Exhibit 10.104
FIRST PREFERRED MORTGAGE
Dated July 9, 1996
HRB RIG CORPORATION
- in favor of -
WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as Trustee
▇▇▇▇▇▇ ▇. ▇▇▇▇
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INDEX
CLAUSE SUBJECT MATTERPAGE
1 DEFINITIONS AND INTERPRETATION . . . . . . . . . . . . . . . 2
2 REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . 7
3 MORTGAGE . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4 PAYMENT COVENANTS . . . . . . . . . . . . . . . . . . . . . 9
5 PRESERVATION OF SECURITY . . . . . . . . . . . . . . . . . 10
6 INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . 11
7 RIG COVENANTS . . . . . . . . . . . . . . . . . . . . . . 13
8 PROTECTION OF SECURITY . . . . . . . . . . . . . . . . . . 17
9 ENFORCEABILITY AND TRUSTEE'S POWERS . . . . . . . . . . . 18
10 APPLICATION OF MONEYS . . . . . . . . . . . . . . . . . . 20
11 FURTHER ASSURANCES . . . . . . . . . . . . . . . . . . . . 21
12 POWER OF ATTORNEY . . . . . . . . . . . . . . . . . . . . 21
13 INDEMNITIES . . . . . . . . . . . . . . . . . . . . . . . 22
14 EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . 23
15 COMMUNICATIONS . . . . . . . . . . . . . . . . . . . . . . 23
16 ASSIGNMENTS . . . . . . . . . . . . . . . . . . . . . . . 24
17 TOTAL AMOUNT, ETC. . . . . . . . . . . . . . . . . . . . . 24
18 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . 24
19 JURISDICTION . . . . . . . . . . . . . . . . . . . . . . . 25
ACKNOWLEDGEMENT OF MORTGAGE
EXHIBIT 1 FORM OF CREDIT AGREEMENT
EXHIBIT 2 FORM OF AMENDMENT
EXHIBIT 3 FORM OF SUBSIDIARY GUARANTY
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THIS FIRST PREFERRED MORTGAGE (this "Mortgage") is made on the 9th day of
July, 1996
BY
(1) HRB RIG CORPORATION, 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 Banks (as hereinafter defined) and as
mortgagee (the "Trustee")
WHEREAS
(A) The Owner is the sole owner of the whole of the ▇▇▇▇-up drilling unit
▇▇▇▇▇▇ ▇. ▇▇▇▇ documented under the laws and flag of the United States
of America with Official Number 642693 of 4,121 gross registered tons
and 3,079 net registered tons (the "Rig").
(B) By a Credit Agreement dated as of April 30, 1996 (as amended, restated
or supplemented from time to time, the "Credit Agreement") among
Reading & ▇▇▇▇▇ Corporation, a Delaware corporation ("Holdings"),
Reading & ▇▇▇▇▇ Drilling Co., an Oklahoma corporation (the
"Borrower"), the banks party thereto, Credit Lyonnais New York Branch,
as co-agent (the "Co-Agent"), and Christiania Bank og Kreditkasse, New
York Branch, as agent (the "Agent"), (the form of which Original
Credit Agreement together with Exhibit B thereto but without the
remaining attachments is attached hereto as Exhibit 1), it was agreed
among other things that the Banks, would make available to the
Borrower upon the terms and conditions therein described a reducing
revolving credit facility (the "Facility") in an aggregate amount at
any time outstanding of ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ Dollars
(US$100,000,000), providing for the making of Loans and the issuance
of, and participation in, Letters of Credit as contemplated therein.
(C) By an Amendment to the Original Credit Agreement dated as of July 9,
1996 (the "Amendment") the form of which Amendment without attachments
is attached hereto as Exhibit 2, among Holdings, the Borrower, the
banks party thereto (collectively the "Banks"), the Co-Agent and the
Agent, it was agreed among other things that the Banks would increase
the amount available to the Borrower under the Facility to an
aggregate amount at any time outstanding of ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ Dollars (US$140,000,000) subject to semi-annual
reductions as set forth therein.
(D) The obligations of the Borrower with respect to the Facility are
evidenced by the Credit Agreement and the other Credit Documents,
including the promissory notes of the Borrower payable to the order of
the respective Banks (each a "Note" and, collectively, the "Notes")
(the form of which is attached as Exhibit B to the Credit Agreement).
(E) The Owner, for good and valuable consideration has authorized,
executed and delivered a Subsidiary Guaranty (as amended, restated or
supplemented from time to time, the "Subsidiary Guaranty"), the form
of which Subsidiary Guaranty is attached hereto as Exhibit 3 in favor
of the Agent guaranteeing the performance by the Borrower of its
obligations under the Credit Agreement and the other Credit Documents.
(F) This Mortgage is made for the benefit of the Trustee to secure the
guaranty by the Owner of (i) the full and prompt payment when due of
(x) the principal and interest on the Notes issued, and Loans made,
under the Credit Agreement, and all reimbursement obligations and
Unpaid Drawings with respect to the Letters of Credit issued under the
Credit Agreement and (y) all other obligations and indebtedness
(including, without limitation, indemnities, Fees and interest
thereon) of the Borrower to the Secured Creditors (as hereinafter
defined), whether now existing or hereafter incurred under, arising
out of or in connection with the Credit Agreement and the other Credit
Documents including, without limitation, this Mortgage and the due
performance and compliance by the Borrower with all of the terms,
conditions and agreements contained in the Credit Agreement and the
other Credit Documents including, without limitation, this Mortgage;
(ii) any and all sums advanced by the Trustee in order to preserve the
Collateral (as hereinafter defined) or preserve its security interest
in the Collateral; (iii) in the event of any proceeding for the
collection or enforcement of any indebtedness, obligations, or
liabilities of the Borrower referred to in clause (i) above, after an
Event of Default shall have occurred and be continuing, the reasonable
expenses of the Trustee of re-taking, holding, preparing for sale or
lease, selling or otherwise disposing of or realizing on the
Collateral, or of any exercise by the Trustee of its rights hereunder,
together with reasonable attorneys' fees of counsel to the Trustee and
court costs; and (iv) all amounts paid by any Indemnitee as to which
such Indemnitee has the right to reimbursement under Clause 13 of this
Mortgage (all such obligations, liabilities, sums and expenses
referred to in clauses (i) through (iv) above being collectively
referred to as the "Obligations"). It is acknowledged and agreed that
the "Obligations" shall include extensions of credit of the types
described above, whether outstanding on the date of this Mortgage or
extended from time to time after the date of this Mortgage.
(G) This First Preferred Mortgage is entered into by the Owner in
consideration of the Banks entering into the Amendment and agreeing to
make the Facility available to the Borrower and as a condition thereto
and for other good and valuable consideration provided by the Banks
(the sufficiency of which the Owner hereby acknowledges).
NOW THIS MORTGAGE WITNESSETH AND IT IS HEREBY AGREED
1. DEFINITIONS AND INTERPRETATION
1.01 In this Mortgage unless the context otherwise requires, the following
expressions shall have the following meanings:
"Agent" shall have the same meaning for such term as set forth in the
Credit Agreement;
"Amendment" means the Amendment dated as of July 9, 1996 among
Holdings, the Borrower, the Banks, the Co-Agent, the Agent first
referred to in Recital (C) hereto;
"Bank" means any lender listed from time to time on Annex 1 to the
Credit Agreement (collectively, the "Banks");
"Collateral Assignment of Insurance" means the Collateral Assignment
of Insurance in respect of the Rig executed or to be executed by the
Owner in favor of the Agent;
"Commitment" shall have the same meaning for such term as set forth in
the Credit Agreement;
"Credit Agreement" means the Credit Agreement, dated as of April 30,
1996, among Holdings, the Borrower, the Banks, the Co-Agent, and the
Agent as amended by the Amendment first referred to in Recital (B)
hereto and as further amended, restated or supplemented from time to
time;
"Credit Documents" shall have the meaning for such term as set forth
in the Credit Agreement;
"Credit Facility Period" shall mean the period commencing on the date
hereof and ending on the date the Total Commitments have terminated,
no Letters of Credit remain outstanding and the Loans and the Unpaid
Drawings together with interest, fees and all other obligations are
paid in full;
"Credit Party" shall have the same meaning for such term as set forth
in the Credit Agreement;
"Default Rate" shall mean the rate of interest calculated in
accordance with Section 1.07(b) of the Credit Agreement;
"Environmental Approvals" means all approvals, licenses, permits,
exemptions or authorization required under applicable Environmental
Laws;
"Environmental Claims" means any and all administrative, regulatory or
judicial actions, suits, demands, demand letters, claims, liens,
notices of noncompliance or violation, investigations (other than
internal reports prepared by Holdings or any of its Subsidiaries
solely in the ordinary course of business of such entity and not in
response to any third party action or request of any kind) or
proceedings relating in any way to any Environmental Law or any permit
issued, or any approval given, under any such Environmental Law
(hereafter, "Claims"), including, without limitation, (a) any and all
Claims by governmental or regulatory authorities for enforcement,
cleanup, removal, response, remedial or other actions or damages
pursuant to any applicable Environmental Law, and (b) any and all
Claims by any third party seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive relief
resulting from Hazardous Materials arising from alleged injury or
threat of injury to health, safety or the environment;
"Environmental Incident" means (i) any release of Environmentally
Sensitive Material from the Rig, (ii) any incident in which
Environmentally Sensitive Material is released from a vessel other
than the Rig and which involves collision between the Rig and such
other vessel or some other incident of navigation or operation, in
either case, where the Rig or the Owner are actually or allegedly at
fault or otherwise liable (in whole or in part) or (iii) any incident
in which Environmentally Sensitive Material is released from a vessel
other than the Rig and where the Rig is actually or potentially liable
to be arrested as a result and/or where the Owner is actually or
allegedly at fault or otherwise liable (and, in each such case,
"release" shall mean disposing, discharging, injecting, spilling,
leaking, leaching, dumping, emitting, escaping, emptying, seeping,
placing and the like, into or upon any land or water or air, or
otherwise entering into the environment);
"Environmental Laws" means all applicable laws, regulations,
conventions and agreements whatsoever relating to pollution or
protection of the environment (including, without limitation, the Oil
Pollution Act of 1990 (33 U.S.C. 2701 et seq.), the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980 (42
U.S.C. 9601 et seq.), the Hazardous Materials Transportation Act (49
U.S.C. 1801 et seq.), the Resource Conservation and Recovery Act of
1976 (42 U.S.C. 6901 et seq.), the Clean Air Act (42 U.S.C. 7401
et seq.), the Federal Water Pollution Control Act (33 U.S.C. 1251 et
seq.) and the Toxic Substances Control Act (15 U.S.C. 2601 et seq.)
(all of the foregoing as amended), and any comparable laws of the
individual States of the United States of America or any other state
or nation);
"Fees" shall have the same meaning for such term as set forth in the
Credit Agreement;
"Hazardous Materials" means (a) any petroleum or petroleum products,
radioactive materials, asbestos in any form that is or could become
friable, urea formaldehyde foam insulation, transformers or other
equipment that contained, electric fluid containing levels of
polychlorinated biphenyls, and radon gas; (b) any chemicals, materials
or substances defined as or included in the definition of "hazardous
substances," "hazardous waste," "hazardous materials," "extremely
hazardous waste," "restricted hazardous waste," "toxic substances,"
"toxic pollutants," "contaminants," or "pollutants," or words of
similar import, under any applicable Environmental Law; and (c) any
other chemical, material or substance, exposure to which is
prohibited, limited or regulated by any governmental authority;
"Indemnitee" shall have the meaning set forth in Section 13.01;
"Insurances" includes all policies and contracts of insurance (which
expression includes all entries of the Rig in a protection and
indemnity association) which are from time to time taken out or
entered into in respect of the Rig or otherwise by the Owner (whether
in the sole name of the Owner or in the joint names of the Owner and
the Agent) and all benefits thereof (including claims of whatsoever
nature and return of premiums);
"Interest Period" shall have the same meaning for such term as set
forth in Section 1.08 of the Credit Agreement;
"Letter of Credit" shall have the same meaning for such term as set
forth in Section 2.01 of the Credit Agreement;
"Loan(s)" shall have the same meaning for such term as set forth in
the Credit Agreement;
"Major Casualty" means any casualty to the Rig in respect whereof the
claim or the aggregate of the claims against all insurers, before
adjustment for any relevant franchise or deductible, exceeds Five
Hundred Thousand United States Dollars (US$500,000) or the equivalent
in any other currency;
"Note" means each promissory note of the Borrower referred to in
Recital (D) hereto and in Section 1.05(a) of the Credit Agreement;
"Obligations" shall have the meaning provided in Recital (F) hereto;
"Oil Pollution Act 1990" means the Oil Pollution ▇▇▇ ▇▇▇▇ (33 U.S.C.
2701 et seq.), as amended;
"Other Rigs" means, individually or collectively, each of (i) the
semi-submersible drilling rig ▇▇▇▇ ▇▇▇▇▇ owned by the Borrower
documented under the laws and flag of the United States of America
with Official Number 906283 of 19,928 gross registered tons and
14,948 net registered tons; (ii) the ▇▇▇▇-up drilling rig ▇.▇. ▇▇▇▇▇▇▇
owned by Reading & ▇▇▇▇▇ Exploration Co. ("R&B Exploration")
documented under the laws and flag of the United States of America
with Official Number 626904 of 6,494 gross registered tons and 5,834
net registered tons; (iii) the drilling tender ▇.▇. ▇▇▇▇ owned by R&B
Exploration documented under the laws and flag of the United States of
America with Official Number 583169 of 5,383 gross registered tons and
4,185 net registered tons; (iv) the drilling tender ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
owned by Reading and ▇▇▇▇▇ Borneo Drilling Co., Ltd. documented under
the laws and flag of the Republic of Panama with Patente Number 6618-
76-CH of 5,829 gross registered tons and 1,748 net registered tons;
(v) the ▇▇▇▇-up drilling rig ▇▇▇ ▇▇▇▇▇▇▇▇▇ owned by Reading & ▇▇▇▇▇
(A) Pty Ltd. documented under the laws and flag of Australia with
Official Number 855213 of 11,455 gross registered tons and 3,436 net
registered tons; (vi) the semi-submersible drilling rig ▇.▇. ▇▇▇▇▇▇
owned by the Borrower documented under the laws and flag of the
Republic of Panama with Patente Number 25384-PEXT of 15,453 gross
registered tons and 4,636 net registered tons, (vii) the semi-
submersible drilling rig RIG 41 owned by RB Drilling Co. ("RB")
documented under the laws and flag of the Republic of Panama with
Patente Number 22365-95 of 10,078 gross registered tons and 3,024 net
registered tons; and (viii) the Panamanian flag rig SEILLEAN to be
acquired by RB as contemplated by the Amendment;
"Permitted Liens" means: (1) liens incident to expenses of current
operations, other than for master's and crew's wages, incurred in the
ordinary course of business of the Owner and due and payable for not
more than thirty (30) days (or being contested in good faith, provided
such liens are not in excess of U.S.$5,000,000.00, and if in excess
thereof, then the Owner shall, upon the written request of the Agent,
provide a bond or other security satisfactory to the Agent); (2) liens
for master's and crew's wages not yet due and payable; (3) liens for
taxes, assessments, governmental charges, fines and penalties not at
the time delinquent (unless being contested in good faith, provided
such liens are not in excess of U.S.$5,000,000.00, and if in excess
thereof, then the Owner shall, upon the written request of the Agent,
provide a bond or other security satisfactory to the Agent); (4) liens
for general average and salvage (including contract salvage); (5)
liens for claims covered by valid policies of insurance meeting the
requirements of Clause 6 hereof (except that no lien shall be deemed
not covered by insurance to the extent insurance in force would cover
the amount secured by the lien but for any applicable deductible
amount approved by the Agent); (6) liens arising pursuant to any
judgment or to an order of attachment, distraint or similar legal
process arising in connection with legal proceedings, but only if and
so long as the execution or other enforcement thereof is not unstayed
for more than 30 consecutive days; (7) any lien for the payment or
discharge of which provisions satisfactory to the Agent have been made
as evidenced by the Agent's written consent to such lien; (8) any lien
in favor of the Banks; and provided that Permitted Liens shall not
include any liens described in subclauses (1) through (7) above unless
they: (i) are subordinate to the lien of this Mortgage or (ii)
constitute a maritime lien which would in any event be entitled as
such to priority over the Mortgage under the United States shipping
laws or other applicable laws relating to the Rig's trading pattern.
Nothing herein shall be deemed a waiver of the preferred status of
this Mortgage;
"Protection and indemnity risks" means the usual risks covered by
protection and indemnity associations of international repute
including the proportion not recoverable in case of collision under
the ordinary running-down clause (unless such is recoverable under the
relevant hull and machinery coverage);
"Requisition Compensation" means all moneys or other compensation
payable during the Credit Facility Period by reason of requisition for
title or other compulsory acquisition of the Rig otherwise than by
requisition for hire;
"Rig" means the vessel described in Recital (A) hereto and includes
any share or interest therein and her engines, machinery, boats,
tackle, outfit, spare gear, fuel, consumable or other stores,
belongings and appurtenances whether on board or ashore and whether
now owned or hereafter acquired (but excluding therefrom any leased
equipment owned by third parties);
"Secured Creditors" shall mean the Trustee, the Banks, the Letter of
Credit Issuer and the Agent under and as defined in the Credit
Agreement;
"Security Documents" shall have the same meaning for such term as set
forth in the Credit Agreement;
"Security Interest" means a mortgage, charge (whether fixed or
floating), pledge, lien, hypothecation, assignment, trust arrangement,
title retention or other security interest or arrangement of any kind
whatsoever;
"Subsidiary Guaranty" means the Guaranty in favor of the Agent and the
Banks, dated as of April 30, 1996, as amended, restated or
supplemented from time to time, to which the Owner has become a
signatory as first referred to in Recital (E) hereto;
"Taxes" shall have the same meaning for such term as set forth in the
Credit Agreement;
"Total Commitment" shall have the same meaning for such term as set
forth in the Credit Agreement;
"Total Loss" means (a) the actual, constructive, arranged, agreed, or
compromised Total Loss of the Rig; (b) the requisition for title or
other compulsory acquisition or forfeiture of the Rig otherwise than
by requisition for hire; (c) the capture, seizure, arrest, detention
or confiscation of the Rig by any government or by persons acting or
purporting to act on behalf of any government unless the Rig be
released from such capture, seizure, arrest or detention within ninety
(90) days after the occurrence thereof;
"United States Dollars" and "US$" means the lawful currency of the
United States of America;
"Unpaid Drawing" shall have the same meaning for such term as set
forth in the Credit Agreement;
"War Risks" includes the risk of mines and all risks excluded from the
standard form of English marine policy by the free of capture and
seizure clause.
1.02 Except where otherwise expressly provided or unless the context
otherwise requires, words and expressions defined in the Credit
Agreement shall have the same meanings when used in this Mortgage.
1.03 In this Mortgage:
(a) Clause headings are inserted for convenience only and shall not
affect the construction of this Mortgage and, unless otherwise
specified, all references to Clauses are to clauses of this
Mortgage;
(b) unless the context otherwise requires, words denoting the
singular number shall include the plural and vice versa;
(c) references to persons include bodies corporate and
unincorporated;
(d) references to assets include property, rights and assets of
every description;
(e) references to any document are to be construed as references to
such document as amended or supplemented from time to time; and
(f) references to any enactment include re-enactments, amendments
and extensions thereof.
2. REPRESENTATIONS AND WARRANTIES
2.01 The Owner hereby represents and warrants to the Trustee that:
(a) the Owner is the sole legal and beneficial owner of the whole of
the Rig and neither the whole nor any share in the Rig is
subject to any Security Interest (except for Permitted Liens and
the lien of this Mortgage);
(b) the Owner has not sold or transferred, or agreed to sell or
transfer, title to the Rig or any share therein;
(c) the Owner is a corporation duly organized and validly existing
and in good standing under the laws of the State of Oklahoma;
(d) the Owner has full power and authority (i) to register the Rig
in its name under United States flag, (ii) to execute and
deliver this Mortgage, (iii) to mortgage the Rig as security for
the Obligations and (iv) to comply with the provisions of, and
perform all its obligations under, this Mortgage;
(e) the Owner has complied with all statutory and other material
requirements relating to the ownership, registration and
operation of the Rig;
(f) the Owner has taken all necessary action to authorize the
execution and delivery of this Mortgage and this Mortgage
constitutes, the legal, valid and binding obligation of the
Owner enforceable against the Owner in accordance with its terms
(except to the extent limited by applicable bankruptcy,
reorganization, insolvency, moratorium or other laws of general
application relating to or affecting the enforcement of
creditors' rights as from time to time in effect and general
equitable principles) and when filed with the United States
Coast Guard's National Vessel Documentation Center in Falling
Waters, West Virginia will create a legal, valid and enforceable
first preferred mortgage lien on the Rig;
(g) the entry into and performance by the Owner of this Mortgage
does not and will not during the Credit Facility Period violate
in any respect (i) any law or regulation of any governmental or
official authority or body, or (ii) any of the constitutive
documents of the Owner including the Certificate of
Incorporation or By-laws, as amended from time to time, or (iii)
any material agreement, contract or other undertaking to which
the Owner is a party or which is binding upon the Owner or any
of its assets;
(h) all consents, licenses, approvals and authorizations required in
connection with the entry into, performance, validity and
enforceability of this Mortgage and the transactions
contemplated hereby and thereby have been obtained and are in
full force and effect and will be so maintained during the
Credit Facility Period;
(i) save for such registrations and filings as are referred to in
this Mortgage, it is not necessary for the legality, validity,
enforceability or admissibility in evidence of this Mortgage
that it or any document relating thereto be registered, filed,
recorded or enrolled with any court or authority in any relevant
jurisdiction or that any stamp, registration or similar taxes be
paid on or in relation to this Mortgage;
(j) the Owner is in compliance with all applicable Environmental
Laws relating to the Rig, its operation and management;
(k) the Owner has obtained all Environmental Approvals and is in
compliance with all requests thereof;
(l) no Environmental Claim has been made or threatened against the
Owner, the Approved Manager or otherwise in connection with the
Rig; and
(m) no Environmental Incident which has resulted, or which could
reasonably be expected to result, in an Environmental Claim in
excess of US$200,000 has occurred.
2.02 The representations and warranties of the Owner set out in Clause 2.01
shall survive the execution of this Mortgage and shall be deemed to be
repeated at the time of the making of each Loan and at the time of the
issuance of each Letter of Credit, with respect to the facts and
circumstances existing at each such time, as if made at each such
time.
3. MORTGAGE
3.01 In order to secure the Obligations the Owner has granted, conveyed and
mortgaged and does by these presents grant, convey and mortgage unto
the Trustee, its successors and assigns, the whole of the Rig TO HAVE
AND TO HOLD the same unto the Trustee, its successors and assigns
forever upon the terms herein set forth for the enforcement of the
Obligations.
Provided only and the condition of these presents is such that if all
of the Obligations secured by this Mortgage have terminated or have
been performed in full as and when the same shall become due and
payable in accordance with the terms of the Credit Agreement, the
Subsidiary Guaranty and this Mortgage and the Owner and its successors
and assigns shall observe and comply with the covenants, terms and
conditions contained in the Subsidiary Guaranty and this Mortgage
expressed or implied to be performed, all without delay or fraud and
according to the true intent and meaning thereof, then these presents
and the rights hereunder shall cease, determine and be void otherwise
to be and remain in full force and effect and, in such event, the
Trustee agrees to execute and record at the expense of the Owner, all
such documents as the Owner may reasonably require to discharge this
Mortgage.
Notwithstanding anything to the contrary herein it is not intended
that any provision of this Mortgage shall waive the preferred status
of this Mortgage and that if any provision or part thereof herein
shall be construed as waiving the preferred status of this Mortgage
then such provision shall to such extent be void and of no effect.
3.02 The Owner shall remain liable to perform all the obligations assumed
by it in relation to the Rig and none of the Secured Creditors shall
be under any obligation of any kind whatsoever in respect thereof or
be under any liability whatsoever in event of any failure by the Owner
to perform its obligations in respect thereof.
4. PAYMENT COVENANTS
4.01 The Owner hereby covenants with the Secured Creditors:
(a) to pay and indemnify the Secured Creditors for all such
expenses, claims, liabilities, losses, costs, duties, fees,
charges or other moneys as are stated in this Mortgage to be
payable by the Owner to or recoverable from the Owner by the
Secured Creditors (or in respect of which the Owner agrees in
this Mortgage to indemnify any of the Secured Creditors) at the
times and in the manner specified in this Mortgage;
(b) to pay interest on any such expenses, claims, liabilities,
losses, costs, duties, fees, charges or other moneys referred to
in Clause 4.01(a) from the date on which demand is made by any
Secured Creditor for payment by the Owner of the relevant
expense, claim, liability, loss, cost, duty, fee, charge or
other money incurred by a Secured Creditor for which the Owner
is responsible (both before and after any relevant judgment) at
the Default Rate; and
(c) to pay and perform its obligations which may be or become due or
owing to a Secured Creditor under this Mortgage and the
Subsidiary Guaranty at the times and in the manner specified
herein or therein.
5. PRESERVATION OF SECURITY
5.01 It is declared and agreed that:
(a) the security created by this Mortgage shall be held by the
Trustee as a continuing security for the performance of the
Obligations and that the security so created shall not be
satisfied by any intermediate payment or satisfaction of any
part of the Obligations;
(b) the security so created shall be in addition to and shall not in
any way be prejudiced or affected by any of the other Security
Documents;
(c) the Trustee shall not have to wait for the Agent to enforce any
of the other Security Documents before enforcing the security
created by this Mortgage;
(d) no delay or omission on the part of the Trustee in exercising
any right, power or remedy under this Mortgage shall impair such
right, power or remedy or be construed as a waiver thereof nor
shall any single or partial exercise of any such right, power or
remedy preclude any further exercise thereof or the exercise of
any other right, power or remedy. The rights, powers and
remedies provided in this Mortgage are cumulative and not
exclusive of any rights, powers and remedies provided by law and
may be exercised from time to time and as often as the Trustee
may deem expedient; and
(e) any waiver by the Trustee of any terms of this Mortgage or any
consent given by the Trustee under this Mortgage shall only be
effective if given in writing and then only for the purpose and
upon the terms for which it is given.
5.02 Any settlement or discharge under this Mortgage between the Trustee
and the Owner shall be conditional upon no security or payment to the
Secured Creditors or any of them by the Credit Parties or any other
person being avoided or set-aside or ordered to be refunded or reduced
by virtue of any provision or enactment relating to bankruptcy,
insolvency, administration or liquidation for the time being in force
and, if such condition is not satisfied, the Trustee shall be entitled
to recover from the Owner on demand the value of such security or the
amount of any such payment as if such settlement or discharge had not
occurred.
5.03 The rights of the Secured Creditors under this Mortgage and the
security hereby constituted shall not be affected by any act,
omission, matter or thing which, but for this provision, might operate
to impair, affect or discharge such rights and security, in whole or
in part, including without limitation, and whether or not known to or
discoverable by the Secured Creditors or any other person:
(a) any time or waiver granted to the Credit Parties or any other
person; or
(b) the taking, variation, compromise, renewal or release of or
refusal or neglect to perfect or enforce any rights, remedies or
securities against any of the Credit Parties or any other
persons; or
(c) any legal limitation, disability, incapacity or other
circumstances relating to the Credit Parties or any other
person; or
(d) any amendment or supplement to the Credit Agreement, the
Subsidiary Guaranty, any of the other Credit Documents (other
than this Mortgage) or any other document or security; or
(e) the dissolution, liquidation, amalgamation, reconstruction or
reorganization of any of the Credit Parties or any other person;
or
(f) the unenforceability, invalidity or frustration of any
obligations of any of the Credit Parties or any other person
under the Credit Agreement, the Subsidiary Guaranty, any of the
other Security Documents (other than this Mortgage) or any other
document or security.
6. INSURANCE
6.01 The Owner covenants with the Trustee throughout the Credit Facility
Period that:
(a) The Owner shall, at its own expense, when and so long as any
Obligation remains outstanding, insure the Rig and keep her
insured, or cause the Rig to be insured, in lawful money of the
United States, in such amounts, for such risks (including
without limitation, hull and machinery/increased value,
protection and indemnity risks, pollution liability, and war
risks), in such form (including without limitation, the form of
the loss payable clause and the designation of named assureds)
and with such first class insurance companies, underwriters,
funds, mutual insurance associations or clubs, as shall be
reasonably satisfactory to the Agent. With respect to hull and
machinery/increased value insurance, including war risk, the
Owner shall insure the Rig and keep her insured, or cause the
Rig to be insured, for an amount which is at least the full
commercial value of the Rig, and when such amount is aggregated
with the amount of such insurance coverage on the Other Rigs,
such aggregate amount shall be at least 110% of the Total
Commitment. The Rig shall in no event be insured for an amount
less than the agreed valuation as set forth in the applicable
marine and war risk policies. Such insurance shall cover marine
and war risk perils, on hull and machinery, with deductibles not
in excess of US$500,000 (such deductibles not to apply in the
case of Total Loss of the Rig), and shall be maintained in the
broadest forms available in the American, British and
Scandinavian insurance markets or in such other major
international markets reasonably acceptable to the 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 in respect of the
Other Rigs, shall be in an amount equal to at least 110% of the
aggregate amount of the Total Commitment (or in lieu of such
mortgagee's interest insurance Owner shall cause the hull and
machinery/increased value insurance to be endorsed to afford
breach of warranty coverage for the benefit of the 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 any Obligations remain
outstanding. All such policies, binders and other interim
insurance contracts shall be executed and issued in the name of
the Owner and shall, to the extent required herein, provide that
loss be payable to the Agent for distribution by it to itself,
the Banks and the Owner as their interests may appear, and shall
provide for at least ten days' prior notice to be given to the
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 Trustee shall
be named as co-assureds on all such policies and insurance
contracts, but without liability of the Agent or the Trustee for
premiums or calls. Certified copies of all such policies,
binders and other interim insurance contracts shall be deposited
with the 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 Secured Creditors under the Security Documents,
whether or not the same be then due and payable, together with
accrued interest and the cost, if any, of collecting the
insurance, and pay the balance as provided in Clause 10.
(d) The Owner shall comply with and satisfy all of the provisions of
any applicable law, regulation, proclamation or order concerning
financial responsibility for liabilities imposed on the Owner or
the Rig with respect to the carriage of passengers or pollution,
and will maintain, or cause to be maintained, all certificates
or other evidence of financial responsibility as may be required
by any such law, regulation, proclamation or order with respect
to the trade in which the Rig from time to time is engaged.
(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 Trustee that throughout the Credit
Facility Period the Owner will:
(a) maintain its existence as a corporation in good standing duly
organized under the laws of the State of Oklahoma;
(b) keep the Rig documented in its name as a United States vessel
and to do or allow to be done nothing whereby such documentation
may be forfeited or imperilled;
(c) not without the previous consent in writing of the Trustee,
change the name of the Rig or make any modification to the Rig
which would or might materially alter the structure or type or
reduce the performance characteristics of the Rig or materially
reduce the value of the Rig;
(d) keep the Rig in a good and efficient state of repair consistent
with the ownership and operating practices of first-class rig
owners and operators so as to maintain her present class (namely
+A1 Self-Elevating Drilling Unit) at the American Bureau of
Shipping free of recommendations and qualifications and change
of class, save those notified to and approved in writing by the
Trustee and so as to comply with all laws, regulations and
requirements (statutory or otherwise) from time to time
applicable to vessels documented under the laws and flag of the
United States and applicable to vessels trading to any
jurisdiction to which the Rig may, subject to the provisions of
this Mortgage, trade from time to time;
(e) procure that all repairs to or replacement of any damaged, worn
or lost parts or equipment be effected in such manner (both as
regards workmanship and quality of materials) as to not diminish
the value of the Rig and not to remove any material part of, or
item of equipment installed on, the Rig unless the part or item
so removed is forthwith replaced by a suitable part or item
which is in the same condition as or better condition than the
part or item removed, is free from any Security Interest (other
than Permitted Liens) in favor of any person other than the
Trustee and becomes on installation on the Rig the property of
the Owner and subject to the security constituted by this
Mortgage;
(f) submit the Rig to such periodical or other surveys as may be
required for classification purposes and if so required to
supply to the Trustee and the Agent copies of all survey reports
issued in respect thereof;
(g) permit the representatives of the Agent or independent surveyors
representing the Trustee to board the Rig at all reasonable
times and upon reasonable notice for the purpose of inspecting
her condition or for the purpose of satisfying themselves in
regard to proposed or executed repairs and to afford all proper
facilities for such inspections;
(h) promptly pay and discharge all debts, damages and liabilities
whatsoever which have given or may give rise to maritime or
possessory liens (other than Permitted Liens) on or claims
enforceable against the Rig and all tolls, dues, taxes,
assessments, governmental charges, fines and penalties lawfully
charged on or in respect of the Rig and all other expenses
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 Trustee all such information as it may
from time to time require regarding the Rig, her employment,
position and engagements, particulars of all towages and
salvages and, upon the request of the Trustee in writing, copies
of all charters and other contracts for her employment or
otherwise howsoever concerning her;
(k) notify both the Trustee and the Agent forthwith by telex or
telecopy thereafter confirmed by letter of:
(i) any casualty to the Rig which is or is likely to be a
Major Casualty; and
(ii) any occurrence in consequence whereof the Rig has become
or is, by the passing of time or otherwise, likely to
become a Total Loss; and
(iii) any requirement or recommendation made by any insurer or
classification society or by any competent authority
which is not immediately complied with; and
(iv) any arrest of the Rig or the exercise or purported
exercise of any lien on the Rig or any requisition of the
Rig for hire; and
(v) any intended dry docking of the Rig, as to which the
Owner shall give the Trustee ten (10) days prior notice,
provided, that in the event of any emergency dry docking
of the Rig, the Owner shall immediately notify the
Trustee; and
(vi) any intended deactivation or lay-up of the Rig (other
than for normal periods of inactivity between contracts
for the Rig during which periods the Rig remains manned)
and obtain the prior written consent of the Trustee;
(l) keep proper books of account in respect of the Rig and as and
when the Trustee or the Agent may so reasonably require make
such books available for inspection on behalf of the Trustee and
furnish satisfactory evidence that the wages and allotments and
the insurance of the master and crew are being regularly paid
and that all deductions from crew's wages in respect of tax
and/or social security liability are being properly accounted
for and that the master has no claim for disbursements other
than those incurred by him in the ordinary course of trading on
the voyage then in progress;
(m) observe the obligations contained in Sections 7 and 8 of the
Credit Agreement which apply to the Rig and the Owner, and in
pursuance thereof such obligations shall be incorporated in and
deemed to form part of this Mortgage mutatis mutandis;
(n) not without the previous consent in writing of the Trustee (such
consent not to be unreasonably withheld), put the Rig into the
possession of any person for the purpose of work being done upon
her in an amount exceeding or likely to exceed ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ Dollars (US$2,500,000) (or the
equivalent in any other currency) unless such person shall first
have given to the Trustee and in terms reasonably satisfactory
to it a written undertaking not to exercise any lien on the Rig
for the cost of such work or otherwise;
(o) comply with and satisfy all the requirements and formalities
established by the Ship Mortgage Act and any other pertinent
legislation of the United States to perfect this Mortgage as a
legal, valid and enforceable first and preferred lien upon the
Rig and promptly to furnish to the Trustee from time to time
such proof as the Trustee may request for its satisfaction with
respect to the Owner's compliance with the provisions of this
sub-clause;
(p) place, and use due diligence to retain, a properly certified
copy of this Mortgage on board the Rig with her papers and cause
such certified copy of this Mortgage to be exhibited to any and
all persons having business with the Rig which might give rise
to any lien thereon other than a lien for crew's wages, general
average and salvage and to any representative of the Trustee on
demand and to place and keep prominently displayed in the chart
room and in the master's cabin of the Rig a framed printed
notice in plain type in English of such size that the paragraph
of reading matter shall cover a space not less than 6 inches
wide and 9 inches high reading as follows:
"NOTICE OF MORTGAGE
This Rig is covered by a First Preferred Mortgage to WILMINGTON
TRUST COMPANY not in its individual capacity but solely as
Trustee for the Banks defined in the said Mortgage under
authority of the United States Ship Mortgage Act, 1920, as
amended, recodified as 46 U.S.C. 31301 et. seq. Under the
terms of the said Mortgage neither the Owner nor any charterer
nor the master of this Rig nor any other person has any right,
power or authority to create, incur or permit to be imposed upon
this Rig any lien whatsoever other than for crew's wages,
general average and salvage."
(q) comply, or procure compliance with, all Environmental Laws and
Environmental Approvals relating to the Rig, its operation or
management and the business of the Owner from time to time;
(r) notify the Trustee forthwith upon:
(i) any Environmental Claim which could reasonably be expected
to result in damages in excess of US$200,000 being or made
against the Owner, or otherwise in connection with the Rig;
or
(ii) any Environmental Incident occurring, and keep the
Trustee advised, in writing on such regular basis and in
such detail as the Trustee shall require, of the Owner's
response to such Environmental Claim or Environmental
Incident;
(s) not sell, mortgage or transfer the Rig (other than as permitted
by the Restated Credit Agreement) without the written consent of
the Trustee having first been obtained, and any such written
consent to any one such sale, mortgage or transfer shall not be
construed to be a waiver of this provision with respect to any
subsequent proposed sale, mortgage or transfer. Any such sale,
mortgage or transfer shall be subject to the provisions of this
Mortgage and the lien it creates. The Owner shall not charter
the Rig to, or permit the Rig to serve under any contract with,
a person included within the definition of (i) "national" of a
"designated foreign country," or "specially designated national"
of a "designated foreign country," in the Foreign Assets Control
Regulations or the Cuban Assets Control Regulations of the
United States Treasury Department, 31 C.F.R. Parts 500 and 515,
in each case as amended, (ii) "Government of Libya", "entity of
the Government of Libya" or "Libyan entity" in the Libyan
Sanctions Regulations of the United States Treasury Department,
31 C.F.R. Part 550, as amended, or (iii) "Government of Iraq",
"entity of the Government of Iraq" or "Iraqi Government entity"
in the Iraqi Sanctions Regulations, 56 Fed. Reg. 2112 (1991) to
be codified at 31 C.F.R. Part 575, as amended, all within the
meaning of said Regulations or of any regulations,
interpretations or rulings issued thereunder, or sail in Cuban
waters or enter any Cuban port for any purpose or engage in any
transaction that violates any provision of said Regulations or
that violates any provision of the Iranian Transactions
Regulations, 31 C.F.R. Part 560, as amended, the Foreign Funds
Control Regulations, 31 C.F.R. Part 520, as amended, the
Transaction Control Regulations, 31 C.F.R. Part 505, as amended,
the Haitian Transaction Regulations, 31 C.F.R. Part 580, as
amended, the Foreign Assets Control Regulations, 31 C.F.R. Part
500, as amended, or Executive Orders 12810 and 12831; if such
transaction or violation would (i) expose the Trustee to any
penalty, sanction or investigation or (ii) jeopardize the lien
created by this Mortgage or (iii) have a material adverse effect
on the Owner or the operation of the Rig;
(t) shall not cause or permit the Rig to be operated in any manner
contrary to law, shall not abandon the Rig in a foreign port,
shall not engage in any unlawful trade or violate any law or
carry any cargo that shall expose the Rig to penalty, forfeiture
or capture, and shall not do, or suffer or permit to be done,
anything which can or may injuriously affect the registration or
enrollment of the Rig under the laws of the United States and
will at all times keep the Rig duly documented thereunder.
8. PROTECTION OF SECURITY
8.01 The Trustee shall without prejudice to its other rights and powers
under this Mortgage and the other Credit Documents be entitled (but
not bound) at any time and as often as may be necessary to take any
such action as it may in the reasonable exercise of its discretion
think fit for the purpose of protecting or maintaining the security
created by this Mortgage and the other Credit Documents (including,
without limitation, such action as is referred to in Clause 8.02) and
each and every expense, liability, or loss (including, without
limitation, legal fees) so incurred by the Secured Creditors in or
about the protection or maintenance of the said security together with
interest payable thereon under Clause 4.01(b) shall be repayable to it
by the Owner on demand.
8.02 Without prejudice to the generality of Clause 8.01:
(a) if the Owner does not comply with the provisions of Clause 6 or
any of them the 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) or 7.01(f) or the Trustee shall be entitled (but not
bound) to arrange for the carrying out of such repairs to 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) the Trustee shall be entitled (but not bound) to pay and
discharge all such debts, damages and liabilities and all such
tolls, dues, taxes, assessments, charges, fines, penalties and
other outgoings as are therein mentioned and/or to take any such
measures as it deems expedient or necessary for the purpose of
securing the release of the Rig.
9. ENFORCEABILITY AND TRUSTEE'S POWERS
9.01 Upon the happening of any of the Events of Default specified in the
Credit Agreement but without the necessity for any court order or
declaration in any jurisdiction to the effect that an Event of Default
has occurred (and whether prior to or after the Banks having served on
the Owner any such notice as is referred to in Section 9 of the Credit
Agreement) the security constituted by this Mortgage shall become
immediately enforceable and the Trustee shall be entitled, as and when
it may see fit, to put into force and exercise all or any of the
powers possessed by it as mortgagee of the Rig or otherwise and in
particular:
(a) to exercise all the rights and remedies in foreclosure and
otherwise given to mortgagees by applicable law including the
provisions of the Ship Mortgage Act;
(b) to take possession of the Rig whether actually or constructively
and/or otherwise to take control of the Rig wherever the Rig may
be and cause the Owner or any other person in possession of the
Rig forthwith upon demand to surrender the same to the Trustee
without legal process and without liability of the Trustee for
any losses or damages incurred thereby and without having to
render accounts to the Owner in connection therewith;
(c) to require that all policies, contracts, certificates of entry
and other records relating to the Insurances (including details
of and correspondence concerning outstanding claims) be
forthwith delivered to or to the order of the 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
Trustee in its absolute discretion thinks fit and to discharge,
compound, release or compromise claims against the Owner in
respect of the Rig which have given or may give rise to any
charge or lien on the Rig or which are or may be enforceable by
proceedings against the Rig;
(f) to sell the Rig or any share therein with or without prior
notice to the Owner free from any claim of or by the Owner of
any nature whatsoever, and with or without the benefit of any
charterparty or other contract for her employment, by public
auction or private contract at such place and upon such terms
(including, without limitation, on terms such that payment of
some or all of the purchase price be deferred) as the Trustee in
its absolute discretion may determine with power to postpone any
such sale, without being answerable for any loss occasioned by
such sale or resulting from postponement thereof, and/or itself
to purchase the Rig at any such public auction and to set off
the purchase price against all or any part of the Obligations;
(g) to manage, insure, maintain and repair the Rig and to charter,
employ, sail or lay up the Rig in such manner, upon such terms
and for such period as the Trustee in its absolute discretion
deems expedient and for the purposes aforesaid the Trustee shall
be entitled to do all acts and things incidental or conducive
thereto and in particular to enter into such arrangements
respecting the Rig, and the insurance, management, maintenance,
repair, classification, chartering and employment of the Rig,
in all respects as if the Trustee were the owner of the Rig and
without being responsible for any loss thereby incurred;
(h) to recover from the Owner on demand any expenses, liabilities or
losses as may be incurred by the Trustee in or about the
exercise of the power vested in the Trustee under
Clause 9.01(g);
(i) generally, to recover from the Owner on demand each and every
expense, liability or loss incurred by the Trustee in or about
or incidental to the exercise by it of any of the powers
aforesaid.
9.02 The Trustee shall not be obliged to make any enquiry as to the nature
or sufficiency of any payment received by it under this Mortgage or to
make any claim, take any action or enforce any rights and benefits
assigned to the Trustee by this Mortgage or to which the Trustee may
at any time be entitled hereunder.
9.03 Neither the Secured Creditors, nor their agents, managers, officers,
employees, delegates and advisers shall be liable for any expense,
claim, liability, loss, cost, damage or expense incurred or arising in
connection with the exercise or purported exercise of any rights,
powers and discretions under this Mortgage in the absence of gross
negligence or wilful misconduct.
9.04 The Trustee shall not by reason of the taking possession of the Rig be
liable to account as mortgagee-in-possession or for anything except
actual receipts or be liable for any loss upon realization or for any
default or omission for which a mortgagee-in-possession might be
liable.
9.05 Upon any sale of the Rig or any share therein by the Trustee the
purchaser shall not be bound to see or enquire whether the power of
sale of the Trustee has arisen in the manner provided in this Mortgage
and the sale shall be deemed to be within the power of the Trustee and
the receipt of the Trustee for the purchase money shall effectively
discharge the purchaser who shall not be concerned with the manner of
application of the proceeds of sale or be in any way answerable
therefor.
10. APPLICATION OF MONEYS
10.01 (a) All moneys received by the Trustee (or any other Secured
Creditor, as the case may be) in respect of sale of the Rig or
any part thereof, in respect of recovery under the Insurances or
in respect of Requisition Compensation, shall be applied in the
following manner:
(i) first, to the payment of all amounts owing the Trustee of
the type described in clauses (ii) and (iii) of Recital
(F);
(ii) second, to the extent moneys remain after the application
pursuant to the preceding clause (i), an amount equal to
the outstanding Obligations shall be paid to the Secured
Creditors as provided in Clause 10.01(c), with each
Secured Creditor receiving an amount equal to such
Obligations held by it or, if the proceeds are
insufficient to pay in full all such Obligations, its Pro
Rata Share (as defined below) of the amount remaining to
be distributed; and
(iii) third, to the extent moneys remain after the application
pursuant to the preceding clauses (i) and (ii), and
following the termination of this Mortgage pursuant to
Clause 3.01, any surplus then remaining shall be paid to
the Owner, subject, however, to the rights of the holder
of any then existing Lien of which the Trustee has actual
notice (without investigation).
(b) For purposes of this Mortgage "Pro Rata Share" shall mean, when
calculating a Secured Creditor's portion of any distribution or
amount in respect of any Obligations, the amount (expressed as a
percentage) equal to a fraction the numerator of which is the
then unpaid amount of such Obligations owing to or held by such
Secured Creditor and the denominator of which is the then
outstanding amount of all such Obligations. For purposes of
determining the amount payable to each Secured Creditor, the
Trustee shall be entitled to request each Secured Creditor to
furnish it with written notice of the amount of Obligations then
owed to it and shall be entitled to reply upon the amounts
stated therein in making such distribution.
(c) All payments required to be made to Secured Creditors hereunder
shall be made to the Agent under the Credit Agreement for the
account of the Secured Creditors.
(d) For purposes of applying payments received in accordance with
this Clause 10.01, the Trustee shall be entitled to reply upon
(i) the Agent under the Credit Agreement and (ii) the Secured
Creditors for a determination (which the Agent and each Secured
Creditor, by their acceptance of the benefits of this Mortgage
shall be obligated to provide upon request of the Trustee) of
the outstanding Obligations owed to the Secured Creditors.
Unless it has actual knowledge (including by way of written
notice from a Secured Creditor) to the contrary, the Agent under
the Credit Agreement, in furnishing information pursuant to the
preceding sentence, and the Trustee, in acting hereunder, shall
be entitled to assume that (x) no obligations other than
principal, interest and regularly accruing fees are owing to any
Secured Creditor.
11. FURTHER ASSURANCES
11.01 The Owner shall execute and do all such assurances, acts and things as
the Trustee in its absolute discretion may require for:
(a) perfecting or protecting the security created (or intended to be
created) by this Mortgage; or
(b) preserving or protecting any of the rights of the Trustee and
the other Secured Creditors under this Mortgage; or
(c) ensuring that the security constituted by this Mortgage and the
covenants and obligations of the Owner under this Mortgage shall
enure to the benefit of any transferee, successor or assignee of
the Trustee; or
(d) enforcing the security constituted by this Mortgage on or at any
time after the same shall have become enforceable; or
(e) the exercise of any power, authority or discretion vested in the
Trustee under this Mortgage,
in any such case, forthwith upon demand by the Trustee and at the
expense of the Owner.
12. POWER OF ATTORNEY
12.01 The Owner, by way of security and in order more fully to secure the
performance of the Obligations, hereby irrevocably appoints the
Trustee as its attorney until the Total Commitment is terminated and
none of the Obligations remain outstanding for the purposes of:
(a) doing in its name all acts and executing, signing and (if
required) registering in its name all documents which the Owner
itself could do, execute, sign or register in relation to the
Rig (including without limitation, transferring title to the Rig
to a third party), provided, however, that such power shall not
be exercisable by or on behalf of the Trustee until this
Mortgage shall have become immediately enforceable pursuant to
Clause 9.01; and
(b) executing, signing, perfecting, doing and (if required)
registering every such further assurance document, act or thing
as is referred to in Clause 11.
12.02 The exercise of such power as is referred to in Clause 12.01(a) by or
on behalf of the Trustee shall not put any person dealing with the
Trustee upon any enquiry as to whether this Mortgage has become
enforceable nor shall such person be in any way affected by notice
that this Mortgage has not become enforceable and, in relation to both
Clauses 12.01(a) and 12.01(b), the exercise by the Trustee of such
power shall be conclusive evidence of its right to exercise the same.
13. INDEMNITIES
13.01 The Owner will indemnify and save harmless each of the Secured
Creditors and each agent or attorney appointed under or pursuant to
this Mortgage (each an "Indemnitee") from and against any and all
expenses, claims, liabilities, losses, taxes, costs, duties, fees and
charges suffered, incurred or made by such Secured Creditor or such
agent or attorney in good faith:
(a) in the exercise or purported exercise of any rights, powers or
discretions vested in them pursuant to this Mortgage; or
(b) in the preservation or enforcement of the rights of the Trustee
under this Mortgage; or
(c) on the release of the Rig from the security created by this
Mortgage,
and each of the Secured Creditors and each such agent or attorney may
retain and pay all sums in respect of the same out of money received
under the powers conferred by this Mortgage. All such amounts
recoverable by such Secured Creditors or such agent or attorney shall
be recoverable on a full indemnity basis.
13.02 Without limiting the foregoing Clause 13.01, the Owner hereby further
indemnifies and holds harmless each of the Secured Creditors and their
respective officers, directors, employees, attorneys and agents from
and against any and all liabilities, losses, obligations, claims,
damages, penalties, causes of action, costs and expenses (including,
without limitation, reasonable attorneys' fees and expenses,
consultant fees, investigation and laboratory fees) imposed upon or
incurred by or asserted against them, or any of them, by reason of (a)
an actual, alleged or threatened Environmental Incident; (b) any
personal injury (including wrongful death) or property damage (real or
personal) or economic damage arising out of or related to such
Environmental Incident; (c) any Environmental Claim brought or
threatened, or settlement reached; or (d) any violation of laws,
orders, regulations, requirements or demands of government authorities
relating to Hazardous Materials at, or discharged from the Rig.
13.03 If, under any applicable law or regulation, and whether pursuant to a
judgment being made or registered against the Owner or the liquidation
of the Owner or for any other reason, any payment under or in
connection with the Subsidiary Guaranty or this Mortgage is made or
fails to be satisfied in a currency (the "payment currency") other
than the currency in which such payment is due under or in connection
with this Mortgage (the "contractual currency"), then to the extent
that the amount of such payment actually received by the Trustee, when
converted into the contractual currency at the rate of exchange, falls
short of the amount due under or in connection with this Mortgage, the
Owner, as a separate and independent obligation, shall indemnify and
hold harmless the Trustee against the amount of such shortfall. For
the purposes of this Clause 13.03, "rate of exchange" means the rate
at which the Trustee is able on the date of such payment (or, if it is
not practicable for the Trustee to purchase the contractual currency
with the payment currency on the date of such payment, at the rate of
exchange as soon afterwards as is practicable for the Trustee to do
so) to purchase the contractual currency with the payment currency and
shall take into account any premium and other costs of exchange with
respect thereto.
14. EXPENSES
14.01 The Owner shall pay to any Secured Creditor on demand all costs, fees
and expenses, including, but not limited to, legal fees and expenses
and valuation fees and Taxes thereon incurred by any Secured Creditor
or for which any Secured Creditor may become liable in connection
with:
(a) the negotiation, preparation and execution of the Credit
Agreement, the Subsidiary Guaranty and the Credit Documents (or
any of them); and/or
(b) the preserving or enforcing of, or attempting to preserve or
enforce, any of its rights under the Credit Agreement, the
Subsidiary Guaranty or the Credit Documents (or any of them).
14.02 The Owner shall pay to the Trustee and the Agent on demand all costs,
fees and expenses (including, but not limited to, legal fees and
expenses) and Taxes thereon incurred by any Secured Creditor in
connection with:
(a) any variation of, or amendment or supplement to, any of the
terms of the Credit Agreement, the Subsidiary Guaranty or the
Credit Documents (or any of them) requested by the Owner,
necessary or advisable under applicable law or relating to the
syndication of the Facility, or initiated during the occurrence
and continuation of an Event of Default; and/or
(b) any consent or waiver required from the Trustee in relation to
the Credit Agreement, the Subsidiary Guaranty and the Credit
Documents (or any of them),
and in each case, regardless of whether the same is actually
implemented, completed or granted, as the case may be.
14.03 The Owner shall pay promptly all stamp, documentary and other like
duties and Taxes to which the Credit Agreement, the Subsidiary
Guaranty and the Credit Documents (or any of them) may be subject or
give rise and shall indemnify the Trustee on demand against any and
all liabilities with respect to or resulting from any delay or
omission on the part of the Owner to pay any such duties or Taxes.
15. COMMUNICATIONS
15.01 All notices to the Trustee hereunder shall be in writing and shall be
made to the following address:
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 provided for in
Section 12.03 of the Credit Agreement and Annex II thereto.
16. ASSIGNMENTS
16.01 This Mortgage shall be binding upon and shall enure to the benefit of
the Owner, the Secured Creditors and their respective transferees,
successors and permitted assigns and references in this Mortgage to
any of them shall be construed accordingly.
16.02 The Owner may not assign or transfer all or any part of its rights
and/or obligations under this Mortgage.
16.03 Pursuant to Section 12.16 of the Credit Agreement, each Bank has the
right to assign or transfer all or any part of its rights and/or
obligations under the Credit Agreement on the terms therein provided.
The Trustee shall notify the Owner promptly following any such
assignment, transfer or change.
17. TOTAL AMOUNT, ETC.
17.01 The total amount of the direct or contingent obligations secured by
this Mortgage is One Hundred Forty Million U.S. Dollars
(US$140,000,000) of principal plus interest, fees, commissions and
performance of mortgage covenants. The interest of the Owner in the
Rig is 100%. The interest of the Trustee in the Rig is 100%. The
date of maturity is April 30, 2001, and the discharge amount is the
same as the total amount plus such other sums as shall be payable by
the Owner to the Banks under the Credit Agreement or the Subsidiary
Guaranty.
18. MISCELLANEOUS
18.01 If at any time any one or more of the provisions in this Mortgage is
or becomes invalid, illegal or unenforceable in any respect under any
law or regulation, the validity, legality and enforceability of the
remaining provisions of this Mortgage shall not be in any way affected
or impaired thereby.
18.02 The Trustee, at any time and from time to time, may delegate by power
of attorney or in any other manner to any person or persons all or any
of the powers, authorities and discretions which are for the time
being exercisable by the Trustee under this Mortgage in relation to
the Rig. Any such delegation may be made upon such terms and subject
to such regulations as the Trustee may think fit. The Trustee shall
not be in any way liable or responsible to the Owner for any loss or
damage arising from any act, default, omission or misconduct on the
part of any such delegate.
18.03 A certification or determination by the Trustee as to any matter
provided for in this Mortgage shall, in the absence of manifest error,
be conclusive and binding on the Owner.
19. JURISDICTION
19.01 The Owner agrees that the Trustee shall have the liberty but shall not
be obliged to take any proceedings in the courts of any country to
protect or enforce the security constituted by this Mortgage or to
enforce any provisions of this Mortgage or to enforce the Obligations
and for the purpose of any proceedings for such enforcement the Owner
hereby submits to the jurisdiction of the courts of any country of the
choice of the Trustee.
19.02 Without prejudice to the generality of Clause 19.01, the Trustee shall
have the right to arrest and take action against the Rig at whatever
place the Rig shall be found lying and for the purpose of any action
which the Trustee may bring before the courts of such jurisdiction or
other judicial authority and for the purpose of any action which the
Trustee may bring against the Rig, any writ, notice, judgment or other
legal process or documents may (without prejudice to any other method
of service under applicable law) be served upon the master of the Rig
(or upon anyone acting as the master) and such service shall be deemed
good service on the Owner for all purposes.
19.03 The Owner agrees that should the Trustee bring a legal action or
proceedings against it or its assets in relation to any matters
arising out of or in connection with this Mortgage, no immunity from
such legal action or proceedings (which shall be deemed to include,
without limitation, suit, attachment prior to judgment, other
attachment, the obtaining of judgment, execution or other enforcement)
shall be claimed by or on behalf of the Owner or with respect of its
assets, and the Owner hereby irrevocably waives any such right of
immunity which it or its assets now has or may hereafter acquire and
the Owner hereby consents generally in respect of any legal action or
proceedings arising out of or in connection with this Mortgage to the
giving out of any relief or the issue of any process in connection
with such action or proceedings including, without limitation, the
making, enforcement or execution or attachment against any property
whatsoever of any order or judgment which may be made or given in such
action or proceedings.
IN WITNESS whereof the Owner has caused this Mortgage to be executed the day
and year first before written.
HRB RIG CORPORATION
By_____________________________________
Its:
ACKNOWLEDGEMENT OF MORTGAGE
STATE OF NEW YORK )
) S.S.
COUNTY OF NEW YORK )
On this 9th day of July, 1996 before me personally appeared ____________ to me
known who being by me duly sworn did dispose and say that he resides at
________________________________, that he is ____________________________ for
HRB RIG CORPORATION, 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 HRB RIG CORPORATION.
________________________
Notary Public