EXHIBIT 10.104
FIRST PREFERRED MORTGAGE
Dated November 28, 1995
READING & ▇▇▇▇▇ EXPLORATION CO.
- in favor of -
WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as Indenture Trustee
▇.▇. ▇▇▇▇▇▇▇
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INDEX
CLAUSE SUBJECT MATTERPAGE
1. DEFINITIONS AND INTERPRETATION . . . . . . . . . . . . . . . .
2. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . .
3. MORTGAGE . . . . . . . . . . . . . . . . . . . . . . . . . . .
4. PAYMENT COVENANTS . . . . . . . . . . . . . . . . . . . . . .
5. PRESERVATION OF SECURITY . . . . . . . . . . . . . . . . . . .
6. INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . .
7. RIG COVENANTS . . . . . . . . . . . . . . . . . . . . . . . .
8. PROTECTION OF SECURITY . . . . . . . . . . . . . . . . . . . .
9. ENFORCEABILITY AND INDENTURE TRUSTEE'S POWERS . . . . . . . .
10. APPLICATION OF MONEYS . . . . . . . . . . . . . . . . . . . .
11. FURTHER ASSURANCES . . . . . . . . . . . . . . . . . . . . . .
12. POWER OF ATTORNEY . . . . . . . . . . . . . . . . . . . . . .
13. INDEMNITIES . . . . . . . . . . . . . . . . . . . . . . . . .
14. EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . .
15. COMMUNICATIONS . . . . . . . . . . . . . . . . . . . . . . . .
16. ASSIGNMENTS . . . . . . . . . . . . . . . . . . . . . . . . .
17. TOTAL AMOUNT, ETC. . . . . . . . . . . . . . . . . . . . . . .
18. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . .
19. JURISDICTION . . . . . . . . . . . . . . . . . . . . . . . . .
ACKNOWLEDGEMENT OF MORTGAGE
EXHIBIT 1 FORM OF CREDIT AGREEMENT (FILED AS EXHIBIT 10.101 TO
THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR 1995
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THIS FIRST PREFERRED MORTGAGE (this "Mortgage") is made on the 28th day of
November, 1995
BY
(1) READING & ▇▇▇▇▇ EXPLORATION CO., an Oklahoma corporation having its
principal offices at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇ (the "Owner"),
IN FAVOR OF
(2) WILMINGTON TRUST COMPANY, a Delaware banking corporation having
offices at ▇▇▇▇▇▇ Square North, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, not in its individual capacity but
solely as indenture trustee for the Lenders (as hereinafter
defined) and as mortgagee (the "Indenture Trustee")
WHEREAS
(A) The Owner is the sole owner of the whole of the semi-submersible
drilling unit ▇.▇. ▇▇▇▇▇▇▇ documented under the laws and flag of
the United States of America with Official Number D626904 of 6,494
gross registered tons and 5,834 net registered tons.
(B) By a Credit Facility Agreement dated as of November 16, 1995 (the
"Credit Agreement") and made by and among (i) the Owner and Reading
& ▇▇▇▇▇ Drilling Co., an Oklahoma corporation ("R&B Drilling"), as
joint and several borrowers (collectively, the "Borrowers"), (ii)
Reading & ▇▇▇▇▇ Corporation, a Delaware corporation, as guarantor
(hereinafter called the "Guarantor" and together with the Borrowers
collectively called the "Companies", and individually called a
"Company"), (iii) the Lenders (as hereinafter defined), acting as
lenders and (iv) Christiania Bank og Kreditkasse, acting through
its New York branch, as agent for the Lenders (the "Agent") (the
form of which Credit Agreement together with Exhibit A thereto but
without the remaining attachments is attached hereto as Exhibit 1),
it was agreed among other things that the Lenders would make
available to the Borrowers upon the terms and conditions therein
described (i) a reducing revolving credit facility in the original
principal amount of Forty-Five Million United States Dollars
(US$45,000,000) (the "Revolving Credit Facility") and (ii) a
standby letter of credit facility in an aggregate amount not to
exceed Ten Million United States Dollars (US$10,000,000)(the
"Standby Letter of Credit Facility").
(C) Pursuant to the said Credit Agreement the Lenders have made the
Revolving Credit Facility available to the Borrowers upon the terms
and conditions described in the Credit Agreement in the original
principal amount of US$45,000,000. The Revolving Credit Facility
and interest, fees and commissions thereon is to be paid and
repaid, as the case may be, as provided in the Credit Agreement.
The Revolving Credit Facility is evidenced by a secured promissory
note (the "Note") (the form of which is attached as Exhibit A to
the Credit Agreement).
(D) Pursuant to the said Credit Agreement the Lenders have made the
Standby Letter of Credit Facility available to the Borrowers in an
aggregate amount not to exceed US$10,000,000. The Borrowers are
obligated, jointly and severally, to reimburse all amounts drawn
under the Standby Letters of Credit (as defined in the Credit
Agreement) issued by the Lenders pursuant to the Standby Letter of
Credit Facility, and to pay all interest and fees thereon as
provided in the Credit Agreement.
(E) The Owner, in order to secure the repayment of the Advances (as
defined in the Credit Agreement), the Unpaid Drawings (as defined
in the Credit Agreement), interest thereon and fees and commissions
payable under the Credit Agreement, the Note and the Security
Documents (as hereinafter defined) and the performance and
observance of and compliance with all of the covenants, terms and
conditions contained in this Mortgage, has duly authorized the
execution and delivery of this First Preferred Mortgage under and
pursuant to the United States Ship Mortgage Act, 1920, as amended,
recodified at 46 U.S.C. 31301, et. seq. (the "Ship Mortgage Act"),
which is entered into by the Owner in consideration of the Lenders
agreeing, at the request of the Owner, to make the Revolving Credit
Facility and the Standby Letter of Credit Facility available to the
Borrowers under the terms of the Credit Agreement and as a
condition thereto and for other good and valuable consideration
provided by the Lenders (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:-
"Advance(s)" shall have the same meaning for such term as set forth
in the Credit Agreement;
"Agent" shall have the same meaning for such term as set forth in
the Credit Agreement;
"Assignment of Insurances" means the Assignment of Insurances in
respect of the Rig executed or to be executed by the Owner in favor
of the Agent;
"Credit Agreement" means the agreement dated as of November 16,
1995 and made among the Borrowers, the Guarantor, the Lenders and
the Agent first referred to in Recital (B) hereto;
"Credit Facility Period" shall have the same meaning for such term
as set forth in the Credit Agreement;
"Default Rate" shall have the same meaning for such term as set
forth in the Credit Agreement;
"Environmental Approvals" means all approvals, licenses, permits,
exemptions or authorization required under applicable Environmental
Laws;
"Environmental Claim" means (i) any claim by, or directive from,
any applicable governmental, judicial or other regulatory authority
alleging breach of, or non-compliance with, any Environmental Laws
or Environmental Approvals or otherwise howsoever relating to or
arising out of an Environmental Incident or (ii) any claim by any
other third party howsoever relating to or arising out of an
Environmental Incident (and, in each such case, "claim" shall mean
for damages, cleanup costs, compliance, remedial action or
otherwise);
"Environmental Incident" means (i) any release of Environmentally
Sensitive Material from the Rig, (ii) any incident in which
Environmentally Sensitive Material is released from a vessel other
than the Rig and which involves collision between the Rig and such
other vessel or some other incident of navigation or operation, in
either case, where the Rig or the Owner are actually or allegedly
at fault or otherwise liable (in whole or in part) or (iii) any
incident in which Environmentally Sensitive Material is released
from a vessel other than the Rig and where the Rig is actually or
potentially liable to be arrested as a result and/or where the
Owner is actually or allegedly at fault or otherwise liable (and,
in each such case, "release" shall mean disposing, discharging,
injecting, spilling, leaking, leaching, dumping, emitting,
escaping, emptying, seeping, placing and the like, into or upon any
land or water or air, or otherwise entering into the environment);
"Environmental Laws" means all applicable laws, regulations,
conventions and agreements whatsoever relating to pollution or
protection of the environment (including, without limitation, the
Oil Pollution Act of 1990 (33 U.S.C. 2701 et seq.), the
Comprehensive Environmental Response, Compensation, and Liability
Act of 1980 (42 U.S.C. Sections 9601 et seq.), the Hazardous
Materials Transportation Act (49 U.S.C. Sections 1801 et seq.), the
Resource Conservation and Recovery Act of 1976 (42 U.S.C. Sections
6901 et seq.), the Clean Air Act (42 U.S.C. Sections 7401 et seq.),
the Federal Water Pollution Control Act (33 U.S.C. Sections 1251 et
seq.) and the Toxic Substances Control Act (15 U.S.C. Section 2601
et seq.) (all of the foregoing as amended), and any comparable laws
of the individual States of the United States of America or any
other state or nation);
"Environmentally Sensitive Material" shall include, but shall not
be limited to, any petroleum or petroleum products, natural gases,
explosives, radioactive materials, hazardous materials, hazardous
wastes, hazardous or toxic substances or related materials,
asbestos or any material containing asbestos or any substances
which are hazardous by virtue of the manner of their use, or any
activity involving any of the foregoing or any other substance or
material or activity defined as hazardous in words or substance by
any present or future Federal, state or local environmental law,
ordinance, rule, regulation or rule of common law including,
without limitation, the Environmental Laws;
"Insurances" includes all policies and contracts of insurance
(which expression includes all entries of the Rig in a protection
and indemnity association) which are from time to time taken out or
entered into in respect of the Rig or otherwise by the Owner
(whether in the sole name of the Owner or in the joint names of the
Owner and the Agent) and all benefits thereof (including claims of
whatsoever nature and return of premiums);
"Interest Period" shall have the same meaning for such term as set
forth in the Credit Agreement;
"Lender" means any Lender listed in Schedule 1 to the Credit
Agreement as the same may be amended from time to time and each of
their successors and assigns (collectively, the "Lenders");
"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 the promissory note of the Owner referred to in
Recital (C) hereto;
"Oil Pollution Act 1990" means the Oil Pollution ▇▇▇ ▇▇▇▇ (33
U.S.C. 2701 et seq.), as amended;
"Other Rig" means the ▇▇▇▇-up drilling unit ▇▇▇▇ ▇▇▇▇▇ owned by R&B
Drilling documented under the laws and flag of the United States
with Official Number D906283 of 19,928 gross registered tons and
14,948 net registered tons;
"Permitted Liens" means: (1) liens incident to expenses of current
operations, other than for master's and crew's wages, incurred in
the ordinary course of business of the Owner and due and payable
for not more than thirty (30) days (or being contested in good
faith, provided such liens are not in excess of U.S.$5,000,000.00,
and if in excess thereof, then the Owner shall, upon the Agent's
request, provide a bond or other security satisfactory to the
Agent); (2) liens for master's and crew's wages not yet due and
payable; (3) liens for taxes, assessments, governmental charges,
fines and penalties not at the time delinquent (unless being
contested in good faith, provided such liens are not in excess of
U.S.$5,000,000.00, and if in excess thereof, then the Owner shall,
upon the Agent's request, provide a bond or other security
satisfactory to the Agent); (4) liens for general average and
salvage (including contract salvage); (5) liens for claims covered
by valid policies of insurance meeting the requirements of Clause 6
hereof (except that no lien shall be deemed not covered by
insurance to the extent insurance in force would cover the amount
secured by the lien but for any applicable deductible amount
approved by the Agent); (6) liens arising pursuant to any judgment
or to an order of attachment, distraint or similar legal process
arising in connection with legal proceedings, but only if and so
long as the execution or other enforcement thereof is not unstayed
for more than 30 consecutive days; (7) any lien for the payment or
discharge of which provisions satisfactory to the Agent have been
made as evidenced by the Agent's written consent to such lien; (8)
any lien in favor of the Lenders; and provided that Permitted Liens
shall not include any liens described in subclauses (1) through (8)
above unless they: (i) are subordinate to the lien of this Mortgage
or (ii) constitute a maritime lien which would in any event be
entitled as such to priority over the Mortgage under the United
States shipping laws or other applicable laws relating to the Rig's
trading pattern. Nothing herein shall be deemed a waiver of the
priority preferred lien status of this Mortgage;
"protection and indemnity risks" means the usual risks covered by
protection and indemnity associations of international repute
including the proportion not recoverable in case of collision under
the ordinary running-down clause (unless such is recoverable under
the relevant hull and machinery coverage);
"Requisition Compensation" means all moneys or other compensation
payable during the Credit Facility Period by reason of requisition
for title or other compulsory acquisition of the Rig otherwise than
by requisition for hire;
"Rig" means the vessel 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 Indebtedness" means the aggregate of (a) the Advances, the
Unpaid Drawings and interest, fees and commissions thereon (and
interest on any unpaid interest thereon and on any other sums of
money on which interest is stated in the Credit Agreement to be
payable), (b) 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 Indenture Trustee (or in respect of which the Owner
agrees in this Mortgage to indemnify the Indenture Trustee) whether
actually or contingently, presently or in the future together with
interest thereon as provided in this Mortgage and (c) all other
sums of money from time to time owing to the Agent and the Lenders
under the Credit Agreement, the Security Documents or any of them
whether actually or contingently, presently or in the future;
"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;
"Standby Letter of Credit" shall have the same meaning for such
term as set forth in the Credit Agreement;
"Taxes" shall have the same meaning for such term as set forth in
the Credit Agreement;
"Total Loss" shall have the same meaning for such term as set forth
in the Credit Agreement;
"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 Indenture 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 save as constituted by 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 Secured Indebtedness 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 relative 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 throughout
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) all applicable Environmental Laws and Environmental Approvals
relating to the Rig, its operation and management and the
business of the Owner (as now conducted and as reasonably
anticipated to be conducted in the future) have been 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 Advance
and at the time of the issuance of each Standby 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 payment of the Secured Indebtedness and to
secure the performance and observance of and compliance with the
covenants, terms and conditions contained in this Mortgage, the
Credit Agreement, the Note and the Security Documents, the Owner
has granted, conveyed and mortgaged and does by these presents
grant, convey and mortgage unto the Indenture Trustee, its
successors and assigns, the whole of the Rig TO HAVE AND TO HOLD
the same unto the Indenture Trustee, its successors and assigns
forever upon the terms herein set forth for the enforcement of the
payment of the Secured Indebtedness and to secure the performance
and observance of, and compliance with, the covenants, terms and
conditions contained in this Mortgage, the Credit Agreement, the
Note and the Security Documents.
Provided only and the condition of these presents is such that if
the Owner or its successors and assigns shall pay or cause to be
repaid in full to the Indenture Trustee, the Lenders and their
respective successors or assigns the Secured Indebtedness as and
when the same shall become due and payable in accordance with the
terms of the Credit Agreement, the Note, the Security Documents and
this Mortgage and shall observe and comply with the covenants,
terms and conditions contained in the Credit Agreement, the Note,
the Security Documents 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 Indenture Trustee agrees by accepting this Mortgage
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 neither the Indenture
Trustee, nor the Agent, nor any of the Lenders 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 Indenture Trustee, the Agent
and the Lenders:-
(a) to pay and indemnify the Indenture Trustee, the Agent and the
Lenders 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 Indenture Trustee, the Agent or the
Lenders (or in respect of which the Owner agrees in this
Mortgage to indemnify the Indenture Trustee, the Agent or the
Lenders) 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
the Indenture Trustee, the Agent or the Lenders, as the case
may be, for payment by the Owner of the relevant expense,
claim, liability, loss, cost, duty, fee, charge or other
money incurred by the Indenture Trustee, the Agent or the
Lenders 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 the Indenture Trustee, the Agent or the Lenders
as the case may be, under this Mortgage and the other
Security Documents to which the Owner is or is to be a party
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
Indenture Trustee as a continuing security for the payment of
the Secured Indebtedness and that the security so created
shall not be satisfied by any intermediate payment or
satisfaction of any part of the Secured Indebtedness;
(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 Indenture Trustee shall not have to wait for the Agent or
the Lenders 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 Indenture 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 Indenture Trustee may deem
expedient; and
(e) any waiver by the Indenture Trustee of any terms of this
Mortgage or any consent given by the Indenture 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
Indenture Trustee and the Owner shall be conditional upon no
security or payment to the Indenture Trustee, the Agent, or the
Lenders or any of them by the Companies 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 Indenture 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 Indenture Trustee and the Lenders 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 Companies, the
Indenture Trustee, the Lenders or any other person:-
(a) any time or waiver granted to the Companies 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 Companies or any other
persons; or
(c) any legal limitation, disability, incapacity or other
circumstances relating to the Companies or any other person;
or
(d) any amendment or supplement to the Credit Agreement, any of
the other Security Documents (other than this Mortgage) or
any other document or security; or
(e) the dissolution, liquidation, amalgamation, reconstruction or
reorganization of any of the Companies or any other person;
or
(f) the unenforceability, invalidity or frustration of any
obligations of any of the Companies or any other person under
the Credit Agreement, any of the other Security Documents
(other than this Mortgage) or any other document or security.
5.04 Until the Secured Indebtedness has been unconditionally and
irrevocably paid and discharged in full to the satisfaction of the
Indenture Trustee, the Owner shall not by virtue of any payment
made hereunder on account of the Secured Indebtedness or by virtue
of any enforcement by the Indenture Trustee of its rights under, or
the security constituted by, this Mortgage or by virtue of any
relationship between, or transaction involving, the Owner and the
Guarantor (whether such relationship or transaction shall
constitute the Owner a creditor of the Guarantor, a guarantor of
the obligations of the Guarantor or a party subrogated to the
rights of others against the Guarantor or otherwise howsoever and
whether or not such relationship or transaction shall be related
to, or in connection with, the subject matter of this Mortgage):-
(a) exercise any rights of subrogation in relation to any rights,
security or moneys held or received or receivable by the
Indenture Trustee or the Lenders or any other person; or
(b) be entitled to exercise any right of contribution from any
co-surety liable in respect of such moneys and liabilities
under any other guarantee, security or agreement; or
(c) exercise any right of set-off or counterclaim against the
Guarantor or any such co-surety; or
(d) receive, claim or have the benefit of any payment,
distribution, security or indemnity from the Guarantor or any
such co-surety; or
(e) unless so directed by the Indenture Trustee (when the Owner
will prove in accordance with such directions), claim as a
creditor of the Guarantor or any such co-surety in
competition with the Indenture Trustee.
The Owner shall hold in trust for the Indenture Trustee and
forthwith pay or transfer (as appropriate) to the Indenture Trustee
any such payment (including an amount equal to any such set-off),
distribution or benefit of such security, indemnity or claim in
fact received by it.
5.05 The Owner unconditionally and irrevocably agrees that if any sums
hereby secured are not recoverable on the basis of a guarantee
(whether by reason of legal limitation, illegality, disability or
incapacity on or of the Guarantor or the Owner or any other person
or by reason of any other fact or circumstance, and whether or not
known to or discoverable by the Owner, the Guarantor, the Indenture
Trustee or any other person), then the Owner will, as a separate
and independent stipulation and as a primary obligor, pay to the
Indenture Trustee on demand an amount or amounts equal to the
amount or amounts which the Owner would have been liable to pay but
for such irrecoverability and will on demand indemnify the
Indenture Trustee against any loss or liability suffered or
incurred by the Indenture Trustee and the Lenders or any of them as
a result of such irrecoverability.
6. INSURANCE
6.01 The Owner covenants with the Indenture Trustee throughout the
Credit Facility Period that:-
(a) The Owner shall, at its own expense, when and so long as the
Secured Indebtedness shall be 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 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 Rig such aggregate amount
shall be at least 110% of the aggregate amount of the Credit
Facility. 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 Norwegian,
American and British insurance markets or in such other major
international markets reasonably acceptable to the 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 ▇▇▇ ▇▇▇▇, or other Environmental
Laws, as and when applicable to the Rig and its operations,
through underwriters or associations acceptable to the Agent.
In addition, the Owner shall, at its own expense, furnish to
the Agent a mortgagee's single interest policy providing
coverage which, when aggregated with the mortgagee's interest
insurance furnished to the Agent by the Owner in respect of
the Other Rig, shall be in an amount equal to at least 110%
of the aggregate amount of the Credit Facility (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
Agent). Such mortgagee's interest insurance and any
additional insurance policies for the benefit of the Agent
shall be maintained in the broadest form available in the
American, British and Scandinavian markets or other major
international markets acceptable to the Agent through
underwriters acceptable to the 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 Agent.
(b) The policy or policies of insurance shall be issued by
responsible underwriters reasonably acceptable to the Agent,
shall contain conditions, terms, stipulations and insuring
covenants satisfactory to the Agent, and shall be kept in
full force and effect by the Owner so long as the Security
Documents and the Secured Indebtedness shall be outstanding.
All such policies, binders and other interim insurance
contracts shall be executed and issued in the name of the
Owner and shall, to the extent required herein, provide that
loss be payable to the Agent for distribution by it to
itself, the Lenders and the Owner as their interests may
appear, and shall provide for at least ten days' prior notice
to be given to the 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 Agent
and the Indenture Trustee shall be named as co-assureds on
all such policies and insurance contracts, but without
liability of the Agent or the Indenture Trustee for premiums
or calls. Certified copies of all such policies, binders and
other interim insurance contracts shall be deposited with the
Agent. Originals shall also be provided upon the request of
the Agent. The Owner shall furnish to the Agent annually a
detailed report signed by a firm of marine insurance brokers
satisfactory to the 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 Agent by notice to the
underwriters, although the following insurance is payable to
the 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 direct for the repair, salvage or other
charges involved or, if the Owner shall have first fully
repaired the damage or paid all of the salvage or other
charges, may pay the Owner as reimbursement therefor;
provided, however, that if such damage involves a before
deductible loss in excess of US$1,000,000, the underwriters
shall not make such payment without first obtaining the
written consent thereto of the Agent (which consent shall not
be unreasonably withheld). Any loss covered by this
paragraph which is paid to the 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 Agent to, or as directed by, the Owner and all other
payments to the Agent of losses covered by this paragraph
shall be applied by the 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 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 Agent.
(c) In the event of an actual or constructive total loss of the
Rig, the 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 Indenture Trustee, the Agent and
the Lenders 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 in Clause 10 provided.
(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 Agent
advised of the progress of such renewals, and procure that
the insurers shall promptly confirm in writing to the 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 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 Indenture 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 Indenture
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) 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
Indenture 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 Indenture 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 Indenture Trustee copies of all survey reports
issued in respect thereof;
(g) permit the representatives of the Agent or independent
surveyors representing the Indenture 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 Agent may
require;
(j) promptly furnish to the Indenture 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 Indenture Trustee's
request in writing, copies of all charters and other
contracts for her employment or otherwise howsoever
concerning her;
(k) notify both the Indenture Trustee and the 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 Indenture 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 Indenture Trustee;
(l) keep proper books of account in respect of the Rig and as and
when the Indenture Trustee or the Agent may so reasonably
require make such books available for inspection on behalf of
the Indenture 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) (i) observe the obligations contained in Clause 12 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; and
(ii) not without the previous written consent of the
Indenture Trustee de-activate or lay up the Rig
(other than for normal periods of inactivity between
contracts for the Rig during which periods the Rig
remains manned);
(n) not without the previous consent in writing of the Indenture
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 ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
Dollars (US$1,500,000) (or the equivalent in any other
currency) unless such person shall first have given to the
Indenture 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 Indenture Trustee from
time to time such proof as the Indenture 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 Indenture 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
WILMINGTON TRUST COMPANY not in its individual capacity but
solely as Indenture Trustee for the Lenders 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 Indenture 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
Indenture Trustee advised, in writing on such regular
basis and in such detail as the Indenture Trustee
shall require, of the Owner's response to such
Environmental Claim or Environmental Incident;
(s) not sell, mortgage, transfer or change the port of registry
of the Rig without the written consent of the Indenture
Trustee having first been obtained, and any such written
consent to any one such sale, mortgage, transfer, or change
shall not be construed to be a waiver of this provision with
respect to any subsequent proposed sale, mortgage, transfer
or change. Any such sale, mortgage, transfer, or change
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 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, or call at a Cuban port to load or
discharge cargo or to effect repairs on 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 Indenture Trustee shall without prejudice to its other rights
and powers under this Mortgage and the other Security 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
Security 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 Indenture Trustee, the Agent or the Lenders 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 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 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 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 Indenture 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 Indenture 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 INDENTURE 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 Majority
Lenders having served on the Owner any such notice as is referred
to in Clause 11 of the Credit Agreement) the security constituted
by this Mortgage shall become immediately enforceable and the
Indenture 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 Indenture Trustee without legal
process and without liability of the Indenture 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 Agent;
(d) to collect, recover, compromise and give a good discharge for
or procure that the 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 Agent take
over or institute all such proceedings in connection with the
Rig, the Insurances, or any Requisition Compensation as the
Indenture 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
Indenture 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 Secured Indebtedness;
(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 Indenture Trustee in
its absolute discretion deems expedient and for the purposes
aforesaid the Indenture 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 Indenture 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 Indenture Trustee in or
about the exercise of the power vested in the Indenture
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 Indenture Trustee
in or about or incidental to the exercise by it of any of the
powers aforesaid.
9.02 The Indenture 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 Indenture Trustee by this
Mortgage or to which the Indenture Trustee may at any time be
entitled hereunder.
9.03 Neither the Indenture Trustee, the Agent, the Lenders 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 Indenture 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 Indenture
Trustee the purchaser shall not be bound to see or enquire whether
the Indenture Trustee's power of sale has arisen in the manner
provided in this Mortgage and the sale shall be deemed to be within
the power of the Indenture Trustee and the receipt of the Indenture
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 Indenture Trustee (or the Agent, as the
case may be):-
(a) in respect of sale of the Rig or any part thereof;
(b) in respect of recovery under the Insurances;
(c) in respect of Requisition Compensation,
shall be held and applied in the first place to pay or make good
all such expenses, liabilities, losses, costs, duties, fees,
charges or other moneys whatsoever (together with interest payable
thereon under Clause 4.01(b)) as may have been paid or incurred by
the Indenture Trustee or the Agent in or about or incidental to the
exercise by the Indenture Trustee or the Agent of the powers
specified or otherwise referred to in Clauses 8 and 9.01 (or any of
them) and in connection with the Indenture Trustee's duties as
Indenture Trustee and the balance shall be applied in the following
manner:-
FIRST: in or towards satisfaction of any amounts in respect of the
balance of the Secured Indebtedness as are then accrued, due and
payable or are then due and payable by virtue of payment demanded
under the Credit Agreement and the other Security Documents (or any
of them), in such order of application as the Indenture Trustee
shall think fit;
SECONDLY: at the option of the Indenture Trustee in retention of
an amount equal to any part or parts of the Secured Indebtedness as
is or are not then due and payable but which (in the sole and
absolute opinion of the Indenture Trustee) will or may become due
and payable in the future and, upon the same becoming due and
payable, in or towards satisfaction thereof in accordance with the
foregoing provisions of this Clause 10.01;
THIRDLY: the surplus (if any) shall be paid to the Owner or to
whomsoever else may be entitled thereto.
11. FURTHER ASSURANCES
11.01 The Owner shall execute and do all such assurances, acts and things
as the Indenture 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 Indenture
Trustee, the Agent, and the Lenders 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 Indenture 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 Indenture Trustee under this Mortgage,
in any such case, forthwith upon demand by the Indenture 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 Owner's obligations under this Mortgage, hereby
irrevocably appoints the Indenture Trustee as its attorney for the
duration of the Credit Facility Period for the purposes of:-
(a) doing in its name all acts and executing, signing and (if
required) registering in its name all documents which the
Owner itself could do, execute, sign or register in relation
to the 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
Indenture 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 Indenture Trustee shall not put any person
dealing with the Indenture 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 Indenture 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 the Indenture Trustee,
the Agent, the Lenders and each agent or attorney appointed under
or pursuant to this Mortgage from and against any and all expenses,
claims, liabilities, losses, taxes, costs, duties, fees and charges
suffered, incurred or made by the Indenture Trustee, the Agent, the
Lenders 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 Indenture Trustee's
rights under this Mortgage; or
(c) on the release of the Rig from the security created by this
Mortgage,
and the Indenture Trustee, the Agent, the Lenders 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 the Indenture Trustee,
the Agent, the Lenders 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 Indenture
Trustee, the Agent, the Lenders 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 Environmentally Sensitive Material 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 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 Indenture
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 Indenture Trustee
against the amount of such shortfall. For the purposes of this
Clause 13.03, "rate of exchange" means the rate at which the
Indenture Trustee is able on the date of such payment (or, if it is
not practicable for the Indenture 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 Indenture 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 the Indenture Trustee and the Agent on
demand all costs, fees and expenses, including, but not limited to,
legal fees and expenses and valuation fees and Taxes thereon
incurred by the Indenture Trustee, the Agent and the Lenders or for
which the Indenture Trustee, the Agent and the Lenders may become
liable in connection with:-
(a) the negotiation, preparation and execution of the Credit
Agreement and the Security 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 and the
Security Documents (or any of them).
14.02 The Owner shall pay to the Indenture Trustee and the Agent on
demand all costs, fees and expenses (including, but not limited to,
legal fees and expenses) and Taxes thereon incurred by the
Indenture Trustee and the Lenders in connection with:-
(a) any variation of, or amendment or supplement to, any of the
terms of the Credit Agreement and the Security Documents (or
any of them) requested by the Owner, necessary or advisable
under applicable law or relating to the syndication of the
Credit Facility, or initiated during the occurrence and
continuation of an Event of Default; and/or
(b) any consent or waiver required from the Indenture Trustee in
relation to the Credit Agreement and the Security 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 and the Security
Documents (or any of them) may be subject or give rise and shall
indemnify the Indenture 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 Indenture Trustee hereunder shall be in writing
and shall be made to the following address:
Wilmington Trust Company
▇▇▇▇▇▇ Square North
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Corporate Trust Division
With a copy to:
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & Finger
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
All other notices shall be made to the addresses given in Clause 20
of the Credit Agreement and Schedule 1 thereto.
16. ASSIGNMENTS
16.01 This Mortgage shall be binding upon and shall enure to the benefit
of the Owner, the Indenture Trustee and the Lenders and the Agent
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 Clause 14 of the Credit Agreement, each Lender 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 Indenture Trustee shall notify the Owner promptly
following any such assignment, transfer or change.
17. TOTAL AMOUNT, ETC.
17.01 The total amount of this Mortgage is US$55,000,000 of principal
plus interest, fees, commissions and performance of mortgage
covenants. The discharge amount is the same as the total amount.
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 Indenture 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 Indenture 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
Indenture Trustee may think fit. The Indenture 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 Indenture 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 Indenture 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 and/or the Credit Agreement and the Security Documents or
to enforce any provisions of this Mortgage and/or the Credit
Agreement and the Security Documents or to recover payment of the
Secured Indebtedness and for the purpose of any proceedings for the
enforcement and execution of this Mortgage and/or the Credit
Agreement and the Security Documents the Owner hereby submits to
the jurisdiction of the courts of any country of the choice of the
Indenture Trustee.
19.02 Without prejudice to the generality of Clause 19.01, the Indenture
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 Indenture Trustee may bring before
the courts of such jurisdiction or other judicial authority and for
the purpose of any action which the Indenture 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 Indenture 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 & ▇▇▇▇▇ EXPLORATION CO.
By_____________________________________
Its:
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ACKNOWLEDGEMENT OF MORTGAGE
STATE OF NEW YORK )
) S.S.
COUNTY OF NEW YORK )
On this _____ day of November, 1995 before me personally appeared ▇▇▇ ▇. ▇▇▇▇▇
to me known who being by me duly sworn did dispose and say that he resides at
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, that he is Vice President and Treasurer for
READING & ▇▇▇▇▇ 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 & ▇▇▇▇▇ EXPLORATION CO.
Notary Public