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EXHIBIT 10.48
FIRST PREFERRED SHIP MORTGAGE
THIS FIRST PREFERRED SHIP MORTGAGE made effective as of April 22, 1999,
by and between FLORIDA CASINO CRUISES, INC., a Georgia corporation, whose
address is 0000 Xxxx Xxxxx Xxxx, Xxxxxx, Xxxxxxx 00000 (the "Mortgagor"), and
FOOTHILL CAPITAL CORPORATION, a California corporation whose address is 00000
Xxxxx Xxxxxx Xxxxxxxxx, Xxxxx 0000, Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000 (the
"Mortgagee"). The Mortgagee shall be a mortgagee in 100% of the Vessel described
below.
W I T N E S S E T H:
MORTGAGE AMOUNT: THE AMOUNT OF THE DIRECT OR CONTINGENT OBLIGATIONS
THAT ARE OR MAY BECOME SECURED BY THIS FIRST PREFERRED SHIP MORTGAGE, EXCLUDING
INTEREST, EXPENSES AND OTHER FEES, IS $8,325,000.00.
WHEREAS, the Mortgagor is the sole owner of the whole of the following
vessel:
Name: Vegas Express
Official No.: 594643
Hailing Port:
Gross Tons: 432
Net Tons: 293
Built: 1978 (RYSCO Shipyard, Blounstown, Florida)
Length Overall: 173.8 feet
Depth: 14 feet
which vessel is duly documented under and pursuant to the laws of the United
States; and
WHEREAS, the Mortgagor is justly indebted to Mortgagee in the principal
sum of up to Eight Million Three Hundred Twenty Five Thousand Dollars
($8,325,000.00) (hereinafter referred to as the "Principal Sum"), and interest
thereon, which indebtedness is evidenced, inter alia, by a certain Security
Agreement, between Mortgagor and Mortgagee (the "Security Agreement", to which
reference is made for capitalized terms not otherwise defined herein), a Secured
Promissory Note in the original principal amount of $3,225,000, executed by
Mortgagor in favor of Mortgagee (the "Note"), a Continuing Guaranty, pertaining
to, among other things, certain indebtedness owing by Leisure Time Cruise
Corporation and Leisure Express Cruise, L.L.C. to Mortgagee, executed by
Mortgagor in favor of Mortgagee (the "Guaranty"), each of even date herewith,
and copies of which are attached hereto as Exhibit A; and
WHEREAS, the Principal Sum, all interest thereon, all late charges as
set forth in the Security Agreement, the Note, the Guaranty, all other costs and
expenses incurred by the Mortgagee in the enforcement and administration of the
Security Agreement, the Note, the
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Guaranty, and this First Preferred Ship Mortgage, and any and all future
advances as may be made from Mortgagee to Mortgagor the total of which, however,
shall not exceed the Principal Sum, shall be collectively referred to hereafter
as the "Secured Obligations"; and
WHEREAS, the Mortgagor, for the purpose of securing payment to the
Mortgagee of the Secured Obligations, as more fully set forth herein, has duly
executed and delivered this First Preferred Ship Mortgage on VEGAS EXPRESS to
the Mortgagee;
NOW, THEREFORE, THIS AGREEMENT WITNESSETH:
In consideration of the foregoing recitals and of the sum of One Dollar
($1.00) to the Mortgagor duly paid by the Mortgagee at and before the sealing
and delivery of these presents, and for other good and valuable consideration,
the receipt of which is hereby acknowledged, and in order to secure the payment
of the Secured Obligations, the Mortgagor, by these presents, does grant,
bargain, sell, convey, transfer, assign, remise, mortgage set over, pledge,
create a security interest in, and confirm to the Mortgagee, its successors and
assigns, the following described property:
The whole of all that certain vessel designated and known as VEGAS
EXPRESS, Official No. 594643, together with all her engines, boilers, machinery,
masts, spars, motors, tools, booms, cranes, rigs, pumps, pipe, tanks, anchors,
cables, rigging, tackle, apparel, fixtures, furniture, boats, chains, equipment,
supplies, fittings, and all her other appurtenances thereunto appertaining and
belonging, whether aboard or removed from the said vessel, together with any and
all additions, improvements, and/or replacements which may hereafter be made to,
on or in said Vessel or any part thereof, whether on board or not, and in or to
her equipment and appurtenances aforesaid, and all rents, charters, charter
parties, charter hire, freights, sub-freights, cargoes, operating agreements and
revenues, lighterage, and all issues, revenues, profits and proceeds of any of
the foregoing, but in no event shall the Vessel include: (a) any accounts of
Mortgagor arising in connection with the operation of the Vessel by Mortgagor,
or the gensets, chassis or other equipment described in clause (b), and (b) any
gensets, chassis, or other equipment leased by Mortgagor and used on or in
connection with the operation of the Vessel, all of the foregoing being
hereinafter referred to as the "Vessel."
TO HAVE AND TO HOLD all of the Vessel unto the Mortgagee, its
successors and assigns, forever upon the terms herein set forth to secure the
performance and observance of and compliance with the covenants, terms and
conditions in this First Preferred Ship Mortgage and the Security Agreement,
Note, and Guaranty contained therein; provided, however, that if the Mortgagor
shall pay, or cause to be paid, to the Mortgagee, its successors or assigns, the
debt aforesaid, with interest thereon, as and when the same shall become due and
payable by maturity or otherwise, under the terms and in the manner provided in
the Security Agreement, the Note, the Guaranty, and this Preferred Ship
Mortgage, and keeps, performs and observes all and singular the covenants and
promises in the Security Agreement, the Note, and the Guaranty and in these
presents expressed to be kept, performed, and observed by or on the part of the
Mortgagor, then this First Preferred Ship Mortgage and the estate and rights
hereby granted shall cease.
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PAYMENT SCHEDULE: The Mortgagor shall pay or cause to be paid to the
Mortgagee, its successors or assigns, the Principal Sum with the interest
thereon, in accordance with the terms and conditions of the Security Agreement,
the Note, and the Guaranty.
MORTGAGE OBLIGATION: The Mortgagor hereby agrees to pay the Principal
Sum and the interest thereon as stipulated, and to fulfill, perform and observe
each and every one of the covenants, agreements, and conditions contained in
this First Preferred Ship Mortgage and in the Note, the Security Agreement, and
the Guaranty; and hereby covenants and agrees to and with the Mortgagee, its
successors and assigns, that the Vessel and the appurtenances thereunto
appertaining and belonging, and all additions, improvements and/or replacements
which may hereafter be made to, on or in said Vessel are to become subject
hereto, and are to be held subject to this First Preferred Ship Mortgage and the
further covenants, representations, warranties, conditions and uses hereinafter
set forth as follows:
Article 1. Corporate Representations and Warranties. Corporate representations
and warranties shall be as set forth in Section 5 of the Security Agreement.
Article 2. Validity of Mortgage. The Mortgagor covenants that this First
Preferred Ship Mortgage is and will be a valid and enforceable obligation of the
Mortgagor in accordance with its terms.
Article 3. Ownership of Vessel. The Mortgagor warrants that it is and shall
continue to be a citizen of the United States as defined and within the meaning
of the Shipping Act of 1916, as amended, 46 App. U.S.C. Section 802, and a
corporation established under the laws of the United States or of a State, whose
president or other chief executive officer and chairman of its board of
directors are citizens of the United States and no more of its directors are
noncitizens than a minority of the number necessary to constitute a quorum,
within the meaning of Section 7 of the Act of August 26, 1983, P.L. 98-89, 97
Stat. 585, as amended, 46 U.S.C. Section 12102, as amended. The Mortgagor
warrants that it is the true, lawful and sole owner of the whole of the Vessel,
including her engines, boilers, machinery, masts, anchors, cables, rigging,
tackle, apparel, furniture, small boats, and all other appurtenances, and that
its ownership is free and clear of all suits, liens, claims, charges, or
encumbrances of any kind or nature except for (a) liens arising prior to the
date of this First Preferred Ship Mortgage which arose in the ordinary course of
business and by operation of law, which liens are no greater than approximately
$25,000.00 as of this date and (b) liens granted to Mortgagee, and that all
action necessary and required by law for the execution and delivery of this
First Preferred Ship Mortgage has been duly and effectively taken, and that this
First Preferred Ship Mortgage is a valid and binding obligation of the Mortgagor
enforceable in accordance with its terms, and that it will forever warrant and
defend its title and possession for the benefit of the Mortgagee against any and
all claims and demands.
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Article 4. Insurance.
(a) The Mortgagor at its own cost and expense as long as any part of the
Secured Obligations are unpaid shall keep the Vessel insured with responsible
underwriters in good standing and reasonably satisfactory to the Mortgagee fully
and adequately protecting the Vessel and the Mortgagee's interest therein
against any marine perils and disasters and all hazards, risks, or liabilities
in any way arising out of the ownership, operation or maintenance of the Vessel,
as provided in the aforesaid Security Agreement, including but not limited to
insurance as follows:
(i) Marine Hull and Machinery and Increased Value insurance in an
amount not less than the full market value of the Vessel, with
responsible underwriters and under policy forms satisfactory to the
Mortgagee, covering the hull and all equipment and appurtenances of the
Vessel against all usual marine risks subject, with respect to an
accident, occurrence, or event that does not result in an actual or
constructive total loss of the Vessel, to no deductible in excess of
$50,000.
(ii) Protection and Indemnity Insurance with underwriters and
under policy forms and in amounts reasonably satisfactory to the
Mortgagee.
(iii) When and while the Vessel is laid up, and in lieu of the
aforesaid insurance referred to in paragraph (i) of this section, Port
Risk Insurance on the Vessel may be taken out by the Mortgagor under
forms of port risk policies and with underwriters satisfactory to the
Mortgagee.
(iv) Insurance protecting against claims under the Longshoremen's
and Harbor Workers, Compensation Act, Workmen's Compensation and public
liability.
(v) Upon the request of the Mortgagee, Mortgagee's Interest
Insurance, including Breach of Warranty insurance if reasonably
available, with responsible underwriters and under policy forms
satisfactory to Mortgagee.
(vi) Collision and property damage insurance with underwriters and
under policy forms and in amounts satisfactory to the Mortgagee.
(vii) Wreck removal and fire insurance with underwriters and under
policy forms and in amounts satisfactory to the Mortgagee.
(viii) Insurance against loss of hire and strikes with a daily
indemnity of not less than $10,000.00 per day, commencing after 3 days
and continuing for up to 21 days per instance.
(ix) MII Additional Perils (Pollution) insurance with underwriters
and under policy forms and in amounts satisfactory to the Mortgagee.
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(b) All Hull and Machinery insurance shall be taken out in the name of
the Mortgagor, but all losses shall be payable to the Mortgagee for distribution
by it, as its interests may appear, except that: (i) in the case of a total
loss, the Mortgagee consents that the underwriters pay direct to the Mortgagor
the amount by which the total loss exceeds the amount then due under the
Mortgage, the Security Agreement, the Note, and the Guaranty; and (ii) in the
event of a partial loss, if there is not a default under this First Preferred
Ship Mortgage, the Mortgagee agrees that the underwriters may pay directly for
repairs, salvage, or other charges and/or reimburse the Mortgagor therefor;
however, (iii) in any event, if the amount of the partial loss is less than
$5,000, Mortgagee consents that the underwriters may pay directly to the
Mortgagor. If the Mortgagor is in default under this First Preferred Ship
Mortgage, the Security Agreement, or the Note, the Mortgagee shall be entitled
to receive the proceeds of any such insurance and shall apply such proceeds in
the manner provided in Article 10(f).
(c) All insurance shall be taken out in the names of the Mortgagor and
any bareboat charterer, with Mortgagee named as an additional insured or loss
payee as follows: (i) Hull and Machinery Insurance and Port Risk Insurance shall
name the Mortgagee as first preferred Mortgagee and loss payee; (ii) Protection
& Indemnity Insurance shall name the Mortgagee as an additional insured.
(d) With respect to both the Mortgagee's Interest and the MII
Additional Perils (Pollution) policies, Mortgagor shall effect and maintain, or,
at the option of the Mortgagee from time to time, reimburse to the Mortgagee on
the Mortgagee's first demand from time to time all costs and expenses incurred
by the Mortgagee in effecting and maintaining, on such terms, in such amounts as
is customary in the industry, and with such insurers as the Mortgagee shall
consider reasonably appropriate.
(e) Copies of all policies, binders and cover notes, together with
original underwriter's certificates, shall be delivered to the Mortgagee from
time to time upon its request for approval and custody.
(f) Mortgagor will pay or cause to be paid the premiums on and costs of
all such insurance and all renewals thereof, when and as the same become
payable, and will forthwith furnish to Mortgagee evidence satisfactory to the
Mortgagee that the same has been paid if requested by the Mortgagee.
(g) The Mortgagor will keep the aforesaid insurance and renewals
thereof valid at all times while this First Preferred Ship Mortgage remains in
force, will comply and will cause any charterer or subcharterer to comply with
all Institute Warranties and Clauses, and will not suffer or permit the Vessel
to engage in any voyage or to carry any cargo not permitted by the policies of
insurance in effect at the time of the voyage, nor do, omit, neglect, or permit
to be done anything whereby any insurance, whether procured by the Mortgagor or
Mortgagee, is or is liable to be impaired or defeated. If at any time (i)
Mortgagor shall fail to deliver to and maintain with the Mortgagee, upon
request, original policies or other insurance documents and other evidence
satisfactory to the Mortgagee that the insurance has been effected and
maintained as hereinabove
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and in the Security Agreement required or (ii) any insurance required to be
maintained hereunder or under the Security Agreement is canceled, terminated or
fails to be renewed without replacement coverage complying with the requirements
hereof and of the Security Agreement, then the Mortgagee may procure the
insurance, and from the date of such expenditure the costs and expenses thereof,
with interest at the rates provided in the Note, shall be an additional
indebtedness due from the Mortgagor secured by this First Preferred Ship
Mortgage and shall be paid by the Mortgagor on demand. The Mortgagee shall not
be under any obligation to procure any such insurance.
(h) Each insurance policy shall prohibit cancellation or substantial
modification by the insurer without the written consent of both the Mortgagor
and the Mortgagee, or, in the absence of such consent, without at least 10 days'
prior written notice to Mortgagor and Mortgagee. Mortgagor shall request that
its P&I Club shall give the Mortgagee as much notice as possible of Mortgagor's
failure to renew its entry in the Club, and in any event Mortgagor shall so
notify Bank immediately if its entry in the Club is not renewed.
(i) Each insurance policy shall provide that there shall be no recourse
against the Mortgagee for premiums in respect thereof.
(j) On the date hereof and on or before April 30 of each year
thereafter, the Mortgagor will furnish to the Mortgagee a report signed by a
recognized marine insurance broker(s) selected by the Mortgagor and reasonably
satisfactory to the Mortgagee with respect to the insurance maintained under
this First Preferred Ship Mortgage (including, without limitation, as to each
policy, its number, the amount, the insurer, the named assureds, the type of
risk, the loss payees and the expiration date).
Article 5. Environmental Matters
(a) The Mortgagor shall operate the Vessel in material compliance with
all Environmental Laws, including but not limited to the Oil Pollution Act of
1990. The Mortgagor has a Vessel Response Plan and a Spill Prevention Plan and
Contingency Plan in force, to the extent applicable.
(b) The Mortgagor shall indemnify and hold harmless the Mortgagee and
its successors and assigns from and against all losses, costs, injuries, damages
(including consequential, punitive or treble damages) and expenses (including
attorneys' fees and disbursements) and, at the Mortgagee's request, defend any
indemnified person under this provision against any action, suit, or other
proceeding resulting from, arising out of or in any way connected directly or
indirectly with any violation of or liability under any Environmental Law with
respect to the ownership, custody, management, operation or control of the
Vessel or the generation of waste by, or the transportation of waste from, the
Vessel.
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(c) The Mortgagor shall maintain a Certificate of Financial
Responsibility issued by the United States pursuant to the Federal Water
Pollution Control Act, and any other applicable legislation.
Article 6. Creation of Liens.
(a) Neither the Mortgagor, the managing owner, ship's husband, master,
or any other person to whom the management of the Vessel may be entrusted, or
any charterer or subcharterer shall have any right, power or authority to
create, incur, or permit to be placed or imposed on the Vessel any liens or
encumbrances whatsoever, other than Ordinary Maritime Liens, which liens consist
of (a) liens in favor of Mortgagee or (b) statutory liens for crew's wages,
wages of stevedores, or for salvage (including contract salvage), or general
average or (c) liens arising in the ordinary course of business prior to the
date hereof or (d) other liens incurred in the ordinary course of business which
are not past due, but only to the extent that such other liens are subordinate
to the lien of this First Preferred Ship Mortgage.
(b) The Mortgagor shall carry a properly certified copy of this First
Preferred Ship Mortgage with the ship's papers and shall exhibit the same to any
person having business with the Vessel which may give rise to any lien other
than for crew's wages or salvage, or to the sale, mortgage or other conveyance
thereof. The Mortgagor shall place and keep prominently in the pilot house,
master's cabin, or engine room of the Vessel a printed or typewritten notice
written as follows:
"This Vessel is owned by FLORIDA CASINO CRUISES, INC. and is
subject to a First Preferred Ship Mortgage dated effective as of
April 22, 1999, in favor of FOOTHILL CAPITAL CORPORATION under
authority of the Act of November 23, 1988, P.L. 100-710, as
amended, and under the terms of said Mortgage, neither the owner,
the master nor any other person has any right, power or authority
to create, incur or permit to be imposed upon this vessel, its
freights, sub-freights, cargoes, profits, hire, charter hire or
revenues, any liens whatsoever, other than for crew's wages or
salvage, including contract salvage or general average."
(c) In the event that a claim for salvage is asserted against the
Vessel, Mortgagor and/or Mortgagee, the Mortgagor shall discharge any ultimate
lien, liability and/or judgment. Any amount paid by the Mortgagee, whether in
settlement of a claim or in satisfaction of a judgment, shall be a debt which is
part of the Secured Obligations, the repayment of which is secured by the lien
of this First Preferred Ship Mortgage and shall be payable when demanded by the
Mortgagee, with at the rates provided in the Note, from the date of payment by
the Mortgagee.
(d) In the event that the title or ownership of the Vessel shall be
requisitioned, purchased or taken by the United States of America or any
government of any other country or any department, agency or representative
thereof, pursuant to any present or future law, proclamation, decree, order or
otherwise, the lien of this First Preferred Ship Mortgage shall be deemed to
attach to the claim for compensation, and the compensation, purchase price,
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reimbursement or award for such requisition, purchase or other taking of such
title or ownership is hereby declared payable to Mortgagee, who shall be
entitled to receive the same and shall apply it to the prepayment of the Note
and the amounts covered by the Guaranty; and in the event of any such
requisition, purchase or taking, the Mortgagor shall promptly execute and
deliver to Mortgagee such documents, if any, as in the opinion of counsel for
Mortgagee may be necessary or useful to facilitate or expedite the collection by
Mortgagee of such compensation, purchase price, reimbursement or award.
(e) In the event that the United States of America or any government of
any other country or any department, agency or representative thereof shall not
take the title or ownership of the Vessel but shall requisition, charter, or in
any manner take over the use of such Vessel pursuant to any present or future
law, proclamation, decree, order or otherwise, and in the event Mortgagor is in
default of the terms of this First Preferred Ship Mortgage, all charter hire and
compensation resulting therefrom shall be payable to Mortgagee, and if, as a
result of such requisitioning, chartering or taking of the use of such Vessel
such government, department, agency or representative thereof shall pay or
become liable to pay any sum by reason of the loss of or injury to or
depreciation of the Vessel any such sum is hereby made payable to Mortgagee, and
in the event of any such requisitioning, chartering or taking of the use of the
Vessel, the Mortgagor shall promptly execute and deliver to Mortgagee such
documents, if any, and shall promptly do and perform such acts, if any, as in
the opinion of counsel for Mortgagee may be necessary or useful to facilitate or
expedite the collection by Mortgagee of such claims arising out of the
requisitioning, chartering or taking of the use of such Vessel.
Article 7. Maintenance and Operation of Vessel.
(a) The Vessel is tight, staunch, strong and well and sufficiently
tackled, appareled, victualed, fitted, manned, furnished, and equipped, and in
every respect seaworthy and in good running condition and repair and in all
respects fit for service. At all times, at its own cost and expense, the
Mortgagor will exercise due diligence to maintain and preserve the Vessel in as
good condition, working order and repair as at the time of the execution of this
First Preferred Ship Mortgage, ordinary wear and tear and depreciation excepted,
and will maintain the Vessel in accordance with good marine maintenance practice
and procedures and applicable legal or regulatory requirements for the service
in which it then is or will be engaged, and in such condition as will enable her
to pass such inspection as may be required by marine underwriters as a condition
of their writing such insurance and in such amounts as is required under this
First Preferred Ship Mortgage. Furthermore, if the vessel is not temporarily
laid-up, the Mortgagor will cause the Vessel to be periodically inspected,
drydocked and recoated (hull paint), and its machinery overhauled in accordance
with normal marine practices or as may be required by the United States Coast
Guard or applicable Classification Society.
(b) The Mortgagor shall afford the Mortgagee or its authorized
representatives, at their own risk and expense, full and complete access to the
Vessel for the purpose of inspecting the same and her cargoes and papers.
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(c) Mortgagor shall certify as often as required by Mortgagee that all
wage and other claims which give rise to liens have been paid, but in the
absence of a default or a potential default, no more often than once a quarter.
(d) The Mortgagor will keep the Vessel duly documented as a vessel of
the United States, under the flag of the United States, and will not suffer or
permit it to be operated in any manner prohibited by the laws or regulations
applicable to the Vessel under its certificate of documentation or its
classification, and will duly comply with all laws and governmental regulations
and contracts applicable to the Vessel and its operation. Mortgagor will never
operate the Vessel outside the navigational limits of the insurance carried
pursuant to Article 4.
(e) If applicable, Mortgagor shall keep the Vessel in such condition as
will entitle her to the highest classification and rating for a Vessel of the
same age, trade and type in the American Bureau of Shipping (NABSO) or such
other classification society as shall be acceptable to Mortgagee, and, upon
request, Mortgagor shall furnish to Mortgagee a certificate by such
classification bureau or society in which the Vessel is then entered that such
classification is maintained.
(f) Mortgagor will furnish Mortgagee within thirty (30) days after
receipt by the Mortgagor, copies of all Certificates of Inspection delivered by
the United States Coast Guard and/or Inspection Reports with respect to the
Vessel delivered by the American Bureau of Shipping, including (as may apply)
Annual Classification Surveys, Special Periodic or Continuous Surveys, Annual
Load-Line Surveys and Drydock Surveys.
(g) Mortgagor shall operate the Vessel in accordance with all
restrictions imposed by the United States Coast Guard, and shall maintain a
coastwise route in the Atlantic Ocean not more than twenty (20) miles offshore,
between Boon Island, Maine and Watch Hill, Rhode Island, and shall carry adult
passengers only.
(h) Mortgage shall operate the Vessel in accordance with all stability
letters issued by the United States Coast Guard.
Article 8. Release of Vessel. If a libel should be filed against the Vessel or
if the Vessel is otherwise levied against, attached, arrested or taken into
custody by virtue of any legal proceedings in any court, the Mortgagor will,
within thirty (30) days thereafter, cause the Vessel to be released and the lien
to be discharged.
Article 9. Payment of Charges. The Mortgagee shall have the right, but shall be
under no obligation, to make any payments and to do any acts which, under the
terms of this First Preferred Ship Mortgage, the Mortgagor is required to make
or do, but the making of any such payment or the doing of any such act by the
Mortgagee shall not relieve the Mortgagor of any default in that respect or
constitute in any respect a waiver of such default. The Mortgagor will reimburse
the Mortgagee promptly, with interest at the rate or rates provided in the Note,
for any and all payments and expenditures so made by it and for any and all
advances and expenses made or incurred by the Mortgagee at any time in taking
possession of Vessel or otherwise protecting its
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rights hereunder and for any and all damages sustained by the Mortgagee from or
by reason of any default or defaults of the Mortgagor and such payments,
expenditures, advances and expenses shall be and are secured by this First
Preferred Ship Mortgage.
Article 10. Events of Default; Remedies.
(a) The following shall constitute "Events of Default" hereunder:
(i) If the Mortgagor shall (a) sell or transfer, or attempt to
sell or transfer by operation of law or otherwise, its interest in the
Vessel, except as permitted in the Security Agreement, or (b) permit the
attachment of any suit, lien, claim, charge or encumbrance of any kind
(i) in excess of $25,000 in the aggregate at any time if the Vessel is in
drydock, (ii) which is not released within 30 days after it first
attaches if the Vessel is in drydock, (iii) in excess of $25,000 in the
aggregate at any time if the Vessel is not in drydock and the costs
relate to items other than non-drydock repairs made while the Vessel is
at port, and (iv) which is not released within 30 days after it first
attaches if the Vessel is not in drydock and the costs relate to items
other than non-drydock repairs made while the Vessel is at port; or
(ii) If the Mortgagor shall remove or attempt to remove the Vessel
beyond the limits of the United States, save on voyages with the
intention of returning to the United States, or shall abandon the Vessel;
or
(iii) If the Vessel shall be libeled and levied upon or taken by
virtue of any attachment or execution against the Mortgagor and such
libel or levy is not released by Mortgagor within 30 days; or
(iv) The occurrence of an "Event of Default" under the Security
Agreement;
(v) If the Mortgagor shall fail to pay any Secured Obligation when
due; or
(vi) The title or ownership of the Vessel shall be requisitioned,
purchased or taken by the government of any country or by any department,
agency or representative thereof and there shall not have been paid to
Mortgagee an amount in cash in United States dollars equal to the fair
value of such Vessel within ninety (90) days after such event occurs;
(b) Upon the occurrence of an Event of Default the Mortgagee may:
(i) Declare the Secured Obligations to be due and payable
forthwith, whereupon such Secured Obligations shall become and be
immediately due and payable;
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(ii) Exercise all of the rights, powers and remedies in
foreclosure and otherwise given to the Mortgagee by the provisions of
Chapter 313 of title 46, United States Code, and acts amendatory thereof
and supplemental thereto;
(iii) Recover judgment for any amount due on the debt and collect
the same out of any property of the Mortgagor without its security under
this First Preferred Ship Mortgage being in any way affected or impaired
thereby;
(iv) Demand and receive all freights, hires, charter hires,
earnings/or profits of the Vessel, due or to become due from any person
whomsoever;
(v) With or without legal process re-enter and take possession of
the Vessel at any time wherever it may be found and, without being
responsible for loss or damage, hold, lease, charter, operate or
otherwise use the Vessel for such time and on such terms as the Mortgagee
may deem advisable and collect and retain all freights, hires, earnings,
and/or other moneys due or to become due and arising therefrom, and/or if
it seems desirable to the Mortgagee, and without being responsible for
loss or damage, with or without possession, sell the Vessel free from any
claim by the Mortgagor in admiralty, in equity, at law or by statute,
after first giving notice of the time and place of sale, with a general
description of the property, by publishing such notice in such manner as
may be required by applicable rules of court and as may be reasonably
calculated to give adequate notice of the sale to potential buyers
through trade publication, via brokers, or otherwise, and by mailing a
similar notice to the Mortgagor at its last known business address on the
day of first publication. Such sale may be held at any place and at such
time as the Mortgagee may specify, and in such manner as the Mortgagee
may deem advisable, and may be conducted without bringing the Vessel to
the place of sale, and the Mortgagee may become a purchaser at the sale.
From time to time the Mortgagee may adjourn any such sale by announcement
at the time and place appointed for such sale or by any adjourned sale;
and without notice or publication, the Mortgagee may make such sale at
the time and place to which the same shall be so adjourned.
(vi) Bring suit at law, in equity or in admiralty, as it may be
advised, to recover judgment for any and all amounts due, and collect the
same from Mortgagor and/or out of any and all property of Mortgagor
whether covered by this First Preferred Ship Mortgage or otherwise;
(vii) Commence a civil action in rem to foreclose this First
Preferred Ship Mortgage and obtain an order to sell, and sell, the
Vessel, pursuant to the provisions of the Act of November 23, 1988, P.L.
100-710, 102 Stat. 4735, as amended, 46 U.S.C. 31325 and 31326, or their
successor provisions, or by other judicial process as may be provided in
the statutes.
(c) Mortgagor hereby consents to the appointment of a custodian of the
Vessel by Mortgagee with the costs thereof to be a cost of the sale to be paid
from the proceeds of the sale or by Mortgagor.
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(d) Each and every power or remedy herein specifically given to the
Mortgagee shall be cumulative and shall be in addition to every other power or
remedy herein specifically given or now or hereafter existing at law, in equity,
in admiralty or by statute, and each and every power or remedy, whether
specifically herein given or otherwise so existing may be exercised from time to
time and as often and at 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 deemed a waiver of the right to exercise at the same time or thereafter
any other power or remedy. No delay or omission by the Mortgagee in the exercise
of any right or power accruing upon any Event of Default shall be construed to
be a waiver of such default or any acquiescence therein; nor shall the
acceptance by the Mortgagee of any security or of any payment after such default
or any payment on account of any past default be deemed a waiver of any right to
take advantage of any other default or of any past default not completely cured
thereby.
(e) If, at any time after an Event of Default and previous to the actual
sale of the Vessel by the Mortgagee or to any foreclosure proceedings, the
Mortgagor completely cures all Events of Default and pays all expenses, advances
and damages to the Mortgagee consequent on such Event of Default with interest
at the rates provided in the Note and the Guaranty (as applicable), then the
Mortgagee shall accept such payment and cure and restore the Mortgagor to its
former position, but such actions shall not affect any subsequent Event of
Default, nor impair any rights consequent thereon.
(f) The proceeds of any sale, and the net earnings of any charter,
operation or other use of the Vessel by the Mortgagee under any of the powers
herein specified, and the proceeds of any judgment collected by the Mortgagee
for any default hereunder and the proceeds of any insurance or of any claim for
damages on account of the Vessel, received by the Mortgagee while exercising any
such power, and any and all other proceeds collected by the Mortgagee, or in any
proceedings hereunder, the application of which has not elsewhere been
specifically provided for, shall be applied as follows:
First: To payment of all expenses and charges, including expenses of any
sale, expense of any retaking, attorney's fees, court costs, and any
other expenses made or incurred by the Mortgagee in the protection of its
rights hereunder, and to the payment of any damages sustained by the
Mortgagee from any default of the Mortgagor hereunder with interest as
provided herein; and to provide adequate indemnity against liens having
priority over this First Preferred Ship Mortgage.
Second: To the payment of the balance due and outstanding upon the
Secured Obligations or otherwise due under the Note, the Guaranty, and
the Security Agreement, including accrued and unpaid interest to the date
of such payment, with such payment to be applied pro rata to such
outstanding principal, interest, and to the payment of all other unpaid
items, costs or expenses constituting part of the Secured Obligations.
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Third: Any surplus thereafter remaining shall be paid to the Mortgagor.
(g) Any sale of the Vessel made in pursuance of this First Preferred Ship
Mortgage, whether under the power of sale hereby granted or any judicial
proceedings, shall operate to divest all right, title, and interest of any
nature whatsoever of the Mortgagor therein and thereto, and shall bar the
Mortgagor, its successors and assigns, and all persons claiming by, through, or
under them. At any such sale Mortgagee or other holder of the Note (the
"holder/purchaser") may bid for and purchase such Vessel and upon compliance
with the terms of the sale may hold, retain and dispose of such property without
further accountability therefor. In case of any such sale the holder/purchaser
shall be entitled, for the purpose of making settlement or payment for the
property purchased, to use and apply the Note, the Guaranty, or any portion
thereof in order that there may be credited against the amount remaining due and
unpaid thereon the sums payable to the holder/purchaser out of the net proceeds
of such sale after allowing for the costs and expense of sale and other charges;
and thereupon the holder/purchaser shall be credited, on account of such
purchase price, with the net proceeds that shall have been so credited upon the
Note and/or the Guaranty. 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.
(h) Whenever any right to enter and take possession of the Vessel accrues
to Mortgagee, it may require the Mortgagor to deliver, and the Mortgagor shall
on demand, at its own cost and expense, deliver such Vessel to Mortgagee as
demanded. If any legal proceedings shall be taken to enforce any rights under
this First Preferred Ship Mortgage, 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, income and profits due or to become due and arising
from the operation thereof.
(i) Mortgagee is hereby appointed attorney-in-fact of the Mortgagor to
execute and deliver to any purchaser and is hereby vested with full power and
authority to make, in the name and in behalf of the Mortgagor, a good conveyance
of the title to the Vessel so sold. In the event of any sale of the Vessel,
under any power herein contained, the Mortgagor will, if and when required by
Mortgagee, execute such form of conveyance of such Vessel as Mortgagee may
direct or approve.
(j) Mortgagee is hereby appointed attorney-in-fact of the Mortgagor upon
the happening of any Event of Default, in the name of the Mortgagor to demand,
collect, receive, compromise and xxx for, so far as may be permitted by law, all
freights, hire, earnings, tolls, rents, issues, revenues, income and profits of
the Vessel and 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 happening of any Event of Default in respect
to the Vessel, or in respect of any insurance thereof from any person
whomsoever, and to make, give and execute in the name of the Mortgagor
acceptances, receipts, releases, or other discharges for the same, whether under
seal or otherwise, and to endorse and accept in the name of the Mortgagor the
other instruments
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in writing with respect to the foregoing. All amounts so received shall first be
applied to operating expenses and then to the Secured Obligations (in any order
selected by the Mortgagee).
(k) If the Mortgagor shall default in the observance or performance of
any of the covenants, conditions or agreements in this First Preferred Ship
Mortgage on its part to be performed or observed (and such default shall
constitute an Event of Default), the Mortgagee may in its discretion, but shall
be under no obligation to, do all acts and make all expenditures necessary to
remedy such default, including, without limitation of the foregoing, entry upon
the Vessel to make repairs, and the Mortgagor shall forthwith reimburse the
Mortgagee, with interest at the interest rate set forth in the Note, for any and
all expenditures so made or incurred and, until the Mortgagor has so reimbursed
the Mortgagee for such expenditures, the amount thereof shall be a debt due from
the Mortgagor to the Mortgagee secured by a first priority claim on the Vessel,
provided, that the making of any such expenditure shall not relieve the
Mortgagor from the consequences of any such default. The Mortgagor shall also
forthwith reimburse the Mortgagee, with interest at the interest rate set forth
in the Note, for any and all advances made or expenses of Mortgagee at any time
in taking the Vessel or otherwise protecting its rights hereunder, and for any
and all damages sustained by the Mortgagee from or by reason of any default or
defaults of the Mortgagor, and the amount of such advances, expenses and damages
shall be a debt due from the Mortgagor to the Mortgagee secured by a first
priority claim on the Vessel.
(l) In the event that the Vessel shall be arrested or detained by a
marshal or other officer of any court of law, equity or admiralty jurisdiction
or by any government or other authority, and shall not be released from arrest
or detention within thirty days from the date of arrest or detention, the
Mortgagor hereby irrevocably authorizes and empowers the Mortgagee and its
appointee or appointees, with full power of substitution, in the name and at the
expense of the Mortgagor, to apply for, claim and receive or take possession of
the Vessel with all rights and powers that the Mortgagor might have and exercise
in any such event. The Mortgagor also irrevocably authorizes and empowers any
such persons to appear, in the name of the Mortgagor, or against the Vessel 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 same has not been released, and to take such proceedings as they or
any of them may deem proper for the defense of such suit and for the release of
the Vessel therefrom in the event that the Mortgagor shall not be taking
proceedings reasonably satisfactory to Mortgagee, and in such case all
expenditures made or incurred by Mortgagee or its appointees for the purpose of
such defense or discharge shall be a debt due from the Mortgagor, its successors
and assigns, to Mortgagee, and shall be secured by the lien of this First
Preferred Ship Mortgage in like manner and extent as if the amount and
description thereof were written herein.
Article 11. Possession Prior to Default. Until one or more of the Events of
Default hereinbefore described shall happen, the Mortgagor shall retain actual
possession of the Vessel, and manage, operate and use the same and collect,
receive, take and use and enjoy the earnings, income, rents, freights, issues
and profits thereof.
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Article 12. Statutory Compliance.
(a) The Mortgagor shall comply with and satisfy all applicable
formalities and provisions of the laws and regulations of the United States of
America, including but not limited to the provisions of 46 U.S.C. Chapter 313 et
seq, as amended, including without limitation the provisions of the Act of
November 23, 1988, P.L. 100-710, 102 Stat. 4735, as amended, in order to
perfect, establish and maintain this First Preferred Ship Mortgage, and any
supplement or amendment thereto upon the Vessel and upon all renewals, as a
first preferred mortgage thereunder, and the Mortgagor shall not sell, mortgage,
transfer, nor merge or consolidate with any other person, firm or corporation,
or dissolve, nor change the flag, name or the port of documentation of the
Vessel, without the written consent of the Mortgagee first obtained. Any such
written consent to any one sale, merger, consolidation, transfer, mortgage or
change of flag, name or port of documentation, shall not be deemed or held to be
a waiver of this provision in respect to any subsequent sale, merger,
consolidation, transfer, mortgage or change of flag, name or port of
documentation.
(b) The Mortgagor will pay and discharge, when due and payable from time
to time, all taxes, assessments, and governmental charges, fines and penalties
lawfully imposed upon the Vessel; provided, however, that the Mortgagor may omit
to pay any such tax, assessment, governmental charge, fine or penalty, so long
as it, in good faith and by appropriate legal proceedings, shall contest the
validity thereof and the Mortgagor shall set aside on its books adequate
reserves in the opinion of the Mortgagor with respect to any such tax,
assessment, charge, fine or penalty so contested, unless and until foreclosure,
distraint, sale or other similar proceedings shall have been commenced with
respect to the property which is subject to any such tax, assessment, charge,
fine or penalty. The right of the Mortgagor to contest the validity of any claim
contemplated by this Article 12 shall in no event be construed as permitting any
libel, attachment or other seizure of the Vessel, under process or color of
legal authority to remain undissolved or undischarged for a period in excess of
30 days.
Article 13. Further Assurances. In the event that this First Preferred Ship
Mortgage, the Security Agreement, the Note, or the Guaranty, or any provision of
this First Preferred Ship Mortgage, the Security Agreement, or the Note, or the
Guaranty, is deemed invalidated, in whole or in part, by any present or future
law or court decision, the Mortgagor shall execute such other or further
instruments, as in the opinion of counsel for the Mortgagee, will carry out the
true intent and spirit of this First Preferred Ship Mortgage. From time to time,
the Mortgagor shall execute such other assurances as, in the opinion of such
counsel, may be required more effectually to subject the Vessel herein mortgaged
or intended to be mortgaged to the payment of the Note and the Guaranty secured
by this First Preferred Ship Mortgage.
Article 14. Lawful Operation. The Mortgagor covenants and agrees to comply with
all the laws, rules, and regulations of the United States of America and/or any
subdivision thereof, the United States Coast Guard, any State and other
governmental authority, pertaining to its operation. The Mortgagor will not
cause or permit the Vessel to be used in any manner contrary to law and will not
engage in any unlawful trade or carry any cargo that will expose the Vessel to
penalty,
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forfeiture, or capture, and will not do, or suffer or permit to be done,
anything which can or may injuriously affect the registration or enrollment or
flag of the Vessel under the laws and regulations of the United States.
Mortgagee does not authorize or consent to any act, failure or omission on the
part of the Mortgagor or any other person which would permit or give rise to the
risk of forfeiture of the Vessel for a violation of any law of the United States
or any other governmental authority.
Article 15. Copy of Entire Agreement. The Mortgagor acknowledges receipt from
the Mortgagee of a true copy of this First Preferred Ship Mortgage which
comprises the entire agreement between the parties respecting the mortgage of
the Vessel, and supersedes any and all other agreements respecting the Vessel,
except as otherwise specifically provided herein.
Article 16. Continuity of Provisions. All the covenants, stipulation and
agreements contained in this First Preferred Ship Mortgage shall be binding upon
and inure to the benefit of the Mortgagor, its successors and assigns, and the
Mortgagee, its successors and assigns. Throughout this First Preferred Ship
Mortgage, the singular shall include the plural.
Article 17. Applicable Law. This instrument shall be construed in accordance
with the statutory and maritime law of the United States, and, where such law is
silent or inapplicable, then under the laws of the State of California.
Article 18. Separate Discharge. Although it is not intended that this First
Preferred Ship Mortgage include any property other than the Vessel, if any
determination is made at any time that for any reason this First Preferred Ship
Mortgage does include any property other than a "Vessel" within the meaning of
Chapter 313 of title 46, United States Code, such property may be separately
discharged from the lien of this First Preferred Ship Mortgage, but only with
the consent of the Mortgagee, by the payment of .01% of the said total amount.
Article 19. Notice. Any notice required or permitted hereunder shall be
sufficient if given in the manner provided in the Security Agreement.
Article 20. Defined Terms. Any capitalized terms which are not otherwise defined
herein shall have the respective meanings, if any, assigned thereto in the
Security Agreement.
Article 21. Remedies Not Exclusive. Each and every right, power and remedy given
to the Mortgagee in this First Preferred Ship Mortgage, the Guaranty, or in the
other Loan Documents shall be cumulative and shall be in addition to every other
right, power and remedy herein specifically given or now or hereafter existing
at law, in equity, in admiralty, or by statute, and each and every right, power
and remedy whether specifically herein given or otherwise existing may be
exercised from time to time and as often and in such order as may be determined
by the Mortgagee, and the exercise or the beginning of the exercise of any
right, power or remedy shall not be construed to be a waiver of the right to
exercise at the same time or thereafter any other right, power or remedy. No
delay or omission by the Mortgagee in the exercise of any right, power or remedy
shall impair any such right, power or remedy or be construed to be a waiver of
any default or to be any acquiescence therein nor shall the acceptance by the
Mortgagee or any
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Holder of any security or of any payment of or on account of the Note or the
Guaranty maturing after a default or of any payment on account of any past
default be construed to be a waiver of any right to take advantage of any future
default or of any past default not completely cured thereby.
IN WITNESS WHEREOF, the Mortgagor has caused these presents to be
executed and attested by its duly authorized officers as of the day and year
first above written.
Attest: FLORIDA CASINO CRUISES, INC.,
a Georgia corporation
By: /s/ By: /s/
------------------------------- --------------------------------
Print Name: Print Name:
Title: Title:
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ACKNOWLEDGMENT
STATE OF ______________
COUNTY OF _____________
BEFORE ME, the undersigned authority, personally appeared _____________________,
to me well known and known to be the person described in and who executed
foregoing instrument, and acknowledged to and before me that he executed said
instrument for the purpose therein expressed.
WITNESS my hand and official seal this ____ day of ________________, 1999.
_________________________________
NOTARY PUBLIC
My Commission Expires:___________
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EXHIBIT A
COPIES OF THE SECURITY AGREEMENT,
SECURED PROMISSORY NOTE, AND CONTINUING GUARANTY
(CONTINUED ON THE FOLLOWING PAGES)
19
