Exhibit 10.132
READING & XXXXX (A) PTY. LTD.
- to -
CHRISTIANIA BANK OG KREDITKASSE,
NEW YORK BRANCH
__________________________
FIRST PRIORITY MORTGAGE
Dated November 13, 1996
_________________________
XXX XXXXXXXXX
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THIS FIRST PRIORITY MORTGAGE is made the 13th day of November, 1996 by
READING & XXXXX (A) PTY. LTD., ACN 064 532 252, a company organized and
existing under the laws of the State of Western Australia and the
Commonwealth of Australia and having its registered office 00 Xxxxx Xxxx
Xxxx, Xxxx Xxxxx, Xxxx Xxxxxxxxx, (the "Owner") to CHRISTIANIA BANK OG
KREDITKASSE, NEW YORK BRANCH having its office at 00 Xxxx 00xx Xxxxxx, 0xx
Xxxxx, Xxx Xxxx, XX 00000 (the "Mortgagee", which expression shall include
its successors and assigns),
WHEREAS:
(1) The Owner is the sole, absolute and unencumbered owner of sixty-four
sixty-fourth shares of the Rig described in the Schedule 1 hereto.
(2) By a Credit Agreement dated as of November 13, 1996 (as modified,
amended or supplemented from time to time, the "Credit Agreement")
among (i) Reading & Xxxxx Corporation, a Delaware corporation,
("Holdings"), (ii) Reading & Xxxxx Drilling Co. (the "Borrower"),
(iii) the banks party thereto (the "Banks"), (iv) Credit Lyonnais New
York Branch and Banque Indosuez, as documentation agents (the
"Documentation Agents") and (v) the Mortgagee, as administrative
agent, arranger and security trustee for the Banks (in such capacity,
the "Administrative Agent") (the form of which Credit Agreement
together with Exhibit B thereto but without the remaining attachments
is attached hereto as Exhibit 1), it was agreed among other things
that the Banks would make available to the Borrower upon the terms
and conditions therein described a reducing revolving credit facility
in an aggregate amount at any one time outstanding of Three Hundred
Million United States Dollars (US$300,000,000) providing for the
making of Loans and the issuance of and participations in, Letters of
Credit as contemplated therein.
(3) The obligations of the Borrower with respect to the Facility are
evidenced by the Credit Agreement and the other Credit Documents, and
including the promissory notes of the Borrower payable to the order
of the respective Banks (each a "Note" and, collectively, the
"Notes") (the form of which is attached as Exhibit B to the Credit
Agreement).
(4) The Owner, for good and valuable consideration, has authorized,
executed and delivered a Subsidiary Guaranty (as modified, amended or
supplemented from time to time, the "Subsidiary Guaranty"), the form
of which Subsidiary Guaranty is attached hereto as Exhibit 2, in
favor of the Administrative Agent guaranteeing the performance by the
Borrower of its obligations under the Credit Agreement including the
payment, when due, of all Obligations.
(5) This Mortgage is made for the benefit of the Mortgagee to secure the
guaranty by the Owner of (i) the full and prompt payment when due of
(x) the principal of and interest on the Notes issued, and Loans
made, under the Credit Agreement, and all reimbursement obligations
and Unpaid Drawings with respect to the Letters of Credit issued
under the Credit Agreement and (y) all other obligations and
indebtedness (including, without limitation, indemnities, Fees and
interest thereon) of the Borrower to the Secured Creditors (as
hereinafter defined), whether now existing or hereafter incurred
under, arising out of or in connection with the Credit Agreement and
the other Credit Documents including, without limitation, this
Mortgage and the due performance and compliance by the Borrower with
all of the terms, conditions and agreements contained in the Credit
Agreement and the other Credit Documents including, without
limitation, this Mortgage; (ii) any and all sums advanced by the
Mortgagee in order to preserve the Rig or preserve its security
interest in the Rig; (iii) in the event of any proceeding for the
collection or enforcement of any indebtedness, obligations, or
liabilities of the Borrower referred to in clause (i) above, after an
Event of Default shall have occurred and be continuing, the
reasonable expenses of the Mortgagee or re-taking, holding, preparing
for sale or lease, selling or otherwise disposing of or realizing on
the Rig, or of any exercise by the Mortgagee of its rights hereunder,
together with reasonable attorneys' fees of counsel to the Mortgagee
and court costs; and (iv) all amounts paid by any Indemnitee as to
which such Indemnitee has the right to reimbursement under Clause 13
of this Mortgage (all such obligations, liabilities, sums and
expenses referred to in clauses (i) through (iv) above being
collectively referred to as the "Obligations"). It is 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.
(6) This First Priority Mortgage, which is entered into by the Owner in
consideration of the Banks entering into the Credit Agreement and
agreeing to make the Facility available to the Borrower and as a
condition thereto and for other good and valuable consideration
provided by the Banks (the sufficiency of which the Owner hereby
acknowledges).
NOW THIS MORTGAGE WITNESSETH AND IT IS HEREBY AGREED as follows:
1. (A) In this Mortgage unless the context otherwise requires:
"Administrative Agent" shall have the same meaning for such term as
set forth in the Credit Agreement;
"Bank" means any lender listed from time to time on Annex I to the
Credit Agreement (collectively, the "Banks");
"Collateral" shall have the same meaning for such term as set forth
in the Credit Agreement;
"Credit Agreement" means the Credit Agreement, dated as of November
13, 1996, among Holdings, the Borrower, the Banks, the Documentation
Agents and the Administrative Agent first referred to in Recital (2)
hereto, as modified, amended or supplemented from time to time;
"Credit Facility Period" shall mean the period commencing on the date
hereof and ending on the date the Total Commitments have terminated,
no Letters of Credit remain outstanding and the Loans and the Unpaid
Drawings, together with interest, fees and all other obligations are
paid in full;
"Default Rate" shall mean the rate of interest calculated in
accordance with Section 1.08(c) of the Credit Agreement;
"Environmental Approvals" means all approvals, licenses, permits,
exemptions or authorization required under applicable Environmental
Laws;
"Environmental Claims" means any and all administrative, regulatory
or judicial actions, suits, demands, demand letters, claims, liens,
notices of noncompliance or violation, investigations (other than
internal reports prepared by Holdings or any of its Subsidiaries
solely in the ordinary course of such Person's business and not in
response to any third party action or request of any kind) or
proceedings relating in any way to any Environmental Law or any
permit issued, or any approval given, under any such Environmental
Law (hereafter, "Claims"), including, without limitation, (a) any and
all Claims by governmental or regulatory authorities for enforcement,
cleanup, removal, response, remedial or other actions or damages
pursuant to any applicable Environmental Law, and (b) any and all
Claims by any third party seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive relief
resulting from Hazardous Materials arising from alleged injury or
threat of injury to health, safety or the environment;
"Environmental Incident" means (i) any release of Environmentally
Sensitive Material from the Rig, (ii) any incident in which
Environmentally Sensitive Material is released from a vessel other
than the Rig and which involves collision between the Rig and such
other vessel or some other incident of navigation or operation, in
either case, where the Rig or the Owner are actually or allegedly at
fault or otherwise liable (in whole or in part) or (iii) any incident
in which Environmentally Sensitive Material is released from a vessel
other than the Rig and where the Rig is actually or potentially
liable to be arrested as a result and/or where the Owner is actually
or allegedly at fault or otherwise liable (and, in each such case,
"release" shall mean disposing, discharging, injecting, spilling,
leaking, leaching, dumping, emitting, escaping, emptying, seeping,
placing and the like, into or upon any land or water or air, or
otherwise entering into the environment);
"Environmental Law" means any applicable Federal, state, foreign or
local statute, law, rule, regulation, ordinance, code, guide, policy
and rule of common law now or hereafter in effect and in each case as
amended, and any judicial or administrative interpretation thereof,
including any judicial or administrative order, consent, decree or
judgement, relating to the environment, health, safety or Hazardous
Materials, including, without limitation, CERCLA; RCRA; the Federal
Water Pollution Control Act, as amended, 33 U.S.C. 1251 et seq.;
the Toxic Substances Control Act, 15 U.S.C. 7401 et seq.; the Clean
Air Act, 42 U.S.C. 7401 et seq.; the Safe Drinking Water Act, 42
U.S.C. 3808 et seq.; the Oil Pollution Act of 1990, 33 U.S.C.
2701 et seq. and any applicable state and local or foreign
counterparts or equivalents;
"Fees" shall have the same meaning for such term as set forth in the
Credit Agreement;
"Hazardous Materials" means (a) any petroleum or petroleum products,
radioactive materials, asbestos in any form that is or could become
friable, urea formaldehyde foam insulation, transformers or other
equipment that contained, electric fluid containing levels of
polychlorinated biphenyls, and radon gas; (b) any chemicals,
materials or substances defined as or included in the definition of
"hazardous substances," "hazardous waste," "hazardous materials,"
"extremely hazardous waste," "restricted hazardous waste," "toxic
substances," "toxic pollutants," "contaminants," or "pollutants," or
words of similar import, under any applicable Environmental Law; and
(c) any other chemical, material or substance, exposure to which is
prohibited, limited or regulated by any governmental authority;
"Indemnitee" shall have the meaning set forth in Section 13(A);
"Insurances" includes all policies and contracts of insurance (which
expression includes all entries of the Rig in a protection and
indemnity association) which are from time to time taken out or
entered into in respect of the Rig or otherwise by the Owner (whether
in the sole name of the Owner or in the joint names of the Owner and
the Administrative Agent) and all benefits thereof (including claims
of whatsoever nature and return of premiums);
"Interest Period" shall have the same meaning for such term as set
forth in Section 1.09 of the Credit Agreement;
"Letter of Credit" shall have the same meaning for such term as set
forth in Section 2.01(a) of the Credit Agreement;
"Loan(s)" shall have the same meaning for such term as set forth in
the Credit Agreement;
"Major Casualty" means any casualty to the Rig in respect whereof the
claim or the aggregate of the claims against all insurers, before
adjustment for any relevant franchise or deductible, exceeds Five
Hundred Thousand United States Dollars (US$500,000) or the equivalent
in any other currency;
"Note" means each promissory note of the Borrower referred to in
Recital (3) hereto and in Section 1.05(a) of the Credit Agreement;
"Obligations" shall have the meaning provided in Recital (5) hereto;
"Oil Pollution Act 1990" means the Oil Pollution Xxx 0000 (33 U.S.C.
2701 et seq.), as amended;
"Other Rigs" means, individually or collectively, each of (i) the
semi-submersible drilling rig XXXX XXXXX owned by the Borrower
documented under the laws and flag of the United States with Official
Number 906283 of 19,928 gross registered tons and 14,948 net
registered tons; (ii) the offshore drilling rig X. X. XXXX owned by
Reading & Xxxxx Exploration Co. ("R&B Exploration") documented under
the laws and flag of the United States with Official Number 583169 of
5,383 gross registered tons and 4,185 net registered tons; (iii) the
offshore drilling rig XXXXXXX XXXXXX owned by Reading and Xxxxx
Borneo Drilling Co., Ltd. documented under the laws and flag of the
Republic of Panama with Patente Number 6618-76-CH of 5,829 gross
registered tons and 1,748 net registered tons; (iv) the drilling rig
X. X. XXXXXXX owned by R&B Exploration documented under the laws and
flag of United States with Official Number 626904 of 6,494 gross
registered tons and 5,834 net registered tons; (v) the semi-
submersible drilling rig X. X. XxXXXX owned by the Borrower
documented under the laws and flag of the Republic of Panama with
Official Number 25384-PEXT of 15,453 gross registered tons and 4,636
net registered tons; (vi) the semi-submersible drilling rig RIG 41
owned by the Borrower documented under the laws and flag of the
Republic of Panama with the Patente Number to be assigned on the date
hereof of 10,078 gross registered tons and 3,024 net registered tons;
(vii) the xxxx-up drilling rig XXXXXX X. XXXX owned by HRB Rig
Corporation documented under the laws and flag of the United States
of America with Official Number 642693 of 4,121 gross registered tons
and 3,079 net registered tons; (vii) the xxxx-up drilling rig X. X.
XxXXXXXXXX owned by Reading & Xxxxx Offshore, Limited documented
under the laws and flag of the United States of America with Official
Number 562059 of 5,525 gross registered tons and 1,657 net registered
tons; (viii) the xxxx-up drilling rig XXXXXXXX XXXX owned by the
Borrower documented under the laws and flag of the United States of
America with Official Number 601699 of 4,701 gross registered tons
and 4,701 net registered tons; (ix) the xxxx-up drilling rig X. X.
XXXXX owned by the Borrower documented under the laws and flag of the
United States of America with Official Number 651645 of 4,186 gross
registered tons and 3,090 net registered tons; (x) the xxxx-up
drilling rig XXXXX X. XXXXXX owned by the Borrower documented under
the laws and flag of the United States of America with Official
Number 645360 of 4,121 gross registered tons and 3,079 net registered
tons; (xi) the xxxx-up drilling rig XXXXXX X. XXXXXXXX owned by
Reading & Xxxxx Offshore, Limited documented under the laws and flag
of the United States of America with Official Number 651646 of 3,729
gross registered tons and 2,496 net registered tons; and (xii) the
xxxx-up drilling rig X.X. XXXXXXXX to be owned by HRB Rig Corporation
documented under the laws and flag of the United States of America
with Official Number 673210 of 6,096 gross registered tons and 6,096
net registered tons;
"Permitted Liens" means: (1) liens incident to expenses of current
operations, other than for master's and crew's wages, incurred in the
ordinary course of business of the Owner and due and payable for not
more than thirty (30) days (or being contested in good faith,
provided such liens are not in excess of U.S.$5,000,000.00, and if in
excess thereof, then the Owner shall, upon the written request of the
Administrative Agent, provide a bond or other security satisfactory
to the Administrative Agent); (2) liens for master's and crew's wages
not yet due and payable; (3) liens for taxes, assessments,
governmental charges, fines and penalties not at the time delinquent
(unless being contested in good faith, provided such liens are not in
excess of U.S.$5,000,000.00, and if in excess thereof, then the Owner
shall, upon the written request of the Administrative Agent, provide
a bond or other security satisfactory to the Administrative Agent);
(4) liens for general average and salvage (including contract
salvage); (5) liens for claims covered by valid policies of insurance
meeting the requirements of Clause 6 hereof (except that no lien
shall be deemed not covered by insurance to the extent insurance in
force would cover the amount secured by the lien but for any
applicable deductible amount approved by the Administrative Agent);
(6) liens arising pursuant to any judgment or to an order of
attachment, distraint or similar legal process arising in connection
with legal proceedings, but only if and so long as the execution or
other enforcement thereof is not unstayed for more than 30
consecutive days; (7) any lien for the payment or discharge of which
provisions satisfactory to the Administrative Agent have been made as
evidenced by the Administrative Agent's written consent to such lien;
(8) any lien in favor of the Banks; and provided that Permitted Liens
shall not include any liens described in subclauses (1) through (7)
above unless they: (i) are subordinate to the lien of this Mortgage
or (ii) constitute a maritime lien which would in any event be
entitled as such to priority over the Mortgage under the United
States shipping laws or other applicable laws relating to the Rig's
trading pattern. Nothing herein shall be deemed a waiver of the
priority preferred lien status of this Mortgage;
"Protection and indemnity risks" means the usual risks covered by
protection and indemnity associations of international repute
including the proportion not recoverable in case of collision under
the ordinary running-down clause (unless such is recoverable under
the relevant hull and machinery coverage);
"Requisition Compensation" means all moneys or other compensation
payable during the Credit Facility Period by reason of requisition
for title or other compulsory acquisition of the Rig otherwise than
by requisition for hire;
"Rig" means the vessel referred to in Recital (1) hereto and more
fully described in Schedule 1 hereto and includes any share or
interest therein and her engines, machinery, boats, tackle, outfit,
spare gear, fuel, consumable or other stores, belongings and
appurtenances whether on board or ashore and whether now owned or
hereafter acquired (but excluding therefrom any leased equipment
owned by third parties);
"Secured Creditors" shall mean the Banks, the Letter of Credit Issuer
and the Administrative Agent under and as defined in the Credit
Agreement;
"Security Documents" shall have the same meaning for such term as set
forth in the Credit Agreement;
"Security Interest" means a mortgage, charge (whether fixed or
floating), pledge, lien, hypothecation, assignment, trust
arrangement, title retention or other security interest or
arrangement of any kind whatsoever;
"Subsidiary Guaranty" means the agreement dated as of November 13,
1996 made by the Owner in favor of the Administrative Agent as first
referred to in Recital (4) hereto, as modified, amended or
supplemented from time to time;
"Taxes" shall have the same meaning for such term as set forth in the
Credit Agreement;
"Total Commitment" shall have the same meaning for such term as set
forth in the Credit Agreement;
"Total Loss" means (a) the actual, constructive, arranged, agreed, or
compromised Total Loss of the Rig; (b) the requisition for title or
other compulsory acquisition or forfeiture of the Rig otherwise than
by requisition for hire; (c) the capture, seizure, arrest, detention
or confiscation of the Rig by any government or by persons acting or
purporting to act on behalf of any government unless the Rig be
released from such capture, seizure, arrest or detention within
ninety (90) days after the occurrence thereof;
"United States Dollars" and "US$" means the lawful currency of the
United States of America;
"Unpaid Drawing" shall have the same meaning for such term as set
forth in the Credit Agreement;
(B) In Clause 5(A) hereof:
(i) "Excess risks" means the proportion of claims for general
average and salvage charges and under the ordinary
running-down clause not recoverable in consequence of the
value at which a vessel is assessed for the purpose of
such claim exceeding her insured value;
(ii) "Protection and indemnity risks" means the usual risks
covered by a protection and indemnity association
including the proportion not recoverable in case of
collision under the ordinary running-down clause;
(iii) "War risks" includes the risk of mines and all risks
excluded from the standard form of English marine policy
by the free of capture and seizure clause.
(C) This Mortgage shall be read together with the Credit Agreement,
the Notes, the Subsidiary Guaranty and the other Credit
Security Documents.
(D) The Owner hereby represents and warrants to the Mortgagee that:
(i) the Owner is the sole legal and beneficial owner of the
whole of the Rig and neither the whole nor any share in
the Rig is subject to any Security Interest (except for
Permitted Liens and the lien of this Mortgage);
(ii) the Owner has not sold or transferred, or agreed to sell
or transfer, title to the Rig or any share therein;
(iii) the Owner is a corporation duly organized and validly
existing and in good standing under the laws of the State
of Western Australia and the Commonwealth of Australia;
(iv) the Owner has full power and authority (i) to register
the Rig in its name under Australian flag, (ii) to
execute and deliver this Mortgage, (iii) to mortgage the
Rig as security for the Obligations and (iv) to comply
with the provisions of, and perform all its obligations
under, this Mortgage;
(v) the Owner has complied with all statutory and other
material requirements relating to the ownership,
registration and operation of the Rig;
(vi) the Owner has taken all necessary action to authorize the
execution and delivery of this Mortgage and this Mortgage
constitutes, the legal, valid and binding obligation of
the Owner enforceable against the Owner in accordance
with its terms (except to the extent limited by
applicable bankruptcy, reorganization, insolvency,
moratorium or other laws of general application relating
to or affecting the enforcement of creditors' rights as
from time to time in effect and general equitable
principles) and when filed with the Registrar of Ships at
the Australian Shipping Registration Office and the
Australian Securities Commission will create a legal,
valid and enforceable first preferred mortgage lien on
the Rig;
(vii) the entry into and performance by the Owner of this
Mortgage does not and will not during the Credit Facility
Period violate in any respect (i) any law or regulation
of any governmental or official authority or body, or
(ii) any of the constitutive documents of the Owner
including its Memorandum and Articles of Association, as
amended from time to time, or (iii) any material
agreement, contract or other undertaking to which the
Owner is a party or which is binding upon the Owner or
any of its assets;
(viii) all consents, licenses, approvals and authorizations
required in connection with the entry into, performance,
validity and enforceability of this Mortgage and the
transactions contemplated hereby and thereby have been
obtained and are in full force and effect and will be so
maintained during the Credit Facility Period;
(ix) save for such registrations and filings as are referred
to in this Mortgage, it is not necessary for the
legality, validity, enforceability or admissibility in
evidence of this Mortgage that it or any document
relating thereto be registered, filed, recorded or
enrolled with any court or authority in any relevant
jurisdiction or that any stamp, registration or similar
taxes be paid on or in relation to this Mortgage;
(x) the Owner is in compliance with all applicable
Environmental Laws and all Environmental Approvals
relating to the Rig, its operation and management and the
business of the Owner (as now conducted and reasonably
anticipated to be conducted in the future) have been
obtained or complied with;
(xi) no Environmental Claim has been made or threatened
against the Owner, the Approved Manager or otherwise in
connection with the Rig; and
(xii) no Environmental Incident which has resulted, or which
could reasonably be expected to result, in an
Environmental Claim in excess of US$200,000 has occurred.
2. In order to induce Banks to enter into the Credit Agreement and to
make the Facility available thereunder and in consideration of other
valuable consideration (receipt whereof is hereby acknowledged by the
Owner) the Owner hereby covenants with the Mortgagee as follows:
(A) The Owner shall pay the full amount of all moneys comprising
the Obligations as and when the same shall become due and
payable in accordance with the terms of the Subsidiary Guaranty
and the other Credit Documents.
(B) The Owner will pay to or indemnify the Mortgagee for such
additional amounts as may be necessary in order that all
payments under this Mortgage after deduction of, for, or on
account of every present or future tax, assessment and
governmental charge imposed by any competent authority in the
State of Western Australia or Commonwealth of Australia (or in
such other jurisdictions to the revenue laws of which the Owner
may for the time being be subject) shall be no less than such
payments would have been had there been no such tax, assessment
or charge.
3. By way of security for the performance of the Obligations THE OWNER
as BENEFICIAL OWNER HEREBY MORTGAGES AND CHARGES to and in favor of
the Mortgagee all the Owner's interest in the Rig, including, without
limitation, all 64 shares in the Rig, the Earnings and the Insurances
(all of which the Owner hereby warrants to be free at the date hereof
from any other charge or incumbrance whatsoever, other than Permitted
Liens, if any) and Requisition Compensation and without prejudice to
the generality of the foregoing THE OWNER HEREBY ASSIGNS AND AGREES
to assign to the Mortgagee (or to procure to assign to the Mortgagee
as the case may be) the Earnings and the Insurances and Requisition
Compensation as defined herein PROVIDED HOWEVER that any sums
receivable in respect of the Insurances shall be payable as follows:
(A) There shall be paid to the Mortgagee any and every sum
receivable in respect of a Total Loss.
(B) Unless and until Underwriters have been otherwise instructed by
notice in writing from the Mortgagee, (i) any loss under any
insurance on the Rig with respect to protection and indemnity
risks may be paid directly to the Owner to reimburse it for any
loss, damage or expense incurred by it and covered by such
insurance or to the person to whom any liability covered by
such insurance has been incurred, (ii) in the case of any loss
(other than a Total Loss or a loss covered by (i) above) under
any insurance with respect to the Rig involving any damage to
the Rig, the Underwriters may pay directly for the repair,
salvage, liability or other charges involved or, if the Owners
shall have first fully repaired the damage and paid the cost
thereof, or discharged the liability or paid all of the salvage
or other charges, then the Underwriters may pay the Owners as
reimbursement therefor, provided, however, that if such damage
involves a loss in excess of U.S. $1,000,000 or its equivalent
the Underwriters shall not make such payment without first
obtaining the written consent thereto of the Mortgagee.
4. It is declared and agreed that the security created by this Mortgage
shall be held by the Mortgagee as a continuing security for the
performance of all Obligations under the Credit Documents and the
performance and observance of and compliance with all of the
covenants, terms and conditions therein and herein contained and that
the security so created shall not be satisfied by any intermediate
payment or satisfaction of any part of the amount hereby and thereby
secured and that the security so created shall be in addition to and
shall not in any way be prejudiced or affected by any collateral or
other security now or hereafter held by the Mortgagee for all or any
part of the moneys hereby and thereby secured and that every power
and remedy given to the Mortgagee hereunder shall be in addition to,
and not a limitation of, any and every other power or remedy vested
in the Mortgagee under the Subsidiary Guaranty and the other Credit
Documents or any other document or instrument entered into pursuant
to the Credit Agreement or at law and that all the powers so vested
in the Mortgagee may be exercised from time to time and as often as
the Mortgagee may deem expedient.
5. The Owner further covenants with the Mortgagee and undertakes that:
(A)(i) The Owner shall, at its own expense, when and so long as
the Obligations remain outstanding, insure the Rig and
keep her insured, or cause the Rig to be insured, in
lawful money of the United States, in such amounts, for
such risks (including without limitation, hull and
machinery/increased value, protection and indemnity
risks, pollution liability, and war risks), in such form
(including without limitation, the form of the loss
payable clause and the designation of named assureds) and
with such first class insurance companies, underwriters,
funds, mutual insurance associations or clubs, as shall
be reasonably satisfactory to the Mortgagee. With
respect to hull and machinery/increased value insurance,
including war risk, the Owner shall insure the Rig and
keep her insured, or cause the Rig to be insured, for an
amount which is at least the full commercial value of the
Rig, and when such amount is aggregated with the amount
of such insurance coverage on the Other Rigs, such
aggregate amount shall be at least 110% of the aggregate
amount of the Total Commitment. The Rig shall in no
event be insured for an amount less than the agreed
valuation as set forth in the applicable marine and war
risk policies. Such insurance shall cover marine and war
risk perils, on hull and machinery, with deductibles not
in excess of US$500,000 (such deductibles not to apply in
the case of Total Loss of the Rig), and shall be
maintained in the broadest forms available in the
American, British and Scandinavian insurance markets or
in such other major international markets reasonably
acceptable to the Mortgagee. The Owner shall maintain,
or cause to be maintained, protection and indemnity or
equivalent insurance, including war risk protection and
indemnity coverage and coverage against pollution
liability, in an amount not less than US$100,000,000 (or,
with respect to pollution liability coverage, such
greater amount as may be required from time to time by
the Oil Pollution Xxx 0000, or other Environmental Laws),
as and when applicable to the Rig and its operations,
through underwriters or associations acceptable to the
Mortgagee. In addition, the Owner shall, at its own
expense, furnish to the Mortgagee a mortgagee's single
interest policy providing coverage which, when aggregated
with the mortgagee's interest insurance furnished to the
Mortgagee in respect of the Other Rigs, shall be in an
amount equal to at least 110% of the aggregate amount of
the Total Commitment (or in lieu of such mortgagee's
interest insurance Owner shall cause the hull and
machinery/increased value insurance to be endorsed to
afford breach of warranty coverage for the benefit of the
Mortgagee). Such mortgagee's interest insurance and any
additional insurance policies for the benefit of the
Mortgagee shall be maintained in the broadest form
available in the American, British and Scandinavian
markets or other major international markets acceptable
to the Mortgagee through underwriters acceptable to the
Mortgagee. The Rig shall not operate in or proceed into
any area then excluded by trading warranties under its
marine or war risk policies (including protection and
indemnity) without obtaining any necessary additional
coverage, satisfactory in form and substance, and
evidence of which shall be furnished, to the Mortgagee.
(ii) The policy or policies of insurance shall be issued by
responsible underwriters reasonably acceptable to the
Mortgagee, shall contain conditions, terms, stipulations
and insuring covenants satisfactory to the Mortgagee, and
shall be kept in full force and effect by the Owner so
long as the Obligations shall be outstanding. All such
policies, binders and other interim insurance contracts
shall be executed and issued in the name of the Owner and
shall, to the extent required herein, provide that loss
be payable to the Mortgagee for distribution by it to
itself, the Banks and the Owner as their interests may
appear, and shall provide for at least ten days' prior
notice to be given to the Mortgagee by the underwriters
or association in the event of cancellation or the
failure of the Owner to pay any premium or call which
would suspend coverage under the policy or the payment of
a claim thereunder. Certified copies of all such
policies, binders and other interim insurance contracts
shall be deposited with the Mortgagee. Originals shall
also be provided upon the request of the Mortgagee. The
Owner shall furnish to the Mortgagee annually a detailed
report signed by a firm of marine insurance brokers
satisfactory to the Mortgagee as to the insurance
maintained in respect of the Rig, as to their opinion as
to the adequacy thereof and as to compliance with the
provisions of this Clause 5(A).
Unless otherwise required by the Mortgagee by notice to
the underwriters, although the following insurance is
payable to the Mortgagee, (i) any loss under any
insurance on the Rig with respect to protection and
indemnity risks may be paid directly to the Owner to
reimburse it for any loss, damage or expense incurred by
it and covered by such insurance or to the person to whom
any liability covered by such insurance has been incurred
and (ii) in the case of any loss (other than a loss
covered by (i) above or by the next following paragraph
of this Clause 5(A)(ii) under any insurance with respect
to the Rig involving any damage to the Rig, the
underwriters may pay directly for the repair, salvage or
other charges involved or, if the Owner shall have first
fully repaired the damage or paid all of the salvage or
other charges, may pay the Owner as reimbursement
therefor; provided, however, that if such damage involves
a before deductible loss in excess of US$1,000,000, the
underwriters shall not make such payment without first
obtaining the written consent thereto of the Mortgagee
(which consent shall not be unreasonably withheld). Any
loss covered by this paragraph which is paid to the
Mortgagee but which might have been paid, in accordance
with the provisions of this paragraph, directly to the
Owner or others, shall be paid by the Mortgagee to, or as
directed by, the Owner and all other payments to the
Mortgagee of losses covered by this paragraph shall be
applied by the Mortgagee in accordance with Clause 10.
In the event of an actual or constructive Total Loss or a
compromised constructive Total Loss or requisition of
title, all insurance payments therefor shall be paid to
the Mortgagee. The Owner shall not declare or agree with
the underwriters that the Rig is a constructive or
compromised, agreed or arranged constructive Total Loss
without the prior written consent of the Mortgagee.
(iii) In the event of an actual or constructive Total Loss of the
Rig, the Mortgagee shall retain out of the insurance payments
received on account of such loss any sum or sums that shall be
or become owing to the Secured Creditors under the Credit
Documents, whether or not the same be then due and payable,
together with accrued interest and the cost, if any, of
collecting the insurance, and pay the balance as provided in
Clause 10.
(iv) The Owner shall comply with and satisfy all of the provisions
of any applicable law, regulation, proclamation or order
concerning financial responsibility for liabilities imposed on
the Owner or the Rig with respect to the carriage of passengers
or pollution, and will maintain, or cause to be maintained, all
certificates or other evidence of financial responsibility as
may be required by any such law, regulation, proclamation or
order with respect to the trade which the Rig from time to time
is engaged in.
(v) The Owner shall renew all insurances as they expire and
so as to insure that there is no gap in coverage, keep
the Mortgagee advised of the progress of such renewals,
and procure that the insurers shall promptly confirm in
writing to the Mortgagee as and when each such renewal is
effected.
(vi) The Owner shall punctually pay all premiums, calls,
contributions or other sums payable in respect of all such
insurances and produce all relevant receipts when so required
by the Mortgagee.
(vii) The Owner shall arrange for the execution of such guarantees as
may from time to time be required by any protection and
indemnity or war risks association.
(viii) The Owner shall not employ the Rig or suffer the Rig to
be employed otherwise than in conformity with the terms
of the instruments of insurance aforesaid relative to the
Rig (including any warranties, express or implied,
therein) without first obtaining the consent of the
insurers to such employment and complying with such
requirements as to extra premium or otherwise as the
insurers may prescribe.
(B) maintain its existence as a corporation in good standing duly
organized under the laws of the State of Western Australia and
Commonwealth of Australia;
(C) Not to change the name of the Rig without the Mortgagee's prior
approval and to keep the Rig registered as an Australian Rig
and not do or suffer to be done anything, or omit to do
anything the doing or omission of which could or might result
in such registration being forfeited or imperilled or which
could or might result in the Rig being required to be
registered otherwise than as an Australian Rig and not to
register the Rig or permit its registration under any other
flag or at any other port without the prior written consent of
the Mortgagee.
(D) not without the previous consent in writing of the Mortgagee
make any modification to the Rig which would or might
materially alter the structure or type or reduce the
performance characteristics of the Rig or materially reduce the
value of the Rig;
(E) To keep the Rig in a good and efficient state of repair
consistent with the ownership and operating practices of
first-class rig owners and operators so as to maintain her
present class (namely Rig Class +A1 Self-Elevating Drilling
Rig) and so as to comply with the provisions of the Shipping
Registration Xxx 0000 (Commonwealth of Australia) and all other
laws, regulations and requirements (statutory or otherwise)
from time to time applicable to vessels registered in Australia
and to procure that all repairs to or replacement of any
damaged, worn or lost parts or equipment be effected in such
manner (both as regards workmanship and quality of materials)
as not to diminish the value of the Rig;
(F) procure that all repairs to or replacement of any damaged, worn
or lost parts or equipment be effected in such manner (both as
regards workmanship and quality of materials) as to not
diminish the value of the Rig and not to remove any material
part of, or item of equipment installed on, the Rig unless the
part or item so removed is forthwith replaced by a suitable
part or item which is in the same condition as or better
condition than the part or item removed, is free from any
Security Interest (other than Permitted Liens) in favor of any
person other than the Mortgagee and becomes on installation on
the Rig the property of the Owner and subject to the security
constituted by this Mortgage;
(G) submit the Rig to such periodical or other surveys as may be
required for classification purposes and if so required to
supply to the Mortgagee copies of all survey reports issued in
respect thereof;
(H) permit the representatives of the Mortgagee or independent
surveyors representing the Mortgagee to board the Rig at all
reasonable times and upon reasonable notice for the purpose of
inspecting her condition or for the purpose of satisfying
themselves in regard to proposed or executed repairs and to
afford all proper facilities for such inspections;
(I) promptly pay and discharge all debts, damages and liabilities
whatsoever which have given or may give rise to maritime or
possessory liens (other than Permitted Liens) on or claims
enforceable against the Rig and all tolls, dues, taxes,
assessments, governmental charges, fines and penalties lawfully
charged on or in respect of the Rig and all other outgoings
whatsoever in respect of the Rig and in the event of arrest of
the Rig pursuant to legal process, or in the event of her
detention in exercise or purported exercise of any such lien or
claim as aforesaid, procure the release of the Rig from such
arrest or detention forthwith upon receiving notice thereof by
providing bail or otherwise as the circumstances may require;
(J) not employ the Rig or allow her employment in any trade or
business which is unlawful under the laws of any relevant
jurisdiction or in carrying illicit or prohibited goods or in
any manner whatsoever which may render her liable to
destruction, seizure or confiscation and in the event of
hostilities in any part of the world (whether war be declared
or not) not employ the Rig or suffer her employment in carrying
any contraband goods or to enter or trade to any zone which is
declared a war zone by any government or by the war risks
insurers of the Rig unless there shall have been effected by
the Owner (at its expense) such special, additional or modified
insurance cover as the Mortgagee may require;
(K) Promptly to furnish to the Mortgagee all such information as it
may from time to time require regarding the Rig, her
employment, position and engagements, particulars of all
towages and salvages and copies of all charters and other
contracts for her employment or otherwise howsoever concerning
her.
(L) To notify the Mortgagee forthwith by cable or telex confirmed
by letter of:
(i) Any accident to the Rig involving repairs the cost
whereof will or is likely to be a Major Casualty;
(ii) Any occurrence in consequence whereof the Rig has become
or is likely to become a Total Loss;
(iii) Any requirement or recommendation made by any insurer or
classification society or by any competent authority
which is not immediately complied with;
(iv) Any arrest of the Rig or the exercise or purported
exercise of any lien on the Rig or any requisition of the
Rig for hire;
(v) any intended dry docking of the Rig, as to which the
Owner shall give the Mortgagee ten (10) days prior
notice, provided, that in the event of any emergency dry
docking of the Rig, the Owner shall immediately notify
the Mortgagee; and
(vi) any intended deactivation or lay-up of the Rig (other
than for normal periods of inactivity between contracts
for the Rig during which periods the Rig remains manned)
and obtain the prior written consent of the Mortgagee;
(M) keep proper books of account in respect of the Rig and as and
when the Mortgagee may so reasonably require make such books
available for inspection on behalf of the Mortgagee and furnish
satisfactory evidence that the wages and allotments and the
insurance of the master and crew are being regularly paid and
that all deductions from crew's wages in respect of tax and/or
social security liability are being properly accounted for and
that the master has no claim for disbursements other than those
incurred by him in the ordinary course of trading on the voyage
then in progress;
(N) observe the obligations contained in Sections 7 and 8 of the
Credit Agreement which apply to the Rig and the Owner, and in
pursuance thereof such obligations shall be incorporated in and
deemed to form part of this Mortgage mutatis mutandis;
(O) not without the previous consent in writing of the Mortgagee
(such consent not to be unreasonably withheld), put the Rig
into the possession of any person for the purpose of work being
done upon her in an amount exceeding or likely to exceed Xxx
Xxxxxxx Xxxx Xxxxxxx Xxxxxxxx Xxxxxx Xxxxxx Dollars
(US$2,500,000) (or the equivalent in any other currency) unless
such person shall first have given to the Mortgagee and in
terms reasonably satisfactory to it a written undertaking not
to exercise any lien on the Rig for the cost of such work or
otherwise;
(P) Reimburse the Mortgagee promptly, with interest at the Default
Rate, for any and all expenditures which the Mortgagee may from
time to time make, lay out or expend in providing such
protection in respect of insurance, discharge of liens, taxes,
dues, assessments, governmental charges, fines and penalties
lawfully imposed, repairs, attorneys' fees and other matters as
the Shipowner is obligated herein to provide, but fails to
provide. 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 to make any such
expenditures, nor shall the making thereof relieve the Owner of
any default in that respect.
(Q) To pay on demand to the Mortgagee (or as it may direct) the
amount of all investigation and legal expenses of any kind
whatsoever, stamp duties (if any), registration fees and any
other charges incurred reasonably and in good faith by the
Mortgagee in connection with the preparation, completion,
enforcement and registration of the Security Documents or
otherwise in connection with the Obligations and the security
therefor.
(R) comply, or procure compliance with, all Environmental Laws and
Environmental Approvals relating to the Rig, its operation or
management and the business of the Owner from time to time;
(S) notify the Mortgagee forthwith upon:
(i) any Environmental Claim which could reasonably be
expected to result in damages in excess of US$200,000
being or made against the Owner, or otherwise in
connection with the Rig; or
(ii) any Environmental Incident occurring, and keep the
Mortgagee advised, in writing on such regular basis and
in such detail as the Mortgagee shall require, of the
Owner's response to such Environmental Claim or
Environmental Incident;
(T) not sell, mortgage or transfer the Rig (other than as permitted
by the Credit Agreement) without the written consent of the
Mortgagee having first been obtained, and any such written
consent to any one such sale, mortgage or transfer shall not be
construed to be a waiver of this provision with respect to any
subsequent proposed sale, mortgage or transfer. Any such sale,
mortgage or transfer shall be subject to the provisions of this
Mortgage and the lien it creates. The Owner shall not charter
the Rig to, or permit the Rig to serve under any contract with,
a person included within the definition of (i) "national" of a
"designated foreign country," or "specially designated
national" of a "designated foreign country," in the Foreign
Assets Control Regulations or the Cuban Assets Control
Regulations of the United States Treasury Department, 31 C.F.R.
Parts 500 and 515, in each case as amended, (ii) "Government of
Libya", "entity of the Government of Libya" or "Libyan entity"
in the Libyan Sanctions Regulations of the United States
Treasury Department, 31 C.F.R. Part 550, as amended, or (iii)
"Government of Iraq", "entity of the Government of Iraq" or
"Iraqi Government entity" in the Iraqi Sanctions Regulations,
56 Fed. Reg. 2112 (1991) to be codified at 31 C.F.R. Part 575,
as amended, all within the meaning of said Regulations or of
any regulations, interpretations or rulings issued thereunder,
or sail in Cuban waters or enter any Cuban port for any purpose
or engage in any transaction that violates any provision of
said Regulations or that violates any provision of the Iranian
Transactions Regulations, 31 C.F.R. Part 560, as amended, the
Foreign Funds Control Regulations, 31 C.F.R. Part 520, as
amended, the Transaction Control Regulations, 31 C.F.R. Part
505, as amended, the Haitian Transaction Regulations, 31 C.F.R.
Part 580, as amended, the Foreign Assets Control Regulations,
31 C.F.R. Part 500, as amended, or Executive Orders 12810 and
12831; if such transaction or violation would (i) expose the
Mortgagee to any penalty, sanction or investigation or (ii)
jeopardize the lien created by this Mortgage or (iii) have a
material adverse effect on the Owner or the operation of the
Rig;
(U) shall not cause or permit the Rig to be operated in any manner
contrary to law, shall not abandon the Rig in a foreign port,
shall not engage in any unlawful trade or violate any law or
carry any cargo that shall expose the Rig to penalty,
forfeiture or capture, and shall not do, or suffer or permit to
be done, anything which can or may injuriously affect the
registration or enrollment of the Rig under the laws of
Australia and will at all times keep the Rig duly documented
thereunder.
6. (A) The Mortgagee shall without prejudice to its other rights and
powers hereunder be entitled (but not bound) at any time and as
often as may be necessary to take any such action as it may in
its discretion think fit for the purpose of protecting the
security created by the Credit Agreement, the Subsidiary
Guaranty and other Credit Documents and each and every expense
or liability so incurred by the Secured Creditors in or about
the protection of the security shall be repayable to it by the
Owner on demand together with interest thereon at the Default
Rate from the date whereon such expense or liability was
incurred by the Mortgagee until the date of actual receipt (as
well after as before any judgment).
(B) Without prejudice to the generality of the foregoing:
(i) In every case that the provisions of Clause 5(A) hereof
or any of them shall not be complied with, the Mortgagee
shall be at liberty to effect and thereafter to maintain
all such insurances upon the Rig as in its discretion it
may think fit;
(ii) In the event that the provisions of Clause 5(C) or 5(D)
hereof or any of them shall not be complied with, the
Mortgagee shall be at liberty to arrange for the carrying
out of such repairs and surveys as it may deem expedient
or necessary;
(iii) In the event that the provisions of Clause 5(F) hereof or
any of them shall not be complied with, the Mortgagee
shall be at liberty to pay and discharge all such debts,
damages and liabilities as are therein mentioned and to
take any such measures as it may deem expedient or
necessary for the purpose of securing the release of the
Rig.
Each and every expense or liability so incurred by the
Mortgagee shall be recoverable, together with interest at the
Default Rate, from the Owner as provided herein.
7. Upon the happening of any of the following events (the "Events of
Default") the security created by this Mortgage shall become
immediately enforceable:
(A) The owner does not pay to the Mortgagee forthwith any sum of
money payable under the Subsidiary Guaranty or the other Credit
Documents.
(B) If the Owner is in breach of the covenants contained in Clauses
5A, 5B, 5C, 5F, 5G, 5H, 5I, 5K, 5L, 5M, 5N or 5O.
(C) If the Owner is in breach of any of the other covenants, terms
and conditions hereof and such breach is not remediable or if
it is capable of being remedied, the same is not remedied
within 10 days of receipt of notice from the Mortgagee
requesting remedial action.
(D) It becomes impossible or unlawful for the Owner to fulfill any
of the covenants and obligations contained in the Subsidiary
Guaranty or the other Credit Documents or for the Mortgagee to
exercise the rights or any of them vested in it under the
Credit Documents or otherwise.
(E) Anything is done or suffered or omitted to be done by the Owner
which in the reasonable opinion of the Mortgagee may imperil
the security created by the Subsidiary Guaranty or the other
Security Documents.
(F) An Event of Default under the Credit Agreement shall have
occurred and be continuing.
8. Upon the security created by this Mortgage becoming immediately
enforceable pursuant to Clause 7 hereof the Mortgagee may by notice
of default given to the Owner declare the Obligations to be forthwith
due and payable and the Mortgagee shall become forthwith entitled as
and when it may see fit to put into force and exercise all the powers
possessed by it as mortgagee of the Rig and chargee of the Rig, the
insurances and the Earnings and in particular:
(A) To exercise all of the rights and remedies given to mortgagees
by the laws of the Commonwealth of Australia and the States and
Territories of Australia or other applicable laws, including
the right to cause the Rig to be arrested and sold by judicial
authority.
(B) To take possession of the Rig.
(C) To require that all policies, contracts and other records
relating to the Insurances or any of them (including details of
and correspondence concerning outstanding claims) be forthwith
delivered to such adjusters and/or brokers and/or other
insurers as the Mortgagee may nominate.
(D) To collect, recover, compromise and give a good discharge for
all claims then outstanding or thereafter arising under the
Insurances and to take over or institute (if necessary using
the name of the Owner) all such proceedings in connection
therewith as the Mortgagee in its absolute discretion thinks
fit and to permit any brokers through whom collection or
recovery is effected to charge the usual brokerage fees
therefor.
(E) To discharge, compound, release or compromise claims against
the Owner in respect of the Rig which have given or may give
rise to any charge or lien on the Rig or which are or may be
enforceable by proceedings against the Rig.
(F) To sell the Rig or any share therein with or without prior
notice to the Owner by public auction or private contract at
home or abroad and upon such terms as the Mortgagee in its
absolute discretion may determine with power to postpone any
such sale and without being answerable for any loss occasioned
by such sale or resulting from postponement thereof and itself
to purchase the Rig at any such public auction and to set off
the purchase price against all or any part of the Obligations.
(G) Pending sale of the Rig to manage, insure, maintain and repair
the Rig and to employ or lay up the Rig in such manner and for
such period as the Mortgagee in its absolute discretion deems
expedient and for the purposes aforesaid the Mortgagee shall be
entitled to do all acts and things incidental or conducive
thereto and in particular to enter into such arrangements
respecting the Rig, her insurance, management, maintenance,
repair, classification and employment in all respects as if the
Mortgagee were the owner of the Rig and without being
responsible for any loss thereby incurred.
(H) To recover from the Owner on demand any such losses as may be
incurred by the Mortgagee in or about the exercise of the power
vested in the Mortgagee under sub-clause (G) above with
interest thereon at the Default Rate from the date when such
losses were incurred by the Mortgagee until the date of actual
receipt (as well after as before any judgment).
(I) To recover from the Owner on demand all expenses, payments and
disbursements incurred by the Mortgagee in or about or
incidental to the exercise by it of any of the powers aforesaid
together with interest thereon at the Default Rate from the
date when such expenses, payments or disbursements were
incurred by the Mortgagee until the date of actual receipt (as
well after as before any judgment).
PROVIDED ALWAYS that upon any sale of the Rig or any share therein by the
Mortgagee pursuant to sub-clause (F) above the purchaser shall not be bound
to see or inquire whether the Mortgagee's power of sale has arisen in the
manner herein provided and the sale of the Rig shall be deemed to be within
the power of the Mortgagee and the receipt of the Mortgagee for the
purchase money shall effectively discharge the purchaser thereof who shall
not be concerned with the manner of application of the proceeds of sale or
be in any way answerable therefor.
9. Upon the security created by this Mortgage becoming immediately
enforceable pursuant to clause 7 hereof, the Mortgagee shall be
entitled to appoint a receiver or manager or receiver and manager
(the "Receiver") of the Rig and the freights, hire, insurances,
revenues, income and profits due or to become due and arising from
the operation of the Rig. Any Receiver so appointed shall be the
agent of the Owner unless at any time otherwise specified by the
Mortgagee. The Owner shall be solely responsible for the
remuneration, costs and expenses of the Receiver. The Mortgagee may
at any time terminate the appointment of the Receiver. In addition
to all the rights and powers conferred on the Receiver at law and in
equity, a Receiver shall be entitled to exercise all of the powers
and rights conferred upon the Mortgagee under this Mortgage or any
other Credit Document.
10. (a) All moneys received by the Mortgagee in respect of any sale by
it of the Rig or any share therein or otherwise pursuant to the
provisions of this Mortgage shall be place to pay or retain all
such payments, disbursements, expenses and losses whatsoever
(together with interest thereon as provided herein) as may have
been incurred by the Mortgagee in or about or incidental to the
exercise by the Mortgagee of the powers applied in the
following manner:
(i) first, to the payment of all amounts owing the Mortgagee
of the type described in clauses (ii) and (iii) of Recital 5;
(ii) second, to the extent moneys remain after the application
pursuant to the preceding clause (i), an amount equal to the
outstanding Obligations shall be paid to the Secured Creditors
as provided in Clause 10(c), with each Secured Creditor
receiving an amount equal to such Obligations held by it or, if
the proceeds are insufficient to pay in full all such
Obligations, its Pro Rata Share (as defined below) of the
amount remaining to be distributed; and
(iii) third, to the extent moneys remain after the application
pursuant to the preceding clauses (i) and (ii), and following
the termination of this Mortgage pursuant to Clause 3, any
surplus then remaining shall be paid to the Owner, subject,
however, to the rights of the holder of any then existing Lien
of which the Mortgagee has actual notice (without
investigation).
(b) For purposes of this Mortgage "Pro Rata Share" shall mean, when
calculating a Secured Creditor's portion of any distribution or
amount in respect of any Obligations, the amount (expressed as
a percentage) equal to a fraction the numerator of which is the
then unpaid amount of such Obligations owing to or held by such
Secured Creditor and the denominator of which is the then
outstanding amount of all such Obligations. For purposes of
determining the amount payable to each Secured Creditor, the
Mortgagee shall be entitled to request each Secured Creditor to
furnish it with written notice of the amount of Obligations
then owed to it and shall be entitled to reply upon the amounts
stated therein in making such distribution.
(c) All payments required to be made to Secured Creditors hereunder
shall be made to the Administrative Agent under the Credit
Agreement for the account of the Secured Creditors.
(d) For purposes of applying payments received in accordance with
this Clause 10, the Mortgagee shall be entitled to reply upon
(i) the Administrative Agent under the Credit Agreement and
(ii) the Secured Creditors for a determination (which the
Administrative Agent and each Secured Creditor, by their
acceptance of the benefits of this Mortgage shall be obligated
to provide upon request of the Mortgagee) of the outstanding
Obligations owed to the Secured Creditors. Unless it has
actual knowledge (including by way of written notice from a
Secured Creditor) to the contrary, the Administrative Agent
under the Credit Agreement, in furnishing information pursuant
to the preceding sentence, and the Mortgagee, in acting
hereunder, shall be entitled to assume that no obligations
other than principal, interest and regularly accruing fees are
owing to any Secured Creditor.
11. No delay or omission of the Mortgagee to exercise any right or power
vested in it under the Subsidiary Guaranty or the other Credit
Documents shall impair such right or power or be construed as a
waiver of or an acquiescence in any default by the Owner and in event
of the Mortgagee at any time agreeing to waive any such right or
power such waiver shall be revocable by the Mortgagee at any time and
the right or power shall thenceforth be again exercisable as though
there had been no such waiver.
12. The Mortgagee shall be entitled at any time and as often as may be
expedient to delegate all or any of the powers and discretions vested
in it by the Subsidiary Guaranty or the other Credit Documents
(including the power vested in it by virtue of Clause 14 hereof) in
such manner upon such terms and to such persons as the Mortgagee in
its absolute discretion may think fit.
13. (A) The Owner will indemnify and save harmless each of the Secured
Creditors and each agent or attorney appointed under or
pursuant to this Mortgage (each an "Indemnitee") from and
against any and all expenses, claims, liabilities, losses,
taxes, costs, duties, fees and charges suffered, incurred or
made by such Secured Creditor or such agent or attorney in good
faith:
(a) in the exercise or purported exercise of any rights,
powers or discretions vested in them pursuant to this
Mortgage; or
(b) in the preservation or enforcement of the rights under
this Mortgage of the Mortgagee; or
(c) on the release of the Rig from the security created by
this Mortgage,
and the Secured Creditors and each such agent or attorney may retain
and pay all sums in respect of the same out of money received under
the powers conferred by this Mortgage. All such amounts recoverable
by such Secured Creditors or such agent or attorney shall be
recoverable on a full indemnity basis.
(B) Without limiting the foregoing Clause 13(A), the Owner hereby
further indemnifies and holds harmless each of the Secured
Creditors and their respective officers, directors, employees,
attorneys and agents from and against any and all liabilities,
losses, obligations, claims, damages, penalties, causes of
action, costs and expenses (including, without limitation,
reasonable attorneys' fees and expenses, consultant fees,
investigation and laboratory fees) imposed upon or incurred by
or asserted against them, or any of them, by reason of (a) an
actual, alleged or threatened Environmental Incident; (b) any
personal injury (including wrongful death) or property damage
(real or personal) or economic damage arising out of or related
to such Environmental Incident; (c) any Environmental Claim
brought or threatened, or settlement reached; or (d) any
violation of laws, orders, regulations, requirements or demands
of governmental authorities relating to Hazardous Materials at,
or discharged from the Rig.
(C) If, under any applicable law or regulation, and whether
pursuant to a judgment being made or registered against the
Owner or the liquidation of the Owner or for any other reason,
any payment under or in connection with this Mortgage is made
or fails to be satisfied in a currency (the "payment currency")
other than the currency in which such payment is due under or
in connection with this Mortgage (the "contractual currency"),
then to the extent that the amount of such payment actually
received by the Mortgagee, when converted into the contractual
currency at the rate of exchange, falls short of the amount due
under or in connection with this Mortgage, the Owner, as a
separate and independent obligation, shall indemnify and hold
harmless the Mortgagee against the amount of such shortfall.
For the purposes of this Clause C, "rate of exchange" means the
rate at which the Mortgagee is able on the date of such payment
(or, if it is not practicable for the Mortgagee) to purchase
the contractual currency with the payment currency on the date
of such payment, at the rate of exchange as soon afterwards as
is practicable for the Mortgagee to do so) to purchase the
contractual currency with the payment currency and shall take
into account any premium and other costs of exchange with
respect thereto.
14. (A) The Owner hereby irrevocably appoints the Mortgagee as its
attorney-in-fact for the duration of the Credit Facility Period
for the purpose of doing in its name all acts which the Owner
itself could do in relation to the Rig, the Requisition
Compensation and the Insurances and the Earnings PROVIDED
HOWEVER that such power shall not be exercisable by or on
behalf of the Mortgagee unless an Event of Default shall have
occurred.
(B) The exercise of such power by or on behalf of the Mortgagee
shall not put any person dealing with the Mortgagee upon any
inquiry as to whether an Event of Default has occurred nor
shall such person be in any way affected by notice that an
Event of Default has not occurred and the exercise by the
Mortgagee of such power shall be conclusive evidence of its
right to exercise the same.
15. The Owner hereby further undertakes at its own expense to execute,
sign, perfect, do and (if required) register every such further
assurance, document, act or thing as in the opinion of the Mortgagee
may be necessary or desirable for the purpose of more effectually
mortgaging and charging the Rig or perfecting the security
constituted by the Subsidiary Guaranty and the other Security
Documents.
16. The Owner covenants with the Mortgagee that it will indemnify the
Mortgagee and hold it harmless against any loss or damage or expenses
which consequent upon a judgment being obtained or enforced in
respect of the non-payment by the Owner of any amount due under the
Subsidiary Guaranty and the other Credit Documents arises or results
from any variation in rates of exchange between U.S. Dollars and the
currency in which such judgment was obtained between the date of the
said amounts becoming due (or the date of the said judgment being
obtained as the case may be) and the date of actual payment thereof
and this indemnity shall not be affected by any time or indulgence
granted to the Owner from time to time and shall continue in full
force and effect notwithstanding any judgment in favor of the
Mortgagee.
17. (A) This Mortgage shall be construed and enforceable according to
the laws of the Australian Capital Territory, Australia.
(B) The Owner agrees that the Mortgagee shall have liberty but
shall not be obliged to take any proceedings in the Courts of
any country to protect or enforce the security hereby
constituted or to enforce any provisions of the Subsidiary
Guaranty and the other Credit Documents or to recover payment
of the Obligations and for the purpose of any proceedings for
the enforcement of the Subsidiary Guaranty or the other Credit
Documents the Owner hereby submits to the jurisdiction of the
Courts of any country of the choice of the Mortgagee.
18. All communications provided for or permitted hereunder shall be in
writing or by telex or telefax confirmed in writing and shall be
delivered, air mailed, telexed or telefaxed to the addresses provided
for in Section 12.03 of the Credit Agreement:
19. In accordance with section 282 of the Corporation Law (as set out in
section 82 of the Corporation Xxx 0000 (Western Australia)), the
maximum prospective liability secured by this Mortgage will be (U.S.
$350,000,000) Three Hundred Fifty Million United States Dollars, but
this clause shall not limit the amount secured by or recoverable
under this Mortgage or any other Credit Document.
IN WITNESS WHEREOF Reading & Xxxxx (A) Pty. Ltd. has caused this
Mortgage to be executed by on the day and year first above written.
THE COMMON SEAL OF )
READING & XXXXX (A) )
PTY LTD (ACN )
064 532 252) was )
affixed by the authority of )
the Board of Directors in the )
presence of: )
Signature of Secretary Signature of Director
Name of Secretary Name of Director
Accepted and Agreed:
CHRISTIANIA BANK OG KREDITKASSE,
NEW YORK BRANCH
By: ____________________________________
Title:
Accepted and Agreed:
CHRISTIANIA BANK OG KREDITKASSE,
NEW YORK BRANCH
By: ____________________________________
Title:
SCHEDULE I hereinbefore referred to
The offshore drilling rig "XXX XXXXXXXXX" of the following dimensions
and tonnages:
Tons Gross approx. 11,455
Tons Net approx. 3,436
having Official Number 855213 at the Registry of Ships in Canberra,
Australia.
SCHEDULE II
AUSTRALIAN SHIPPING REGISTRATION ACT 1981
Particulars under section 38(2)
1. Name and Official Number:
"XXX XXXXXXXXX", Australian Official No. 855213.
2. The number of shares affected - 64
3. Name and address of the mortgagor
Reading & Xxxxx (A) Pty. Ltd., a company organized and existing
under the laws of the State of Western Australia and the
Commonwealth of Australia and having its registered office at
00 Xxxxx Xxxx Xxxx, Xxxx Xxxxx, Xxxxxxx Xxxxxxxxx.
4. Name and address of the mortgagee:
Christiania Bank og Kreditkasse, New York Branch, 00 Xxxx 00xx
Xxxxxx, 0xx Xxxxx, Xxx Xxxx, XX 00000
Signed by READING & XXXXX (A) PTY. LTD. by ________________________________
Its: Attorney-in-Fact
ACKNOWLEDGMENT
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the 13th day of November, 1996, before me personally came X.X.
Xxxxx, to me known, who being by me duly sworn did depose and say that he
resides at 00000 Xxxxx Xxxx, Xxxxxxx, XX; that he is a Director for READING
& XXXXX (A) PTY. LTD., the corporation described in and which executed the
above First Priority Mortgage; and that he signed his name thereto pursuant
to authority granted to him by the Board of Directors of said corporation.
_________________________________
Notary Public
ACKNOWLEDGMENT
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the 13th day of November, 1996, before me personally came Hans
Chr. Kjelsrud, to me known, who being by me duly sworn did depose and say
that he resides at 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, XX; that he is a Vice
President for CHRISTIANIA BANK OG KREDITKASSE, the corporation described in
and which executed the above First Priority Mortgage; and that he signed
his name thereto pursuant to authority granted to him by the Board of
Directors of said corporation.
_________________________________
Notary Public
ACKNOWLEDGMENT
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the 13th day of November, 1996, before me personally came Xxxxxx
XxXxxxx, III, to me known, who being by me duly sworn did depose and say
that he resides at 00 Xxxxxxxx Xxxxxx, Xxxxxxx, XX; that he is a Vice
President for CHRISTIANIA BANK OG KREDITKASSE, the corporation described in
and which executed the above First Priority Mortgage; and that he signed
his name thereto pursuant to authority granted to him by the Board of
Directors of said corporation.
_________________________________
Notary Public
