Exhibit 10.93
Dated April 30, 1996
READING & XXXXX DRILLING CO.,
as Owner
-and-
CHRISTIANIA BANK OG KREDITKASSE,
NEW YORK BRANCH,
as Mortgagee
X.X. XxXXXX
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DEED OF COVENANT
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INDEX
CLAUSE PAGE
1 DEFINITIONS AND INTERPRETATION 2
2 REPRESENTATIONS AND WARRANTIES 7
3 PAYMENT COVENANTS 8
4 MORTGAGE 9
5 PRESERVATION OF SECURITY 9
6 INSURANCE 12
7 RIG COVENANTS 14
8 PROTECTION OF SECURITY 18
9 ENFORCEABILITY AND MORTGAGEE'S POWERS 18
10 APPLICATION OF MONEYS 20
11 FURTHER ASSURANCES 21
12 POWER OF ATTORNEY 22
13 INDEMNITIES 22
14 EXPENSES 23
15 COMMUNICATIONS 24
16 ASSIGNMENTS 24
17 MISCELLANEOUS 24
18 LAW AND JURISDICTION 24
EXECUTION
EXHIBIT 1 FORM OF CREDIT AGREEMENT
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THIS DEED OF COVENANT is made on the 30th day of April, 1996
BETWEEN:
(1) READING & XXXXX DRILLING CO., a corporation incorporated in the State
of Oklahoma having its principal office at 000 Xxxxxxxxxxxx, Xxxxx 000,
Xxxxxxx, Xxxxx 00000 (the "Owner"), and
(2) CHRISTIANIA BANK OG KREDITKASSE, NEW YORK BRANCH having offices at 00
Xxxx 00xx Xxxxxx, Xxx Xxxx, XX 00000, as agent for the Banks (as
hereinafter defined) (the "Mortgagee")
WHEREAS
(A) By a Credit Agreement dated as of April 30, 1996 (as in effect from
time to time the "Credit Agreement") among Reading & Xxxxx Corporation, a
Delaware corporation ("Holdings"), the Owner, the Banks party thereto, Credit
Lyonnais, New York Branch, as co-agent, and Christiania Bank og Kreditkasse,
New York Branch, (the "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 Owner upon the terms and conditions therein described a
reducing revolving credit facility (the "Facility") in an aggregate amount at
any one time outstanding of Xxx Xxxxxxx Xxxxxxx Xxxxxx Xxxxxx Dollars
(US$100,000,000) providing for the making of Loans and the issuance of and
participations in Letters of Credit as contemplated therein.
(B) The obligations of the Borrower with respect to the Facility are
evidenced by the Credit Agreement and the other Credit Documents 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).
(C) It is a condition precedent to the Banks advancing amounts under the
Credit Facility to the Owner that the Owner shall execute, deliver and
register a statutory mortgage in favor of the Mortgagee over sixty four sixty-
fourth shares in the Rig (as hereinafter defined) and shall enter into a Deed
of Covenant supplemental thereto in the form of this Deed.
(D) The Owner has executed in favor of the Mortgagee a statutory mortgage
in account current form bearing the same date as this Deed and constituting a
first mortgage of sixty four sixty-fourth shares in the said Rig and the said
statutory mortgage and this Deed are each entered into by the Owner in
consideration of the Banks agreeing, at the request of the Owner, to make
Loans to the Owner and issue Letters of Credit for the account of the Owner
under the Credit Facility and as a condition thereto and for other good and
valuable consideration provided by the Banks (the sufficiency and receipt of
which the Owner hereby acknowledges). The Mortgage and this Deed of Covenants
is made for the benefit of the Mortgagee and the other Secured Creditors (as
hereinafter defined) to secure (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, 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, the Mortgage and this Deed of Covenants) 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, the Mortgage and this Deed of Covenants); (ii)
any and all sums advanced by the Secured Creditors in order to preserve the
Collateral (as hereinafter defined) or preserve its security interest in the
Collateral; (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 of re-taking,
holding, preparing for sale or lease, selling or otherwise disposing of or
realizing on the Collateral, 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
Deed of Covenants (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 Deed or extended from time to time after the
date of this Deed.
(E) This Deed is supplemental to the said statutory mortgage and to the
security thereby created.
NOW THIS DEED WITNESSETH AND IT IS HEREBY AGREED
1 DEFINITIONS AND INTERPRETATION
1.1 In this Deed unless the context otherwise requires, the following
expressions shall have the following meanings:
"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 Annex 1 to the Credit
Agreement (collectively, the "Banks");
"Business Day" shall have the same meaning for such term as set forth
in the Credit Agreement;
"Collateral Assignment of Insurances" means the Collateral Assignment
of Insurance in respect of the Rig executed or to be executed by the
Owner in favor of the Agent;
"Commitment" shall have the same meaning for such term as set forth in
the Credit Agreement;
"Credit Agreement" means the Credit Agreement, dated as of April 30,
1996, among Holdings, the Owner, the Banks, Credit Lyonnais New York
Branch, as co-agent, and the Agent first referred to in Recital (A)
hereto;
"Credit Documents" shall have the meaning for such term as set forth in
the Credit Agreement;
"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;
"Credit Party" shall have the meaning for such term as set forth in the
Credit Agreement;
"Default Rate" shall mean the rate of interest calculated in accordance
with Section 1.07(b) 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 Laws" means all applicable laws, regulations,
conventions and agreements whatsoever relating to pollution or
protection of the environment (including, without limitation, the Oil
Pollution Act of 1990 (33 U.S.C. 2701 et seq.), the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980 (42
U.S.C. 9601 et seq.), the Hazardous Materials Transportation Act (49
U.S.C. 1801 et seq.), the Resource Conservation and Recovery Act of
1976 (42 U.S.C. 6901 et seq.), the Clean Air Act (42 U.S.C. 7401 et
seq.), the Federal Water Pollution Control Act (33 U.S.C. 1251 et
seq.) and the Toxic Substances Control Act (15 U.S.C. 2601 et seq.)
(all of the foregoing as amended), and any comparable laws of the
individual States of the United States of America or any other state or
nation);
"Fees" shall have the same meaning for such terms 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 13.1;
"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
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 1.08 of the Credit Agreement;
"Letter of Credit" shall have the same meaning for such term as set
forth in Section 2.01 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;
"Mortgage" means the statutory mortgage on the Rig bearing the same
date as this Deed first referred to in Recital (D) hereto;
"Note" means each promissory note of the Owner referred to in Recital
(B) hereto and in Section 1.05(a) of the Credit Agreement;
"Obligations" shall have the meaning provided in Recital (D) 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
offshore drilling rig X. X. XXXXXXX owned by Reading & Xxxxx
Exploration Co. ("R&B Exploration") documented under the laws and flag
of the United States with Official Number 626904 of 6494 gross
registered tons and 5834 net registered tons; (ii) the offshore
drilling rig X. X. XXXX owned by 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 offshore drilling rig XXX XXXXXXXXX owned
by Reading & Xxxxx (A) Pty Ltd. documented under the laws and flag of
Australia with Official Number 855213 of 11,455 gross registered tons
and 3,436 net registered tons; and (v) the offshore drilling rig XXXX
XXXXX owned by the Owner 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;
"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 Agent,
provide a bond or other security satisfactory to the 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 Agent,
provide a bond or other security satisfactory to the 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 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 Agent have been made as evidenced by the
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 whole of the offshore drilling X.X. XxXXXX documented
under the laws and flag of the Bahamas with Official Number 715954 of
9199.01 gross registered tons and 7267.22 net registered tons 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 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;
"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;
"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.
1.2 In Clause 6.1:
"excess risks" means the proportion of claims for general average,
salvage and salvage charges not recoverable under the hull and
machinery policies in respect of the Rig in consequence of her insured
value being less than the value at which the Rig is assessed for the
purpose of such claims;
"protection and indemnity risks" means the usual risks covered by a
protection and indemnity association managed in London including the
proportion (if any) of any sums payable to any other person or persons
in case of collision which are not recoverable under the hull and
machinery policies by reason of the incorporation therein of Clause 1
of the Institute Time Clauses (Hulls) (1/10/83) or the Institute
Amended Running Down Clause (1/10/71) or any equivalent provision;
1.3 Except where otherwise expressly provided or unless the context
otherwise requires, words and expressions defined in the Credit Agreement
shall bear the same meanings when used in this Deed.
1.4 This Deed shall be read together with the other Security Documents.
1.5 Notwithstanding that this Deed is supplemental to the Mortgage it shall
continue in full force and effect after any discharge of the Mortgage.
1.6 In this Deed:
(a) Clause headings are inserted for convenience only and shall not
affect the construction of this Deed and, unless otherwise
specified, all references to Clauses are to clauses of this Deed;
(b) unless the context otherwise requires, words denoting the singular
number shall include the plural and vice versa;
(c) references to persons include references to bodies corporate and
unincorporate;
(d) references to assets include property, rights and assets by every
description;
(e) references to any document are to be construed as references to
such document as amended or supplemented from time to time; and
(f) references to any enactment shall include re-enactments,
amendments and extensions thereof.
2 REPRESENTATIONS AND WARRANTIES
2.1 The Owner hereby represents and warrants to the Mortgagee that:
(a) the Owner is the sole legal and beneficial owner of sixty four
sixty-fourths shares of and in the Rig and none of the said shares
is subject to any Security Interest (save as constituted by the
Permitted Liens, the Mortgage and this Deed);
(b) the Owner has not sold or transferred, or agreed to sell or
transfer, the Rig or any share therein;
(c) the Owner has full power and authority to mortgage sixty four
sixty-fourth shares of and in the Rig as security for the
Obligations;
(d) the Owner is a corporation duly organized and validly existing and
in good standing under the laws of the State of Oklahoma;
(e) the Owner has complied with all statutory and other material
requirements relating to the ownership, registration and operation
of the Rig;
(f) the Owner has taken all necessary action to authorize the
execution and delivery of the Mortgage and this Deed, and this
Deed 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). The Mortgage when filed with the Bahamian Registrar
of Ships will create a legal, valid and enforceable first priority
mortgage lien on the Rig;
(g) the entry into and performance by the Owner of this Deed 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 the Certificate of Incorporation or By-laws,
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;
(h) all consents, licenses, approvals and authorizations required in
connection with the entry into, performance, validity and
enforceability of this Deed 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;
(i) save for such registrations and filings as are referred to in this
Deed, it is not necessary for the legality, validity,
enforceability or admissibility in evidence of this Deed 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 Deed; and
(j) the Owner is fully familiar with and agrees to all the provisions
of all agreements relating to the Obligations.
2.2 The Owner hereby further represents and warrants to the Mortgagee that:
(a) all applicable Environmental Laws and Environmental Approvals
relating to the Rig, its operation and management and the business
of the Owner (as now conducted and as reasonably anticipated to be
conducted in the future) have been complied with; and
(b) no Environmental Claim has been made or threatened against the
Owner or the Approved Manager or otherwise in connection with the
Rig; and
(c) 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.
2.3 The representations and warranties of the Owner set out in Clause 2.1
and Clause 2.2 shall survive the execution of this Deed and shall be deemed to
be repeated throughout the Credit Facility Period at the time of the making of
each Loan and the issuance of each Letter of Credit with respect to the facts
and circumstances existing at each such time, as if made at each such time.
3 PAYMENT COVENANTS
3.1 The Owner hereby covenants with the Secured Creditors:
(a) to pay all such expenses, claims, liabilities, losses, costs,
duties, fees, charges or other moneys as are stated in the Credit
Agreement and/or this Deed to be payable by the Owner to or
recoverable from the Owner by the Secured Creditors or any of them
(or in respect of which the Owner agrees in the Credit Agreement
and/or this Deed to indemnify any of the Secured Creditors) at the
times and in the manner specified in the Credit Agreement and/or
this Deed; and
(b) to pay interest on any amount payable by the Owner under the
Credit Agreement and on any such expenses, claims, liabilities,
losses, costs, duties, fees, charges or other moneys referred to
in Clause 3.1(a) from the date on which the relevant amount
becomes payable under the Credit Agreement or such expense, claim,
liability, loss, cost, duty, fee, charge or other money is paid or
incurred by any Secured Creditor until the date of payment
reimbursement thereof to such Secured Creditor (as well after as
before judgment) at the Default Rate; and
(c) to pay each and every other sum of money which may be or become
owing to the any Secured Creditor under this Deed and the other
Credit Documents to which the Owner is or is to be a party at the
times and in the manner specified herein or therein.
4 MORTGAGE
4.1 By way of security for the Obligations the Owner with full title
guarantee hereby mortgages and charges and agrees to mortgage and charge to
and in favor of the Mortgagee all its rights, title and interest, present and
future, to and in the Rig.
4.2 The Owner covenants with the Mortgagee that it will not at any time
during the Credit Facility Period without the previous consent in writing of
the Mortgagee (and then only subject to such terms as the Mortgagee may
impose):
(a) create or suffer the creation of any Security Interest on or in
respect of the Rig or any share therein in favor of any person
other than the Mortgagee or unless the same is being contested in
good faith by proceedings diligently conducted in relation to
which the Owner has established an adequate reserve; or
(b) sell, agree to sell or otherwise dispose of the Rig or any share
therein.
4.3 The Owner shall remain liable to perform all the obligations assumed by
it in relation to the Rig and the Mortgagee shall be under no obligation of
any kind whatsoever in respect thereof or be under any liability whatsoever in
event of any failure by the Owner to perform its obligations in respect
thereof.
4.4 On the date on which the Credit Agreement and all Letters of Credit
shall have been terminated, when no Note remains outstanding and all
Obligations shall have been irrevocably paid in full, the Mortgage and this
Deed of Covenants shall terminate, and the Mortgagee at the request and
expense of the Owner, will execute and deliver to the Owner a proper
instrument or instruments acknowledging the satisfaction and termination of
the Mortgage and this Deed of Covenants, and will duly assign, transfer and
deliver to the Owner (without recourse and without any representation or
warranty) such of the Rig as may remain in the possession of the Mortgagee
together with any moneys at the time held by the Mortgagee hereunder.
5 PRESERVATION OF SECURITY
5.1 It is declared and agreed that:
(a) the security created by the Mortgage and this Deed (or either of
them) shall be held by the Mortgagee as a continuing security for
the performance of the Obligations and that the security so
created shall not be satisfied by any intermediate payment or
satisfaction of any part of the Obligations;
(b) the security so created shall be in addition to and shall not in
any way be prejudiced or affected by any of the other Security
Documents;
(c) the Mortgagee shall not be bound to enforce any of the other
Security Documents before enforcing the security created by the
Mortgage and this Deed (or either of them);
(d) no delay or omission on the part of the Mortgagee in exercising
any right, power or remedy under the Mortgage and this Deed (or
either of them) shall impair such right, power or remedy or be
construed as a waiver thereof nor shall any single or partial
exercise of any such right, power or remedy preclude any further
exercise thereof or the exercise of any other right, power or
remedy. The rights powers and remedies provided in this Deed are
cumulative and not exclusive of any rights, powers and remedies
provided by law and may be exercised from time to time and as
often as the Mortgagee may deem expedient; and
(e) any waiver by the Mortgagee of any terms of this Deed or any
consent given by the Mortgagee under this Deed shall only be
effective if given in writing and then only for the purpose and
upon the terms for which it is given.
5.2 Any settlement or discharge under the Mortgage and this Deed (or either
of them) between the Mortgagee and the Owner shall be conditional upon no
security or payment to the Secured Creditors by any person being avoided or
set-aside or ordered to be refunded or reduced by virtue of any provision or
enactment relating to bankruptcy, insolvency, administration or liquidation
for the time being in force and, if such condition is not satisfied, the
Mortgagee shall be entitled to recover from the Owner on demand the value of
such security or the amount of any such payment as if such settlement or
discharge had not occurred.
5.3 The rights of the Secured Creditors under the Mortgage and this Deed
and the security thereby and hereby constituted shall not be affected by any
act, omission, matter or thing which, but for this provision, might operate to
impair, affect or discharge such rights and security, in whole or in part,
including without limitation, and whether or not known to or discoverable by
any person:
(a) any time or waiver granted to or composition with any person; or
(b) the taking, variation, compromise, renewal or release of or
refusal or neglect to perfect or enforce any rights, remedies or
securities against any person; or
(c) any legal limitation, disability, incapacity or other
circumstances relating to any person; or
(d) any amendment or supplement to any of the Credit Documents or any
other document or security; or
(e) the dissolution, amalgamation, reconstruction or reorganisation of
any person; or
(f) the unenforceability, invalidity or frustration of any obligations
of any person under any of the Credit Documents or any other
document or security.
5.4 Until the Obligations have been satisfied unconditionally and
irrevocably paid and discharged in full to the satisfaction of the Mortgagee,
the Owner shall not by virtue of any payment made hereunder on account of the
Obligations or by virtue of any enforcement by the Mortgagee of its rights
under, or the security constituted by, the Mortgage and this Deed or by virtue
of any relationship between or transaction involving any person in any way
whatsoever and whether or not such relation or transaction shall be related
to, or in connection with, the subject matter of the Credit Agreement, the
Mortgage and/or this Deed):
(a) exercise any rights of subrogation in relation to any rights,
security or moneys held or received or receivable by the Secured
Creditors or any other person; or
(b) exercise any right of contribution from any co-surety liable in
respect of such moneys and liabilities under any other guaranty,
security or agreement; or
(c) exercise any right of set-off or counterclaim against any person
or any co-surety; or
(d) receive, claim or have the benefit of any payment, distribution,
security or indemnity from any person or any co-surety; or
(e) unless so directed by the Mortgagee (when the Owner will prove in
accordance with such directions), claim as a creditor of any
person or any co-surety in competition with the Secured Creditors.
The Owner shall hold in trust for the Mortgagee and forthwith pay or
transfer (as appropriate) to the Mortgagee any such payment (including an
amount equal to any such set-off), distribution or benefit of such security,
indemnity or claim in fact received by it.
5.5 Until the Obligations have been unconditionally and irrevocably
performed in full to the satisfaction of the Mortgagee, the Mortgagee may at
any time keep in a separate account for as long as it may think fit, any
moneys received, recovered or realised under the Mortgage and this Deed (or
either of them) or under any other guarantee, security or agreement relating
in whole or in part to the Secured Indebtedness without being under any
intermediate obligation to apply the same or any part thereof in or towards
the discharge of such amount.
5.6 The Owner unconditionally and irrevocably agrees that if any sums
hereby secured are not recoverable on the basis of a guaranty (whether by
reason of legal limitation, illegality, disability or incapacity on or of any
person or by reason of any other fact or circumstance, and whether or not
known to or discoverable by any person), then the Owner will, as a separate
and independent stipulation and as a primary obligor, pay to the Secured
Creditors on demand an amount or amounts equal to the amount or amounts which
the Owner would have been liable to pay but for such irrecoverability and will
on demand indemnify the Mortgagee against any loss or liability suffered or
incurred by the Secured Creditors as a result of such irrecoverability.
6 INSURANCE
6.1 The Owner covenants with the Mortgagee throughout the Credit Facility
Period that:
(a) The Owner shall, at its own expense, when and so long as the any
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 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
Total Commitment (or in lieu of such mortgagee's interest
insurance the 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.
(b) 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 any Obligations remain 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 6.01.
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 6.01(b)) under any
insurance with respect to the Rig involving any damage to the Rig,
the underwriters may pay direct 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 10.01.
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.
(c) 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 Security 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.
(d) 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.
(e) 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.
(f) 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.
(g) 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.
(h) 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.
7 RIG COVENANTS
7.1 The Owner further covenants with the Mortgagee that throughout the
Credit Facility Period the Owner will:
(a) keep the Rig registered in its name as a Bahamian flag vessel at
the Port of Nassau and to do or allow to be done nothing whereby
such registration may be forfeited or imperilled and, if the Rig
shall be provisionally as opposed to permanently registered as a
Bahamas vessel as at the date of this Deed, procure that the Rig
be duly permanently registered within three months of the date of
this Deed and promptly furnish to the Mortgagee from time to time
such proofs as the Mortgagee may request for its satisfaction with
respect to the Owner's compliance with this sub-clause;
(b) not without the previous consent in writing of the Mortgagee
change the name or port of registry of the Rig or make any
modification to the Rig which would or might materially alter the
structure, type or performance characteristics of the Rig or
materially reduce the value of the Rig;
(c) keep the Rig in a good and efficient state of repair consistent
with first-class ship ownership and management practice and so as
to maintain the highest classification available from her
classification society, namely +A1 Column Stabilized Drilling
Unit, free of recommendations and qualifications save those
notified to and approved in writing by the Mortgagee or which have
been complied with in accordance with their terms and so as to
comply with the provisions of the Merchant ping Acts and all other
regulations and requirements of any government, government agency
or other regulatory authority (statutory or otherwise) from time
to time applicable to vessels registered at ports in the
Commonwealth of the Bahamas and applicable to vessels of the same
type as the Rig trading to any jurisdiction to which the Rig may,
subject to the provisions of this Deed, trade from time to time;
(d) 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 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 the Mortgage and this Deed;
(e) submit the Rig regularly 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;
(f) permit the Mortgagee by surveyors or other persons appointed by it
for that purpose to board the Rig at all reasonable times 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;
(g) 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;
(h) 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;
(i) promptly 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, upon the Mortgagee's request in writing, copies of all
charters and other contracts for her employment or otherwise
howsoever concerning her;
(j) notify the Mortgagee forthwith by telex or telecopy thereafter
confirmed by letter of:-
(i) any casualty to the Rig which is or is likely to be a Major
Casualty, and
(ii) any occurrence in consequence whereof the Rig has become or
is, by the passing of time or otherwise, likely to become a
Total Loss, and
(iii) any requirement or recommendation made by any insurer or
classification society or by any competent authority
which is not immediately complied with, and
(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, and
(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 Mortgagee's prior written consent;
(k) 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;
(l) 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 and this Deed mutatis mutandis;
(m) 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;
(n) keep the Mortgage registered against the Rig as a valid first
priority mortgage, to carry on board the Rig a certified copy of
the Mortgage and this Deed and to place and maintain in a
conspicuous place in the navigation room and the Master's cabin of
the Rig a framed printed notice stating that the Rig is mortgaged
by the Owner to the Mortgagee.
7.2 The Owner further covenants with the Mortgagee that throughout the
Security Period the Owner will:
(a) 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;
(b) notify the Mortgagee forthwith upon:
(i) any Environmental Claim being made against the Owner which
could reasonably be expected to result in damages in excess
of US$200,000 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.
(c) 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;
(d) 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 the United States and will
at all times keep the Rig duly documented thereunder.
8 PROTECTION OF SECURITY
8.1 The Mortgagee shall without prejudice to its other rights and powers
under the Mortgage and this Deed and the other Credit Documents 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 or
maintaining the security created by the Mortgage and this Deed (including,
without limitation, such action as is referred to in Clause 8.2) and each and
every expense, liability, or loss (including, without limitation, legal fees)
so incurred by the Mortgagee in or about the protection or maintenance of the
said security together with interest payable thereon under Clause 3.1(c) shall
be repayable to it by the Owner on demand.
8.2 Without prejudice to the generality of Clause 8.1:
(a) if the Owner does not comply with the provisions of Clause 6.1 or
any of them the Mortgagee shall be entitled (but not bound) to
effect or to replace and renew and thereafter to maintain
Insurances in such manner as in its discretion it may think fit
and to require that all policies, contracts and other records
relating to the Insurances (including details of and
correspondence concerning outstanding claims) be forthwith
delivered to such brokers as the Mortgagee may nominate and to
collect, recover, compromise and give a good discharge for all
claims then outstanding or thereafter arising under the Insurances
or any of them and to take over or institute (if necessary using
the name of the Owner) all such proceedings in connection
therewith as the Mortgagee in its absolute discretion may think
fit and to permit the brokers through whom the collection or
recovery is effected to charge the usual brokerage therefor; and
(b) if the Owner does not comply with the provisions of Clause 7.1(c)
and/or 7.1(e) or any of them the Mortgagee shall be entitled (but
not bound) to arrange for the carrying out of such repairs to
and/or surveys of the Rig as it deems expedient or necessary; and
(c) if the Owner does not comply with the provisions of Clause 7.1(g)
or any of them the Mortgagee shall be entitled (but not bound) to
pay and discharge all such debts, damages and liabilities and all
such tolls, dues, taxes, assessments, charges, fines, penalties
and other outgoings as are therein mentioned and/or to take any
such measures as it deems expedient or necessary for the purpose
of securing the release of the Rig.
9 ENFORCEABILITY AND MORTGAGEE'S POWERS
9.1 Upon the happening of any of the Events of Default specified in the
Credit Agreement but without the necessity for any court order or declaration
in any jurisdiction to the effect that an Event of Default has occurred (and
whether prior to or after the Mortgagee having served on the Owner any such
notice is referred in Section 9 of the Credit Agreement) the security
constituted by the Mortgage and this Deed shall become immediately enforceable
and the power of sale and other powers conferred by law shall be immediately
exercisable and the Mortgagee shall be entitled, as and when it may see fit,
to put into force and to exercise all the powers possessed by it as mortgagee
and chargee of the Rig and in particular:
(a) to take possession of the Rig whether actually or constructively
and/or otherwise to take control of the Rig wherever the Rig may
be and cause the Owner or any other person in possession of the
Rig forthwith upon demand to surrender the same to the Mortgagee
without legal process and without liability of the Mortgagee for
any losses or damages incurred thereby and without having to
render accounts to the Owner in connection therewith;
(b) to require that all policies, contracts, certificate of entry and
other records relating to the Insurances (including details of and
correspondence concerning outstanding claims) be forthwith
delivered to or to the order of the Mortgagee;
(c) to collect, recover, compromise and give a good discharge for any
and all moneys or claims for moneys then outstanding or thereafter
arising under the Insurances and to permit any brokers through
whom collection or recovery is effected to charge the usual
brokerage therefor;
(d) to take over or institute (if necessary using the name of the
Owner) all such proceedings in connection with the Mortgaged
Premises as the Mortgagee in its absolute discretion thinks fit
and 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;
(e) to sell the Rig or any share therein with or without prior notice
to the Owner, and with or without the benefit of any charterparty
or other contract for her employment, by public auction or private
contract at such place and upon such terms (including, without
limitation, on terms such that payment of some or all of the
purchase price be deferred) as the Mortgagee in its absolute
discretion may determine with power to postpone any such sale,
without being answerable for any loss occasioned by such sale or
resulting from postponement thereof, and/or 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;
(f) to manage, insure, maintain and repair the Rig and to charter,
employ, sail or lay up the Rig in such manner, upon such terms 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, and the insurance, management, maintenance, repair,
classification, chartering and employment of the Rig, in all
respects as if the Mortgagee were the owner of the Rig and without
being responsible for any loss thereby incurred;
(g) to recover from the Owner on demand any expenses, liabilities or
losses as may be incurred by the Mortgagee in or about the
exercise of the power vested in the Mortgagee under Clause 9.1(f);
(h) generally, to recover from the Owner on demand each and every
expense, liability or loss incurred by the Mortgagee in or about
or incidental to the exercise by it of any of the powers
aforesaid.
9.2 The Mortgagee shall not be obliged to make any enquiry as to the nature
or sufficiency of any payment received by it under the Mortgage and this Deed
(or either of them) or to make any claim under this Deed or to enforce any
rights and benefits assigned to the Mortgagee by this Deed or to which the
Mortgagee may at any time be entitled hereunder.
9.3 Neither the Secured Creditors nor their agents, managers, officers,
employees, delegates and advisers shall be liable for any expense, claim,
liability, loss, cost, damage or expense incurred or arising in connection
with the exercise or purported exercise of any rights, powers and discretions
under the Mortgage and this Deed (or either of them) in the absence of gross
negligence or wilful misconduct.
9.4 The Mortgagee shall not by reason of the taking possession of the Rig
be liable to account as mortgagee-in-possession or for anything except actual
receipts or be liable for any loss upon realisation or for any default or
omission for which a mortgagee-in-possession might be liable.
9.5 Upon any sale of the Rig or any share therein by the Mortgagee, the
purchaser shall not be bound to see or enquire whether the Mortgagee's power
of sale has become exercisable in the manner provided in this Deed and the
sale shall be deemed to be within the power of the Mortgagee and the receipt
of the Mortgagee for the purchase money shall effectively discharge the
purchaser who shall not be concerned with the manner of application of the
proceeds of sale or be in any way answerable therefor.
10 APPLICATION OF MONEYS
10.1 (a) All moneys received by the Mortgagee in respect of sale of the Rig
or any share therein; in respect of recovery under the Insurances;
or in respect of Requisition Compensation;
(i) first, to the payment of all amounts owing the Mortgagee of
the type described in clauses (ii) and (iii) of Recital D;
(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 10.01(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 Mortgage and this Deed of Covenants pursuant to
Clause 4.4, 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 Deed of Covenants "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 Agent under the Credit Agreement for the
account of the Secured Creditors.
(d) For purposes of applying payments received in accordance with this
Clause 10.01, the Mortgagee shall be entitled to reply upon (i)
the Agent under the Credit Agreement and (ii) the Secured
Creditors for a determination (which the Agent and each Secured
Creditor, by their acceptance of the benefits of this Deed 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 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 (x) no obligations other than principal,
interest and regularly accruing fees are owing to any Secured
Creditor.
11 FURTHER ASSURANCES
11.1 The Owner shall execute and do all such assurances, acts and things as
the Mortgagee in its absolute discretion may require for:
(a) perfecting or protecting the security created (or intended to be
created) by the Mortgage and this Deed; or
(b) preserving or protecting any of the rights of the Mortgagee under
the Mortgage and this Deed (or either of them); or
(c) ensuring that the security constituted by the Mortgage and this
Deed and the covenants and obligations of the Owner under this
Deed shall enure to the benefit of any such assignee of the
Mortgagee as is referred to in Clause 16.3; or
(d) enforcing the security constituted by the Mortgage and this Deed
on or at any time after the same shall have become enforceable; or
(e) the exercise of any power, authority or discretion vested in the
Mortgagee under the Mortgage and this Deed (or either of them),
in any such case, forthwith upon demand by the Mortgagee and at the expense of
the Owner.
12 POWER OF ATTORNEY
12.1 The Owner, by way of security and in order more fully to secure the
performance of the Obligations, hereby irrevocably appoints the Mortgagee as
its attorney for the duration of the Credit Facility Period for the purposes
of:
(a) doing in its name all acts and executing, signing and (if
required) registering in its name all documents which the Owner
itself could do, execute, sign or register in relation to the
(including without limitation, transferring title to the to a
third party) Provided however that such power shall not be
exercisable by or on behalf of the Mortgagee until the Mortgage
and this Deed shall have become immediately enforceable pursuant
to Clause 9.1; and
(b) executing, signing, perfecting, doing and (if required)
registering every such further assurance document, act or thing as
is referred to in Clause 11.
12.2 The exercise of such power as is referred to in Clause 12.1(a) by or on
behalf of the Mortgagee shall not put any person dealing with the Mortgagee
upon any enquiry as to whether the Mortgage and this Deed have become
enforceable nor shall such person be in any way affected by notice that the
Mortgage and this Deed have not become enforceable and, in relation to both
Clauses 12.1(a) and 12.1(b), the exercise by the Mortgagee of such power shall
be conclusive evidence of its right to exercise the same.
13 INDEMNITIES
13.1 The Owner will indemnify and save harmless the Secured Creditors and
each agent or attorney appointed under or pursuant to this Deed (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:
(a) in the exercise or purported exercise of any rights, powers or
discretions vested in them pursuant to the Mortgage and this Deed
(or either of them); or
(b) in the preservation or enforcement of the Mortgagee's rights under
the Mortgage and this Deed (or either of them); or
(c) on the release of the Rig or any share therein from the security
created by the Mortgage and this Deed (or either of them),
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 the Mortgage and this Deed (or either of them). All such amounts
recoverable by such Secured Creditor or such agent or attorney shall be
recoverable on a full indemnity basis.
13.2 Without limiting the foregoing Clause 13.01, 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 government authorities relating to
Hazardous Materials at, or discharged from the Rig.
13.3 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 the
Mortgage and this Deed (or either of them) is made or falls to be satisfied in
a currency (the "payment currency") other than the currency in which such
payment is due under or in connection with the Mortgage and this Deed (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 the Mortgage and this Deed, 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 13.3,
"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 it 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 EXPENSES
14.1 The Owner shall pay to the Mortgagee on demand all costs, fees and
expenses (including, but not limited to, legal, surveyor's and shipbroker's
fees and expenses) and Taxes thereon incurred by any Secured Creditor or for
which any Secured Creditor may become liable in connection with:
(a) the negotiation, preparation and execution of the Credit Agreement
and the Credit Documents; and/or
(b) the preserving or enforcing of, or attempting to preserve or
enforce, any of its rights under the Credit Agreement and the
Credit Documents (or any of them).
14.2 The Owner shall pay to the Mortgagee on demand all costs, fees and
expenses (including, but not limited to, legal fees and expenses) and Taxes
thereon incurred by any Secured Creditor in connection with:
(a) any variation of, or amendment or supplement to, any of the terms
of the Credit Agreement and the Credit Documents (or any of them);
and/or
(b) any consent or waiver required from the Mortgagee in relation to
the Credit Agreement and the Credit Documents (or any of them),
and in each case, regardless of whether the same is actually implemented,
completed or granted, as the case may be.
14.3 The Owner shall pay promptly all stamp, documentary and other like
duties and Taxes to which the Credit Agreement and the Credit Documents (or
any of them) may be subject or give rise and shall indemnify the Mortgagee on
demand against any and all liabilities with respect to or resulting from any
delay or omission on the part of the Owner to pay any such duties or Taxes.
15 COMMUNICATIONS
15.1 The provisions of Clause 12.03 of the Credit Agreement shall apply in
relation to any notice, demand or other communication under this Deed.
16 ASSIGNMENTS
16.1 The Mortgage and this Deed shall be binding upon and shall enure to the
benefit of the Owner and the Secured Creditors and their respective successors
and permitted assigns and references in the Mortgage and this Deed to either
of them shall be construed accordingly.
16.2 The Owner may not assign or transfer all or any part of its rights
and/or obligations under the Mortgage and this Deed (or either of them).
16.3 The Mortgagee may assign or transfer all or any part of its rights or
obligations under the Mortgage and this Deed to any permitted assignee or
transferee of all or any such part of its rights and/or obligations under the
Credit Agreement on the terms therein provided. The Mortgagee shall notify
the Owner promptly following any such assignment, transfer or change.
17 MISCELLANEOUS
17.1 If at any time any one or more of the provisions in this Deed is or
becomes invalid, illegal or unenforceable in any respect under any law or
regulation, the validity, legality and enforceability of the remaining
provisions of this Deed shall not be in any way affected or impaired thereby.
17.2 The Mortgagee, at any time and from time to time, may delegate by power
of attorney or in any other manner to any person or persons all or any of the
powers, authorities and discretions which are for the time being exercisable
by the Mortgagee under the Mortgage and this Deed (or either of them) in
relation to the Mortgaged Premises or any part thereof. Any such delegation
may be made upon such terms and subject to such regulations as the Mortgagee
may think fit. The Mortgagee shall not be in any way liable or responsible to
the Owner for any loss or damage arising from any act, default, omission or
misconduct on the part of any such delegate.
17.3 This Deed may be executed in several counterparts, each of which shall
be an original, but which together shall constitute but one and the same
document.
18 LAW AND JURISDICTION
18.1 This Deed shall be governed by, and construed in accordance with
Bahamian Law.
18.2 The Owner agrees that the Mortgagee shall have the liberty, but shall
not be obligated, to take any proceedings in the courts of any jurisdiction to
protect and enforce the security hereby constituted or to enforce any
provision of the Security Documents or to enforce the Obligations. For the
purpose of any proceedings for the enforcement of this Deed and the other
Security Documents, the Owner hereby submits to the jurisdiction of the courts
of the Bahamas, the state and federal courts located in New York, New York and
the courts of any jurisdiction where the Rig may be found, and the Owner
agrees to accept service in respect of any such proceeding by registered or
certified mail addressed in accordance with the Credit Agreement.
18.3 Without prejudice to the generality of Clause 18.2 the Mortgagee shall
have the right to arrest and take action against the Rig at whatever place the
Rig shall be found lying and for the purpose of any action which the Mortgagee
may bring before the Courts of such jurisdiction or other judicial authority
and for the purpose of any action which the Mortgagee may bring against the
Rig, any writ, notice, judgment or other legal process or documents may
(without prejudice to any other method of service under applicable law) be
served upon the Master of the Rig (or upon anyone acting as the Master) and
such service shall be deemed good service on the Owner for all purposes.
IN WITNESS whereof the parties hereto have caused this Deed to be duly
executed the day and year first before written.
OWNER
SIGNED SEALED and DELIVERED )
on behalf of READING & XXXXX )
DRILLING CO. )
by )
its duly authorised attorney-in-fact )
in the presence of: )
Witness:
MORTGAGEE
SIGNED SEALED and DELIVERED )
on behalf of CHRISTIANIA BANK OG )
KREDITKASSE, NEW YORK BRANCH )
by )
its duly authorised attorney-in-fact )
in the presence of: )
Witness:
