Deed of Covenant to Accompany Statutory Mortgage of Ship
THIS DEED OF COVENANT is made the ....... day of ......... between M/s. AB & Co. Ltd., a company registered under the companies Act, 1956, having its registered office at ................. (hereinafter called the "Mortgagor") of the one part and Bank of ........... a banking corporation constituted under the Banking Companies (Acquisition and Transfer of Undertaking) Act 1970 and having its Head Office at ......... (here in after called the ''Mortgagee'') of the other part.
WHEREAS:
1. The mortgagor is the absolute and unencumbered owner of all the shares of and in the ship by name ....... and which is more particularly described in the schedule hereunder written and is hereinafter referred to as ''the said ship''.
2. The mortgagees have lent to the mortgagor the sum of Rs. ........ upon having the same secured by a statutory mortgage of the said ship and upon the terms hereinafter set out and the mortgagor has executed a statutory mortgage of the said ship bearing even date with this deed and intended to be forthwith registered for securing the said sum of Rs. .... with interest and any other sums which may be owing in accordance with the terms of this deed.
3. This deed is supplemental to the said mortgage and to the security thereby created.
NOW THIS DEED WITNESSETH AS FOLLOWS:
1. The mortgagor doth hereby acknowledge that the mortgagor owes to the mortgagees the principal sum of Rs. ...... (hereinafter called the principal sum) and hereby covenants with the Mortgagees as follows:
a. To pay interest at the rate of ..... per cent per annum on the principal sum or other the sum for the time being owing on the security of the said recited mortgage (hereinafter called the statutory mortgage) in half-yearly payments on the day ...... and on the ....... day of in every year and such interest to be paid on those dated respectively;
b. To repay the said principal amount by four installments that is to say, to pay a sum of Rs. ........ at the end of the first year from the date hereof, an equal sum of Rs. ...... at the expiration of three years from the date hereof, another sum of Rs...... at the expiration of three years from the date hereof and the balance of the principal sum on the expiration of four years from the date hereof, each time to be deemed of the essence of the contract.
c. In the event of default in payment of any installment of interest or the due date thereof as hereinabove provided the Mortgagor will be liable to pay and shall pay interest on such defaulted installment of interest at the rate as aforesaid from the date of default until payment as and way of compound interest.
2. The statutory mortgage and the policies of insurance herein mentioned shall be held by the Mortgages as security for the payment of all monies for principal, interest or otherwise however (hereinafter referred to as ''the mortgagee debt'') which may become due and payable under or in respect of any of the provisions hereof.
3. The mortgagor further covenants with the mortgagees that through out the currency of this security and until all monies secured hereby and by the statutory mortgage have been paid, the mortgage shall-
a. Insure and keep the said ship at all times insured to the extent of her full market value (in the joint names of the mortgagor and the mortgagees) by policies to be approved by the mortgagees against all such risks as are from time to time required by the mortgagees to be covered by insurance with such insurance companies underwriters war risks or other mutual insurance associations and through such brokers in India as the mortgagees shall from time to time approve in writing.
b. Enter and keep the said ship at all times entered in respect of her full value and tonnage in such protection and Indemnity association in India as the mortgagees shall approve for all risks and liabilities for the time being usually covered therein and to arrange for guarantees (if required) to be given to the satisfaction of such association.
c. Punctually pay all such premia, calls, contributions or other sums as may be payable by the Mortgagor in order so to insure and keep the ship insured and entered and to produce all relevant receipts when so required by the mortgagees.
d. Procure that the interest of the mortgagees shall be duly endorsed or noted upon all slips, cover notes, policies. Certificates of entry or other instrument of insurance issued in connection with such insurances or entry and that each and every policy covered by these provisions shall contain or have attached thereto a Loss payable Clause whereby any monies due in respect of claims under the policy shall be payable to the Mortgagees or in accordance with their directions;
e. Procure that all such instrument of insurance shall be deposited with the approved brokers and shall (if required) be delivered up by them to the Mortgagees or their nominees and that the brokers shall give appropriate letters of undertaking stipulating that the brokers will hold all such instruments for the benefit of the Mortgagees.
f. At the outset at any time of the Mortgagees, assign, endorse and deliver to the mortgagees the originals of all policies covered by these provisions and all monies insured by or to become payable under such policies or any of them and the full benefit thereof and to do all such things and execute all such documents as shall create legal title in such policies in the mortgagees.
g. Not do anything nor suffer anything to be done whereby any policy or policies on the ship or any cover afforded by the rules of any Association in which the ship is entered may be or become void and in particular shall not employ the ship or suffer the ship to be employed otherwise than in accordance with the terms of such policies and cover (including any warranties or trading limits therein) without first giving written notice to the mortgagees and obtaining the consent of the insurers concerned and complying with such requirements as to payment of extra premium or otherwise as the insurers may impose;