Senior Primary Obligations or Junior Primary Obligations, as the case may be, or Senior Secondary Obligations or Junior Secondary Obligations, as the case may be, of such Secured Creditor and the denominator of which is the unpaid Senior Primary Obligations or Junior Primary Obligations, as the case may be, or Senior Secondary Obligations or Junior Secondary Obligations, as the case may be, of all Secured Creditors of such Class entitled to such distribution. (d) Each of the Secured Creditors, by their acceptance of the benefits hereof, agrees and acknowledges that if the Senior Creditors are to receive a distribution on account of undrawn 20 S A M P L E amounts with respect to Letters of Credit issued under the Credit Agreement (which shall only occur after all outstanding Loans and Unpaid Drawings with respect to such Letters of Credit have been paid in full), such amounts shall be paid to the Administrative Agent under the Credit Agreement and held by it, for the equal and ratable benefit of the Senior Creditors, as cash security for the repayment of Obligations owing to the Senior Creditors as such. If any amounts are held as cash security pursuant to the immediately preceding sentence, then upon the termination of all outstanding Letters of Credit, and after the application of all such cash security to the repayment of all Obligations owing to the Senior Creditors after giving effect to the termination of all such Letters of Credit, if there remains any excess cash, such excess cash shall be distributed by the Administrative Agent in accordance with '2.8(a) hereof. (e) All payments required to be made hereunder to (i) the Senior Creditors shall be made to the Administrative Agent under the Credit Agreement for the account of the Senior Creditors and (ii) the Junior Creditors shall be made to the Arranger under the Senior Secured Second Lien Documents for the account of the Junior Creditors, or to any other representative duly appointed by them. (f) For purposes of applying payments received in accordance with this '2.8, the Mortgagee shall be entitled to rely upon (i) the Administrative Agent under the Credit Agreement and (ii) the Arranger under the Senior Secured Second Lien Documents for a determination (which the Administrative Agent and the Arranger agree (or shall agree) to provide upon request of the Mortgagee), of the outstanding Obligations owed to the Senior Creditors or the Junior Creditors, as the case may be. Unless it has actual knowledge (including by way of written notice from a Senior Creditor or a Junior Creditor) to the contrary, the Administrative Agent or the Arranger, in furnishing information pursuant to the preceding sentence, and the Mortgagee, in acting hereunder, shall be entitled to assume that (i) no Senior Secondary Obligations and (ii) no Junior Secondary Obligations, are outstanding. (g) It is understood and agreed that the Owner shall remain liable to the extent of any deficiency between the amount of the proceeds of the Vessel or other amounts received hereunder and the aggregate amount of the Obligations. '2.9. Further Assurances. In the event that this Mortgage or any other Secured Debt Agreement, or any provision hereof or thereof, shall be deemed invalid in whole or in part by reason of any present or future law or any decision of any court having jurisdiction, or if the documents at any time held by the Mortgagee be deemed by the Mortgagee for any reason insufficient to carry out the provisions, true intent or spirit of this Mortgage and the other Secured Debt Agreements, then, from time to time, the Owner will execute, on its own behalf, such other and further assurances and documents as in the opinion of the Mortgagee may be required more effectually to subject the Vessel to the payment of the principal sum of the Obligations, as in the Secured Debt Agreements and as herein provided, and to the performance of the terms and provisions of the Subsidiary Guaranty, the Note Subsidiary Guaranty, the Credit Agreement, the Senior Secured Second Lien Documents and this Mortgage. 21 S A M P L E '2.10. Severability. Any provision of this Mortgage which is prohibited, unenforceable or not authorized in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition, unenforceability or non-authorization without invalidating the remaining provisions hereof or affecting the validity, enforceability or legality of such provision in any other jurisdiction. '2.11. Requisition of Title, Use. (a) In the event that the title or ownership of the Vessel shall be requisitioned, purchased or taken by any government of any country or any department, agency or representative thereof, pursuant to any present or future law, proclamation, decree, order or otherwise, the lien of this Mortgage shall be deemed to attach to the claim for compensation therefore, and the compensation, purchase price, reimbursement or award for such requisition, purchase or other taking of such title or ownership is hereby agreed to be payable to the Mortgagee, who shall be entitled to receive the same and shall, except as otherwise provided in Section 4.02(A)(j) of the Credit Agreement, apply it as provided in '2.8 of this Mortgage. In the event of any such requisition, purchase or taking, and the failure of the Mortgagee to receive proceeds as herein provided, the Owner shall promptly execute and deliver to the Mortgagee such documents, if any, and shall promptly do and perform such acts, if any, as in the opinion of the Mortgagee may be necessary or useful to facilitate or expedite the collection by the Mortgagee of such part of the compensation, purchase price, reimbursement or award as is payable to it hereunder. (b) In the event that any government of any country or any department, agency or representative thereof shall not take over the title or ownership of the Vessel but shall requisition, charter or in any manner take over the use of the Vessel pursuant to any present or future law, proclamation, decree, order or otherwise and shall, as a result of such requisitioning, chartering or taking of the use of the Vessel pay or become liable to pay sums by reason of the loss of or injury to or depreciation of the Vessel, any such sum is hereby made payable to the Mortgagee, who shall, except as otherwise provided in Section 4.02(A)(j) of the Credit Agreement, apply it as provided in '2.8 of this Mortgage. In the event of any such requisitioning, chartering or taking of the use of the Vessel, the Owner shall promptly execute and deliver to the Mortgagee such documents, if any, and shall promptly do and perform such acts, if any, as in the reasonable opinion of the Mortgagee may be necessary or useful to facilitate or expedite the collection by the Mortgagee of such claims arising out of the requisitioning, chartering or taking of the use of the Vessel. ARTICLE III DEFEASANCE '3.1. Defeasance. If (i) the Owner shall indefeasibly pay and discharge the entire indebtedness secured hereby by well and truly paying or causing to be paid the principal of and interest due under the Obligations as and when the same becomes due and payable, (ii) the Total Commitment has been terminated, no Note is outstanding (and all Loans have been repaid in full), all Letters of Credit have been terminated, all Senior Secured Second Lien Notes have been repaid in full and all other obligations due pursuant to the Credit Documents and the Senior Secured Second Lien Documents then due and payable have been paid in full, and (iii) the Owner shall also 22 S A M P L E indefeasibly pay or cause to be paid all other sums payable hereunder by the Owner, then this Mortgage and the lien, rights and interest hereby granted shall cease, determine and become null and void, and the Mortgagee shall, at the request of the Owner, execute and deliver such instrument or instruments of satisfaction as may be necessary to satisfy and discharge the lien hereof, and forthwith the estate, right, title and interest of the Mortgagee in and to all property subject to this Mortgage shall thereupon cease, determine and become null and void. ARTICLE IV SUNDRY PROVISIONS '4.1. Recording. The maximum principal amount (including the Owner's guaranty of the Obligations) that may be outstanding under this Mortgage at any one time is [WRITTEN AMOUNT ($USDXXXXXX)]. For the purposes of recording this First Preferred Mortgage, as required by the Commonwealth of Dominica International Maritime Act, 2000, as amended, the total principal amount of the direct or contingent obligations that are or may be secured by the Mortgage is [WRITTEN AMOUNT ($USDXXXXXX)], plus interest, expenses, fees and any additional amounts for which the Owner may become liable in connection with the performance of the covenants of this Mortgage, the Credit Agreement, the other Credit Documents and the Senior Secured Second Lien Documents. There is no separate discharge amount for the Vessel, and the total discharge amount is the same as the total amount. The maturity date of the Obligations is [XXXXX]. '4.2. Successors and Assigns. All of the covenants, promises, stipulations and agreements of the Owner in this Mortgage contained shall bind the Owner and its successors and assigns and shall inure to the benefit of the Mortgagee and its successors and assigns provided, that the Owner shall not assign or transfer any of its rights or obligations hereunder. '4.3. Agents. Wherever and whenever herein any right, power or authority is granted or given to the Mortgagee, such right, power or authority may be exercised in all cases by the Mortgagee or such agent or agents as it may appoint, and the act or acts of such agent or agents when taken shall constitute the act or acts of the Mortgagee hereunder. '4.4. Notices. Except as otherwise expressly provided in this Mortgage, all notices and other communications made or required to be given pursuant to this Mortgage shall be in writing and shall be delivered in hand, mailed by United States registered or certified first class mail, postage prepaid, sent by overnight courier, or sent by facsimile and confirmed by delivery via courier or postal service, addressed as follows: (a) if to the Owner, at [NAME & ADDRESS], with a copy to[NAME & ADDRESS], or at such other address for notice as the Owner shall last have furnished in writing to the Person giving the notice; 23 S A M P L E (b) if to the Mortgagee, at [BANK NAME AND ADDRESS] or such other address for notice as the Mortgagee shall last have furnished in writing to the Person giving the notice; and Any such notice or demand shall be deemed to have been duly given or made and to have become effective (i) if delivered by hand, overnight courier or facsimile to a responsible officer of the party to which it is directed, at the time of the receipt thereof by such officer or the sending of such facsimile and (ii) if sent by registered or certified first-class mail, postage prepaid, on the third Business Day following the mailing thereof. '4.5. No Waiver of Preferred Status. Notwithstanding anything contained in this Mortgage to the contrary, nothing herein shall waive the preferred status of this Mortgage and if any provision herein shall be construed to waive such status, then such provision shall to the extent so construed be void and of no effect. '4.6. Indemnity. (a) The Owner assumes liability for, and agrees to indemnify and hold the Mortgagee, each other Secured Creditor and their respective successors, permitted assigns, employees, agents and servants (hereinafter in this '4.6 referred to individually as ‘Indemnitee’, and collectively as ‘Indemnitees’) harmless from, any and all liabilities, obligations, damages, injuries, penalties, claims, demands, actions, suits, judgments and any and all costs, expenses or disbursements (including reasonable attorneys’ fees and expenses) (for the purposes of this '4.6 the foregoing are collectively called ‘expenses’) of whatsoever kind and nature imposed on, asserted against or incurred by any of the Indemnitees in any way relating to or arising out of this Mortgage, any other Secured Debt Agreement or any other document executed in connection herewith or therewith or in any other way connected with the administration of the transactions contemplated hereby or thereby or the enforcement of any of the terms thereof, or the preservation of any rights under any thereof, or in any way relating to or arising out of the construction, ownership, contracting, purchase, delivery, control, acceptance, lease, charter, financing, possession, operation, condition, sale, or other disposition, or use of the Vessel (including, without limitation, latent or other defects, whether or not discoverable), the violation of the laws of any country, state or other governmental body or unit, any tort (including, without limitation, claims arising or imposed under the doctrine of strict liability, unseaworthiness of the Vessel or the negligence of any Person (including any Indemnitee), or for or on account of injury to or the death of any Person (including any Indemnitee), or property damage), or contract claim; provided that no Indemnitee shall be indemnified pursuant to this '4.6 for losses, damages or liabilities to the extent caused by the gross negligence or willful misconduct of such Indemnitee. The Owner agrees that upon written notice by any Indemnitee of the assertion of such a liability, obligation, damage, injury, penalty, claim, demand, action, suit or judgment, the Owner shall assume full responsibility for the defense thereof. Each Indemnitee agrees to use its best efforts to promptly notify the Owner of any such assertion of which such Indemnitee has knowledge. (b) Without limiting the application of '4.6(a) hereof, the Owner agrees to pay, or reimburse the Mortgagee for any and all reasonable fees, costs and expenses of whatever kind or nature incurred in connection with the creation, preservation or protection of the Mortgagee’s lien 24 S A M P L E under this Mortgage on the Vessel, including, without limitation, all fees and taxes in connection with the recording or filing of instruments and documents in public offices, payment or discharge of any taxes or Liens (other than Permitted Liens) upon or in respect of the Vessel, premiums for insurance with respect to the Vessel and all other fees, costs and expenses in connection with protecting, maintaining or preserving the Vessel and the Mortgagee’s interest therein, whether through judicial proceedings or otherwise, or in defending or prosecuting any actions, suits or proceedings arising out of or relating to the Vessel. (c) Without limiting the application of '4.6(a) or (b) hereof, the Owner agrees to pay, indemnify and hold each Indemnitee harmless from and against any loss, costs, damages and expenses which such Indemnitee may suffer, expend or incur in consequence of or growing out of any misrepresentation by the Owner in this Mortgage, any other Secured Debt Agreement or in any writing contemplated by or made or delivered pursuant to or in connection with this Mortgage or any other Secured Debt Agreement. (d) If and to the extent that the obligations of the Owner under this '4.6 are unenforceable for any reason, the Owner hereby agrees to make the maximum contribution to the payment and satisfaction of such obligations which is permissible under applicable law. (e) Any amounts paid by any Indemnitee as to which such Indemnitee has the right to reimbursement shall constitute Obligations secured by the lien of this Mortgage. The indemnity obligations of the Owner contained in this '4.6 shall continue in full force and effect notwithstanding the full payment of all of the Obligations and notwithstanding the full payment of all Loans under the Credit Agreement, the termination of all Letters of Credit, the payment of the Senior Secured Second Lien Notes and the payment of all other Obligations and notwithstanding the discharge thereof but shall not thereafter be secured by any lien granted hereunder. '4.7. Consent to Forum. THE OWNER HEREBY IRREVOCABLY CONSENTS AND AGREES THAT ANY LEGAL ACTION, SUIT, OR PROCEEDING ARISING OUT OF OR IN ANY WAY IN CONNECTION WITH THIS MORTGAGE MAY BE INSTITUTED OR BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, AS THE MORTGAGEE MAY ELECT, AND BY EXECUTION AND DELIVERY OF THIS MORTGAGE, THE OWNER HEREBY IRREVOCABLY ACCEPTS AND SUBMITS TO, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, THE NON-EXCLUSIVE JURISDICTION OF ANY SUCH COURT, AND TO ALL PROCEEDINGS IN SUCH COURTS. THE OWNER IRREVOCABLY CONSENTS TO SERVICE OF ANY SUMMONS AND/OR LEGAL PROCESS BY REGISTERED OR CERTIFIED UNITED STATES AIR MAIL, POSTAGE PREPAID, TO THE OWNER AT ITS ADDRESS AS SET FORTH IN '4.4 OF ARTICLE IV HEREOF, SUCH METHOD OF SERVICE TO CONSTITUTE, IN EVERY RESPECT, SUFFICIENT AND EFFECTIVE SERVICE OF PROCESS IN ANY SUCH LEGAL ACTION OR PROCEEDING. NOTHING IN THIS MORTGAGE SHALL AFFECT THE RIGHT OF THE MORTGAGEE TO EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR LIMIT THE RIGHT OF THE MORTGAGEE TO BRING 25 S A M P L E ACTIONS, SUITS OR PROCEEDINGS WHETHER IN REM, IN PERSONAM, IN LAW, EQUITY, ADMIRALTY OR OTHERWISE IN THE COURTS OF ANY OTHER JURISDICTION. THE OWNER FURTHER AGREES THAT FINAL JUDGMENT AGAINST IT IN ANY SUCH LEGAL ACTION, SUIT OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN ANY OTHER JURISDICTION, WITHIN OR OUTSIDE THE UNITED STATES OF AMERICA, BY SUIT ON THE JUDGMENT, A CERTIFIED OR EXEMPLIFIED COPY OF WHICH SHALL BE CONCLUSIVE EVIDENCE OF THE FACT AND THE AMOUNT OF THE LIABILITY. '4.8. The Mortgagee. The Mortgagee will hold in accordance with this Mortgage all of the property at any time received under this Mortgage. As between the Mortgagee, the Senior Creditors and the Junior Creditors, and by the acceptance by any such party of the benefits of this Mortgage, it is expressly understood and agreed that the obligations of the Mortgagee with respect to the Vessel and the disposition thereof, and otherwise under this Mortgage, are only those set forth in this Mortgage, and the Mortgagee shall act hereunder on the terms and conditions set forth in Annex K to the Security Agreement. [The remainder of this page intentionally left blank] 26 S A M P L E IN WITNESS WHEREOF, the Owner and the Mortgagee have executed this Mortgage on the respective dates described in the acknowledgments below, to be effective as of the ___ day of ______________. [OWNER NAME], By; __________________________ NAME TITLE ACKNOWLEDGMENT [COUNTRY] [CITY] On this ___ day of _______, 2002, before me personally came [NAME], to me known, who being by me duly sworn, did depose and say that his address is [XXXX]; that he is the [TITLE] of [COMPANY NAME]. ______________________________ Notary Public My Commission Expires: _____________ REFERENCE: DATE AND TIME: S A M P L E [BANK NAME] As Collateral Agent By; __________________________ Name: ________________________ Title: _________________________ ACKNOWLEDGMENT [COUNTRY] [CITY] On this __ day of ____________________, 200X, before me personally came _______________________, to me known, who being by me duly sworn, did depose and say that his address is [XXXXX]; that he is the _________________________ of [BANK NAME], the corporation described in and which executed the foregoing instrument; and that he signed his name thereto by order of the Board of Directors of said corporation and acknowledged the same to be his act and deed as such ____________________ on behalf of the corporation. ______________________________ Notary Public My Commission Expires: _____________ REFERENCE: DATE AND TIME: S A M P L E INSURANCE SCHEDULE 1 OWNER: Vessel Name H&M Insured Total Insured H&M P&I Amount Value Deductible Deductible $ $ $ $ REFERENCE: DATE AND TIME: S A M P L E EXHIBIT A [Credit Agreement (with Schedule I and the form of Notes, Subsidiary Guaranty and Letter of Credit Request attached, but without the other schedules and exhibits)] REFERENCE: DATE AND TIME: S A M P L E EXHIBIT B [Copy of the Indenture (with the Securities, as such term is defined in the Indenture, and the Note Subsidiary Guaranty attached, but without the other exhibits)] REFERENCE: DATE AND TIME: