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EXHIBIT 10.17
FIRST PREFERRED SHIP MORTGAGE
FIRST PREFERRED SHIP MORTGAGE, made the 26th day of March, 1999 by R&B
FALCON CORPORATION, a corporation organized and existing under the laws of the
State of Delaware with offices at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇,
qualifying as a Foreign Maritime Entity into the ▇▇▇▇▇▇▇▇ Islands (the
"Shipowner") and RBF FINANCE CO., a corporation organized and existing under the
laws of the State of Delaware with offices at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇ (the "Mortgagee");
WHEREAS:
A. The Shipowner is the sole-owner of 100% of the following ▇▇▇▇▇▇▇▇
Islands flag vessel:
Name Off. No.
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PEREGRINE IV 1326
which vessel has been duly documented in the name of the Shipowner in accordance
with the laws of the Republic of the ▇▇▇▇▇▇▇▇ Islands.
B. Pursuant to the Loan Agreement dated as of March 26, 1999 (the "Loan
Agreement") among the Shipowner and the Mortgagee, the Mortgagee has agreed to
loan up to USD 166,000,000.00 (the "Loan") to the Borrower.
C. The Borrower has delivered to the Mortgagee its Promissory Notes
(collectively, the "Note") dated the date hereof to evidence the Loan. A copy of
the form of the Loan Agreement and the Note are attached hereto as Exhibit A.
D. In order to secure the payment of all amounts due under the Loan
Agreement and the Note (including the principal of and interest thereon)
according to their terms, and the payment of all other such sums that may
hereinafter be secured by this Mortgage in accordance with the terms hereof, and
to secure the performance and observance of and compliance with all the
agreements, covenants and conditions of this Mortgage, the Shipowner has duly
authorized the execution and delivery of this First Preferred Ship Mortgage.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, and in order to secure the payment of all amounts due
under the Loan Agreement and the Note (including the principal of and interest
thereon) according to the terms of this Mortgage, the Loan Agreement and the
Note, and the payment of
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all other sums that may hereafter be secured by this Mortgage in accordance with
the terms hereof (all such principal, interest, and other sums being hereinafter
called the "Indebtedness hereby secured") and to secure the performance and
observance of and compliance with all of the agreements, covenants and
conditions of this Mortgage, the Loan Agreement and the Note, the Shipowner has
granted, conveyed, mortgaged, pledged, confirmed, assigned, transferred and set
over and by these presents does grant, convey, mortgage, pledge, confirm,
assign, transfer and set over, unto the Mortgagee, and its successors and
assigns the whole of the above mentioned vessel, including, without being
limited to, all of the boilers, engines, machinery, masts, spars, boats,
anchors, cables, chains, rigging, tackle, capstans, outfit, tools, pumps and
pumping equipment, apparel, furniture, fittings, equipment, spare parts, and all
other appurtenances (including without limitation drilling masts, rotary tables,
substructures, draw work, engines, pumps, blowout prevention equipment, drill
pipe and drill bits) thereunto appertaining or belonging, whether now owned or
hereafter acquired, and also any and all additions, improvements, renewals and
replacements hereafter made in or to such vessel or any part thereof, including
all items and appurtenances aforesaid (such together with all of the foregoing,
being herein called the "Vessel").
TO HAVE AND TO HOLD all and singular the above mortgaged and described
property unto the Mortgagee and its successors and assigns, to its and to its
successors' and assigns' own use, benefit and behoof forever.
PROVIDED, and these presents are upon the condition, that, if the
Shipowner or its successors or assigns shall pay or cause to be paid the
Indebtedness hereby secured as and when the same shall become due and payable in
accordance with the Note, the Loan Agreement and this Mortgage, and all other
such sums as may hereafter become secured by this Mortgage in accordance with
the terms hereof, and the Shipowner shall duly perform, observe and comply with
or cause to be performed, observed, or complied with all the covenants, terms
and conditions of this Mortgage, the Loan Agreement and the Note expressed or
implied, to be performed, then this Mortgage and the estate and rights hereunder
shall cease, determine and be void, otherwise to remain in full force and
effect.
The Shipowner for itself, its successors and assigns, hereby covenants,
declares and agrees with the Mortgagee and its successors and assigns that the
Vessel is to be held subject to the further covenants, conditions, terms and
uses hereinafter set forth.
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ARTICLE I
Representations and Covenants of the Shipowner.
Section 1. (a) The Shipowner will pay the Indebtedness hereby secured
and will observe, perform and comply with the covenants, terms and conditions
herein and in the Loan Agreement and the Note on its part to be observed,
performed or complied with.
(b) The obligation of the Indebtedness hereby secured is an obligation
in Dollars of the United States of America and the term "USD" when used herein
shall mean such Dollars. Notwithstanding fluctuations in the value or rate of
Dollars in terms of gold, or any other currency, all payments hereunder or
otherwise in respect of the Indebtedness hereby secured shall be payable in
terms of Dollars when due, and if not paid when due, in terms of Dollars when
paid, whether such payment is made before or after the due date.
(c) If a payment falls due on a day which banks in Houston, Texas and
New York, New York are not open for business ("holiday"), such payment is due on
the next following business day unless it would fall in a new calendar month, in
which event it shall be the preceding business day.
Section 2. The Shipowner is a corporation duly incorporated and
existing under the laws of the State of Delaware. The Shipowner has full power
and authority to own and mortgage the Vessel; all action necessary and required
by law for the execution and delivery of this Mortgage has been duly and
effectively taken; and the Indebtedness hereby secured is and will be the valid
and enforceable obligation of the Shipowner in accordance with its terms.
Section 3. The Shipowner lawfully owns and is lawfully possessed of the
Vessel free from any lien or encumbrance whatsoever other than for current
operating expenses incurred in the ordinary course of business (payment for
which is not overdue) and for liens covered (in excess of approved deductibles)
by insurance (collectively, the "Permitted Liens") or any commitment to make the
Vessel available to any governmental authority for charter, or sale or use, and
will warrant and defend the title and possession thereto and to every part
thereof for the benefit of the Mortgagee against the claims and demands of all
persons whomsoever.
Section 4. The Shipowner will cause this Mortgage to be duly recorded
with the Office of the Maritime Administrator, Republic of the ▇▇▇▇▇▇▇▇ Islands,
in accordance with the provisions of Sections 66 and 70 of the Maritime ▇▇▇ ▇▇▇▇
of the Republic of the ▇▇▇▇▇▇▇▇ Islands, and will otherwise comply with and
satisfy all of the provisions of the Maritime ▇▇▇ ▇▇▇▇ as amended in order
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to establish and maintain this Mortgage as a first preferred mortgage lien
thereunder upon the Vessel and upon all renewals, replacements and improvements
made in or to the same for the amount of the Indebtedness hereby secured.
Section 5. The Shipowner will not cause or permit the Vessel to be
operated in any manner contrary to law, and the Shipowner will not engage in any
unlawful trade or violate any law or carry any cargo that will expose the Vessel
to penalty, forfeiture or capture, and will not do, or suffer or permit to be
done, anything which can or may injuriously affect the registration or
enrollment of the Vessel under the laws and regulations of the the Republic of
the ▇▇▇▇▇▇▇▇ Islands and will at all times keep the Vessel duly documented
thereunder.
Section 6. The Shipowner will pay and discharge when due and payable,
from time to time, all taxes, assessments, governmental charges, fines and
penalties lawfully imposed on the Vessel or any income therefrom; provided that
the Shipowner shall not be required to pay any such tax, assessment or charge if
the validity or amount thereof is concurrently contested in good faith by
appropriate proceedings and if the Shipowner shall have set aside on its books
reserves in accordance with generally accepted accounting principles in the
United States deemed by it adequate with respect to such tax, assessment or
charge; and provided further, however, that the Shipowner will pay or cause to
be paid all such taxes, assessments or charges forthwith upon the commencement
of proceedings to foreclose any lien which is attached as security therefor.
Section 7. Neither the Shipowner, any charterer, the Master of the
Vessel nor any other person has or shall have any right, power or authority to
create, incur or permit to be placed or imposed or continued upon the Vessel any
lien whatsoever other than the lien of this Mortgage and Permitted Liens.
Section 8. The Shipowner will place, and at all times and places will
retain, a properly certified copy of this Mortgage on board the Vessel with her
papers and will cause each such certified copy to be exhibited to any and all
persons having business therewith which might give rise to any lien thereon
other than Permitted Liens, and to any representative of the Mortgagee; and will
place and keep prominently displayed in the chart room and in the Master's cabin
of the Vessel a framed printed notice in plain type reading as follows:
"NOTICE OF MORTGAGE
This Vessel is covered by a First Preferred Ship Mortgage in
favor of RBF Finance Co., under authority of Chapter 3 of the Maritime
▇▇▇ ▇▇▇▇ of the Republic of the ▇▇▇▇▇▇▇▇ Islands. Under the terms of
said Mortgage,
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neither the owner, any charterer, the Master of this Vessel nor any
other person has any right, power or authority to create, incur or
permit to be imposed upon this Vessel any other lien whatsoever except
Permitted Liens (as defined in the Mortgage), a copy of which is
available on board for inspection upon the request of any party having
business with the Vessel."
Section 9. Except for the lien of this Mortgage and Permitted Liens,
the Shipowner will not suffer to be continued any lien, encumbrance or charge on
the Vessel, and in due course and in any event within thirty (30) days after the
same becomes due and payable will pay or cause to be discharged or make adequate
provision for the satisfaction or discharge of all such claims or demands, or
will cause the Vessel to be released or discharged from any such lien,
encumbrance or charge therefor.
Section 10. If a libel or complaint is filed against the Vessel or the
Vessel is otherwise attached, levied upon or taken into custody by virtue of any
legal proceeding in any court, the Shipowner will promptly notify the Mortgagee
thereof by telex or telefax confirmed by letter, at its address, as specified in
this Mortgage, and within fifteen (15) days will cause the Vessel to be released
and all liens thereon other than this Mortgage and Permitted Liens to be
discharged and will promptly notify the Mortgagee thereof in the manner
aforesaid. The Shipowner will notify the Mortgagee within forty-eight (48) hours
after it has become known to the Shipowner of any average or salvage incurred by
the Vessel.
Section 11. (a) The Shipowner will at all times and without cost or
expense to the Mortgagee upgrade, maintain and preserve, or cause to be
upgraded, maintained and preserved, the Vessel and all its equipment, outfit and
appurtenances, tight, staunch, strong, in good condition, working order and
repair and in all respects seaworthy and fit for its intended service, and will
keep the Vessel, or cause it to be kept, in such condition as will entitle it to
the highest classification and rating for vessels of the same age and type in
Bureau Veritas or other classification society which is a member of the
International Association of Classification Societies and approved by the
Mortgagee, and will at the time of execution of this Mortgage, and annually
thereafter on the anniversary of the date of execution hereof will furnish to
the Mortgagee a certificate by such classification society that such
classification is maintained. The Vessel shall, and the Shipowner covenants that
it will, at all times comply with all applicable laws, treaties and conventions
to which the Republic of the ▇▇▇▇▇▇▇▇ Islands is a party, and rules and
regulations issued thereunder, and shall have on board as and when required
thereby valid certificates showing compliance therewith. The Shipowner will not
make, or permit to be made, any substantial change in the structure, type or
speed of the Vessel or change in its rig, without first receiving the written
approval thereof by the Mortgagee.
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(b) The Shipowner agrees, following request by the Mortgagee, to give
the Mortgagee at least ten (10) days notice of actual date and place of any
survey of the Vessel in order that the Mortgagee may have representatives
present if desired. The Shipowner agrees that at the Mortgagee's request it will
satisfy the Mortgagee that the expense of such survey or work to be done thereat
is within the Shipowner's financial ability and will not result in a claim or
lien against the Vessel in violation of the provisions of this Mortgage.
Section 12. (a) The Shipowner will at all reasonable times afford the
Mortgagee or its authorized representatives full and complete access to the
Vessel for the purpose of inspecting the Vessel and its cargo and papers and, at
the request of the Mortgagee, the Shipowner will deliver for inspection copies
of any and all contracts and documents relating to the Vessel, whether on board
or not.
(b) The Shipowner hereby appoints the Mortgagee attorney-in-fact of the
Shipowner, whether or not an event of default shall have occurred or is
continuing, to appear before governmental bodies, classification societies and
insurers and to demand and receive to the same extent that the Shipowner itself
might, all information and certificates respecting (i) the corporate status of
the Shipowner under the laws of its jurisdiction of incorporation or any other
jurisdiction in which it may have qualified to do business, (ii) the status of
the Vessel under the laws and regulations of its country of registration and its
compliance with the requirements thereof, and (iii) the state of the records of
the Vessel or of the Shipowner in respect of the Vessel in any classification
society with which the Vessel may be classed or of any company, association or
club by whom the Vessel or the Shipowner in respect of the Vessel may be
insured; and the Shipowner hereby agrees that the Mortgagee may execute its
powers as attorney-in-fact as aforesaid through its agents, representatives and
attorneys. This power of attorney is coupled with an interest and shall be
irrevocable as long as any indebtedness from the Shipowner to the Mortgagee
remains outstanding.
Section 13. The Shipowner will not transfer or change the flag or port
of documentation of the Vessel without the prior written consent of the
Mortgagee, and any such written consent to any one transfer or change of flag or
port of documentation shall not be construed to be a waiver of this provision
with respect to any subsequent proposed transfer or change of flag or port of
documentation.
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Section 14. The Shipowner will not sell, mortgage, demise charter for a
period longer than six (6) months, transfer or change the management of the
Vessel without the prior written consent of the Mortgagee, and any such written
consent to any one sale, mortgage, demise charter or transfer shall not be
construed to be a waiver of this provision with respect to any subsequent
proposed sale, mortgage, demise charter or transfer. Any such sale, mortgage,
demise charter or transfer of the Vessel shall be subject to the provisions of
this Mortgage and the lien hereof.
Section 15. (a) The Shipowner will cause to be carried and maintained
on or in respect of the Vessel without expense to the Mortgagee, all risk
equivalent Hull and Machinery and Protection and Indemnity insurance with
responsible and reputable insurance companies, underwriters, associations, clubs
or funds reasonably acceptable to the Mortgagee in an amount not less than the
greater of (X) 110% of the amount of the outstanding Indebtedness hereby secured
or (Y) the fair market value of the Vessel's hull and machinery, the "agreed
value"), war risk and protection and indemnity and insurances in such amounts
(with such deductibles or franchises), against such risks (including but not
limited to, loss of or damage to hull or machinery; protection and indemnity;
war risks in the event the Vessel is located outside United States territorial
waters; or waters above the outer Continental Shelf of the United States;
pollution risks) in such form (including, without limitation, the form of the
loss payable clause) and in U.S. currency as the Mortgagee shall from time to
time reasonably require or approve and as provided hereafter; and providing for
deductibles no greater than USD 1,000,000.00 per occurrence. The Shipowner shall
maintain liability insurance including crew liability, cargo liability,
pollution liability, contractual liability and removal of wreck insurance in
amounts similar to that maintained by owners of similar vessels and reasonably
acceptable to the Mortgagee or, without expense to the Mortgagee, have the
Vessel fully entered in a responsible and reputable Protection and Indemnity
Association or club in good standing and reasonably acceptable to the Mortgagee.
The Shipowner will cause such association or club to issue to the Mortgagee a
Letter of Undertaking or certificate or cover note, noting the Mortgagee's
interest in such insurance in a form reasonably satisfactory to the Mortgagee.
The Shipowner will furnish the Mortgagee from time to time on request and in any
event at least annually a detailed report (including a list showing the insured
value of the Vessel) signed by a firm of marine insurance brokers reasonably
acceptable to the Mortgagee with respect to the insurance carried and maintained
on the Vessel, together with its report as to the compliance of such insurance
with the requirements of this Section 15. The Shipowner agrees that, unless the
insurances by its terms provide that they cannot cease without the Mortgagee
being informed and having the right to continue the insurances by paying any
premiums not paid by the Shipowner, receipts showing payment of premiums for
required insurance paid shall be in the hands of the Mortgagee at least two (2)
days before the risk in question commences.
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(b) The Shipowner shall, at its own expense, furnish to the Mortgagee a
breach of warranty endorsement, including Additional Perils Pollution, providing
coverage for the Mortgagee in an amount equal to at least 110% of the amount of
the Indebtedness hereby secured. Such mortgagee's breach of warranty endorsement
insurance shall be maintained in the broadest form available in the American or
British markets for vessels of the same type as the Vessel through underwriters
reasonably acceptable to the Mortgagee. The Vessel shall not undertake any
construction operations, carry any cargoes or proceed in an area then excluded
by trading warranties under its marine or war risk policies (including
protection and indemnity) without obtaining all necessary additional coverage,
reasonably satisfactory in form and substance to the Mortgagee; and evidence of
which additional insurance shall be furnished to the Mortgagee.
(c) The Shipowner will cause the relevant insurance brokers to agree
to, and the Shipowner hereby covenants and agrees that it will, advise the
Mortgagee of any expiration, termination, nonrenewal, alteration or cancellation
of any policy, any default in the payment of any premium and of any other act or
omission on the part of the Shipowner of which it has knowledge and which might
invalidate or render unenforceable, in whole or in part, any insurance on the
Vessel. To the extent obtainable from underwriters or brokers, all policies
required hereby shall provide for not less than thirty (30) days prior written
notice (ten (10) days with respect to non-payment of premiums and seven (7) days
with respect to war risks) to be received by the Mortgagee of the termination or
cancellation of the insurance evidenced thereby. All policies of insurance
maintained pursuant to this Article I, Section 15 shall contain provisions
waiving underwriters' rights of subrogation thereunder against any assured named
in such policy and any assignee of said assured.
(d) Unless the Mortgagee shall otherwise agree, all insurance (other
than any Protection and Indemnity Association or Club) must name the Mortgagee
as an additional insured but without liability for premiums, club calls,
assessments, warranties or representations, and all amounts of whatsoever nature
payable under any insurance must be payable to the Mortgagee for distribution
first to itself and thereafter to the Shipowner or others as interest may
appear. Nevertheless, unless an Event of Default shall have occurred and is
continuing (i) amounts payable under any insurance on the Vessel with respect to
protection and indemnity risks may be paid directly to the Shipowner 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; provided, however, if the Mortgagee shall give notice that the
Shipowner is in default hereunder, all
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such payments shall be made to the Mortgagee (with the exception of payments
made under employers liability, ▇▇▇▇▇▇▇'▇ compensation and similar insurances)
until the Indebtedness hereby secured has been fully discharged, and (ii) unless
an Event of Default has occurred or is continuing amounts payable under any
insurance with respect to the Vessel involving any damage to the Vessel not
constituting an actual or constructive total loss, the underwriters may pay
direct for the repair, salvage or other charges involved or, if the Shipowner
shall have first fully repaired the damage or paid all of the salvage or other
charges, may pay the Shipowner as reimbursement therefor; provided, however,
that if such amounts (including any franchise or deductible) are greater than
USD 1,000,000.00 the underwriters shall not make such payment without first
obtaining the written consent thereto of the Mortgagee.
(e) All amounts paid to the Mortgagee in respect of any insurance on
the Vessel shall be disposed of as follows:
(i) any amount which might have been paid at the time, in
accordance with the provisions of paragraph (d) above, directly to the
Shipowner or others shall be paid by the Mortgagee to, or as directed
by, the Shipowner;
(ii) all amounts paid to the Mortgagee in respect of an actual
or constructive or arranged total loss or requisition shall be applied
by the Mortgagee to the payment of the Indebtedness hereby secured in
full;
(iii) so long as no Event of Default shall have occurred and
be continuing all other amounts paid to the Mortgagee in respect of any
insurance on the Vessel shall be applied to the making of needed
repairs or other work on the Vessel, or to the payment of other claims
incurred by the Shipowner relating to the Vessel, or may be paid to the
Shipowner or whosoever may be entitled thereto;
(iv) all other amounts paid to the Mortgagee in respect of any
insurance on the Vessel may, in the Mortgagee's sole discretion, be
held and applied to the prepayment of the Indebtedness hereby secured.
(f) In the event that any claim or lien is asserted against the Vessel
for loss, damage or expense which is covered by insurance required hereunder and
it is necessary for the Shipowner to obtain a bond or supply other security to
prevent arrest of the Vessel or to release the Vessel from arrest on account of
such claim or lien, the Mortgagee, on request of the Shipowner, may, in the sole
discretion of the Mortgagee, assign to any person, firm or corporation executing
a surety or guarantee bond or other agreement to save or release the Vessel from
such arrest, all right, title and interest of the Mortgagee in and to said
insurance covering
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said loss, damage or expense, as collateral security to indemnify against
liability under said bond or other agreement.
(g) The Shipowner shall deliver to the Mortgagee certified copies or
originals whenever so requested by the Mortgagee in writing, of all certificates
of entry, cover notes, binders, evidences of insurance and policies for the
purpose of inspection or safekeeping, or, alternatively, satisfactory letters of
undertaking from the broker holding the same.
(h) The Shipowner agrees that it will not execute or permit or
willingly allow to be done any act by which any insurance may be suspended,
impaired or canceled, and that it will not permit or allow the Vessel to
undertake any construction operations or run any risk or transport any cargo
which may not be permitted by the policies in force, without having previously
insured the Vessel by additional coverage to extend to such construction
operations, risks or cargoes.
(i) In case any underwriter proposes to pay less on any claim of total
loss (whether actual, constructive or compromised) than the amount thereof, the
Shipowner shall forthwith inform the Mortgagee and the consent of the Mortgagee
shall be required for any compromise thereof; and the Shipowner shall not agree
to any adjustment or compromise of any such loss except for the highest amount
reasonably obtainable thereon.
(j) The Shipowner will comply with and satisfy all of the provisions of
any applicable law, convention, regulation, proclamation or order concerning
financial responsibility for liabilities imposed on the Shipowner or the Vessel
with respect to pollution by any state or nation or political subdivision
thereof and will maintain all certificates or other evidence of financial
responsibility as may be required by any such law, convention, regulation,
proclamation or order with respect to the trade which the Vessel are from time
to time engaged in and the cargo carried by it or the construction projects
conducted by it.
(k) Any provision of this Section 15 to the contrary notwithstanding,
all aspects of the insurances on the Vessel (including risks covered, policy
terms, deductibles, forms of loss payable clauses, and underwriters or clubs)
shall at all times be fully satisfactory to and approved by the Mortgagee,
acting in its sole discretion. The Shipowner shall cause any insurance broker
arranging the insurances required by this Mortgage (who shall be approved by the
Mortgagee) to issue its letter of undertaking to the Mortgagee with respect to
such insurance matters as the Mortgagee shall request in accordance with usual
commercial practice.
Section 16. The Shipowner will reimburse the Mortgagee promptly, for
any and all expenditures which the Mortgagee may from
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time to time make, lay out or expend in providing such protection in respect of
insurance, discharge or purchase of liens, taxes, dues, assessments,
governmental charges, fines and penalties lawfully imposed, repairs, attorney's
fees, necessary translation fees for documents made in a language other than
English, and other matters as the Shipowner is obligated herein to provide, but
fails to provide. Such obligation of the Shipowner to reimburse the Mortgagee
shall be an additional indebtedness due from the Shipowner, secured by this
Mortgage, and shall be payable by the Shipowner on demand. The Mortgagee, though
privileged to do so, shall be under no obligation to the Shipowner to make any
such expenditures, nor shall the making thereof relieve the Shipowner of any
default in that respect.
Section 17. The Shipowner will fully perform any and all charter
parties or contracts of affreightment which are, or may be, entered into with
respect to the Vessel.
Section 18. The Shipowner further covenants and agrees with the
Mortgagee that, so long as any part of the Indebtedness hereby secured remains
unpaid, there shall be no change in the ownership of the Vessel, without the
prior written consent of the Mortgagee.
Section 19. (a) In the event of an actual or constructive or arranged
total loss or seizure or forfeiture or requisition or other taking, or any sale,
exchange, or other disposition of the Vessel by the Shipowner, whether or not
with the consent of the Mortgagee, then and in each such case the Shipowner
shall forthwith on demand prepay the Indebtedness hereby secured pursuant to
Section 2.3 of the Loan Agreement.
(b) This Mortgage shall extend to and constitute a lien upon, and the
Shipowner hereby grants the Mortgagee a security interest in, all proceeds
resulting from any of the events mentioned in subsection (a) above as security
for the Indebtedness hereby secured.
(c) The Shipowner hereby irrevocably authorizes the Mortgagee to file
and record financing statements under the Uniform Commercial Code in any
jurisdiction where the same may be in force or under any legislation having
similar effect for the purpose of perfecting or continuing the perfection of the
security interests granted by the Shipowner to the Mortgagee herein without
obtaining the signature of the Shipowner thereto. The Shipowner hereby
irrevocably authorizes the Mortgagee to execute any such financing statement or
similar document in the name of the Shipowner.
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ARTICLE II
Events of Default and Remedies.
Section 1. In case any one or more of the following events, herein
termed "Events of Default", shall have occurred and be continuing:
(a) any payment in respect of the Indebtedness hereby secured
has not been received by the Mortgagee when due after giving effect to
any applicable grace periods; or
(b) any Event of Default has occurred under the Loan
Agreement;
(c) the statements in Sections 2 and 3 of Article I shall
prove to be untrue in a material way; or
(d) a default shall have occurred in the due and punctual
observance and performance of any of the provisions of Sections 4, 5,
6, 9, 10, 11, 13, 14, 15, 16, 18 or 19 of Article I hereof; or
(e) a default by the Shipowner in the observance or
performance of any other agreement under this Mortgage shall have
occurred and shall remain unremedied for thirty (30) days after written
notice thereof shall have been given to the Shipowner by the Mortgagee;
or
(f) the Shipowner or any other obligor of any part of the
Indebtedness hereby secured: (i) is dissolved or its legal status is
lost or canceled by reason of any valid, judicial, extra-judicial, or
administrative proceeding shall have occurred, or (ii) dies or is
adjudicated a bankrupt, or (iii) shall admit in writing its inability
to pay its debts as they fall due, or (iv) shall make a general
assignment for the benefit of its creditors; or a receiver of the
property or business of the Shipowner or any obligor on or guarantor of
any part of the Indebtedness hereby secured is appointed by a court of
competent jurisdiction;
then, and in each and every such case, the Mortgagee shall have the
right to:
(1) Declare all the then unpaid Indebtedness hereby secured to
be due and payable immediately, and upon such declaration the same,
including interest to date of declaration, shall become and be
immediately due and payable (provided no declaration shall be required
if an event of default shall have occurred under subsection (f)
hereof);
(2) Exercise all of the rights and remedies in foreclosure and
otherwise given to mortgagees by the provisions of the laws of the
Republic of the ▇▇▇▇▇▇▇▇ Islands or of any other jurisdiction where the
Vessel may be found;
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(3) Bring suit at law, in equity or in admiralty, as it may be
advised, to recover judgment for the Indebtedness hereby secured, and
collect the same out of any and all property of the Shipowner whether
covered by this Mortgage or otherwise;
(4) Take and enter into possession of the Vessel, at any time,
wherever the same may be, without legal process and without being
responsible for loss or damage, and the Shipowner or other person in
possession forthwith upon demand of the Mortgagee shall surrender to
the Mortgagee possession of the Vessel and the Mortgagee may, without
being responsible for loss or damage, hold, lay up, lease, charter,
operate or otherwise use the Vessel for such time and upon such terms
as it may deem to be for its best advantage, and demand, collect and
retain all hire, freights, earnings, issues, revenues, income, profits,
return premiums, salvage awards or recoveries, recoveries in general
average, and all other sums due or to become due in respect of the
Vessel or in respect of any insurance thereon from any person
whomsoever, accounting only for the net profits, if any, arising from
such use of the Vessel and charging upon all receipts from the use of
the Vessel or from the sale thereof by court proceedings or pursuant to
Subsection (5) next following, all costs, expenses, charges, damages or
losses by reason of such use; and if at any time the Mortgagee shall
avail itself of the right herein given it to take the Vessel, the
Mortgagee shall have the right to dock the Vessel, for a reasonable
time at any dock, pier or other premises of the Shipowner without
charge, or to dock it at any other place at the cost and expense of the
Shipowner;
(5) Take and enter into possession of the Vessel, at any time,
wherever the same may be, without legal process, and if it seems
desirable to the Mortgagee and without being responsible for loss or
damage, sell the Vessel, at any place and at such time as the Mortgagee
may specify and in such manner as the Mortgagee may deem advisable,
free from any claim by the Shipowner in admiralty, in equity, at law or
by statute, at public or private sale, by sealed bids or otherwise, by
mailing, by air or otherwise, notice of such sale, whether public or
private, addressed to the Shipowner at its last known address, fourteen
(14) days prior to the date fixed for entering into the contract of
sale and by first publishing notice of any such public sale for ten
consecutive days, in a daily newspaper of general circulation published
in the City of Houston, State of Texas or if the place of sale should
not be in Houston, Texas then by publication of a similar notice at or
near the place of sale; in the event that the Vessel shall be offered
for sale by private sale, no newspaper publication of notice shall be
required, nor notice of adjournment of sale; the sale may be held at
such place and
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at such time as the Mortgagee by notice may have specified, or may be
adjourned by the Mortgagee from time to time by announcement at the
time and place appointed for such sale or for such adjourned sale, and
without further notice or publication the Mortgagee may make any such
sale at the time and place to which the same shall be so adjourned; and
any sale may be conducted without bringing the Vessel to the place
designated for such sale and in such manner as the Mortgagee may deem
to be for its best advantage, and the Mortgagee may become the
purchaser at any judicial sale.
Section 2. Any sale of the Vessel made in pursuance of this Mortgage,
whether under the power of sale hereby granted or any judicial proceedings,
shall operate to divest all right, title and interest of any nature whatsoever
of the Shipowner therein and thereto, and shall bar the Shipowner, its
successors and assigns, and all persons claiming by, through or under it. No
purchaser shall be bound to inquire whether notice has been given, or whether
any default has occurred, or as to the propriety of the sale, or as to the
application of the proceeds thereof. In case of any such sale, the Mortgagee, if
it is the purchaser, shall be entitled for the purpose of making settlement or
payment for the property purchased to use and apply the Indebtedness hereby
secured in order that there may be credited against the amount remaining due and
unpaid thereon the sums payable out of the net proceeds of such sale to the
Mortgagee after allowing for the costs and expense of sale and other charges;
and thereupon such purchaser shall be credited, on account of such purchase
price, with the net proceeds that shall have been so credited upon the
Indebtedness hereby secured. At any such judicial sale, the Mortgagee may bid
for and purchase such property and upon compliance with the terms of sale may
hold, retain and dispose of such property without further accountability
therefor.
Section 3. The Mortgagee is hereby appointed attorney in-fact of the
Shipowner, upon the happening of any Event of Default, to execute and deliver to
any purchaser aforesaid, and is hereby vested with full power and authority to
make, in the name and in behalf of the Shipowner, a good conveyance of the title
to the Vessel so sold. In the event of any sale of the Vessel, under any power
herein contained, the Shipowner will, if and when required by the Mortgagee,
execute such form of conveyance of the Vessel as the Mortgagee may direct or
approve.
Section 4. The Mortgagee is hereby appointed attorney in-fact of the
Shipowner upon the happening of any Event of Default, in the name of the
Shipowner to demand, collect, receive, compromise and ▇▇▇ for, so far as may be
permitted by law, all freight, hire, earnings, issues, revenues, income and
profits of the Vessel and all amounts due from underwriters under any insurance
thereon as payment of losses or as return premiums or otherwise, salvage awards
and recoveries, recoveries in general average or otherwise,
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and all other sums due or to become due at the time of the happening of any
Event of Default in respect of the Vessel, or in respect of any insurance
thereon, from any person whomsoever, and to make, give and execute in the name
of the Shipowner acquittances, receipts, releases or other discharges for the
same, whether under seal or otherwise, and to endorse and accept in the name of
the Shipowner all checks, notes, drafts, warrants, agreements and other
instruments in writing with respect to the foregoing.
Section 5. Whenever any right to enter and take possession of the
Vessel accrues to the Mortgagee, it may require the Shipowner to deliver, and
the Shipowner shall on demand, at its own cost and expense, deliver to the
Mortgagee the Vessel to a location designated by the Mortgagee as demanded. If
the Mortgagee shall be entitled to take any legal proceedings to enforce any
right under this Mortgage, the Mortgagee shall be entitled as a matter of right
to the appointment of a receiver of the Vessel and of the freights, hire,
earnings, issues, revenues, income and profits due or to become due and arising
from the operation thereof.
Section 6. The Shipowner authorizes and empowers the Mortgagee or its
appointees or any of them to appear in the name of the Shipowner, its successors
and assigns, in any court of any country or nation of the world where a suit is
pending against the Vessel because of or on account of any alleged lien against
the Vessel from which the Vessel has not been released and to take such
proceedings as to them or any of them may seem proper towards the defense of
such suit and the purchase or discharge of such lien, and all expenditures made
or incurred by them or any of them for the purpose of such defense or purchase
or discharge shall be a debt due from the Shipowner, its successors and assigns,
to the Mortgagee, and shall be secured by the lien of this Mortgage in like
manner and extent as if the amount and description thereof were written herein.
Section 7. The Shipowner covenants that upon the happening of any Event
of Default, then, upon written demand of the Mortgagee, the Shipowner will pay
to the Mortgagee the whole amount due and payable in respect of the Indebtedness
hereby secured; and in case the Shipowner shall fail to pay the same forthwith
upon such demand, the Mortgagee shall be entitled to recover judgment for the
whole amount so due and unpaid, together with such further amounts as shall be
sufficient to cover the reasonable compensation to the Mortgagee's agents,
attorneys and counsel and any necessary advances, expenses and liabilities made
or incurred by it hereunder. All moneys collected by the Mortgagee under this
Article II, Section 7 shall be applied by the Mortgagee in accordance with the
provisions of Section 11 of this Article II.
Section 8. Each and every power and remedy herein given to the
Mortgagee shall be cumulative and shall be in addition to every
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other power and remedy herein given or now or hereafter existing at law, in
equity, in admiralty or by statute, and each and every power and remedy whether
herein given or otherwise existing may be exercised from time to time and as
often and in such order as may be deemed expedient by the Mortgagee, and the
exercise or the beginning of the exercise of any power or remedy shall not be
construed to be a waiver of the right to exercise at the same time or thereafter
any other power or remedy. No delay or omission by the Mortgagee in the exercise
of any right or power or in the pursuance of any remedy accruing upon any
default as above defined shall impair any such right, power or remedy or be
construed to be a waiver of any such Event of Default or to be an acquiescence
therein; nor shall the acceptance by the Mortgagee of any security or of any
payment of or on account of the Indebtedness hereby secured maturing after any
Event of Default or of any payment on account of any past default be construed
to be a waiver of any right to take advantage of any future Event of Default or
of any past Event of Default not completely cured thereby. No consent, waiver or
approval of the Mortgagee shall be deemed to be effective unless in writing and
duly signed by authorized signatories of the Mortgagee.
Section 9. If at any time after an Event of Default and prior to the
actual sale of the Vessel by the Mortgagee or prior to any enforcement or
foreclosure proceedings the Shipowner offers completely to cure all Events of
Default and to pay all expenses, advances and damages to the Mortgagee
consequent on such Events of Default, with interest with respect to the
Shipowner's obligations as provided herein or in the Loan Agreement as set forth
therein, then the Mortgagee may accept such offer and payment and restore the
Shipowner to its former position, but such action, if taken, shall not affect
any subsequent event of default or impair any rights consequent thereon.
Section 10. In case the Mortgagee shall have proceeded to enforce any
right, power or remedy under this Mortgage by foreclosure, entry or otherwise,
and such proceedings shall have been discontinued or abandoned for any reason or
shall have been determined adversely to the Mortgagee, then and in every such
case the Shipowner and the Mortgagee shall be restored to their former positions
and rights hereunder with respect to the property subject or intended to be
subject to this Mortgage, and all rights, remedies and powers of the Mortgagee
shall continue as if no such proceedings had been taken.
Section 11. The proceeds of any sale of the Vessel and the net earnings
of any charter operation or other use of the Vessel and any and all other moneys
received by the Mortgagee pursuant to or under the terms of this Mortgage or in
any proceedings hereunder, the application of which has not elsewhere herein
been specifically provided for, shall be applied as follows:
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First: To the payment of all expenses and charges, including
the expenses of any sale, the expenses of any retaking, attorney's
fees, court costs, and any other expenses or advances made or incurred
by the Mortgagee in the protection of its rights or the pursuance of
its remedies hereunder;
Second: To the payment of the Indebtedness hereby secured,
whether due or not, including interest thereon to the date of such
payment; and
Third: To the payment of any surplus thereafter remaining to
the Shipowner or to whomsoever may be entitled thereto.
Section 12. Until one or more Events of Default shall happen, the
Shipowner (a) shall be suffered and permitted to retain actual possession and
use of the Vessel and (b) shall have the right, from time to time, in its
discretion, and without application to the Mortgagee, and without obtaining a
release thereof by the Mortgagee, to dispose of, free from the lien hereof, any
boilers, engines, machinery, masts, spars, sails, rigging, boats, anchors,
chains, tackle, apparel, furniture, fittings or equipment or any other
appurtenances of the Vessel that are no longer useful, necessary, profitable or
advantageous in the operation of the Vessel, first or simultaneously replacing
the same by new boilers, engines, machinery, masts, spars, sails, rigging,
boats, anchors, chains, tackle, apparel, furniture, fittings, equipment, or
other appurtenances of substantially equal value to the Shipowner, which shall
forthwith become subject to the lien of this Mortgage as a preferred mortgage
thereon.
Section 13. (a) If any provision of this Mortgage should be
deemed invalid or shall be deemed to affect adversely the preferred status of
this Mortgage under any applicable law, such provision shall cease to be a part
of this Mortgage without affecting the remaining provisions, which shall remain
in full force and effect.
(b) In the event that the Note, the Loan Agreement or this Mortgage or
any of the documents or instruments which may from time to time be delivered
hereunder or thereunder or any provision hereof or thereof shall be deemed
invalidated by present or future law of any nation or by decision of any court,
or if any third party shall fail or refuse to recognize any of the powers
granted to the Mortgagee hereunder when it is sought to exercise them, this
shall not affect the validity or enforceability of all or any other parts of the
Note, the Loan Agreement or the Mortgage or such documents or instruments and,
in any such case, the Shipowner covenants and agrees that, on demand, it will
execute and deliver such other and further agreements, documents and instruments
and do such things as the Mortgagee in its sole discretion may deem to be
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necessary to carry out the true intent of this Mortgage, the Loan Agreement and
the Note.
(c) Anything herein to the contrary notwithstanding, it is intended
that nothing herein shall waive the preferred status of this Mortgage and that,
if any provision or portion thereof herein shall be construed to waive the
preferred status of this Mortgage, then such provision to such extent shall be
void and of no effect.
Section 14. In the event of any legal proceedings, the Shipowner
accepts for itself and subsequent owners of the Vessel, irrespective of domicile
or residence the nonexclusive jurisdiction of the courts of the State of New
York and the United States District Court of the Southern District Court of New
York as venue with notice provided in the manner established for residents of
the venue served on the Shipowner or on the Shipowner's manager or managing
owner or the Vessel's master.
ARTICLE III
Sundry Provisions
Section 1. All of the covenants, promises, stipulations and agreements
of the Shipowner in this Mortgage contained shall bind the Shipowner and its
successors and assigns and shall inure to the benefit of the Mortgagee and its
respective successors and assigns. In the event of any assignment or transfer of
this Mortgage, the term "Mortgagee", as used in this Mortgage, shall be deemed
to mean any such assignee or transferee.
Section 2. Wherever and whenever herein any right, power or authority
is granted or given to the Mortgagee, such right, power or authority may be
exercised in all cases by the Mortgagee or such agent or agents as it may
appoint, and the act or acts of such agent or agents when taken shall constitute
the act of the Mortgagee hereunder.
Section 3. This Mortgage may be executed in any number of counterparts,
each of which shall be an original, but such counterparts shall together
constitute but one and the same instrument.
Section 4. Any notice or other communication to be given pursuant
hereto shall be in the manner provided in Section 7.8 of the Loan Agreement and
addressed:
If to the Shipowner to:
R&B Falcon Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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If to the Mortgagee to:
RBF Finance Co.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇
or at such other address as either party may notify to the other in writing.
Section 5. The maximum principal amount that may be
outstanding under this Mortgage is ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
Dollars (USD 166,000,000.00) and for the purpose of recording this Mortgage, the
total amount of this First Preferred Ship Mortgage is ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ Dollars (USD 166,000,000.00), and interest, expenses and
performance of mortgage covenants. The maturity date is March 15, 2009. The
discharge amount is the same as the total amount.
IN WITNESS WHEREOF, the Shipowner has caused this First
Preferred Ship Mortgage to be duly executed the day and year first above
written.
R&B FALCON CORPORATION
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: Attorney-in-Fact
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STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this 26th day of March, 1999, before me personally appeared ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, to me known, who, being by me duly sworn, did depose and say that he
resides at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇; that he is the Attorney-in-Fact
of R&B Falcon Corporation, the corporation described in the foregoing
instrument; that he signed his name thereto by order of the Board of Directors
of said corporation and that the foregoing instrument is the act and deed of the
corporation.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
Notary Public
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