Exhibit 10.120
FIRST PREFERRED MORTGAGE
Dated November 13, 1996
READING & XXXXX EXPLORATION CO.
- in favor of -
CHRISTIANIA BANK OG KREDITKASSE,
NEW YORK BRANCH,
as Security Trustee
X. X. XXXXXXX
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INDEX
CLAUSE SUBJECT MATTERPAGE
1 DEFINITIONS AND INTERPRETATION . . . . . . . . . . . . . . . . 2
2 REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . 7
3 MORTGAGE . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4 PAYMENT COVENANTS . . . . . . . . . . . . . . . . . . . . . . . 9
5 PRESERVATION OF SECURITY . . . . . . . . . . . . . . . . . . 10
6 INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . 11
7 RIG COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . 14
8 PROTECTION OF SECURITY . . . . . . . . . . . . . . . . . . . 18
9 ENFORCEABILITY AND TRUSTEE'S POWERS . . . . . . . . . . . . . 19
10 APPLICATION OF MONEYS . . . . . . . . . . . . . . . . . . . . 21
11 FURTHER ASSURANCES . . . . . . . . . . . . . . . . . . . . . 22
12 POWER OF ATTORNEY . . . . . . . . . . . . . . . . . . . . . . 22
13 INDEMNITIES . . . . . . . . . . . . . . . . . . . . . . . . . 23
14 EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . 24
15 COMMUNICATIONS . . . . . . . . . . . . . . . . . . . . . . . 24
16 ASSIGNMENTS . . . . . . . . . . . . . . . . . . . . . . . . . 25
17 TOTAL AMOUNT, ETC. . . . . . . . . . . . . . . . . . . . . . 25
18 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . 25
19 JURISDICTION . . . . . . . . . . . . . . . . . . . . . . . . 26
ACKNOWLEDGEMENT OF MORTGAGE
EXHIBIT 1 FORM OF CREDIT AGREEMENT
EXHIBIT 2 FORM OF SUBSIDIARY GUARANTY
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THIS FIRST PREFERRED MORTGAGE (this "Mortgage") is made on the 13th day of
November, 1996
BY
(1) READING & XXXXX EXPLORATION CO., an Oklahoma corporation having its
principal offices at 000 Xxxxxxxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxx 00000
(the "Owner"),
IN FAVOR OF
(2) CHRISTIANIA BANK OG KREDITKASSE, NEW YORK BRANCH, a Norwegian banking
corporation having its office at 00 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx
Xxxx, as security trustee for the Banks (as hereinafter defined) and
as mortgagee (the "Trustee")
WHEREAS
(A) The Owner is the sole owner of the whole of the xxxx-up drilling rig
X. X. XXXXXXX documented under the laws and flag of the United States
of America with Official Number 626904 of 6,494 gross registered tons
and 5,834 net registered tons (the "Rig").
(B) 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., an Oklahoma
corporation (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 Trustee,
as administrative agent, arranger and security trustee (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 (the "Facility") in an aggregate amount at any time
outstanding of Three Hundred Million United States Dollars
(US$300,000,000), providing for the making of Loans and the issuance
of, and participation in, Letters of Credit as contemplated therein.
(C) 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).
(D) 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 and the other
Credit Documents.
(E) This Mortgage is made for the benefit of the Trustee 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 Trustee 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 Trustee 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 Trustee of its rights hereunder,
together with reasonable attorneys' fees of counsel to the Trustee 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.
(F) This First Preferred Mortgage is entered into by the Owner in
consideration of the Banks 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
1. DEFINITIONS AND INTERPRETATION
1.01 In this Mortgage unless the context otherwise requires, the following
expressions shall have the following meanings:
"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 (B)
hereto, as modified, amended or supplemented from time to time;
"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;
"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
judgment, 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 13.01;
"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 (C) hereto and in Section 1.05(a) of the Credit Agreement;
"Obligations" shall have the meaning provided in Recital (E) 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
the Owner 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
xxxx-up 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; (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 Patente 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; (viii) 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;
(ix) 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; (x) 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; (xi) 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; (xii) 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 (xiii) 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 preferred 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 described in Recital (A) 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 Trustee, 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 (D) hereto, as modified, amended or
supplemented from time to time;
"Ship Mortgage Act" means the United States Ship Mortgage Act, 1920,
as amended, recodified at 46 U.S.C. 31301, et seq.;
"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.
1.02 Except where otherwise expressly provided or unless the context
otherwise requires, words and expressions defined in the Credit
Agreement shall have the same meanings when used in this Mortgage.
1.03 In this Mortgage:
(a) Clause headings are inserted for convenience only and shall not
affect the construction of this Mortgage and, unless otherwise
specified, all references to Clauses are to clauses of this
Mortgage;
(b) unless the context otherwise requires, words denoting the
singular number shall include the plural and vice versa;
(c) references to persons include bodies corporate and
unincorporated;
(d) references to assets include property, rights and assets of
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 include re-enactments, amendments
and extensions thereof.
2. REPRESENTATIONS AND WARRANTIES
2.01 The Owner hereby represents and warrants to the Trustee that:
(a) 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);
(b) the Owner has not sold or transferred, or agreed to sell or
transfer, title to the Rig or any share therein;
(c) the Owner is a corporation duly organized and validly existing
and in good standing under the laws of the State of Oklahoma;
(d) the Owner has full power and authority (i) to register the Rig
in its name under United States 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;
(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 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 United States
Coast Guard's National Vessel Documentation Center in Falling
Waters, West Virginia will create a legal, valid and enforceable
first preferred mortgage lien on the Rig;
(g) 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 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 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;
(i) 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;
(j) 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 as reasonably anticipated to be conducted in the
future) have been obtained or complied with;
(k) no Environmental Claim has been made or threatened against the
Owner, the Approved Manager or otherwise in connection with the
Rig; and
(l) 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.
2.02 The representations and warranties of the Owner set out in Clause 2.01
shall survive the execution of this Mortgage and shall be deemed to be
repeated at the time of the making of each Loan and at the time of 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. MORTGAGE
3.01 In order to secure the Obligations, the Owner has granted, conveyed
and mortgaged and does by these presents grant, convey and mortgage
unto the Trustee, its successors and assigns, the whole of the Rig TO
HAVE AND TO HOLD the same unto the Trustee, its successors and assigns
forever upon the terms herein set forth for the enforcement of the
Obligations.
Provided only and the condition of these presents is such that if all
of the Obligations secured by this Mortgage have terminated or have
been performed in full as and when the same shall become due and
payable in accordance with the terms of the Subsidiary Guaranty and
this Mortgage and shall observe and comply with the covenants, terms
and conditions contained in the Subsidiary Guaranty and this Mortgage
expressed or implied to be performed, observed or complied with by and
on the part of the Owner and its successors and assigns, all without
delay or fraud and according to the true intent and meaning thereof,
then these presents and the rights hereunder shall cease, determine
and be void otherwise to be and remain in full force and effect and,
in such event, the Trustee agrees to execute and record at the expense
of the Owner, all such documents as the Owner may reasonably require
to discharge this Mortgage.
Notwithstanding anything to the contrary herein it is not intended
that any provision of this Mortgage shall waive the preferred status
of this Mortgage and that if any provision or part thereof herein
shall be construed as waiving the preferred status of this Mortgage
then such provision shall to such extent be void and of no effect.
3.02 The Owner shall remain liable to perform all the obligations assumed
by it in relation to the Rig and none of the Secured Creditors shall
be under any 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. PAYMENT COVENANTS
4.01 The Owner hereby covenants with the Secured Creditors:
(a) to pay and indemnify the Secured Creditors for all such expenses,
claims, liabilities, losses, costs, duties, fees, charges or other
moneys as are stated in this Mortgage to be payable by the Owner
to or recoverable from the Owner by the Secured Creditors (or in
respect of which the Owner agrees in this Mortgage to indemnify
any of the Secured Creditors) at the times and in the manner
specified in this Mortgage;
(b) to pay interest on any such expenses, claims, liabilities, losses,
costs, duties, fees, charges or other moneys referred to in
Clause 4.01(a) from the date on which demand is made by any
Secured Creditor for payment by the Owner of the relevant expense,
claim, liability, loss, cost, duty, fee, charge or other money
incurred by a Secured Creditor for which the Owner is responsible
(both before and after any relevant judgment) at the Default Rate;
and
(c) to pay and perform its obligations which may be or become due or
owing to a Secured Creditor under this Mortgage and the Subsidiary
Guaranty at the times and in the manner specified herein or
therein.
5. PRESERVATION OF SECURITY
5.01 It is declared and agreed that:
(a) the security created by this Mortgage shall be held by the Trustee
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 Trustee shall not have to wait for the Administrative Agent to
enforce any of the other Security Documents before enforcing the
security created by this Mortgage;
(d) no delay or omission on the part of the Trustee in exercising any
right, power or remedy under this Mortgage 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 Mortgage 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 Trustee may deem expedient;
and
(e) any waiver by the Trustee of any terms of this Mortgage or any
consent given by the Trustee under this Mortgage shall only be
effective if given in writing and then only for the purpose and
upon the terms for which it is given.
5.02 Any settlement or discharge under this Mortgage between the Trustee
and the Owner shall be conditional upon no security or payment to the
Secured Creditors or any of them by the Credit Parties or any other
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 Trustee 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.
5.03 The rights of the Secured Creditors under this Mortgage and the
security 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 the Secured Creditors or any other person:
(a) any time or waiver granted to the Credit Parties or any other
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 of the Credit Parties or any other persons;
or
(c) any legal limitation, disability, incapacity or other
circumstances relating to the Credit Parties or any other person;
or
(d) any amendment or supplement to the Credit Agreement, any of the
other Credit Documents (other than this Mortgage) or any other
document or security; or
(e) the dissolution, liquidation, amalgamation, reconstruction or
reorganization of any of the Credit Parties or any other person;
or
(f) the unenforceability, invalidity or frustration of any obligations
of any of the Credit Parties or any other person under the Credit
Agreement, any of the other Security Documents (other than this
Mortgage) or any other document or security.
6. INSURANCE
6.01 The Owner covenants with the Trustee throughout the Credit Facility
Period that:
(a) The Owner shall, at its own expense, when and so long as any
Obligation remains 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
Administrative Agent. 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
Administrative Agent. 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 Administrative Agent. In addition,
the Owner shall, at its own expense, furnish to the Administrative
Agent a mortgagee's single interest policy providing coverage
which, when aggregated with the mortgagee's interest insurance
furnished to the Administrative Agent 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 Administrative
Agent). Such mortgagee's interest insurance and any additional
insurance policies for the benefit of the Administrative Agent
shall be maintained in the broadest form available in the
American, British and Scandinavian markets or other major
international markets acceptable to the Administrative Agent
through underwriters acceptable to the Administrative Agent. 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 Administrative
Agent.
(b) The policy or policies of insurance shall be issued by responsible
underwriters reasonably acceptable to the Administrative Agent,
shall contain conditions, terms, stipulations and insuring
covenants satisfactory to the Administrative Agent, 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 Administrative Agent 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 Administrative Agent 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. The Administrative Agent and the Trustee shall be
named as co-assureds on all such policies and insurance contracts,
but without liability of the Administrative Agent or the Trustee
for premiums or calls. Certified copies of all such policies,
binders and other interim insurance contracts shall be deposited
with the Administrative Agent. Originals shall also be provided
upon the request of the Administrative Agent. The Owner shall
furnish to the Administrative Agent annually a detailed report
signed by a firm of marine insurance brokers satisfactory to the
Administrative Agent 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 Administrative Agent by notice to
the underwriters, although the following insurance is payable to
the Administrative Agent, (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 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 Administrative Agent (which consent shall not be
unreasonably withheld). Any loss covered by this paragraph which
is paid to the Administrative Agent 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
Administrative Agent to, or as directed by, the Owner and all
other payments to the Administrative Agent of losses covered by
this paragraph shall be applied by the Administrative Agent 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 Administrative
Agent. 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
Administrative Agent.
(c) In the event of an actual or constructive Total Loss of the Rig,
the Administrative Agent 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 Administrative
Agent advised of the progress of such renewals, and procure that
the insurers shall promptly confirm in writing to the
Administrative Agent 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
Administrative Agent.
(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
7.01 The Owner covenants with the Trustee that throughout the Credit
Facility Period the Owner will:
(a) maintain its existence as a corporation in good standing duly
organized under the laws of the State of Oklahoma;
(b) keep the Rig documented in its name as a United States vessel and
to do or allow to be done nothing whereby such documentation may
be forfeited or imperilled;
(c) not without the previous consent in writing of the Trustee, change
the name of the Rig or 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;
(d) 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
+A1 Self-Elevating Drilling Unit) at the American Bureau of
Shipping free of recommendations and qualifications and change of
class, save those notified to and approved in writing by the
Trustee and so as to comply with all laws, regulations and
requirements (statutory or otherwise) from time to time applicable
to vessels documented under the laws and flag of the United States
and applicable to vessels trading to any jurisdiction to which the
Rig may, subject to the provisions of this Mortgage, trade from
time to time;
(e) 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 Trustee and becomes
on installation on the Rig the property of the Owner and subject
to the security constituted by this Mortgage;
(f) submit the Rig to such periodical or other surveys as may be
required for classification purposes and if so required to supply
to the Trustee and the Administrative Agent copies of all survey
reports issued in respect thereof;
(g) permit the representatives of the Administrative Agent or
independent surveyors representing the Trustee 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;
(h) 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;
(i) 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
Administrative Agent may require;
(j) promptly furnish to the Trustee 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 request of the Trustee in writing, copies of all
charters and other contracts for her employment or otherwise
howsoever concerning her;
(k) notify both the Trustee and the Administrative Agent 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 Trustee ten (10) days prior notice, provided,
that in the event of any emergency dry docking of the Rig,
the Owner shall immediately notify the Trustee; 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 Trustee;
(l) keep proper books of account in respect of the Rig and as and when
the Trustee or the Administrative Agent may so reasonably require
make such books available for inspection on behalf of the Trustee
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;
(m) 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;
(n) not without the previous consent in writing of the Trustee (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 Trustee 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;
(o) comply with and satisfy all the requirements and formalities
established by the Ship Mortgage Act and any other pertinent
legislation of the United States to perfect this Mortgage as a
legal, valid and enforceable first and preferred lien upon the Rig
and promptly to furnish to the Trustee from time to time such
proof as the Trustee may request for its satisfaction with respect
to the Owner's compliance with the provisions of this sub-clause;
(p) place, and use due diligence to retain, a properly certified copy
of this Mortgage on board the Rig with her papers and cause such
certified copy of this Mortgage to be exhibited to any and all
persons having business with the Rig which might give rise to any
lien thereon other than a lien for crew's wages, general average
and salvage and to any representative of the Trustee on demand and
to place and keep prominently displayed in the chart room and in
the master's cabin of the Rig a framed printed notice in plain
type in English of such size that the paragraph of reading matter
shall cover a space not less than 6 inches wide and 9 inches high
reading as follows:
"NOTICE OF MORTGAGE
This Rig is covered by a First Preferred Mortgage to CHRISTIANIA
BANK OG KREDITKASSE, NEW YORK BRANCH, as Security Trustee for the
Banks defined in the said Mortgage under authority of the United
States Ship Mortgage Act, 1920, as amended, recodified as 46
U.S.C. 31301 et seq. Under the terms of the said Mortgage
neither the Owner nor any charterer nor the master of this Rig nor
any other person has any right, power or authority to create,
incur or permit to be imposed upon this Rig any lien whatsoever
other than for crew's wages, general average and salvage."
(q) 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;
(r) notify the Trustee 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 Trustee
advised, in writing on such regular basis and in such detail
as the Trustee shall require, of the Owner's response to
such Environmental Claim or Environmental Incident;
(s) not sell, mortgage or transfer the Rig (other than as permitted by
the Credit Agreement) without the written consent of the Trustee
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 Trustee 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;
(t) 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
8.01 The Trustee shall without prejudice to its other rights and powers
under this Mortgage 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 the reasonable exercise of its discretion
think fit for the purpose of protecting or maintaining the security
created by this Mortgage and the other Credit Documents (including,
without limitation, such action as is referred to in Clause 8.02) and
each and every expense, liability, or loss (including, without
limitation, legal fees) so incurred by the Secured Creditors in or
about the protection or maintenance of the said security together with
interest payable thereon under Clause 4.01(b) shall be repayable to it
by the Owner on demand.
8.02 Without prejudice to the generality of Clause 8.01:
(a) if the Owner does not comply with the provisions of Clause 6 or
any of them the Administrative Agent shall be entitled (but not
bound) to effect or to replace and renew and thereafter to
maintain the 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 any
correspondence concerning outstanding claims) be forthwith
delivered to such brokers as the Administrative Agent 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 Administrative Agent 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 7.01(d)
and/or 7.01(f) or any of them the Trustee 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 7.01(h)
or any of them the Trustee 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 TRUSTEE'S POWERS
9.01 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 Required Banks having
served on the Owner any such notice as is referred to in Section 9 of
the Credit Agreement) the security constituted by this Mortgage shall
become immediately enforceable and the Trustee shall be entitled, as
and when it may see fit, to put into force and exercise all or any of
the powers possessed by it as mortgagee of the Rig or otherwise and in
particular:
(a) to exercise all the rights and remedies in foreclosure and
otherwise given to mortgagees by applicable law including the
provisions of the Ship Mortgage Act;
(b) 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 Trustee
without legal process and without liability of the Trustee for any
losses or damages incurred thereby and without having to render
accounts to the Owner in connection therewith;
(c) to require that all policies, contracts, certificates 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 Administrative Agent;
(d) to collect, recover, compromise and give a good discharge for or
procure that the Administrative Agent collect, recover, compromise
and give good discharge for any and all moneys or claims for
moneys then outstanding or thereafter arising under the Insurances
or any Requisition Compensation and to permit any brokers through
whom collection or recovery is effected to charge the usual
brokerage therefor;
(e) to take over or institute (if necessary using the name of the
Owner) or, to the extent lawful, procure that the Administrative
Agent take over or institute all such proceedings in connection
with the Rig, the Insurances, or any Requisition Compensation as
the Trustee 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;
(f) to sell the Rig or any share therein with or without prior notice
to the Owner free from any claim of or by the Owner of any nature
whatsoever, 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 Trustee 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;
(g) 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 Trustee in its absolute discretion deems
expedient and for the purposes aforesaid the Trustee 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 Trustee were the owner of the Rig and without
being responsible for any loss thereby incurred;
(h) to recover from the Owner on demand any expenses, liabilities or
losses as may be incurred by the Trustee in or about the exercise
of the power vested in the Trustee under Clause 9.01(g);
(i) generally, to recover from the Owner on demand each and every
expense, liability or loss incurred by the Trustee in or about or
incidental to the exercise by it of any of the powers aforesaid.
9.02 The Trustee shall not be obliged to make any enquiry as to the nature
or sufficiency of any payment received by it under this Mortgage or to
make any claim, take any action or enforce any rights and benefits
assigned to the Trustee by this Mortgage or to which the Trustee may
at any time be entitled hereunder.
9.03 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 this Mortgage in the absence of gross
negligence or wilful misconduct.
9.04 The Trustee 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 realization or for any
default or omission for which a mortgagee-in-possession might be
liable.
9.05 Upon any sale of the Rig or any share therein by the Trustee the
purchaser shall not be bound to see or enquire whether the power of
sale of the Trustee has arisen in the manner provided in this Mortgage
and the sale shall be deemed to be within the power of the Trustee and
the receipt of the Trustee 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
10.01 All moneys received by the Trustee (or any other Secured Creditor, as
the case may be) in respect of sale of the Rig or any part thereof, in
respect of recovery under the Insurances or in respect of Requisition
Compensation, shall be applied in the following manner:
(i) first, to the payment of all amounts owing the Trustee of the
type described in clauses (ii) and (iii) of Recital E;
(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 this Mortgage pursuant to Clause 3.01, 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 Trustee 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 Trustee 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 10.01, the Trustee 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 Trustee) 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 Trustee,
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. FURTHER ASSURANCES
11.01 The Owner shall execute and do all such assurances, acts and things as
the Trustee in its absolute discretion may require for:
(a) perfecting or protecting the security created (or intended to be
created) by this Mortgage; or
(b) preserving or protecting any of the rights of the Trustee and the
other Secured Creditors under this Mortgage; or
(c) ensuring that the security constituted by this Mortgage and the
covenants and obligations of the Owner under this Mortgage shall
enure to the benefit of any transferee, successor or assignee of
the Trustee; or
(d) enforcing the security constituted by this Mortgage 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
Trustee under this Mortgage,
in any such case, forthwith upon demand by the Trustee and at the
expense of the Owner.
12. POWER OF ATTORNEY
12.01 The Owner, by way of security and in order more fully to secure the
performance of the Obligations, hereby irrevocably appoints the
Trustee as its attorney until the Total Commitment is terminated and
none of the Obligations remain outstanding 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 Rig
(including without limitation, transferring title to the Rig to a
third party), provided, however, that such power shall not be
exercisable by or on behalf of the Trustee until this Mortgage
shall have become immediately enforceable pursuant to Clause 9.01;
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.
12.02 The exercise of such power as is referred to in Clause 12.01(a) by or
on behalf of the Trustee shall not put any person dealing with the
Trustee upon any enquiry as to whether this Mortgage has become
enforceable nor shall such person be in any way affected by notice
that this Mortgage has not become enforceable and, in relation to both
Clauses 12.01(a) and 12.01(b), the exercise by the Trustee of such
power shall be conclusive evidence of its right to exercise the same.
13. INDEMNITIES
13.01 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 of the Trustee
under this Mortgage; or
(c) on the release of the Rig from the security created by this
Mortgage,
and each of 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.
13.02 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.
13.03 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 Subsidiary Guaranty or 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 Trustee, 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 Trustee against the amount of such shortfall. For
the purposes of this Clause 13.03, "rate of exchange" means the rate
at which the Trustee is able on the date of such payment (or, if it is
not practicable for the Trustee 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 Trustee 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
14.01 The Owner shall pay to any Secured Creditor on demand all costs, fees
and expenses, including, but not limited to, legal fees and expenses
and valuation fees 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, the Subsidiary Guaranty and the Credit Documents (or
any of them); and/or
(b) the preserving or enforcing of, or attempting to preserve or
enforce, any of its rights under the Credit Agreement, the
Subsidiary Guaranty or the Credit Documents (or any of them).
14.02 The Owner shall pay to the Trustee and the Administrative Agent 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, the Subsidiary Guaranty or the Credit
Documents (or any of them) requested by the Owner, necessary or
advisable under applicable law or relating to the syndication of
the Facility, or initiated during the occurrence and continuation
of an Event of Default; and/or
(b) any consent or waiver required from the Trustee in relation to the
Credit Agreement, the Subsidiary Guaranty 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.
14.03 The Owner shall pay promptly all stamp, documentary and other like
duties and Taxes to which the Credit Agreement, the Subsidiary
Guaranty and the Credit Documents (or any of them) may be subject or
give rise and shall indemnify the Trustee 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
15.01 All notices to the Trustee hereunder shall be in writing and shall be
made to the following address:
Christiania Bank og Kreditkasse, New York Branch
00 Xxxx 00xx Xxxxxx
0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telefax: (000) 000-0000
Attention: Loan Administration
All other notices shall be made to the addresses provided for in
Section 12.03 of the Credit Agreement and Annex II thereto.
16. ASSIGNMENTS
16.01 This Mortgage shall be binding upon and shall enure to the benefit of
the Owner, the Secured Creditors and their respective transferees,
successors and permitted assigns and references in this Mortgage to
any of them shall be construed accordingly.
16.02 The Owner may not assign or transfer all or any part of its rights
and/or obligations under this Mortgage.
16.03 Pursuant to Section 12.04 of the Credit Agreement, each Bank has the
right to assign or transfer all or any part of its rights and/or
obligations under the Credit Agreement on the terms therein provided.
The Trustee shall notify the Owner promptly following any such
assignment, transfer or change.
17. TOTAL AMOUNT, ETC.
17.01 The total amount of the direct or contingent obligations secured by
this Mortgage is Three Hundred Million U.S. Dollars (US$300,000,000)
of principal plus interest, fees, commissions and performance of
mortgage covenants. The interest of the Owner in the Rig is 100%.
The interest of the Trustee in the Rig is 100%. The date of maturity
is November 13, 2001, and the discharge amount is the same as the
total amount plus such other sums as shall be payable by the Owner to
the Banks under the Credit Agreement or the Subsidiary Guaranty.
18. MISCELLANEOUS
18.01 If at any time any one or more of the provisions in this Mortgage 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 Mortgage shall not be in any way affected
or impaired thereby.
18.02 The Trustee, 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 Trustee under this Mortgage in relation to
the Rig. Any such delegation may be made upon such terms and subject
to such regulations as the Trustee may think fit. The Trustee 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.
18.03 A certification or determination by the Trustee as to any matter
provided for in this Mortgage shall, in the absence of manifest error,
be conclusive and binding on the Owner.
19. JURISDICTION
19.01 The Owner agrees that the Trustee shall have the liberty but shall not
be obliged to take any proceedings in the courts of any country to
protect or enforce the security constituted by this Mortgage or to
enforce any provisions of this Mortgage or to enforce the Obligations
and for the purpose of any proceedings for such enforcement the Owner
hereby submits to the jurisdiction of the courts of any country of the
choice of the Trustee.
19.02 Without prejudice to the generality of Clause 19.01, the Trustee 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 Trustee may bring before the courts of such jurisdiction or
other judicial authority and for the purpose of any action which the
Trustee 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.
19.03 The Owner agrees that should the Trustee bring a legal action or
proceedings against it or its assets in relation to any matters
arising out of or in connection with this Mortgage, no immunity from
such legal action or proceedings (which shall be deemed to include,
without limitation, suit, attachment prior to judgment, other
attachment, the obtaining of judgment, execution or other enforcement)
shall be claimed by or on behalf of the Owner or with respect of its
assets, and the Owner hereby irrevocably waives any such right of
immunity which it or its assets now has or may hereafter acquire and
the Owner hereby consents generally in respect of any legal action or
proceedings arising out of or in connection with this Mortgage to the
giving out of any relief or the issue of any process in connection
with such action or proceedings including, without limitation, the
making, enforcement or execution or attachment against any property
whatsoever of any order or judgment which may be made or given in such
action or proceedings.
IN WITNESS whereof the Owner has caused this Mortgage to be executed the day
and year first before written.
READING & XXXXX EXPLORATION CO.
By_____________________________________
Name: X.X. Xxxxx
Title: Vice President and Treasurer
ACKNOWLEDGEMENT OF MORTGAGE
STATE OF NEW YORK )
) S.S.
COUNTY OF NEW YORK )
On this 13th day of November, 1996 before me personally appeared Xxxxxxx 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 Vice President and
Treasurer for READING & XXXXX EXPLORATION CO., the corporation described in
and which executed the foregoing instrument; and that he signed his name
thereto by order of the Board of Directors of READING & XXXXX EXPLORATION CO.
______________________
Notary Public
