EXHIBIT 10.110
MEMORANDUM OF AGREEMENT
THIS MEMORANDUM OF AGREEMENT (this "MOA") is entered into to
be effective as of November 28, 1995, by and between READING AND ▇▇▇▇▇,
INC., an Oklahoma corporation ("Seller"), and DEEP SEA INVESTORS, L.L.C.,
a Delaware limited liability company ("Buyer"), with reference to the
following facts:
A. Seller is the sole owner of the whole of the offshore
drilling unit "▇.▇. ▇▇▇▇▇, ▇▇.," Official No. 651644,
together with all related equipment (but excluding leased
equipment owned by third parties), machinery, spare parts and
other property and each part thereof, whether onboard or
ashore, including, without limitation, any and all
attachments, accessories and additions thereto, and all
substitutions, replacements, products and proceeds thereof
(the "Vessel"), as more particularly described herein.
B. Seller wishes to sell the Vessel to Buyer, and Buyer wishes
to purchase the Vessel from Seller, upon the terms and
subject to the conditions set forth herein.
C. Immediately upon the transfer of title to the Vessel from
Seller to Buyer, Reading & ▇▇▇▇▇ Drilling Co., an Oklahoma
corporation ("Charterer") wishes to charter the Vessel from
Buyer, and Buyer wishes to charter the Vessel to Charterer,
upon the terms and subject to the conditions set forth in the
Bareboat Charter to be entered into by and between Buyer and
Charterer.
NOW, THEREFORE, for and in consideration of the mutual
benefits accruing and expected to accrue hereunder, Seller hereby agrees
to sell, and Buyer hereby agrees to purchase, the Vessel, subject to the
following terms and conditions:
1. Vessel. The Vessel is a semi-submersible drilling unit built
in 1983 by Daewoo Shipbuilding at Koje Island, South Korea, and is
documented under the laws and flag of the United States of America. The
Vessel is classed by the American Bureau of Shipping ("ABS") as a Maltese
Cross A-1 AMS column stabilized drilling unit. The Vessel currently is
located at Garden Banks Block 387, Outer Continental Shelf, Gulf of
Mexico, and will remain at that location at least through the Closing
Date (as defined below).
2. Price. The total purchase price for the sale of the Vessel
shall be FIFTY MILLION U.S. Dollars ($50,000,000) (the "Purchase Price").
3. Closing. Closing for the sale of the Vessel from Seller to
Buyer ("Closing") shall occur on a date mutually agreed upon by Buyer and
Seller promptly after the satisfaction of all of the conditions required
to be satisfied under Section 6 below (the "Closing Date"). The Closing
shall be held at a location to be mutually agreed upon by Buyer and
Seller. Upon Closing, Seller shall have provided for the deletion from
the Registry of Vessels of Seller s name as designated owner of the
Vessel.
4. Payment. Buyer agrees to pay Seller the total Purchase Price
at Closing, net of all costs, fees and expenses payable or reimbursable
by Seller pursuant to Section 10 below, by wire transfer in immediately
available, same-day funds to such accounts as Seller shall notify Buyer
in writing at or prior to Closing.
5. Equipment; Spares. The Purchase Price includes, and Seller
shall convey the Vessel to Buyer with, all spare parts, equipment and
other items belonging to her (but excluding all leased equipment owned by
third parties). All spare parts and equipment, including, without
limitation, all items set forth in Schedule A attached hereto and all
broached and unbroached stores and provisions belonging to the Vessel at
the time of Closing, used or unused, whether onboard or ashore, shall
become Buyer's property.
6. Conditions Precedent. The obligation of Buyer to consummate
the purchase of the Vessel is subject to (i) receipt by Buyer of each of
the documents described in subsections a. through z. below, in form and
substance satisfactory to Buyer and each Investor (as defined in the
Bareboat Charter), and (ii) satisfaction of each of the other conditions
set forth in subsections aa. through gg. below in a manner satisfactory
to Buyer and each Investor (as defined in the Charter) in all respects.
a. A Bareboat Charter, substantially in the form of
Exhibit A (the "Charter"), duly executed by Charterer.
b. A Guaranty, substantially in the form of Exhibit B,
duly executed by Reading & ▇▇▇▇▇ Corporation, a
Delaware corporation ("Parent"), the parent of Seller
and Charterer, guaranteeing the respective obligations
of Seller and Charterer under this MOA, the Charter,
the Mortgages, the Security Agreement (each as defined
herein) and all other documents related thereto,
together with any and all amendments, supplements,
renewals or substitutions of all or any of such
documents (collectively, the Charter Documents ).
c. A Preferred Mortgage, substantially in the form of
Exhibit C-1 (the "▇▇▇▇▇▇▇▇▇▇ Mortgage"), duly executed
by Charterer, mortgaging to Wilmington Trust Company,
Trustee for the benefit of Buyer (in such capacity, the
"Trustee"), a second drilling unit, the ▇▇▇
▇▇▇▇▇▇▇▇▇▇ (the "▇▇▇▇▇▇▇▇▇▇"), and a First Preferred
Mortgage, substantially in the form of Exhibit C-2 (the
"▇▇▇▇ Mortgage"), duly executed by Charterer,
mortgaging to the Trustee a third drilling unit, the
▇▇▇▇▇▇▇▇ ▇▇▇▇ (the "▇▇▇▇"), to secure Charterer's
obligations under the Charter Documents (the ▇▇▇▇▇▇▇▇▇▇
and the ▇▇▇▇, together, the "Collateral Vessels" and
the ▇▇▇▇▇▇▇▇▇▇ Mortgage and the ▇▇▇▇ Mortgage,
together, the "Mortgages").
d. A Security Agreement substantially in the form of
Exhibit D (the "Security Agreement"), duly executed by
Charterer.
e. Duly executed Officers Certificates, dated as of the
Closing Date, in the form of Exhibit E, from an
executive officer and the Secretary or Assistant
Secretary of each of Seller, Charterer and Parent
(collectively, the "R&B Companies").
f. A Consent to Preferred Mortgage, substantially in the
form of Exhibit F, duly executed by ABC Equipment
Leasing, Inc., the mortgagee under the First Preferred
Mortgage encumbering the ▇▇▇▇▇▇▇▇▇▇.
g. Certified copies of resolutions of each of the R&B
Companies approving this MOA, the Charter, the Guaranty
and the other Charter Documents to which each is a
party and authorizing the transactions contemplated
herein and therein, duly adopted at a meeting of, or by
the unanimous written consent of, the Board of
Directors of each corporation.
h. An original executed opinion dated the Closing Date
from ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, General Counsel to the R&B
Companies, setting forth customary opinions regarding
(i) the R&B Companies due organization, valid
existence, good standing, corporate power and
authority, (ii) the legal, valid and binding nature of
this MOA, the Charter, the Guaranty and the other
Charter Documents, (iii) the absence of violations of,
or conflicts with, laws, corporate organizational and
governance documents or other agreements, (iv) the
absence of any required consents, and (v) such other
matters as Buyer may reasonably require be addressed.
In addition, such opinion shall also opine that no
consent or approval of the U.S. Department of
Transportation Maritime Administration, the United
States Coast Guard ("USCG") or any other entity having
jurisdiction over the Vessel, the Collateral Vessels or
any of the R&B Companies is required in order to
consummate the transactions contemplated hereby or by
any of the other Charter Documents.
i. An original executed opinion from ▇▇▇▇▇ & ▇▇▇▇▇,
L.L.P., counsel to Buyer, regarding (i) the legal,
valid and binding nature of this MOA, the Charter, the
Guaranty and certain other Charter Documents and (ii)
certain tax matters.
j. UCC financing statements, duly executed by Charterer,
as required by Buyer to perfect the security interest
granted under the Security Agreement, to be filed with
the appropriate filing offices.
k. An appraisal report for each of the Vessel and the
▇▇▇▇▇▇▇▇▇▇, indicating the fair market value of each to
be no less than $50,000,000, and satisfactory
completion of the environmental assessment with respect
to the Vessel, as more fully described in the Letter
Agreement dated October 10, 1995, among Pilko &
Associates, Inc., AT&T Capital Corporation and GATX
Capital Corporation.
l. A certificate of insurance for the Vessel and a
detailed written report signed by an independent marine
insurance broker, evidencing compliance with the
insurance requirements set forth in the Charter.
m. A certificate of insurance for each of the Collateral
Vessels and a detailed written report signed by an
independent marine insurance broker, evidencing
compliance with the insurance requirements set forth in
the Mortgages.
n. A certificate of insurance evidencing that Parent
maintains commercial general liability insurance
coverage for liability arising from all operations of
the Parent. Such insurance shall include coverage for
premises and operations, independent contractors,
completed operations and contractual liability (or
their equivalents) and shall name Buyer and each member
of the Owner Group (as defined in the Charter) as
additional insureds (except with respect to workers'
compensation and employer's liability coverage). The
minimum policy limit shall be U.S. $1,000,000 single
limit per occurrence.
o. Duly executed Officers Certificates from (i) Seller,
certifying that all representations and warranties of
Seller herein and in any other Charter Documents are
true and correct as of the Closing Date; (ii)
Charterer, certifying that all representations and
warranties of Charterer contained in the Charter and
any other Charter Documents are true and correct as of
the Closing Date; and (iii) Parent, certifying that, as
of the Closing Date, all representations and warranties
in the Guaranty are true and correct and all
information provided (including, but not limited to,
the Reading & ▇▇▇▇▇ Corporation/GATX Due Diligence
Confidential Binder, dated July 20, 1995, as previously
provided to the Investors (as defined in the Charter),
and all budgets, financial statements, descriptions of
contracts, debt schedules, projections and other
information therein) were true, correct and fairly
presented in all respects when made.
p. A ▇▇▇▇ of Sale (USCG Form CG-1340) in duplicate, duly
executed by Seller, transferring title to the Vessel
from Seller to Buyer with warranties of good and
marketable title and freedom from all liens and
encumbrances; the warranties in such ▇▇▇▇ of Sale shall
survive the Closing.
q. A Certificate of Ownership (USCG Form CG-1330) for each
of the Vessel and the Collateral Vessels, showing
Seller as the owner of the Vessel and Charterer as the
owner of each of the Collateral Vessels, free and clear
of all liens and encumbrances of record, other than (i)
the First Preferred Mortgage encumbering the ▇▇▇▇▇▇▇▇▇▇
and (ii) mortgages which will be released or satisfied
at or prior to Closing.
r. An ABS Certificate of Classification for each of the
Vessel and the Collateral Vessels, dated no earlier
than fifteen (15) days prior to the Closing Date,
indicating that each vessel is in class free of
outstanding recommendations.
s. The most recent Certificate of Inspection (USCG Form
CG-841) for each of the Vessel and the Collateral
Vessels.
t. A Certificate of Documentation (USCG Form CG-1270) for
each of the Vessel and the Collateral Vessels, showing
Seller as the owner of the Vessel and Charterer as the
owner of the Collateral Vessels, and evidencing that
all three vessels are duly documented under the laws
and flag of the United States of America, and are
qualified solely in foreign trade.
u. A Certificate of Admeasurement (USCG Form CG-1414) for
each of the Vessel and the Collateral Vessels.
v. The most recent ABS Summary Report of Class Survey for
each of the Vessel and the Collateral Vessels.
w. A Certificate of Marking (USCG Form CG-1322) for each
of the Vessel and the Collateral Vessels.
x. A Declaration of Citizenship for Vessel Recordation
Purposes (Maritime Administration Form MA-899) for each
of the Vessel and the Collateral Vessels, evidencing
that both Seller and Charterer are U.S. citizens within
the meaning of the Documentation of Vessels Act, 46
U.S.C. 12102 et seq., as amended.
y. A copy of the fully executed Ship Repair Agreement by
and between Charterer and Amfels, Inc., providing for
certain installations, repairs and modifications to the
Vessel, together with a Consent to Assignment of Ship
Repair Agreement duly executed by Amfels, Inc.
z. Satisfactions or releases of mortgage, UCC-3
termination statements and such other instruments as
may be required by Buyer in order to extinguish all
liens on or security interests in the Vessel, the
Collateral Vessels or the Collateral (as defined both
in the Mortgages and in the Security Agreement), other
than the lien of the First Preferred Mortgage (as
defined in the ▇▇▇▇▇▇▇▇▇▇ Mortgage) encumbering the
▇▇▇▇▇▇▇▇▇▇.
aa. No loss, constructive loss or requisitioning for use by
any governmental authority of the Vessel or the
Collateral Vessels shall have occurred.
bb. No change shall have occurred in applicable law or
regulations thereunder or in interpretations thereof by
any regulatory authority which would make it illegal
for Seller, Buyer or any Investor (as defined in the
Charter) to enter into any of the transactions
contemplated in the Charter Documents or which would
subject Seller, Buyer or any Investor (as defined in
the Charter) to any penalty or other liability as a
result of any transaction contemplated in any of the
Charter Documents.
cc. No material adverse change shall have occurred in the
physical condition of either the Vessel or the
Collateral Vessels.
dd. All governmental and regulatory approvals, licenses and
authorizations necessary or, in the opinion of Buyer,
the Investors (as defined in the Charter) or their
respective counsel, advisable in connection with the
transactions contemplated in the Charter Documents
shall have been duly received or obtained.
ee. Buyer shall have received evidence that, upon filing of
the ▇▇▇▇ of Sale and related documents with the USCG
National Vessel Documentation Center, title to the
Vessel will be transferred to Buyer, that Buyer will be
the owner of the Vessel free and clear of all recorded
liens, charges or other encumbrances of record and that
no other action is necessary or advisable in order to
establish and perfect Buyer s title to and interest in
the Vessel as against Seller or any third parties in
any jurisdiction.
ff. Buyer shall have received evidence that (i) upon filing
of the Mortgages with the USCG National Vessel
Documentation Center, the Trustee will possess a valid
and perfected lien on and security interest in both the
Collateral Vessels for the benefit of Buyer, subject
and subordinate to no other lien, charge or encumbrance
other than the lien in favor of the First Mortgagee (as
defined in the ▇▇▇▇▇▇▇▇▇▇ Mortgage) encumbering the
▇▇▇▇▇▇▇▇▇▇ and (ii) that upon filing of such UCC
financing statements as may be necessary to perfect the
security interest granted under the Security Agreement
with the appropriate filing offices, the Trustee will
possess a valid and perfected first priority security
interest in the Collateral (as defined in the Security
Agreement) for the benefit of Buyer.
gg. Buyer's determination that, since December 31, 1994, no
material adverse charge has occurred with respect to
the financial or other condition of Seller, Charterer
or Parent.
7. Representations, Warranties, and Covenants of Seller. Seller
represents and warrants to Buyer as follows:
a. Corporate Existence and Authority. Seller and each of
the other R&B Companies (i) is a corporation duly organized, validly
existing and in good standing under the law of its jurisdiction of
incorporation and is in good standing in all jurisdictions in which
failure to be or remain in good standing would have a material adverse
effect upon the Vessel or upon its ability to pay, observe or perform its
liabilities, duties or obligations under this MOA, the Charter, the
Guaranty and the other Charter Documents to which it is a party, and (ii)
has all requisite corporate power to conduct its business and to execute
and deliver and perform its obligations under this MOA, the Charter, the
Guaranty and the other Charter Documents to which it is a party.
b. Authorization; Binding Obligations. The execution,
delivery and performance by Seller and each of the other R&B Companies of
this MOA and/or each of the other Charter Documents to which each is or
will be a party, and the transactions contemplated hereby and thereby,
have been duly authorized and approved by all necessary corporate action
on the part of each. This MOA constitutes the legal, valid and binding
obligation of Seller, each of the other Charter Documents to which any of
the R&B Companies is or will be a party will be, when executed and
delivered, the legal, valid and binding obligation of such company and
each of this MOA and the other Charter Documents to which any of the R&B
Companies has or will become a party will be enforceable against such
company in accordance with its terms, except insofar as enforceability
may be limited by applicable debtor relief laws or subject to general
principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
c. Compliance with Laws and Documents; No Default. None
of the R&B Companies is in breach or violation of or in default under (i)
any contractual obligation or any applicable law other than such
breaches, violations or defaults that individually or in the aggregate
could not be reasonably expected to have a material adverse effect on the
obligation of each under the Charter Documents, or (ii) its corporate
organizational or governance documents. The execution, delivery,
performance, or compliance with the terms of this MOA or any of the other
Charter Documents by any of the R&B Companies does not, and consummation
of the transactions contemplated by this MOA and the Charter Documents
does not and will not: (i) conflict with, breach, violate or constitute
a default under (A) any applicable law, (B) the corporate organizational
or governance documents of any of the R&B Companies, or (C) any other
contractual obligation of any of the R&B Companies; (ii) result in the
mandatory acceleration or prepayment of any debt owed by any of the R&B
Companies or afford any holder of any such debt the right to require any
of the R&B Companies to purchase, redeem or otherwise acquire, reacquire
or repay any such debt; or (iii) result in the imposition of any lien or
encumbrance upon the assets, properties, revenues or rights of any of the
R&B Companies (other than liens or encumbrances imposed or created or to
be imposed or created under or pursuant to the Mortgages or the Security
Agreement).
d. No Consents. No order, consent, approval, license,
permit, franchise, waiver, exemption, authorization of or validation of,
or filing, recording or registration with (except those that have been
heretofore obtained or made) or exemption by, any person or tribunal is
required to authorize, or is required in connection with, the execution,
delivery, performance, legality, validity, binding effect or
enforceability of this MOA and the other Charter Documents or the
transactions contemplated hereby or thereby except for the filing of the
UCC financing statements, the ▇▇▇▇ of Sale and the Mortgages described
herein and other actions expressly required to be taken pursuant to this
MOA and the other Charter Documents.
e. Disclosure. All information that has been (or is
hereafter) made available to Buyer or any Investor (as defined in the
Charter) by or on behalf of any of the R&B Companies in connection with
this MOA, any of the other Charter Documents or the transactions
contemplated hereby or thereby was (and will be) complete and correct in
all material respects and did not (and will not) contain any untrue
statement of a material fact or omit to state a material fact necessary
in order to make the statements contained therein not materially
misleading in light of the circumstances under which such statements were
(or will be) made. Without limiting the generality of the foregoing, the
Buyer and the Investors have been provided with the financial statements
(including balance sheet and related statements of income and cash flows)
for the year ended December 31, 1994 and for the nine (9) month period
ended September 30, 1995 for the Seller, Charterer and Parent. Such
financial statements are complete, true and correct in all respects and
fairly present the financial condition of the Seller, Charterer or Parent
(as the case may be) as of the dates thereof and their respective results
of operations for the periods then ended. Since December 31, 1994, there
has been no material adverse change with respect to the financial or
other condition of the Seller, Charterer or Parent.
f. No Encumbrances. The Vessel and each of the Collateral
Vessels shall, on the Closing Date, be free from all encumbrances and
liens, maritime or otherwise, or any other debts whatsoever, other than
(i) the liens and security interests in favor of the Trustee under the
Mortgages and the Security Agreement and (ii) the lien created under the
existing First Preferred Mortgage encumbering the ▇▇▇▇▇▇▇▇▇▇.
g. Taxes. The R&B Companies have caused to be duly filed
in a timely manner with the appropriate federal, foreign, state, local
and other governmental authorities all tax returns, statements and
reports required to be filed on or before the Closing Date by or with
respect to the Vessel or either of the Collateral Vessels or the
ownership or operation thereof, and have caused to be paid or deposited
all taxes, including estimated taxes, required to be shown on such
returns, statements or reports. No extension of time is in effect with
respect to the date on which any tax return, statement or report is to be
filed with respect to the Vessel or either of the Collateral Vessels or
the ownership or operation thereof. No tax liens exist or will arise, on
or with respect to the Vessel or either of the Collateral Vessels, except
for liens imposed by law and incurred in the ordinary course of business
for obligations not yet due. There are no outstanding agreements or
waivers extending the period for assessment or collection of any taxes
relating to the Vessel or either of the Collateral Vessels or the
ownership or operation thereof and the R&B Companies have neither
received nor have knowledge or notice of any notice of deficiency or
assessment or proposed deficiency or assessment from any taxing authority
relating to the Vessel or either of the Collateral Vessels or the
ownership or operation thereof nor is there any basis for any such notice
of deficiency or assessment.
h. Litigation. No litigation, investigation or proceeding
of or before any governmental authority or arbitrator is pending or
threatened by or against any of the R&B Companies with respect to the
Vessel, either of the Collateral Vessels or the Charter Documents or any
of the transactions contemplated thereby, nor is any litigation,
investigation or proceeding of or before any governmental authority or
arbitrator pending or threatened by or against any of the R&B Companies
or any of their respective properties or revenues which could reasonably
be expected to have a material adverse effect on the financial or other
condition of any of the R&B Companies.
i. ERISA. None of the R&B Companies has received any
notice or otherwise acquired any notice or knowledge that it is not in
full compliance with any of the requirements of the Employee Retirement
Income Security Act of 1974, as amended ( ERISA ). No Reportable Event
(as defined in Title IV of ERISA) or other fact or circumstance exists
which may have an adverse effect on the tax qualified status of any
employee benefit plan maintained by any of the R&B Companies. None of
the R&B Companies has any accumulated funding deficiency within the
meaning of ERISA or has any liability or knows of or has notice of any
fact or circumstances which could result in any liability to the Pension
Benefit Guaranty Corporation, the Internal Revenue Service, the
Department of Labor or any participant in connection with any employee
benefit plan (other than accrued benefits which are or which may become
payable to participants or beneficiaries in the ordinary course of any
such plan).
j. Patents. The R&B Companies own or possess (or are
licensed or otherwise have the full right to use) all United States or
foreign patents or patent applications ( Patents ) necessary for the
ownership or operation of the Vessel and the Collateral Vessels as of the
Closing Date, without any conflict with the rights of other persons. The
consummation of the transactions contemplated by the Charter Documents
will not alter or impair the validity of any of such Patents or any of
such rights of such persons.
k. Valid Title. Upon filing of the ▇▇▇▇ of Sale and
related documents with the USCG National Vessel Documentation Center, (i)
title to the Vessel will have been transferred to Buyer, (ii) Buyer will
be the owner of the Vessel free and clear of all recorded liens, charges
or other encumbrances of record, (iii) the Vessel will have been duly
documented in the name of Buyer under the laws and regulations and the
flag of the United States and (iv) no other action will be necessary or
advisable in order to establish and perfect Buyer s title to and interest
in the Vessel as against Seller or any third parties in any jurisdiction.
l. Validity of Security Documents. The Mortgages and the
Security Agreement are effective to create in favor of the Trustee for
the benefit of Buyer a legal, valid and enforceable security interest in
the collateral described therein, and proceeds thereof (subject to debtor
relief laws and general equitable principles), and, after the filing of
the Mortgages and UCC financing statements in the appropriate
governmental offices, the Mortgages and Security Agreement shall
constitute fully perfected liens on and security interests in, all right,
title and interest of Charterer in such collateral and the proceeds
thereof, as security for the Secured Obligations (as defined in the
Mortgages and the Security Agreement), in each case prior and superior in
right to any person other than, in the case of the ▇▇▇▇▇▇▇▇▇▇ Mortgage,
the First Mortgagee (as defined in the ▇▇▇▇▇▇▇▇▇▇ Mortgage).
m. Validity of Contracts. All contracts previously
presented to Buyer and the Investors (as defined in the Charter), remain
in full force and effect as of the Closing Date, have not been altered,
modified or amended in any manner and are valid and enforceable against
all parties thereto, and no event has occurred which is an event of
default, or with the passing of time or the giving of notice or both
would be an event of default, under any of such contracts. There is no
drilling contract on the Vessel other than the Offshore Drilling Contract
dated July 25, 1995 between the Charterer and Enserch Exploration, Inc.
(The "Old Enserch Contract").
n. Environmental, Health and Safety Requirements. The
operations of Parent, Seller and Charterer, the Vessel and the Collateral
Vessels comply in all material respects with all applicable laws
(including all environmental, health and safety requirements of law);
neither the Vessel nor either of the Collateral Vessels is the subject of
any environmental property transfer act; neither Parent, Seller,
Charterer, the Vessel, nor either of the Collateral Vessels are the
subject of any actual or threatened investigation by, order from or
agreement with any governmental or private entity respecting any laws
(including all environmental, health or safety requirements of law), any
remedial action or any claims or liabilities and costs arising from the
release or threatened release of a contaminant, including petroleum and
fractions thereof, into the environment; none of the present or past
operations undertaken on the Vessel or either of the Collateral Vessels
are the subject of any actual or threatened judicial or administrative
proceeding, order, judgment, decree or settlement alleging or addressing
a violation of or a liability under any law (including all environmental,
health or safety requirement of law); neither Parent, Seller nor
Charterer has filed any notice under any applicable requirement of law
reporting a release of a contaminant from the Vessel or either of the
Collateral Vessels, including petroleum and fractions thereof, into the
environment or reporting a violation of any applicable law (including
environmental, health or safety requirements of law); and no liens
arising under any environmental laws have attached to the Vessel or
either of the Collateral Vessels.
o. Other Matters. (i) No loss, constructive loss, or
requisitioning for use by any governmental authority of the Vessel or
either of the Collateral Vessels has occurred; (ii) no change has
occurred in applicable law or regulations thereunder or in
interpretations thereof by any regulatory authority which would make it
illegal for Seller, Buyer or any Investor (as defined in the Charter) to
enter into any of the transactions contemplated in or by any of the
Charter Documents or which would subject Seller, Buyer or any Investor
(as defined in the Charter) to any penalty or other liability as a result
of any of the transactions contemplated in or by any of the Charter
Documents; and (iii) no material adverse change has occurred in the
physical condition of the Vessel or either of the Collateral Vessels and
each of the Vessel and the Collateral Vessels is tight, staunch, strong
and well and sufficiently tackled, appareled, furnished and equipped and
in every respect seaworthy, in accordance with specifications, in good
working order, condition and repair (normal wear and tear excepted) and
without defect in condition, design, operation or fitness for use.
p. Enserch Contract. No earlier than the first day after
the Closing Date but not later than 30 days thereafter, Charterer shall
deliver to Buyer a copy of the fully executed Offshore Drilling Contract
by and between Charterer and Enserch Exploration, Inc. with respect to
the Vessel (the "New Enserch Contract") with no material changes to the
New Enserch Contract draft dated August 17, 1995, other than such changes
previously requested by Buyer.
8. Representation and Warranty of Buyer. Buyer represents and
warrants to Seller that the Trustee is and will be at Closing a citizen
of the United States within the meaning of the Documentation of Vessels
Act, 46 U.S.C. Section 12102 et seq., as amended, or otherwise authorized
to be a mortgagee with respect to the Collateral Vessels, and will
deliver to Seller at such Closing a Declaration of Citizenship for Vessel
Recordation Purposes (Maritime Administration Form MA-899) for each of
the Collateral Vessels, evidencing same.
9. Indemnity. Whether or not any of the transactions
contemplated hereby are consummated, Seller hereby indemnifies Buyer and
each member of the Owner Group (as defined in the Charter) (each, an
"Indemnitee" and, collectively, the "Indemnitees") and each Indemnitee s
successors, assigns, employees, servants and agents against, and agrees
to protect, save and keep harmless each thereof from, any and all
liabilities, obligations, losses, damages (including, without limitation,
obligations based on strict liability in tort), penalties, claims,
actions, suits, costs, expenses and disbursements, including legal fees
and expenses, of whatsoever kind and nature, imposed on, incurred by or
asserted against any Indemnitee or any successors, assigns, employees,
servants or agents thereof, even if such liability or loss may have been
caused or contributed to by the negligence of the Indemnitee, in any way
relating to or arising out of (i) this MOA or any of the other Charter
Documents, (ii) the purchase of the Vessel or mortgaging of the
Collateral Vessels pursuant to this MOA and the other Charter Documents,
(iii) the ownership, mortgaging, delivery, nondelivery, charter,
subcharter, possession, registration, re-registration, use, operation,
condition, sale, return or other disposition of the Vessel or the
Collateral Vessels (as the case may be) (including, in each case and
without limitation, (x) latent or other defects, whether or not
discoverable and any claim for patent, trademark or copyright
infringement and (y) all liabilities, obligations, losses, damages and
claims in any way relating to or arising out of injury to persons,
property or the environment, or strict liability in tort) or (iv) the
making of the investment of each member of the Owner Group (as defined in
the Charter) in the Vessel in the manner contemplated hereby, provided
that the foregoing indemnity with regard to any particular Indemnitee
shall not extend to any liability, obligation, loss, damage, penalty,
claim, action, suit, cost, expense or disbursement (A) resulting from the
willful misconduct or gross negligence of such Indemnitee, or any
successors, assigns, employees, servants, or agents thereof or (B) so
long as no Event of Default (as defined in the Charter) shall have
occurred, (i) to the extent attributable to acts or events which occur
after the Vessel is no longer owned by Buyer or chartered under the
Charter or, (ii) if the Vessel remains owned by Buyer after the
expiration of the term of the Charter, from acts or events which occur
after possession of the Vessel has been delivered to the Buyer in
accordance with the applicable provisions of the Charter. If any
Indemnitee has knowledge of any liability hereby indemnified against, it
shall give prompt written notice thereof to Seller, or, if Seller has
knowledge of any liability hereby indemnified against, it shall give
prompt written notice thereof to the Indemnitee, provided, however, that
any failure to give such notice shall not in any manner discharge, waive,
diminish, limit or otherwise affect any of Seller s obligations under
this Section 9 or otherwise hereunder. Without limitation of the
foregoing, and whether or not any of the transactions contemplated hereby
are consummated, the Seller agrees to pay the fees and expenses of each
Indemnitee, all fees and expenses of such Indemnitees counsel other than
as otherwise provided in Section 10 and (iii) all liability and loss with
respect to or resulting from any and all claims for or on account of
brokers or finders fees or commissions (other than with respect to any
broker or finder employed by Buyer or any Investor). So long as no Event
of Default (as defined in the Charter) shall have occurred, Seller, at
its sole cost and expense, may contest in good faith by appropriate
proceedings and by appropriate persons (in the judgment of the
Indemnitees in question) any liability indemnified against under this
Section 9, provided that such contest will not (i) involve any danger of
the sale, forfeiture or loss of, or the creation of any lien, charge or
encumbrance on, the Vessel, either of the Collateral Vessels or any part
thereof or any interest therein, or (ii) cause any impairment of the
timely payment of hire by the Charterer under the Charter or (iii)
adversely affect the Vessel, either of the Collateral Vessels or any
other property, assets or rights of an Indemnitee, or (iv) involve any
other claim against the Indemnitee in question which is not severable and
for which Seller is not obligated to indemnify under this Section 9.
10. Transaction Expenses. Any taxes (including, but not limited
to, sales, use, value-added, gross receipt, excise, stamp, transfer,
documentary, recording and similar taxes), fees and expenses connected
with the registration of the Vessel in Buyer s name or sale of the Vessel
to Buyer, the creation, filing or perfection of the Mortgages and other
security interests contemplated by the Charter Documents, as well as
similar charges connected with the closing of Seller s register, shall be
for Seller s account. Whether or not the transactions contemplated by
this MOA and the other Charter Documents shall be consummated, Seller
shall, subject to the last sentence of this Section 10, pay or reimburse
Buyer and the Trustee for all reasonable costs, fees and expenses paid or
incurred by Buyer, the Trustee, any Investor (as defined in the Charter)
or its legal counsel in connection with this MOA or any of the other
Charter Documents (excluding, however, the cost of any environmental
survey performed by or on behalf of Buyer or any Investor), including,
without limitation, all costs, fees and expenses relating to the
preparation, negotiation and execution of the Charter Documents,
recording and filing fees and appraisal fees. All such costs, fees and
expenses which have been paid or incurred by Buyer, the Trustee or any
Investor (as defined in the Charter) as of the Closing Date shall be paid
or withheld by Buyer from the Purchase Price payment to be made pursuant
to Section 4 above. All other reimbursements and payments required by
this Section 10 shall be made by Seller within 10 days of demand by
Buyer, the Trustee or any Investor (as defined in the Charter) therefor.
Seller shall be solely responsible for the first $75,000 of such legal
fees and expenses paid or incurred by Buyer and shall be responsible for
50% of all such legal fees and expenses paid or incurred by Buyer in
excess of $75,000.
11. Title; Condition at Closing. The Vessel, with everything
belonging to her, shall be at Seller s risk and expense until title
passes to Buyer at the time of the Closing. Seller hereby warrants to
Buyer that there are no defects in the Vessel s hull or machinery which
would materially and adversely affect the Vessel s ABS Certificate of
Class or USCG certification. Notwithstanding the foregoing, at the time
title is transferred to Buyer, the Vessel shall be in class free of
recommendations with classification and USCG certificates clear and valid
in accordance with the terms of the most recently issued certificates.
Seller shall notify the ABS of any matters coming to its notice or
knowledge prior to Closing which, upon being reported to the ABS, would
lead to the withdrawal of the Vessel s class or to the imposition of a
recommendation relating to her class. All of the Vessel s continuous
survey cycles shall be clear and up-to-date at Closing.
12. Seller s Default. If Seller fails to execute a legal
transfer of title to the Vessel, together with everything belonging to
her, in accordance with the terms and conditions of this MOA, for reasons
within Seller s control, Buyer shall have the right to cancel this MOA
and Buyer shall be entitled to claim compensation for its losses and for
all expenses incurred together with interest at the Overdue Rate (as
defined in the Charter).
13. GOVERNING LAW. THIS MOA SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICT OF LAWS.
14. VENUE; SERVICE OF PROCESS. SELLER, FOR ITSELF, ITS SUCCESSORS
AND ASSIGNS, HEREBY KNOWINGLY AND INTENTIONALLY AND IRREVOCABLY AND
UNCONDITIONALLY a) SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE
NONEXCLUSIVE JURISDICTION OF THE STATE COURTS OF THE STATE OF NEW YORK
AND THE FEDERAL COURTS SITTING IN THE STATE OF NEW YORK AND AGREES AND
CONSENTS THAT SERVICE OF PROCESS MAY BE MADE UPON IT IN ANY LEGAL
PROCEEDING ARISING OUT OF OR IN CONNECTION WITH THIS MOA OR THE OTHER
CHARTER DOCUMENTS BY SERVICE OF PROCESS AS PROVIDED BY NEW YORK LAW, b)
WAIVES, TO THE EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY LITIGATION ARISING OUT OF OR
IN CONNECTION WITH THIS MOA OR THE OTHER CHARTER DOCUMENTS BROUGHT IN ANY
NEW YORK STATE COURT OR FEDERAL COURT SITTING IN THE STATE OF NEW YORK,
c) WAIVES ANY CLAIMS THAT ANY LITIGATION BROUGHT IN ANY SUCH COURT HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM, d) CONSENTS TO THE SERVICE OF
PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH LITIGATION BY
THE MAILING OF COPIES THEREOF BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED,
POSTAGE PREPAID, TO SELLER AT THE ADDRESS SET FORTH HEREIN AND e) AGREES
THAT ANY LEGAL PROCEEDING AGAINST SELLER ARISING OUT OF, RELATED TO OR IN
CONNECTION WITH THIS MOA OR THE OTHER CHARTER DOCUMENTS OR THE
OBLIGATIONS HEREUNDER OR THEREUNDER MAY BE BROUGHT IN ANY COURT OF
COMPETENT JURISDICTION IN THE STATE OF NEW YORK. NOTHING HEREIN SHALL
AFFECT THE RIGHT OF BUYER TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE
PROCEED AGAINST SELLER OR ANY OF THE OTHER R&B COMPANIES IN ANY OTHER
JURISDICTION OR TO SERVE PROCESS IN ANY MANNER PERMITTED BY APPLICABLE
LAW.
15. WAIVER OF JURY TRIAL. SELLER, FOR ITSELF AND ITS SUCCESSORS
AND ASSIGNS, HEREBY KNOWINGLY AND INTENTIONALLY AND IRREVOCABLY AND
UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ITS
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS MOA OR ANY OF THE OTHER CHARTER DOCUMENTS OR ANY
DEALINGS WITH BUYER RELATING TO THE SUBJECT MATTER OF THE TRANSACTIONS
CONTEMPLATED HEREBY AND THEREBY AND THE RELATIONSHIP THAT IS BEING
ESTABLISHED. THE FOREGOING WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, MODIFICATIONS, RENEWALS, SUPPLEMENTS OR SUBSTITUTIONS TO THIS
MOA OR ANY OF THE OTHER CHARTER DOCUMENTS WHETHER OR NOT EXPRESSLY SET
FORTH HEREIN OR THEREIN.
16. Notice. All notices hereunder shall be in writing and shall
be delivered in person, given by registered or certified mail, postage
prepaid, return receipt requested, or given by facsimile transmission, as
follows:
If to Seller:
Reading and ▇▇▇▇▇, Inc. Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
If to Buyer:
Deep Sea Investors, L.L.C. Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇
c/▇ ▇▇▇▇▇▇ Financial, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Legal Department
with a copy to:
▇▇▇▇▇ & ▇▇▇▇▇, L.L.P. Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Each notice to be given or delivered pursuant to this MOA shall be deemed
so given or delivered (i) if sent by registered or certified mail,
postage prepaid, return receipt requested, on the third business day
after such notice, communication or material, addressed as above
provided, is delivered to a United States post office and a receipt
therefor is issued thereby, (ii) if sent by any other means of physical
delivery, when such notice, communication or material is delivered to the
appropriate address as provided and (iii) if sent by telecopier, when
such notice, communication or material is transmitted to the appropriate
telecopier number as above provided and is received at such number.
17. Survival. All covenants, representations and warranties of
the parties contained in this MOA shall survive the Closing and transfer
of title to the Vessel.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK;
SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, Buyer and Seller have executed this MOA
by their respective representatives thereunto duly authorized to be
effective as of the date first set forth above.
DEEP SEA INVESTORS, L.L.C. READING AND ▇▇▇▇▇, INC.
By: GATX MARINE INVESTORS By:
CORPORATION, Member Name:
Title:
By:
Name:
Title:
By: ▇▇▇▇▇▇ FINANCIAL LEASING, INC.,
Member
By:
Name:
Title:
By: MDFC EQUIPMENT LEASING CORPORATION,
Member
By:
Name:
Title:
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Schedule A
Equipment Inventory
SEE ATTACHED
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EXHIBIT A
BAREBOAT CHARTER
SEE ATTACHED
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EXHIBIT B
GUARANTY
THIS GUARANTY (the "Guaranty") dated as of November 28, 1995,
is made by READING & ▇▇▇▇▇ CORPORATION, a Delaware corporation
("Guarantor"), in favor of DEEP SEA INVESTORS, L.L.C., a Delaware
limited liability company ("Owner"), the Owner under the Bareboat Charter
described below.
WHEREAS, Reading and ▇▇▇▇▇, Inc., an Oklahoma corporation
("Seller ), and Owner have entered into that certain Memorandum of
Agreement (the "MOA") dated of even date herewith;
WHEREAS, pursuant to the terms of the MOA, Seller has agreed
to sell to Owner the Vessel described therein and immediately thereafter
Reading & ▇▇▇▇▇ Drilling Co., an Oklahoma corporation ( Charterer ), has
agreed to charter the Vessel from Owner, upon the terms and subject to
the conditions set forth in the Bareboat Charter of even date herewith
(the Charter ) (capitalized terms used herein and not otherwise defined
herein have the meanings assigned to such terms in the Charter);
WHEREAS, such transactions between Owner and Seller and Owner
and Charterer are sometimes referred to collectively herein as the Sale
and Lease ;
WHEREAS, Guarantor directly owns all of the capital stock of
Charterer and indirectly owns all of the capital stock of Seller and
shall derive substantial benefit, whether directly or indirectly, from
the Sale and Lease and from the making of this Guaranty; and
WHEREAS, as a condition precedent to the consummation of the
Sale and Lease, Owner has required that the Guarantor execute and deliver
this Guaranty;
NOW, THEREFORE, in consideration of the premises and in order
to induce Owner to enter into the Sale and Lease, Guarantor hereby agrees
as follows:
SECTION 1. Guaranty. Guarantor hereby absolutely,
unconditionally, irrevocably, jointly and severally guarantees the full
and punctual payment, observance and performance when due of all
obligations of Seller now or hereafter existing under the MOA and all
other documents executed in connection therewith and all obligations of
Charterer now or hereafter existing under the Charter and all other
documents executed in connection therewith, together with any and all
amendments, supplements, renewals or substitutions of all or any of such
foregoing documents (collectively, the "Charter Documents"), whether for
rent, interest, fees, expenses, taxes, costs, indemnities, losses,
compensation, reimbursements or any other amount payable under the terms
of any such agreement (all of the above being hereinafter called the
"Obligations").
SECTION 2. Guaranty Absolute. The Guarantor guarantees that
the Obligations will be paid, observed and performed strictly in
accordance with the terms of the MOA, the Charter and the other Charter
Documents, regardless of any law, regulation or order now or hereafter in
effect in any jurisdiction affecting any of such terms or the rights of
Owner with respect thereto. If any of the Obligations shall not be paid,
observed or performed in accordance with their terms, the Guarantor shall
immediately pay, observe or perform the same, this Guaranty being a
guaranty of full payment, observance and performance and not of
collectability, and is in no way conditional or contingent. The
liability of Guarantor under this Guaranty shall be absolute, independent
and unconditional, and shall not be diminished, discharged, waived,
limited or otherwise affected for any reason whatsoever, including,
without limitation, the following:
(a) any lack of validity or enforceability of or
irregularity, defect or deficiency in the MOA, the Charter or
any of the other Charter Documents;
(b) any change in the time, manner, terms or place of
payment of, or in any other term of, all or any of the
Obligations, or any other amendment or waiver of or any
restructuring of, or consent to departure from, the MOA, the
Charter or any of the other Charter Documents;
(c) any sale, exchange, release or non-perfection or
impairment of any collateral, including, without limitation,
the offshore drilling units "▇▇▇ ▇▇▇▇▇▇▇▇▇▇" and "▇▇▇▇▇▇▇▇
▇▇▇▇" (together, the "Collateral Vessels"), or release of any
guarantor or any release or amendment or waiver of or consent
to departure from any other guaranty, for all or any of the
Obligations;
(d) any change in the existence, structure or
ownership of Seller or Charterer or any other Person
(including any guarantor) or any insolvency, bankruptcy,
reorganization or other similar proceeding affecting Seller
or Charterer or any other Person (including any guarantor) or
any of their assets;
(e) the existence of any claim, set-off or other
rights which Guarantor may have at any time against Seller or
Charterer, the obligees of the Obligations or any other
Person, whether or not arising in connection with this
Guaranty, the MOA, the Charter or any of the other Charter
Documents;
(f) any other circumstance which might otherwise
constitute a defense available to, or a release or discharge
of, Seller or Charterer or any other Person (including any
guarantor) in respect of the Obligations, whether at law, in
admiralty or equity or otherwise, other than payment in full
by Seller or Charterer of the Obligations.
Without limiting the generality of the foregoing, this Guaranty is in no
way conditioned upon any requirement that Owner first attempt to collect
payment from, or enforce observance or performance of, any of the
Obligations by Seller, Charterer or any other Guarantor or obligor of or
for any of the Obligations, or resort to any collateral or security,
including, without limitation, the Collateral Vessels, or any other means
of obtaining or collecting payment or seeking observance or performance
of any of the Obligations or upon any other contingency whatsoever. This
Guaranty shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Obligations is annulled, set
aside, invalidated, declared to be fraudulent or preferential, rescinded
or must otherwise be returned, refunded or repaid by Owner or the
proceeds of any collateral are required to be returned by Owner upon the
insolvency, bankruptcy, dissolution, liquidation or reorganization of
Seller or Charterer, or any other guarantor or surety, or upon or as a
result of the appointment of a receiver, intervenor or conservator of, or
trustee or similar officer for, Seller or Charterer or any other
guarantor or surety or any substantial part of its property or otherwise
for any other reason whatsoever, all as though such payment or payments
had not been made. The obligations of the Guarantor under this Guaranty
shall not be subject to reduction, termination or other impairment by
reason of any setoff, recoupment, counterclaim or defense or for any
other reason.
SECTION 3. Continuing Guaranty. This is a continuing
guaranty, and all extensions of credit and financial accommodations
concurrently herewith or hereafter made by Owner to Seller or Charterer
in connection with the Sale and Lease shall be conclusively presumed to
have been made or acquired in acceptance hereof and in reliance hereon.
SECTION 4. Waiver. Guarantor hereby waives receipt of a
copy of the MOA, the Charter and the other Charter Documents and any
amendment, supplement, modification or restatement of any of the
foregoing, promptness, diligence, presentment, notice of acceptance,
demand for payment, protest, notice of dishonor or non-payment, non-
observance or non-performance of any of the terms or conditions of the
MOA, the Charter or any of the other Charter Documents, or notice of any
default or event of default under any of the foregoing, or notice of any
suit or other action against Seller, Charterer or any other Person and,
except as expressly set forth herein and to the fullest extent permitted
by applicable law, any other notice with respect to any of the
Obligations or this Guaranty; and any requirement that Owner protect,
secure, perfect or insure any security interest or lien on any property
subject thereto or exhaust any right or take any action against Seller,
Charterer or any other Person or any collateral (it being the intention
of the parties hereto that this Guaranty is to be a guaranty of payment
and not of collection) or that Seller, Charterer or any other Person be
joined in any action hereunder. Should Owner seek to enforce the
obligations of the Guarantor hereunder by action in any court, the
Guarantor waives any necessity, substantive or procedural, that a
judgment previously be rendered against Seller, Charterer or any other
Person, or that any action be brought against Seller, Charterer or any
other Person, or that Seller, Charterer or any other Person should be
joined in such cause. Such waiver shall be without prejudice to Owner at
its option to proceed against Seller, Charterer or any other Person,
whether by separate action or by joinder. The Guarantor hereby waives
marshaling of assets and liabilities, sale in inverse order of
alienation, notice by Owner of any indebtedness or liability to which
Owner applies or may apply any amounts received by Owner, and of the
creation, advancement, increase, existence, extension, renewal,
restructuring, rearrangement and/or modification of any of the
Obligations.
SECTION 5. Several Obligations. The obligations of
Guarantor hereunder are several from the obligations of Seller, Charterer
or any other Person, and are primary obligations concerning which
Guarantor is the principal obligor. Guarantor agrees that this Guaranty
shall not be discharged except by the complete and irrevocable payment,
observance and performance of all Obligations and the obligations of
Guarantor hereunder. The obligations of Guarantor hereunder shall not be
affected in any way by any receivership, insolvency, bankruptcy or other
proceedings affecting Seller, Charterer or any other Person or any of the
assets of Seller, Charterer or any other Person, or the release or
discharge (other than by the complete and irrevocable performance of all
Obligations) of Seller, Charterer or any other Person from the
performance of any obligation contained in any promissory note or other
instrument issued in connection with, evidencing or securing any
indebtedness guaranteed by this instrument, whether occurring by reason
of law, admiralty, equity or any other cause, whether similar or
dissimilar to the foregoing.
SECTION 6. No Subrogation. Notwithstanding anything to the
contrary in this Guaranty, Guarantor hereby irrevocably waives any rights
which may have arisen in connection with this Guaranty or the other
Charter Documents to be subrogated to any of the rights (whether
contractual, under the United States Bankruptcy Code, as amended,
including Section 509 thereof, under common law or otherwise) of Owner
against Seller, Charterer or any other Person or against any collateral
security or guaranty or right of offset held by Seller or Charterer or
any other Person for the payment of the Obligations. Guarantor hereby
further irrevocably waives all contractual, common law, statutory or
other rights of reimbursement, contribution, exoneration or indemnity (or
other similar right) from or against Seller, Charterer or any other
Person which may have arisen in connection with this Guaranty or the
other Charter Documents. So long as the Obligations remain outstanding,
if any amount shall be paid by or on behalf of Seller or Charterer or any
other Person to Guarantor on account of any of the rights waived in this
paragraph, such amount shall be held by Guarantor in trust, segregated
from other funds of such Guarantor, and shall, forthwith upon receipt by
such Guarantor, be turned over to Owner in the exact form received by
Guarantor (duly endorsed by Guarantor to Owner, if required), to be
applied against the Obligations, whether matured or unmatured, in such
order as Owner may in its sole discretion determine.
SECTION 7. Stay of Acceleration. If acceleration of the
time for payment of any amount payable by Seller or Charterer under the
Charter Documents is stayed upon the insolvency, bankruptcy or
reorganization of Seller or Charterer all such amounts otherwise subject
to acceleration under the terms of the Charter Documents shall
nonetheless be payable by Guarantor hereunder forthwith on demand.
SECTION 8. Representations and Warranties. Guarantor
represents and warrants to Owner as follows:
(a) Guarantor has received, or will receive, substantial
direct or indirect benefit from the making of this Guaranty.
(b) Guarantor (i) is a corporation duly organized, validly
existing and in good standing under the law of its jurisdiction of
incorporation and is in good standing in all jurisdictions in which
failure to be or remain in good standing would have a material
adverse effect upon its ability to pay, observe or perform its
duties, obligations or liabilities hereunder and (ii) has all
requisite corporate power to conduct its business and to execute
and deliver and perform its obligations under this Guaranty.
(c) The execution, delivery and performance by Guarantor of
this Guaranty has been duly authorized and approved by all
necessary corporate action on the part of Guarantor. This Guaranty
constitutes the legal, valid and binding obligation of Guarantor
and is enforceable against Guarantor in accordance with its terms,
except insofar as enforceability may be limited by applicable
debtor relief laws or subject to general principles of equity
(regardless of whether such enforceability is considered in a
proceeding in equity or at law).
(d) No order, consent, approval, license, permit,
franchise, waiver, exemption, authorization of or validation of, or
filing, recording or registration with (except those that have been
heretofore obtained or made and of which the Owner has heretofore
been given written notice) or exemption by, any Person or tribunal
is required to authorize, or is required in connection with, the
execution, delivery, performance, legality, validity, binding
effect or enforceability of this Guaranty.
(e) All information that has been or is hereafter made
available to Owner by or on behalf of Guarantor in connection with
this Guaranty or the Sale and Lease was (and will be) complete and
correct in all material respects and did not (and will not) contain
any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements contained therein
not materially misleading in light of the circumstances under which
such statements were (or will be) made. Without limiting the
generality of the foregoing, the Owner and the Investors have been
provided with the financial statements (including balance sheet and
related statements of income and cash flows) of Guarantor and its
consolidated subsidiaries for the year ended December 31, 1994 and
for the nine (9) month period ended September 30, 1995. Such
financial statements are true, complete and correct in all respects
and fairly present the financial condition of Guarantor and its
consolidated subsidiaries as of the dates thereof and the results
of operations of Guarantor and its consolidated subsidiaries for
the periods then ended.
(f) Guarantor has a direct and substantial economic
interest in Seller and Charterer, and expects to derive substantial
benefits therefrom and from the transactions contemplated by the
MOA, the Charter and the other Charter Documents. Owner shall have
no duty to inquire into or confirm the receipt of any such
benefits, and this Guaranty shall be effective and enforceable by
Owner without regard to the receipt, nature or value of any such
benefits.
(g) No bankruptcy, insolvency, reorganization, arrangement,
readjustment of debt, dissolution, liquidation or similar
proceeding with respect to Guarantor or any of its Subsidiaries (as
defined in the Charter) has been commenced in any jurisdiction.
(h) Guarantor and its Subsidiaries (as defined in the
Charter) are not in default under or with respect to any of their
contractual obligations in any respect which could reasonably be
expected to have a material adverse effect on the business, assets,
operations or condition, financial or otherwise, of Guarantor or
its Subsidiaries (as defined in the Charter) or the ability of
Guarantor to perform its obligations under this Guaranty.
(i) No litigation, investigation or proceeding of or before
any governmental authority or arbitrator is pending or threatened
by or against Guarantor or its Subsidiaries (as defined in the
Charter) with respect to the Vessel, the Collateral Vessels or the
Charter Documents or any of the transactions contemplated thereby,
nor is any litigation, investigation or proceeding of or before any
governmental authority or arbitrator pending or threatened by or
against Guarantor or its Subsidiaries (as defined in the Charter)
or any of their respective properties or revenues which could
reasonably be expected to have a material adverse effect on the
financial or other condition of any of Guarantor or its
Subsidiaries (as defined in the Charter).
(j) Guarantor and its Subsidiaries (as defined in the
Charter) have not received any notice nor otherwise acquired any
knowledge that it is or they are not in full compliance with any of
the requirements of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"). No Reportable Event (as defined in
Title IV of ERISA) or other fact or circumstance exists which may
have an adverse effect on the tax qualified status of any employee
benefit plan maintained by Guarantor or its Subsidiaries (as
defined in the Charter). Guarantor and its Subsidiaries (as
defined in the Charter) have no accumulated funding deficiency
within the meaning of ERISA and have no liability or know or have
notice of no fact or circumstances which could result in any
liability to the Pension Benefit Guaranty Corporation, the Internal
Revenue Service, the Department of Labor or any participant in
connection with any employee benefit plan (other than accrued
benefits which are or which may become payable to participants or
beneficiaries in the ordinary course of any such plan).
(k) The operations of Guarantor and its Subsidiaries (as
defined in the Charter) comply in all material respects with all
applicable laws (including any environmental, health and safety
requirements of law); Guarantor and its Subsidiaries (as defined in
the Charter) are not the subject of any actual or threatened
investigation by, order from or agreement with any governmental or
private entity respecting any laws (including any environmental,
health or safety requirements of law), any remedial action or any
claims or liabilities and costs arising from the release or
threatened release of a contaminant, including petroleum and
fractions thereof, into the environment; none of the present or
past operations undertaken on the Vessel or either of the
Collateral Vessels are the subject of any actual or threatened
judicial or administrative proceeding, order, judgment, decree or
settlement alleging or addressing a violation of or a liability
under any laws (including any environmental, health or safety
requirement of law); neither Guarantor nor any of its Subsidiaries
(as defined in the Charter) has filed any notice under any
applicable requirement of law reporting a release of a contaminant
from the Vessel or either of the Collateral Vessels, including
petroleum and fractions thereof, into the environment or reporting
a violation of any applicable laws (including any environmental,
health or safety requirements of law); and no liens arising under
any environmental laws have attached to the Vessel or either of the
Collateral Vessels.
(l) Since December 31, 1994, no material adverse change has
occurred with respect to the financial or other condition of
Guarantor or its Subsidiaries (as defined in the Charter).
(m) None of Guarantor or its Subsidiaries (as defined in
the Charter) is in breach or violation of or in default under (i)
any contractual obligation or any applicable law, other than such
breaches, violations or defaults that individually or in the
aggregate could not reasonably be expected to have a material
adverse effect on the obligation of each under the Charter
Documents, or (ii) its corporate organizational or governance
documents. The execution, delivery, performance, or compliance
with the terms of this Guaranty or any of the other Charter
Documents by any of Guarantor or its Subsidiaries (as defined in
the Charter) does not, and consummation of the transactions
contemplated by this Guaranty and the Charter Documents does not
and will not: (i) conflict with, breach, violate or constitute a
default under (A) any applicable law, (B) the corporate
organizational or governance documents of any of Guarantor or its
Subsidiaries (as defined in the Charter) or (C) any other
contractual obligation of any of the Guarantor or its Subsidiaries
(as defined in the Charter) (ii) result in the mandatory
acceleration or prepayment of any debt owed by any of the Guarantor
or its Subsidiaries (as defined in the Charter) or afford any
holder of any such debt the right to require any of the Guarantor
or its Subsidiaries (as defined in the Charter) to purchase, redeem
or otherwise acquire, reacquire or repay any such debt; or
(iii) result in the imposition of any lien or encumbrance upon the
assets, properties, revenues or rights of any of the Guarantor or
its Subsidiaries (as defined in the Charter) (other than liens or
encumbrances imposed or created or to be imposed or created under
or pursuant to the Mortgages or the Security Agreement).
(n) Guarantor presently maintains commercial general
liability insurance coverage for liability arising from all
operations of the Guarantor. Such insurance includes coverage for
premises and operations, independent contractors, completed
operations and contractual liability (or their equivalents) and
names Owners and each member of the Owner Group (as defined in the
Charter) as additional insureds (except with respect to workers
compensation and employer s liability coverage). The minimum
policy limit is U.S. $1,000,000 single limit per occurrence.
(o) Guarantor is not insolvent within the meaning of any
applicable law and the execution and delivery of this Guaranty and
the performance of Guarantor s obligations hereunder (i) shall not
cause Guarantor to be, or otherwise render Guarantor, insolvent
within the meaning of any applicable law; (ii) shall not result in
Guarantor being unable to pay its debts as they mature and
Guarantor will be able to make all scheduled payments on its
indebtedness due in the next twelve (12) months; (iii) shall not
leave Guarantor with property remaining in its hands constituting
unreasonably small capital with which to conduct its business or
any business in which Guarantor is currently planning to engage;
and (iv) results in material and substantial benefit to Guarantor
and such benefit constitutes reasonably equivalent value and fair
consideration for the execution and delivery of this Guaranty and
the performance by Guarantor of its obligations hereunder within
the meaning of any applicable law. Guarantor has not taken any
actions with respect to this Guaranty, the execution or delivery
hereof or the performance of Guarantor s obligations hereunder with
actual intent to hinder, delay or defraud either present or future
creditors.
SECTION 9. Certain Covenants of Guarantor. Guarantor agrees
that, so long as any of the Obligations shall be outstanding, Guarantor
shall:
(a) Furnish and deliver, or cause to be furnished and
delivered, to Owner and each Investor (as defined in the Charter):
(i) within 45 days after the end of each of the first
three fiscal quarters during each fiscal year of Guarantor, a
consolidated balance sheet of Guarantor and its consolidated
subsidiaries as of the close of each such fiscal quarter,
together with a consolidated income statement and
consolidated statement of cash flows of Guarantor and such
subsidiaries for such fiscal quarter, in each case setting
forth in comparative form the corresponding consolidated
figures for the same period of the next preceding fiscal
year, all in reasonable detail and certified by the chief
financial officer of Guarantor as being true, complete and
correct and as fairly presenting the financial condition and
the results of operations of the respective corporations
covered thereby, subject to year end adjustment;
(ii) within 90 days after the close of each fiscal
year of Guarantor (A) consolidated balance sheets of
Guarantor and its consolidated subsidiaries as of the close
of such fiscal year, together with consolidated profit and
loss statements and consolidated statements of cash flows of
Guarantor and such subsidiaries for such fiscal year
certified by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Co. or by independent public
accountants of comparable national standing and reputation as
being true, complete and correct and as fairly presenting the
consolidated financial position of Guarantor and such
subsidiaries as of the end of such fiscal year and the
consolidated results of their operations for such fiscal year
in conformity with generally accepted accounting principles
applied on a basis consistent with prior fiscal years with
such adjustments or changes as to which such independent
public accountants concur; and (B) an update of the Contract
Data Sheet previously submitted to the Investors (as defined
in the Charter) (including, but not limited to, rig and
contract status and updated annual budget), in each case
true, complete and correct and fairly presenting the
information contained therein as of the date of its
submission to Owner and the Investors (as defined in the
Charter); and
(iii) within 30 days after the filing thereof with the
Securities and Exchange Commission, a copy of each report,
form or prospectus filed by Guarantor or any of its
subsidiaries with the Securities and Exchange Commission, and
within 5 days of their issuance, any press releases or
similar materials issued by Guarantor or any of its
subsidiaries; and
(iv) such other financial or other information
relating to the affairs of Guarantor and its subsidiaries or
affiliates as the Owner or any Investor (as defined in the
Charter) may from time to time reasonably request.
(b) Immediately after the commencement thereof, notify
Owner in writing of all litigation and of all proceedings before
any governmental or regulatory agency which, if determined
adversely to Guarantor or any of its Subsidiaries (as defined in
the Charter), could have a material adverse effect on the assets,
operations or condition (financial or otherwise) of Guarantor or
any of its Subsidiaries (as defined in the Charter).
(c) (i) Immediately upon receiving notice or knowledge of
the same, Guarantor shall notify Owner in writing of any breach or
violation of or default by Guarantor or its Subsidiaries (as
defined in the Charter) under (A) any contractual obligation or any
applicable law other than such breaches, violations or defaults
that individually or in the aggregate could not be reasonably
expected to have a material adverse effect on the obligation of
each under the Charter Documents, or (B) its corporate
organizational or governance documents; and (ii) immediately upon
receiving notice or knowledge of the occurrence of any default
(which has not been remedied or waived) in the payment, observance
or performance of any of the terms or provisions of this Guaranty
or any of the other Charter Documents or any Event of Default under
the Charter, Guarantor shall deliver to Owner a certificate of
either the Chairman, the President or a Vice President and the
Chief Financial Officer of Guarantor describing the default or
Event of Default and stating the date of commencement thereof, what
action is proposed to be taken with respect thereto and the
estimated date when it will be remedied.
(d) Guarantor will at all times maintain commercial general
liability insurance coverage for liability arising from all
operations of the Guarantor. Such insurance shall include coverage
for premises and operations, independent contractors, completed
operations and contractual liability (or their equivalents) and
shall name Owner and each member of the Owner Group (as defined in
the Charter) as additional insureds (except with respect to
workers' compensation and employer's liability coverage). The
minimum policy limit shall be U.S. $1,000,000 single limit per
occurrence.
SECTION 10. INTENTIONALLY DELETED.
SECTION 11. Amendments, Etc. No amendment or waiver of any
provision of this Guaranty nor consent to any departure by Guarantor
therefrom shall in any event be effective unless the same shall be in
writing and signed by Owner, and each such waiver or consent shall be
effective only in the specific instance and for the specific purpose for
which given.
SECTION 12. Notices, Etc. All notices and other
communications provided for herein shall be given or made in the manner
and with the effect described in Section 19.1 of the Charter and
addressed, if to Owner, as stipulated therein or, if to Guarantor, to its
address set forth under its signature below.
SECTION 13. No Waiver; Remedies. No failure on the part of
Owner to exercise, and no delay in exercising, any right hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of
any right hereunder preclude any other or further exercise thereof or the
exercise of any other right. No course of dealing between Seller and
Owner or Charterer and Owner or any other Person and Owner shall operate
as a waiver of any right of Owner. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law, admiralty,
equity or otherwise.
SECTION 14. Separability. Should any clause, sentence,
paragraph, sub-section or Section of this Guaranty be judicially declared
to be invalid, unenforceable or void, such decision will not have the
effect of invalidating or voiding the remainder of this Guaranty, and
Guarantor agrees that the part or parts of this Guaranty so held to be
invalid, unenforceable or void will be deemed to have been stricken
herefrom and the remainder will have the same force and effectiveness as
if such part or parts had never been included herein.
SECTION 15. Captions. The captions in this Guaranty have
been inserted for convenience only and shall be given no substantive
meaning or significance whatever in construing the terms and provisions
of this Guaranty.
SECTION 16. Successors and Assigns; Assignment. This
Guaranty shall (a) remain in full force and effect until final and
irrevocable payment, observance and performance in full of the
Obligations and all other amounts payable under the Charter Documents;
(b) be binding upon Guarantor, its successors and assigns; provided that
Guarantor's rights and obligations hereunder may not be assigned without
the prior written consent of Owner; and (c) inure to the benefit of and
be enforceable by Owner and its successors and assigns. This Guaranty
may be assigned by Owner at any time without the prior written consent of
or notice to Guarantor or any other Person.
SECTION 17. Conditions of Consolidation or Merger.
Guarantor shall not consolidate with or merge into any other corporation
to the extent that (a) Guarantor is not the surviving entity or (b)
Guarantor is the surviving entity and will not have, after giving effect
to such consolidation or merger, and maintain, for a period of six months
thereafter, a rating for its long term unsecured senior debt of at least
B1 or higher by ▇▇▇▇▇'▇ Investor Service, Inc. or at least B+ or higher
by Standard & Poor's Ratings Group or (c) the successor corporation
formed by such consolidation or into which Guarantor is merged (i) will
not have, after giving effect to such consolidation or merger, and
maintain, for a period of six months thereafter, a rating for its long
term unsecured senior debt of at least B1 or higher by ▇▇▇▇▇'▇ Investor
Service, Inc. or at least B+ or higher by Standard & Poor's Ratings Group
or (ii) shall not succeed to, and be substituted for, Guarantor with
respect to all obligations and liabilities of Guarantor under this
Guaranty with the same effect as if such successor corporation had been
named as Guarantor herein or (d) any Event of Default (as defined in the
Charter) shall have occurred and be continuing.
SECTION 18. Limitation by Law. All rights, remedies and
powers provided in this Guaranty may be exercised only to the extent that
the exercise thereof does not violate any applicable provision of law,
and all the provisions of this Guaranty are intended to be subject to all
applicable mandatory provisions of law which may be controlling and to be
limited to the extent necessary so that they will not render the Guaranty
invalid, unenforceable, in whole or in part, or not entitled to be
recorded, registered or filed under the provisions of any applicable law.
SECTION 19. Survival of Covenants, Representations and
Warranties. All covenants, representations and warranties contained in
this Guaranty shall survive the execution and delivery of this Guaranty
and shall continue until final and irrevocable payment and satisfaction
of all obligations and the termination of the Charter Documents. Any
investigation by Owner shall not diminish in any respect whatsoever its
right to rely on such covenants, representations and warranties.
SECTION 20. Fees and Expenses. Guarantor shall pay all
costs, fees and expenses (including, but not limited to, reasonable
attorneys fees and disbursements) incurred by Owner or the Trustee (as
defined in the MOA) in collecting or enforcing Guarantor s obligations or
Owner s or Trustee's rights or remedies under this Guaranty and all such
amounts shall be part of the Obligations guaranteed hereby.
SECTION 21. GOVERNING LAW. THIS GUARANTY SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.
SECTION 22. VENUE; SERVICE OF PROCESS. GUARANTOR, FOR
ITSELF, ITS SUCCESSORS AND ASSIGNS, HEREBY KNOWINGLY AND INTENTIONALLY
AND IRREVOCABLY AND UNCONDITIONALLY a) SUBMITS, FOR ITSELF AND ITS
PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE STATE COURTS OF THE
STATE OF NEW YORK AND THE FEDERAL COURTS SITTING IN THE STATE OF NEW YORK
AND AGREES AND CONSENTS THAT SERVICE OF PROCESS MAY BE MADE UPON IT IN
ANY LEGAL PROCEEDING ARISING OUT OF OR IN CONNECTION WITH THIS GUARANTY,
THE MOA, THE CHARTER, THE OTHER CHARTER DOCUMENTS OR THE OBLIGATIONS BY
SERVICE OF PROCESS AS PROVIDED BY NEW YORK LAW, b) WAIVES, TO THE EXTENT
PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF VENUE OF ANY LITIGATION ARISING OUT OF OR IN CONNECTION WITH
THIS GUARANTY, THE OTHER CHARTER DOCUMENTS OR THE OBLIGATIONS BROUGHT IN
ANY NEW YORK STATE COURT OR FEDERAL COURT SITTING IN THE STATE OF NEW
YORK, c) WAIVES ANY CLAIMS THAT ANY LITIGATION BROUGHT IN ANY SUCH COURT
HAS BEEN BROUGHT IN AN INCONVENIENT FORUM, d) CONSENTS TO THE SERVICE
OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH LITIGATION
BY THE MAILING OF COPIES THEREOF BY CERTIFIED MAIL, RETURN RECEIPT
REQUESTED, POSTAGE PREPAID, TO GUARANTOR AT THE ADDRESS SPECIFIED HEREIN
AND e) AGREES THAT ANY LEGAL PROCEEDING ARISING OUT OF, RELATED TO OR IN
CONNECTION WITH THIS GUARANTY, THE MOA, THE CHARTER, THE OTHER CHARTER
DOCUMENTS OR THE OBLIGATIONS MAY BE BROUGHT IN ANY COURT OF COMPETENT
JURISDICTION IN THE STATE OF NEW YORK. NOTHING HEREIN SHALL AFFECT THE
RIGHT OF OWNER TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST
GUARANTOR IN ANY OTHER JURISDICTION OR TO SERVE PROCESS IN ANY MANNER
PERMITTED BY APPLICABLE LAW.
SECTION 23. WAIVER OF JURY TRIAL. GUARANTOR, FOR ITSELF AND
ITS SUCCESSORS AND ASSIGNS, HEREBY KNOWINGLY AND INTENTIONALLY AND
IRREVOCABLY AND UNCONDITIONALLY WAIVES TO THE FULLEST EXTENT PERMITTED BY
LAW ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON
OR ARISING OUT OF THIS GUARANTY, THE MOA, THE CHARTER, OR ANY OF THE
OTHER CHARTER DOCUMENTS OR ANY DEALINGS WITH OWNER RELATING TO THE
SUBJECT MATTER OF THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY AND
THE RELATIONSHIP THAT IS BEING ESTABLISHED. THE FOREGOING WAIVER SHALL
APPLY TO ANY SUBSEQUENT AMENDMENTS, MODIFICATIONS, RENEWALS, SUPPLEMENTS
OR SUBSTITUTIONS TO THIS GUARANTY, THE MOA, THE CHARTER, OR ANY OF THE
OTHER CHARTER DOCUMENTS WHETHER OR NOT EXPRESSLY SET FORTH HEREIN OR
THEREIN.
SECTION 24. Final Agreement. This Guaranty, together with
the other written documents, instruments, agreements and papers executed
in connection herewith, represents the final agreement between Owner and
Guarantor with respect to the subject matter hereof. This Guaranty and
such writings supersede all prior proposals, negotiations, agreements and
understandings related to such subject matter. Each of Guarantor and
Owner hereby represents and warrants that it is not relying on any
statement, representation, warranty, covenant or agreement of any kind
except for those set forth in this Guaranty and such other documents,
instruments, agreements and papers.
IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be
duly executed by its officer thereunto duly authorized, as of the date
first above written.
READING & ▇▇▇▇▇ CORPORATION
By:
Name:
Title:
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇
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EXHIBIT C-1
PREFERRED MORTGAGE
PREFERRED MORTGAGE ("Mortgage"), made the 28th day of
November, 1995, by READING & ▇▇▇▇▇ DRILLING CO., an Oklahoma corporation
("Mortgagor"), to WILMINGTON TRUST COMPANY, a Delaware banking
corporation, not in its individual capacity, but solely as Trustee (in
such capacity, "Mortgagee") for the benefit of DEEP SEA INVESTORS,
L.L.C., a Delaware limited liability company ("Beneficiary").
WHEREAS:
A. Mortgagor is the sole owner of the whole of that certain
vessel known as the "▇▇▇ ▇▇▇▇▇▇▇▇▇▇ , official number 651643, gross
tonnage 7977, net tonnage 5866, built at Okpo Island, South Korea, in
1982, duly documented in the name of Mortgagor under the laws and flag of
the United States of America (the "Collateral Vessel").
B. This Mortgage is being executed and delivered by Mortgagor
pursuant to that certain Memorandum of Agreement (the "MOA") dated of
even date herewith by and between Beneficiary and Reading and ▇▇▇▇▇,
Inc., an Oklahoma corporation ("R&B, Inc."), a subsidiary of Mortgagor s
parent corporation, Reading & ▇▇▇▇▇ Corporation, a Delaware corporation
(the "Parent"). Under the MOA, R&B, Inc. agreed to sell a certain other
vessel to Beneficiary and Beneficiary agreed to lease that vessel to
Mortgagor under the terms and subject to the conditions set forth in the
Bareboat Charter (the "Charter") dated of even date herewith by and
between Mortgagor and Beneficiary (the MOA, the Charter, this Mortgage
and all other documents executed in connection therewith, together with
any and all amendments, supplements, renewals or substitutions of all or
any of such documents, are sometimes referred to collectively herein as
the "Charter Documents").
C. Beneficiary requires that Mortgagor execute and deliver this
Mortgage to secure the prompt and complete payment, observance and
performance of all representations, warranties, covenants, duties,
liabilities and obligations of Mortgagor under the Charter Documents (the
"Secured Obligations").
D. The Board of Directors of Mortgagor having determined that
Mortgagor will derive substantial benefit, directly or indirectly, from
the sale and lease transaction among R&B, Inc., Mortgagor and
Beneficiary, Mortgagor wishes to execute and deliver this Mortgage as
required by Beneficiary.
NOW, THEREFORE, THIS MORTGAGE WITNESSETH:
That in consideration of the premises and of other good and
valuable consideration, the receipt whereof is hereby acknowledged, and
in order to secure the payment, observance and performance of the
Secured Obligations according to the terms thereof, and the payment of
all such other sums as may hereafter become secured by this Mortgage in
accordance with the terms hereof, and to secure the performance and ob-
▇▇▇▇▇▇▇▇ of and compliance with the representations, warranties,
covenants, terms and conditions herein and in the Charter Documents
contained, Mortgagor does by these presents GRANT, CONVEY, MORTGAGE,
PLEDGE, ASSIGN, TRANSFER, SET OVER and CONFIRM unto the Mortgagee, its
successors and assigns, for the benefit of Beneficiary, the whole of the
Collateral Vessel, together with all of the boilers, engines, machinery,
masts, spars, rigging, boats, anchors, chains, cables, tackle, apparel,
furniture, fittings and equipment (but excluding leased equipment owned
by third parties) and all other appurtenances to the Collateral Vessel
appertaining or belonging, whether now owned or hereafter acquired,
whether on board or not and all additions, substitutions, improvements
and replacements hereafter made in or to the Collateral Vessel, or any
part thereof, or in or to the equipment and appurtenances aforesaid and
all products, rentals and proceeds (including, but not limited to,
insurance proceeds) of any of the foregoing (collectively, the
Collateral ).
TO HAVE AND TO HOLD the same unto the Mortgagee, its
successors and assigns, forever, upon the terms herein set forth for the
enforcement of the payment and performance of the Secured Obligations and
to secure the performance and observance of and compliance with the
covenants, terms and conditions in this Mortgage and in the Charter
Documents.
PROVIDED, ONLY, and the conditions of these presents are
such, that if the Secured Obligations shall be paid, performed and
discharged as and when the same shall become payable or are to be
performed in accordance with the terms of this Mortgage and of the
Charter Documents, and if all other such sums as may hereafter become
secured by this Mortgage are paid in accordance with the terms hereof,
and if Mortgagor shall perform, observe and comply with all the
covenants, terms and conditions in the Charter Documents and in this
Mortgage, expressed or implied, to be performed, observed or complied
with by and on the part of Mortgagor, and the Charter Documents shall
have terminated pursuant to the terms thereof, then these presents and
the rights hereunder shall cease, determine and be void, otherwise to be
and remain in full force and effect.
A copy of the Charter is annexed hereto and made a part
hereof as Exhibit A.
IT IS HEREBY COVENANTED, DECLARED AND AGREED that the
property above described is to be held subject to the further covenants,
conditions, provisions, terms and uses hereinafter set forth.
ARTICLE I.
COVENANTS OF MORTGAGOR
Mortgagor covenants and agrees with Mortgagee as follows:
1. Mortgagor will observe, perform and comply with each
and every one of the covenants, terms and conditions herein, expressed or
implied, on its part to be observed, performed or complied with.
2. Mortgagor was duly organized and is now existing as a
corporation under the laws of the State of Oklahoma and shall so remain
during the life of this Mortgage; it is now, and shall remain during the
life of this Mortgage, a citizen of the United States as defined in
Section 2 of the Shipping Act, 1916, as at any time amended; it is duly
authorized to mortgage the Collateral Vessel and the Collateral; all
corporate action necessary and required by law for the execution and
delivery of this Mortgage, and the good faith affidavit filed herewith,
has been duly and effectively taken; and the Secured Obligations will be
the valid and enforceable obligations of Mortgagor in accordance with
their terms.
3. Mortgagor lawfully owns and is lawfully possessed of,
and has good title to, the Collateral Vessel and the Collateral free from
(i) any security interest, lien, charge or encumbrance whatsoever, other
than, with respect to the Collateral Vessel (a) for current crew s wages,
general average and salvage, in each case, incurred in the ordinary
course of business and that are not yet overdue and (b) that certain
First Preferred Mortgage dated January 28, 1987, securing a principal
amount of not more than $11,000,000 which is payable in accordance with
the amortization schedule annexed hereto and made a part hereof as
Exhibit B (the "First Preferred Mortgage"), in favor of ABC Equipment
Leasing, Inc. (the "First Mortgagee"), recorded March 4, 1987, as
Instrument No. 1, Book No. PM149, in the records of the Eighth Coast
Guard District, Port of Houston, Texas, or (ii) any commitment to make
the Collateral Vessel available for charter, other than drilling
contracts that comply with the terms of this Mortgage and the other
Charter Documents and charters or subcharters (whether demise or
otherwise) to the Parent and its Subsidiaries (as defined in the
Charter), or (iii) sale or use by any governmental authority, and it will
warrant and defend the title and possession thereto and to every part
thereof for the benefit of the Mortgagee against the claims and demands
of all persons whomsoever. This Mortgage constitutes the legal, valid
and binding obligation of Mortgagor, is enforceable against Mortgagor in
accordance with its terms, and when filed of record with the U.S. Coast
Guard National Vessel Documentation Center, will create a valid and
perfected preferred mortgage upon, security interest in and lien on the
Collateral Vessel and the Collateral, subject and subordinate (with
respect to the Collateral Vessel) only to the lien of the First Preferred
Mortgage (to the extent that such remains in effect). Upon payment of
the obligations secured by the First Mortgage, Mortgagor shall promptly
cause the First Mortgagee to execute and deliver to the Beneficiary for
filing, at Mortgagor s sole cost and expense, with each filing officer
with which the First Mortgage, any financing statement or other
instrument covering the Collateral Vessel or any other Collateral was
filed, all satisfactions of mortgage, satisfaction pieces, termination
statements and similar instruments, and take or cause to be taken such
other or further action, as Beneficiary may deem necessary or appropriate
to terminate the First Mortgagee's mortgage, lien and security interest
in the Collateral Vessel or any other Collateral.
4. Mortgagor will comply with and satisfy all the
provisions of Chapter 313 of Title 46, United States Code, as at any time
amended (the "Ship Mortgage Act"), and shall execute, deliver, file
and/or record, or cause the execution and delivery and the filing and/or
recordation of, such documents or instruments, and shall take or cause to
be taken such actions as may be necessary or desirable in the opinion of
the Beneficiary or the Mortgagee, in order to establish and maintain this
Mortgage as a valid and perfected preferred mortgage upon the Collateral
Vessel and upon all renewals, improvements and replacements made in or to
the same, subject and subordinate only to the lien of the First Preferred
Mortgage (to the extent that such remains in effect).
5. Mortgagor will not cause or permit the Collateral
Vessel to be operated in any manner contrary to law, will not abandon the
Collateral Vessel in a foreign port, will not engage in any unlawful
trade or violate any law or carry any cargo that will expose the
Collateral Vessel or the Collateral to penalty, forfeiture or capture,
and will not do, or suffer or permit to be done, anything which can or
may injuriously or adversely affect the registration or enrollment of the
Collateral Vessel under the laws and regulations of the United States of
America and will at all times keep the Collateral Vessel duly documented
thereunder. Neither Mortgagor nor the Collateral Vessel is the subject
of any pending or threatened environmental enforcement proceedings or
investigations, nor any other pending or threatened proceedings or
investigations with respect to any other environmental, health or safety
matters. Mortgagor is in compliance with all applicable laws and
regulations with respect to the Collateral Vessel or otherwise relating
to pollution control and other environmental, health or safety matters in
all jurisdictions in which Mortgagor is doing business. Mortgagor shall
assume all responsibility for the control and removal of, and hold
Mortgagee, Beneficiary and every member of the Owner Group (as defined in
the Charter) harmless from loss or damage, liabilities or claims arising
from, directly or indirectly, pollution or contamination by any liquid or
non-liquid waste material whatsoever found that is discharged, spilled or
leaked from the Collateral Vessel, and for noncompliance with
environmental, health and safety laws. To the extent that any law,
regulation or governmental entity acting within its jurisdiction imposes
on Mortgagee, Beneficiary or any member of the Owner Group (as defined in
the Charter) liability for any such pollution, notwithstanding such
imposition of direct liability, Mortgagor shall have designated Mortgagee
(both in its individual capacity and as Trustee), Beneficiary and each
member of the Owner Group (as defined in the Charter) as an additional
insured under its insurance policies and Mortgagor shall hold Mortgagee
(both in its individual capacity and as Trustee), Beneficiary and each
member of the Owner Group (as defined in the Charter) harmless from such
loss, damage or claims and reimburse any of Mortgagee (both in its
individual capacity and as Trustee), Beneficiary or any member of the
Owner Group (as defined in the Charter) for any amounts it may be
required to pay. This indemnity is valid irrespective of the negligence
or fault, whether sole, joint, active or passive of the indemnified party
and whether predicated on strict liability, statutory duty, contractual
indemnity or any other theory of liability of the indemnified party.
6. Mortgagor will pay and discharge when due and payable,
from time to time, all taxes, assessments, governmental charges, fines
and penalties lawfully imposed on the Collateral Vessel or the Collateral
or any income therefrom.
7. Neither Mortgagor, any charterer, the Master of the
Collateral Vessel or any other person has or shall have any right, power
or authority to create, incur or permit to be placed or imposed or
continued upon the Collateral Vessel or the Collateral, any lien
whatsoever other than this Mortgage, the First Preferred Mortgage and
liens for current crew's wages, general average, and salvage, in each
case, incurred in the ordinary course of business and that are not yet
overdue.
8. Mortgagor will place, and at all times and places will
retain, a properly certified copy of this Mortgage on board the
Collateral Vessel with her papers and will cause such certified copy and
such papers to be exhibited to any and all persons having business
therewith which might give rise to any lien thereon other than liens for
current crew's wages, general average and salvage, in each case, incurred
in the ordinary course of business and that are not yet overdue, and to
any representative of Mortgagee or Beneficiary; and will place and keep
prominently displayed in the chart room and in the Master's cabin of the
Collateral Vessel a framed printed notice in plain type of such size that
the paragraph of reading matter shall cover a space not less than 6
inches wide by 9 inches high, reading as follows:
"NOTICE OF MORTGAGE
This vessel is covered by a Preferred Mortgage to
Wilmington Trust Company, Trustee, under authority of
Chapter 313 of Title 46, United States Code, as at any
time amended. Under the terms of said Mortgage,
neither the owner, any charterer, nor the Master of
this vessel has any right, power or authority to
create, incur or permit to be imposed upon this vessel
any lien whatsoever other than for current crew's
wages, general average and salvage, in each case,
incurred in the ordinary course of business and that
are not yet overdue."
9. Except for the lien of this Mortgage and of the First
Preferred Mortgage, Mortgagor will not create or suffer to be continued
any security interest, lien, encumbrance or charge on the Collateral
Vessel or the Collateral and in due course and in any event within 30
days after the same becomes due and payable will pay or cause to be
discharged or make adequate provision for the payment or discharge of all
claims or demands which, if not paid or discharged, might result in the
creation of such a security interest, lien, encumbrance or charge and
will cause the Collateral Vessel or the Collateral to be released or
discharged from each such security interest, lien, encumbrance or charge
therefor; provided, however, that the undertaking of such corrective
action shall in no event be deemed a cure of any breach of this Mortgage
or be deemed a waiver by Mortgagee or Beneficiary of any of their rights
or remedies hereunder with respect thereto.
10. If a libel is filed against the Collateral Vessel or if
the Collateral Vessel is otherwise attached, levied upon, or taken into
custody or detained by any proceeding in any court or tribunal or by any
Government or other authority, Mortgagor will promptly notify (i)
Mortgagee thereof by telecopier, confirmed by letter, at its office at
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇, Attention: Corporate Trust Administration, Telecopier No. (302)
651-8882 and (ii) notify Beneficiary thereof by telecopier, confirmed by
letter, at its office c/▇ ▇▇▇▇▇▇ Financial, Inc., Attention: Legal
Department, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Telecopier No.
(▇▇▇) ▇▇▇-▇▇▇▇, and within 15 days will cause such Collateral Vessel to
be released and all valid liens thereon other than this Mortgage and the
First Mortgage to be discharged, and will promptly notify Mortgagee and
Beneficiary thereof in the manner aforesaid; provided, however, that the
undertaking of such corrective action shall in no event be deemed a cure
of any breach of this Mortgage or be deemed a waiver by Mortgagee or
Beneficiary of any of their rights or remedies hereunder with respect
thereto.
11. Mortgagor hereby acknowledges and confirms as of the
Closing Date (as defined in the MOA) that (a) no loss, constructive loss
or requisitioning for use by any governmental authority of the Collateral
Vessel (and, where applicable, the Collateral) has occurred; and (b) the
Collateral Vessel (and, where applicable, the Collateral) is tight,
staunch, strong and well and sufficiently tackled, appareled, furnished
and equipped and in every respect seaworthy, in accordance with
specifications, in good working order, condition and repair (normal wear
and tear excepted) and without defect in condition, design, operation or
fitness for use. Mortgagor will at all times and without cost or expense
to Mortgagee or Beneficiary maintain and preserve, or cause to be
maintained and preserved, the Collateral Vessel (and, where applicable,
the Collateral) in good running order and repair, so that the Collateral
Vessel shall be, at all times, tight, staunch, strong and well and
sufficiently tackled, appareled, furnished, equipped and in every respect
seaworthy and in good operating condition and in accordance with
specifications; and will keep the Collateral Vessel (and, where
applicable, the Collateral) in such condition as will entitle the
Collateral Vessel to the highest classification and rating for vessels of
the same age and type by the American Bureau of Shipping or other
classification society of like standing, and annually will furnish to
Mortgagee and Beneficiary a certificate by such Bureau or classification
society (if applicable) that such classification is maintained. The
Collateral Vessel shall, and Mortgagor covenants that it will, at all
times comply with all applicable laws, treaties and conventions of the
United States of America, and rules and regulations issued thereunder,
and shall have on board as and when required thereby valid certificates
showing compliance therewith. Mortgagor will not make, or permit to be
made, any change in the structure, character or type of, or any
modifications or improvements to, the Collateral Vessel which diminish
the value, utility, useful life or seaworthiness of the Collateral Vessel
without first receiving the written approval thereof by Mortgagee and
Beneficiary (such approval not to be unreasonably withheld) and, upon
request, shall promptly provide Mortgagee and Beneficiary with all
designs, drawings, plans and specifications relating to any such changes,
modifications or improvements. Mortgagor will notify Mortgagee and
Beneficiary of (i) any damage to the Collateral Vessel requiring repairs
reasonably expected to cost $1,000,000 or more promptly following the
occurrence thereof and (ii) any changes, modifications or improvements to
the Collateral Vessel reasonably expected to cost $5,000,000 or more
prior to commencing such changes, modifications or improvements.
Mortgagor agrees to give Mortgagee and Beneficiary at least
10 days notice of the actual date and place of any survey or drydocking
in order that Mortgagee and Beneficiary may have representatives present
if desired. Mortgagor agrees that at Mortgagee's or Beneficiary's
request it will satisfy the Mortgagee and the Beneficiary that the
expense of such survey or drydocking or work to be done thereat is within
Mortgagor's financial ability and will not result in a claim or lien
against the Collateral Vessel or the Collateral in violation of the
provisions of this Mortgage.
12. Mortgagor at all times will afford Mortgagee and
Beneficiary or their authorized representatives full and complete access
to the Collateral Vessel for the purpose of inspecting the same and the
Collateral Vessel's cargo and papers and, at the request of Mortgagee or
Beneficiary, Mortgagor will deliver for inspection copies of any and all
contracts and documents relating to the Collateral Vessel, whether on
board or not.
13. Mortgagor will not transfer or change the flag or port
of documentation of the Collateral Vessel without the written consent of
Mortgagee and Beneficiary first had and obtained, and any such written
consent to any one transfer or change of flag or port of documentation
shall not be construed to be a waiver of this provision with respect to
any subsequent proposed transfer or change of flag or port of
documentation.
14. Mortgagor will not sell, mortgage, transfer, demise or
other charter or change the management of the Collateral Vessel or the
Collateral, except, with respect to the Collateral Vessel, drilling
contracts that comply with the terms of this Mortgage and the other
Charter Documents and charters or subcharters (whether demise or
otherwise) to the Parent and its Subsidiaries (as defined in the
Charter), without the written consent of Mortgagee and Beneficiary first
had and obtained, and any such written consent to any one sale, mortgage,
transfer, demise or other charter or change shall not be construed to be
a waiver of this provision with respect to any subsequent proposed sale,
mortgage, transfer, demise or other charter or change. Any such sale,
mortgage, transfer or charter of the Collateral Vessel or the Collateral
(including any sale or transfer to the Parent or any Subsidiary (as
defined in the Charter) of the Parent) shall be subject to the provisions
of this Mortgage and the lien it creates. Mortgagor will not charter the
Collateral Vessel to, or permit the Collateral Vessel to serve under any
contract with, a person included within the definition of " designated
foreign country" or "national" of a "designated foreign country" in the
Foreign Assets Control Regulations or Cuban Assets Control Regulations of
the United States Treasury Department, 31 C.F.R., Chapter V, as amended,
or any person included within the definition of "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, within the meaning of said Regulations or of any
regulation, interpretation or ruling issued thereunder.
15. (a) Mortgagor will, at its own expense, when and so
long as this Mortgage or any Secured Obligations shall be outstanding,
insure the Collateral Vessel and keep her insured, in lawful money of the
United States, for not less than the full fair market value thereof (as
determined by the appraisal of the Collateral Vessel prepared by ▇▇▇▇▇▇▇
& ▇▇▇▇▇▇▇▇▇, Inc. and dated November 1995 (the "Appraisal"). The
Collateral Vessel 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, and shall be maintained in the broadest forms available in
the American or British insurance markets for vessels of the same type as
the Collateral Vessel. In addition, Mortgagor shall, at its own expense,
furnish to Beneficiary a mortgagee's single interest policy (or shall
cause the hull and machine insurance on the Collateral Vessel to be
endorsed to afford breach of warranty coverage for the benefit of
Beneficiary and the members of the Owner Group (as defined in the
Charter)) providing coverage in an amount equal to at least the full fair
market value of the Collateral Vessel, as determined by the Appraisal.
Such mortgagee's interest insurance shall be maintained in the broadest
form available in the American or British markets for vessels of the same
type as the Collateral Vessel through underwriters acceptable to
Beneficiary. In addition, Mortgagor shall maintain protection and
indemnity or equivalent insurance, through underwriters or associations
reasonably acceptable to Beneficiary in an amount not less than the fair
market value of the Collateral Vessel, as determined by the Appraisal,
provided, however, that war risk protection and indemnity insurance shall
be in an amount not less than the amount of insurance against total loss.
The Collateral Vessel shall not carry any cargoes or proceed into an area
then excluded by trading warranties under its marine or war risk policies
(including expropriation, protection and indemnity) without obtaining all
necessary additional coverage, satisfactory in form and substance, and
satisfactory evidence of which shall be promptly furnished, to
Beneficiary.
(b) The policy or policies of insurance described in this
Section 15 shall be issued by responsible underwriters reasonably
acceptable to Beneficiary in all respects, shall contain conditions,
terms, stipulations and insuring covenants reasonably satisfactory to
Beneficiary in all respects (including, but not limited to, waivers of
subrogation rights of the insurers against the insureds and waivers of
any rights of the insurers to any set off, counterclaim or deduction,
whether by attachment or otherwise) and shall be kept in full force and
effect by Mortgagor so long as this Mortgage or any Secured Obligations
shall be outstanding. All such policies, binders and other interim
insurance contracts shall be executed and issued in the name of Mortgagor
and shall provide that loss be payable (i) for so long as the Collateral
Vessel is encumbered by the First Preferred Mortgage, to the First
Mortgagee for distribution by it to itself, Beneficiary and Mortgagor, as
their interests may appear, and (ii) thereafter, to Beneficiary for
distribution by it to itself and Mortgagor, as their interests may
appear. Copies of all such policies, binders and other interim insurance
contracts shall be deposited with Beneficiary. Such insurance policies
shall provide for at least 30 days' prior written notice to be given to
Beneficiary by the underwriters or association in the event of (i)
cancellation (or at least 7 days prior written notice, with respect to
war risk coverage) or (ii) the failure of Mortgagor to pay any premium or
call which would suspend coverage under the policy or the payment of a
claim thereunder. Mortgagor shall furnish to Beneficiary annually, not
later than thirty days prior to expiration, a detailed report signed by a
firm of marine insurance brokers satisfactory to Beneficiary as to the
insurance maintained in respect of the Collateral Vessel, as to their
opinion as to the adequacy thereof and as to compliance with the
provisions of this Section 15.
Unless otherwise required by Beneficiary by notice to the
underwriters, although the following insurance is payable to Beneficiary,
(i) any loss under any insurance on the Collateral Vessel with respect to
protection and indemnity risks may be paid directly to Mortgagor to
reimburse it for any loss, damage or expense actually incurred by it and
covered by such insurance or to the person to whom any liability covered
by such insurance has been actually incurred, and (ii) in the case of any
loss (other than a loss covered by clause (i) above or by the next
paragraph of this Section) under any insurance with respect to the
Collateral Vessel involving any damage to such Collateral Vessel, the
underwriters may pay directly for the repair, salvage or other charges
involved or, if Mortgagor shall have first fully repaired the damage or
paid all of the salvage or other charges, may pay Mortgagor as
reimbursement therefor; provided, however, that if such damage involves a
loss in excess of $1,000,000, the underwriters shall not make such
payment without first obtaining the written consent thereto of
Beneficiary. Any loss covered by this paragraph which is paid to
Beneficiary but which might have been paid, in accordance with the
provisions of this paragraph, directly to Mortgagor or others, shall be
paid by Beneficiary to, or as directed by, Mortgagor and all other
payments to Beneficiary of losses covered by this paragraph shall be
applied by Beneficiary in accordance with the Charter Documents.
In the event of an actual or constructive total loss or a
compromised constructive total loss or requisition, all insurance
payments therefor shall be paid toBeneficiary (subject to the prior
rights of the First Mortgagee). Mortgagor shall not declare or agree
with underwriters that the Collateral Vessel is a constructive or
compromised, agreed or arranged constructive total loss without the prior
written consent of Beneficiary.
(c) In the event of an actual or constructive total loss of
the Collateral Vessel, Beneficiary shall (subject to the prior rights of
the First Mortgagee) retain out of the insurance payments received on
account of such loss, which shall become the sole property of Beneficiary
(subject to the prior rights of the First Mortgagee), any sum or sums
that shall be or become owing under the Charter Documents or this
Mortgage, 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 Section 26 hereinafter provided.
(d) Mortgagor will comply with and satisfy all of the
provisions of any applicable environmental, health and safety or other
law, regulation, proclamation or order including, without limitation,
those concerning financial responsibility for liabilities imposed on
Mortgagor or the Collateral Vessel with respect to pollution including,
without limitation, the U.S. Water Pollution Control Act, as amended, and
the U.S. Oil Pollution Act, as amended, 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 Collateral Vessel from time to time
is engaged in and the cargoes carried by it.
(e) In addition to, and except as otherwise expressly
provided in, this Section 15, Mortgagor shall maintain insurance with
respect to the Collateral Vessel in the amounts and types specified in
the Charter with respect to the vessel being leased by Mortgagor
thereunder.
(f) Mortgagor will reimburse Mortgagee and Beneficiary
within 3 business days after receipt of a demand therefor accompanied by
a reasonable description of the related expenditures, with interest at a
rate per annum equal to the Overdue Rate (as defined in the Charter) for
any and all expenditures which Mortgagee or Beneficiary may from time to
time make, lay out or expend in providing such protection in respect of
insurance, discharge of liens, taxes, dues, assessments, governmental
charges, fines and penalties lawfully imposed, repairs, attorneys' fees
and other matters as Mortgagor is obligated herein to provide, but fails
to provide. Such obligation of Mortgagor to reimburse Mortgagee and
Beneficiary shall be an additional indebtedness due from Mortgagor,
secured by this Mortgage, and shall be payable by Mortgagor on demand.
Mortgagee or Beneficiary, though privileged so to do, shall be under no
obligation to Mortgagor to make any such expenditures, nor shall the
making thereof relieve Mortgagor of any default in that respect.
16. INTENTIONALLY DELETED.
ARTICLE II
EVENTS OF DEFAULT AND REMEDIES
17. In case any Event of Default (as defined in the
Charter) shall occur and be continuing, then and in each and every such
case Mortgagee, for the benefit of Beneficiary, shall have the right to:
(a) Exercise all the rights and remedies in foreclosure and
otherwise given to mortgagees by the provisions of the Ship
Mortgage Act or any other jurisdiction where the Collateral Vessel
may be found;
(b) Bring suit at law, in equity or in admiralty, as it may
determine or be advised, to recover judgment for any and all
amounts due under the Charter Documents or otherwise hereunder, and
collect the same out of any and all property of Mortgagor whether
covered by this Mortgage or otherwise;
(c) Take the Collateral Vessel and any Collateral, wherever
it may be, without legal process and without being responsible for
loss or damage; and Mortgagor or any other person in possession
forthwith upon demand of Mortgagee shall surrender to Mortgagee
possession of the Collateral Vessel and any Collateral, as demanded
by Mortgagee, and Mortgagee may, without being responsible for loss
or damage, hold, lay up, lease, charter, operate or otherwise use
the Collateral Vessel and any Collateral for such time and upon
such terms as it may deem to be for its best advantage, accounting
only for the net profits, if any, arising from such use and
charging upon all receipts from such use or from the sale of the
Collateral Vessel and any Collateral by court proceedings or
pursuant to Subsection (d) next following, all costs, expenses,
charges, damages or losses by reason of such use; and if at any
time Mortgagee shall avail itself of the right herein given it to
take the Collateral Vessel and shall take it, Mortgagee shall have
the right to dock the Collateral Vessel for a reasonable time (not
to be less than 150 days) at any dock, pier or other premises of
Mortgagor without charge, or to dock it at any other place at the
cost and expense of Mortgagor;
(d) Without being responsible for loss or damage, sell the
Collateral Vessel and any Collateral at any place and at such time
as Mortgagee may specify and in such manner as Mortgagee or
Beneficiary may deem advisable free from any claim by Mortgagor in
admiralty, in equity, at law or by statute, after first giving
notice of the time and place of sale with a general description of
the property in the following manner (which Mortgagor acknowledges
and agrees is commercially reasonable in all respects):
(i) By publishing such notice for 10 consecutive days
in a daily newspaper of general circulation published in New
York City;
(ii) If the place of sale should not be New York City,
then also by publication of a similar notice in a daily
newspaper, if any, published at the place of sale; and
(iii) By sending a similar notice by registered mail to
Mortgagor on the day of first publication.
18. A sale of the Collateral Vessel or any Collateral made
in pursuance of this Mortgage, whether under the power of sale hereby
granted or any judicial proceedings, shall operate to divest all right,
title and interest of any nature whatsoever of Mortgagor therein and
thereto, and shall bar Mortgagor, its successors and assigns, and all
persons claiming by, through or under them. No purchaser shall be bound
to inquire whether notice has been given, or whether any Event of Default
(as defined in the Charter) has occurred, or as to the propriety of the
sale, or as to the application of the proceeds thereof. In case of such
sale, any purchaser who is the obligee of any Secured Obligations shall
be entitled, for the purpose of making settlement or payment for the
property purchased, to use and apply the amount of the Secured
Obligations owing to such purchaser in order that there may be credited
against the amount remaining due and unpaid thereon the sums payable out
of the net proceeds of such sale to the obligee of the Secured
Obligations after allowing for the costs and expense of sale and other
charges; and thereupon such purchaser shall be credited, on account of
such purchase price, with the net proceeds that shall have been so
credited upon the Secured Obligations. At such sale, the obligee of the
Secured Obligations may bid for and purchase such property, and upon
compliance with the terms of sale may hold, retain and dispose of such
property without further accountability therefor.
19. Mortgagee is hereby irrevocably appointed attorney-in-
fact of Mortgagor to execute and deliver to any purchaser aforesaid, and
is hereby vested with full power and authority to make, in the name and
in behalf of Mortgagor, a good conveyance of the title to the Collateral
Vessel or the Collateral. In the event of a sale of the Collateral
Vessel or any Collateral, under any power herein contained, Mortgagor
will, if and when required by Mortgagee, execute such form of conveyance
of the Collateral Vessel or any Collateral or similar document as
Mortgagee may direct or approve.
20. Mortgagee is hereby irrevocably appointed attorney-in-
fact of Mortgagor, in the name, place and stead of Mortgagor, to demand,
collect, receive, compromise and ▇▇▇ for, so far as may be permitted by
law, admiralty, equity or otherwise, all freights, hire, earnings,
issues, revenues, income and profits of the Collateral Vessel or any
Collateral, and all amounts due from underwriters under any insurance
thereon as payment of losses or as return premiums or otherwise, salvage
awards and recoveries, recoveries in general average or otherwise, and
all other sums due or to become due in respect of the Collateral Vessel
or any Collateral, or in respect of any insurance thereon from any person
whomsoever, and to make, give and execute in the name, place and stead of
Mortgagor acquittances, receipts, releases or other discharges for the
same, whether under seal or otherwise, and to endorse and accept in the
name, place and stead of Mortgagor all checks, notes, drafts, warrants,
agreements and all other instruments in writing with respect to the
foregoing.
21. Whenever any right to enter and take possession of the
Collateral Vessel or any Collateral accrues to Mortgagee, it may require
Mortgagor to deliver, and Mortgagor shall on demand, at its own cost and
expense, deliver, to Mortgagee the Collateral Vessel or such Collateral
as demanded. If any legal proceedings shall be taken to enforce any
right under this Mortgage, Mortgagee shall be entitled as a matter of
right to the appointment of a receiver of the Collateral Vessel or such
Collateral and the freights, hire, earnings, issues, revenues, income and
profits due or to become due and arising from the possession, use or
operation thereof.
22. Mortgagor authorizes and empowers Mortgagee or its
appointees or any of them to appear in the name, place and stead of
Mortgagor, its successors and assigns, in any court of any country or
nation of the world where a suit is pending against the Collateral Vessel
or any Collateral because of or on account of any alleged lien against
the Collateral Vessel or any Collateral from which the Collateral Vessel
or any Collateral has not been released and to take such proceedings as
to it as they or any of them may deem proper towards the defense of such
suit and the purchase or discharge of such lien, and all expenditures
made or incurred by them or any of them for the purpose of such defense,
purchase or discharge shall be a debt due from Mortgagor, its successors
and assigns, to Mortgagee, and shall be secured by the lien of this
Mortgage in like manner and extent as if the amount and description
thereof were written herein and shall be payable on demand. Mortgagee
shall notify Mortgagor of any circumstances permitting Mortgagee to take
action under this Section 22 promptly after becoming aware of such
circumstances.
23. Each and every power and remedy herein given to
Mortgagee shall be cumulative and shall be in addition to every other
power and remedy herein given or now or hereafter existing at law, in
equity, in admiralty, or by statute, and each and every power and remedy
whether herein given or otherwise existing may be exercised from time to
time and as often and in such order as may be deemed expedient by
Mortgagee, and the exercise or the beginning of the exercise of any power
or remedy shall not be construed to be a waiver of the right to exercise
at the same time or thereafter any other power or remedy. Unless
otherwise agreed to in writing by Mortgagee, no delay or omission by
Mortgagee or by the obligee of any Secured Obligations in the exercise of
any right or power or in the pursuance of any remedy accruing upon any
Event of Default (as defined in the Charter) shall impair any such right,
power or remedy or be construed to be a waiver of any such Event of
Default (as defined in the Charter) or to be an acquiescence therein; nor
shall the acceptance by Mortgagee of any security or of any payment of or
on account of any part of any Secured Obligations maturing after any
Event of Default (as defined in the Charter) or of any payment on account
of any past default be construed to be a waiver of any right to take
advantage of any future Event of Default (as defined in the Charter) or
of any past Event of Default (as defined in the Charter) not completely
cured thereby.
To the fullest extent that it may lawfully so agree,
Mortgagor covenants and agrees it shall not at any time insist upon,
claim, plead, or take the benefit or advantage of any appraisement,
valuation, stay, extension, moratorium, or redemption law now or
hereafter in force in order to prevent, delay or hinder the enforcement
of this Mortgage or the exercise by Mortgagee of any of the remedies set
forth in Section 17 hereof or the taking of possession of the Collateral
Vessel or any Collateral by any purchaser at any sale held pursuant to
this Mortgage; and Mortgagor, for itself and all who may claim by,
through or under it, as far as it or they now or hereafter lawfully may
do so, hereby waives the benefit of all such laws.
Nothing in this Article II and none of the actions or
omissions to act by Mortgagee contemplated by this Article II shall be
deemed a waiver by Mortgagee of the preferred status of the Mortgage nor
of any of the benefits, privileges or provisions given by the Ship
Mortgage Act, no provision hereof shall constitute a waiver of such
preferred status or of any of such benefits, privileges or provisions,
and in the event that any provision of this Mortgage should be, or should
be held by a court of competent jurisdiction to be, a waiver of or
otherwise prejudicial to such preferred status, then in such event such
provisions of this Mortgage should be and shall be deemed to be of no
force and effect.
24. If at any time after an Event of Default (as defined in
the Charter) and prior to the actual sale of the Collateral Vessel by
Mortgagee or prior to any foreclosure proceedings, Mortgagor offers to
cure completely all Events of Default (as defined in the Charter) and to
pay all expenses, advances and damages to Mortgagee consequent on such
Events of Default (as defined in the Charter), with interest at a rate
per annum equal to the Overdue Rate (as defined in the Charter), then
Mortgagee may accept such offer, but such action shall not affect any
subsequent Event of Default (as defined in the Charter) or impair any
rights consequent thereon.
25. In case Mortgagee shall have proceeded to enforce any
right, power or remedy under this Mortgage by foreclosure, entry or
otherwise, and such proceeding shall have been discontinued or abandoned
for any reason or shall have been determined adversely to Mortgagee, then
and in every such case Mortgagor and Mortgagee shall be restored to their
former positions and rights hereunder with respect to the property
subject or intended to be subject to this Mortgage, and all rights,
remedies and powers of Mortgagee shall continue as if no such proceedings
had been taken.
26. The proceeds of sale of the Collateral Vessel or any
Collateral and the net earnings of any charter operation or other use
thereof by Mortgagee under any of the powers herein specified and any and
all other moneys received by Mortgagee pursuant to or under the terms of
this Mortgage or in any proceedings hereunder, the application of which
has not elsewhere herein been specifically provided for, shall be applied
as provided in the Charter and in such order as set forth therein.
27. Until one or more Events of Default shall happen,
Mortgagor (a) shall be suffered and permitted to retain actual possession
and use of the Collateral Vessel and (b) shall have the right, from time
to time, in its discretion, and without application to Mortgagee or
Beneficiary, and without obtaining a release thereof by Mortgagee or
Beneficiary, to dispose of, free from the lien hereof, any boilers,
engines, machinery, bowsprits, masts, spars, rigging, boats, anchors,
cables, chains, tackle, apparel, furniture, fittings or equipment or any
other appurtenances to the Collateral Vessel that are no longer useful,
necessary, profitable or advantageous in the operation of such Collateral
Vessel and that have an aggregate replacement cost not exceeding
$10,000,000, first or simultaneously replacing the same by new boilers,
engines, machinery, bowsprits, masts, spars, rigging, boats, anchors,
chains, cables, tackle, apparel, furniture, fittings, equipment or other
appurtenances of substantially equal value, utility and useful life
(assuming such replaced items were in the working order, condition and
state of repair required under the terms of this Mortgage) which shall
forthwith become subject to the lien and other terms and conditions of
this Mortgage as a preferred mortgage thereon.
ARTICLE III
SECOND LIEN PROVISIONS
28. Notwithstanding anything contained herein to the
contrary, this Mortgage is and shall remain secondary and subordinate to
the First Preferred Mortgage (to the extent that such remains in effect).
By its acceptance of the benefits hereof, so long as the First Preferred
Mortgage remains a valid lien against the Collateral Vessel, Mortgagee
acknowledges, stipulates and agrees as follows:
(a) all the terms and provisions of this Mortgage are
unconditionally subordinate to the terms and conditions of the
First Preferred Mortgage (to the extent that such remains in
effect) including, without limitation, the provisions regarding the
application and use of insurance proceeds;
(b) only so long as the First Preferred Mortgage
remains in effect, proceeds from the sale of the Collateral
Vessel, rents and profits and any other sums attributable to or
arising from the use, sale, charter, refinancing or taking of the
Collateral Vessel, if collected by or for the holder of this
Mortgage, shall be applied first to the payment of any amounts
secured by the First Preferred Mortgage (if and only to the extent
that such First Preferred Mortgage extends to such proceeds), in
such order as is prescribed in the First Mortgage, prior to being
applied to any sums secured by this Mortgage; and
(c) only so long as the First Preferred Mortgage
remains in effect, written notice of default under this Mortgage
and written notice of the commencement of any action (whether
judicial or pursuant to a power of sale) to foreclose or otherwise
enforce this Mortgage shall be given to the First Mortgagee at the
address indicated in the First Preferred Mortgage, unless Mortgagee
is otherwise notified by the First Mortgagee of a change in its
address, upon the later to occur of Mortgagee s delivery of such
notice to Mortgagor or immediately after the occurrence of any such
default or commencement.
ARTICLE IV
SUNDRY PROVISIONS
29. For the purpose of this Mortgage and the endorsement of
this Mortgage on the documents of the Collateral Vessel, the total amount
of the Secured Obligations is $60,000,000.00 plus interest, fees and
other expenses and performance of mortgage covenants. The date of
maturity is February 28, 2006 and the discharge amount is the same as the
total amount.
30. All the covenants, representations, warranties,
promises, stipulations and agreements of Mortgagor in this Mortgage
contained shall bind Mortgagor and its successors and assigns and shall
inure to the benefit of Mortgagee, Beneficiary and their respective
successors and assigns and shall survive termination of this Mortgage.
Notwithstanding the foregoing, Mortgagor s rights and obligations
hereunder may not be assigned without the prior written consent of
Mortgagee and Beneficiary. This Mortgage may be assigned by Mortgagee
without the consent of Mortgagor or any person or entity other than
Beneficiary (whose consent shall be required for any such assignment).
Mortgagee agrees to provide Mortgagor with notice of any such assignment
by Mortgagee; provided, however, that failure to provide such notice
shall in no way affect the validity or effectiveness of such assignment.
31. Wherever and whenever herein any right, power or
authority is granted or given to Mortgagee, such right, power or
authority may be exercised in all cases by Mortgagee or such agent or
agents as it may appoint, and the act or acts of such agent or agents
when taken shall constitute the act of Mortgagee hereunder.
IN WITNESS WHEREOF, Mortgagor has executed this Mortgage by
its officer thereunto duly authorized the day and year first above
written.
READING & ▇▇▇▇▇ DRILLING CO.
By:
Name:
Title:
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ACKNOWLEDGMENT
STATE OF )
) ss.
COUNTY OF )
On this the _____ day of November, 1995, before me came
_________________________ to me known, who, being by me duly sworn, did
d e p o s e a n d s a y t h a t h e r e s i d e s a t
________________________________________________________; that he is the
___________________ of Reading & ▇▇▇▇▇ Drilling Co., the corporation
described in and which executed the foregoing mortgage; that he knows the
seal of said corporation; that the seal affixed to said mortgage is such
corporate seal; that it was so affixed by order of the Board of Directors
of said corporation; and that he signed his name to said mortgage by like
order and he acknowledged to me that he executed said mortgage as
_____________________of said corporation, and that the same is the free
and voluntary act and deed of said corporation, and of himself as such
officer for the uses and purposes therein expressed.
My Commission Expires: Notary Public
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Exhibit A
Copy of Bareboat Charter
SEE ATTACHED
-----------------------------------------------------------------------------
Exhibit B
Amortization Schedule
SEE ATTACHED
-----------------------------------------------------------------------------
EXHIBIT C-2
FIRST PREFERRED MORTGAGE
FIRST PREFERRED MORTGAGE ("Mortgage"), made the 28th day of
November, 1995, by READING & ▇▇▇▇▇ DRILLING CO., an Oklahoma corporation
("Mortgagor"), to WILMINGTON TRUST COMPANY, a Delaware banking
corporation, not in its individual capacity, but solely as Trustee (in
such capacity, "Mortgagee") for the benefit of DEEP SEA INVESTORS,
L.L.C., a Delaware limited liability company ("Beneficiary").
WHEREAS:
A. Mortgagor is the sole owner of the whole of that certain
vessel known as the "▇▇▇▇▇▇▇▇ ▇▇▇▇", official number 601699, duly
documented in the name of Mortgagor under the laws and flag of the United
States of America (the "Collateral Vessel").
B. This Mortgage is being executed and delivered by Mortgagor
pursuant to that certain Memorandum of Agreement (the "MOA") dated of
even date herewith by and between Beneficiary and Reading and ▇▇▇▇▇,
Inc., an Oklahoma corporation ("R&B, Inc."), a subsidiary of Mortgagor s
parent corporation, Reading & ▇▇▇▇▇ Corporation, a Delaware corporation
(the "Parent"). Under the MOA, R&B, Inc. agreed to sell a certain other
vessel to Beneficiary and Beneficiary agreed to lease that vessel to
Mortgagor under the terms and subject to the conditions set forth in the
Bareboat Charter (the "Charter") dated of even date herewith by and
between Mortgagor and Beneficiary (the MOA, the Charter, this Mortgage
and all other documents executed in connection therewith, together with
any and all amendments, supplements, renewals or substitutions of all or
any of such documents, are sometimes referred to collectively herein as
the "Charter Documents").
C. Beneficiary requires that Mortgagor execute and deliver this
Mortgage to secure the prompt and complete payment, observance and
performance of all representations, warranties, covenants, duties,
liabilities and obligations of Mortgagor under the Charter Documents (the
"Secured Obligations").
D. The Board of Directors of Mortgagor having determined that
Mortgagor will derive substantial benefit, directly or indirectly, from
the sale and lease transaction among R&B, Inc., Mortgagor and
Beneficiary, Mortgagor wishes to execute and deliver this Mortgage as
required by Beneficiary.
NOW, THEREFORE, THIS MORTGAGE WITNESSETH:
That in consideration of the premises and of other good and
valuable consideration, the receipt whereof is hereby acknowledged, and
in order to secure the payment, observance and performance of the
Secured Obligations according to the terms thereof, and the payment of
all such other sums as may hereafter become secured by this Mortgage in
accordance with the terms hereof, and to secure the performance and ob-
▇▇▇▇▇▇▇▇ of and compliance with the representations, warranties,
covenants, terms and conditions herein and in the Charter Documents
contained, Mortgagor does by these presents GRANT, CONVEY, MORTGAGE,
PLEDGE, ASSIGN, TRANSFER, SET OVER and CONFIRM unto the Mortgagee, its
successors and assigns, for the benefit of Beneficiary, the whole of the
Collateral Vessel, together with all of the boilers, engines, machinery,
masts, spars, rigging, boats, anchors, chains, cables, tackle, apparel,
furniture, fittings and equipment (but excluding leased equipment owned
by third parties) and all other appurtenances to the Collateral Vessel
appertaining or belonging, whether now owned or hereafter acquired,
whether on board or not and all additions, substitutions, improvements
and replacements hereafter made in or to the Collateral Vessel, or any
part thereof, or in or to the equipment and appurtenances aforesaid and
all products, rentals and proceeds (including, but not limited to,
insurance proceeds) of any of the foregoing (collectively, the
"Collateral").
TO HAVE AND TO HOLD the same unto the Mortgagee, its
successors and assigns, forever, upon the terms herein set forth for the
enforcement of the payment and performance of the Secured Obligations and
to secure the performance and observance of and compliance with the
covenants, terms and conditions in this Mortgage and in the Charter
Documents.
PROVIDED, ONLY, and the conditions of these presents are
such, that if the Secured Obligations shall be paid, performed and
discharged as and when the same shall become payable or are to be
performed in accordance with the terms of this Mortgage and of the
Charter Documents, and if all other such sums as may hereafter become
secured by this Mortgage are paid in accordance with the terms hereof,
and if Mortgagor shall perform, observe and comply with all the
covenants, terms and conditions in the Charter Documents and in this
Mortgage, expressed or implied, to be performed, observed or complied
with by and on the part of Mortgagor, and the Charter Documents shall
have terminated pursuant to the terms thereof, then these presents and
the rights hereunder shall cease, determine and be void, otherwise to be
and remain in full force and effect.
A copy of the Charter is annexed hereto and made a part
hereof as Exhibit A.
IT IS HEREBY COVENANTED, DECLARED AND AGREED that the
property above described is to be held subject to the further covenants,
conditions, provisions, terms and uses hereinafter set forth.
ARTICLE I.
COVENANTS OF MORTGAGOR
Mortgagor covenants and agrees with Mortgagee as follows:
1. Mortgagor will observe, perform and comply with each
and every one of the covenants, terms and conditions herein, expressed or
implied, on its part to be observed, performed or complied with.
2. Mortgagor was duly organized and is now existing as a
corporation under the laws of the State of Oklahoma and shall so remain
during the life of this Mortgage; it is now, and shall remain during the
life of this Mortgage, a citizen of the United States as defined in
Section 2 of the Shipping Act, 1916, as at any time amended; it is duly
authorized to mortgage the Collateral Vessel and the Collateral; all
corporate action necessary and required by law for the execution and
delivery of this Mortgage, and the good faith affidavit filed herewith,
has been duly and effectively taken; and the Secured Obligations will be
the valid and enforceable obligations of Mortgagor in accordance with
their terms.
3. Mortgagor lawfully owns and is lawfully possessed of,
and has good title to, the Collateral Vessel and the Collateral free from
(i) any security interest, lien, charge or encumbrance whatsoever, other
than, with respect to the Collateral Vessel, for current crew s wages,
general average and salvage, in each case, incurred in the ordinary
course of business and that are not yet overdue or (ii) any commitment to
make the Collateral Vessel available for charter, other than drilling
contracts that comply with the terms of this Mortgage and the other
Charter Documents and charters or subcharters (whether demise or
otherwise) to the Parent and its Subsidiaries (as defined in the
Charter), or (iii) sale or use by any governmental authority, and it will
warrant and defend the title and possession thereto and to every part
thereof for the benefit of the Mortgagee against the claims and demands
of all persons whomsoever. This Mortgage constitutes the legal, valid
and binding obligation of Mortgagor, is enforceable against Mortgagor in
accordance with its terms, and when filed of record with the U.S. Coast
Guard National Vessel Documentation Center, will create a valid and
perfected first preferred mortgage upon, security interest in and lien on
the Collateral Vessel and the Collateral.
4. Mortgagor will comply with and satisfy all the
provisions of Chapter 313 of Title 46, United States Code, as at any time
amended (the "Ship Mortgage Act"), and shall execute, deliver, file
and/or record, or cause the execution and delivery and the filing and/or
recordation of, such documents or instruments, and shall take or cause to
be taken such actions as may be necessary or desirable in the opinion of
the Beneficiary or the Mortgagee, in order to establish and maintain this
Mortgage as a valid and perfected first preferred mortgage upon the
Collateral Vessel and upon all renewals, improvements and replacements
made in or to the same.
5. Mortgagor will not cause or permit the Collateral
Vessel to be operated in any manner contrary to law, will not abandon the
Collateral Vessel in a foreign port, will not engage in any unlawful
trade or violate any law or carry any cargo that will expose the
Collateral Vessel or the Collateral to penalty, forfeiture or capture,
and will not do, or suffer or permit to be done, anything which can or
may injuriously or adversely affect the registration or enrollment of the
Collateral Vessel under the laws and regulations of the United States of
America and will at all times keep the Collateral Vessel duly documented
thereunder. Neither Mortgagor nor the Collateral Vessel is the subject
of any pending or threatened environmental enforcement proceedings or
investigations, nor any other pending or threatened proceedings or
investigations with respect to any other environmental, health or safety
matters. Mortgagor is in compliance with all applicable laws and
regulations with respect to the Collateral Vessel or otherwise relating
to pollution control and other environmental, health or safety matters in
all jurisdictions in which Mortgagor is doing business. Mortgagor shall
assume all responsibility for the control and removal of, and hold
Mortgagee, Beneficiary and every member of the Owner Group (as defined in
the Charter) harmless from loss or damage, liabilities or claims arising
from, directly or indirectly, pollution or contamination by any liquid or
non-liquid waste material whatsoever found that is discharged, spilled or
leaked from the Collateral Vessel, and for noncompliance with
environmental, health and safety laws. To the extent that any law,
regulation or governmental entity acting within its jurisdiction imposes
on Mortgagee, Beneficiary or any member of the Owner Group (as defined in
the Charter) liability for any such pollution, notwithstanding such
imposition of direct liability, Mortgagor shall have designated Mortgagee
(both in its individual capacity and as Trustee), Beneficiary and each
member of the Owner Group (as defined in the Charter) as an additional
insured under its insurance policies and Mortgagor shall hold Mortgagee
(both in its individual capacity and as Trustee), Beneficiary and each
member of the Owner Group (as defined in the Charter) harmless from such
loss, damage or claims and reimburse any of Mortgagee (both in its
individual capacity and as Trustee), Beneficiary or any member of the
Owner Group (as defined in the Charter) for any amounts it may be
required to pay. This indemnity is valid irrespective of the negligence
or fault, whether sole, joint, active or passive of the indemnified party
and whether predicated on strict liability, statutory duty, contractual
indemnity or any other theory of liability of the indemnified party.
6. Mortgagor will pay and discharge when due and payable,
from time to time, all taxes, assessments, governmental charges, fines
and penalties lawfully imposed on the Collateral Vessel or the Collateral
or any income therefrom.
7. Neither Mortgagor, any charterer, the Master of the
Collateral Vessel or any other person has or shall have any right, power
or authority to create, incur or permit to be placed or imposed or
continued upon the Collateral Vessel or the Collateral, any lien
whatsoever other than this Mortgage and liens for current crew's wages,
general average, and salvage, in each case, incurred in the ordinary
course of business and that are not yet overdue.
8. Mortgagor will place, and at all times and places will
retain, a properly certified copy of this Mortgage on board the
Collateral Vessel with her papers and will cause such certified copy and
such papers to be exhibited to any and all persons having business
therewith which might give rise to any lien thereon other than liens for
current crew's wages, general average and salvage, in each case, incurred
in the ordinary course of business and that are not yet overdue, and to
any representative of Mortgagee or Beneficiary; and will place and keep
prominently displayed in the chart room and in the Master's cabin of the
Collateral Vessel a framed printed notice in plain type of such size that
the paragraph of reading matter shall cover a space not less than 6
inches wide by 9 inches high, reading as follows:
"NOTICE OF MORTGAGE"
This vessel is covered by a First Preferred
Mortgage to Wilmington Trust Company, Trustee, under
authority of Chapter 313 of Title 46, United States
Code, as at any time amended. Under the terms of said
Mortgage, neither the owner, any charterer, nor the
Master of this vessel has any right, power or authority
to create, incur or permit to be imposed upon this
vessel any lien whatsoever other than for current
crew's wages, general average and salvage, in each
case, incurred in the ordinary course of business and
that are not yet overdue."
9. Except for the lien of this Mortgage and of the First
Preferred Mortgage, Mortgagor will not create or suffer to be continued
any security interest, lien, encumbrance or charge on the Collateral
Vessel or the Collateral and in due course and in any event within 30
days after the same becomes due and payable will pay or cause to be
discharged or make adequate provision for the payment or discharge of all
claims or demands which, if not paid or discharged, might result in the
creation of such a security interest, lien, encumbrance or charge and
will cause the Collateral Vessel or the Collateral to be released or
discharged from each such security interest, lien, encumbrance or charge
therefor; provided, however, that the undertaking of such corrective
action shall in no event be deemed a cure of any breach of this Mortgage
or be deemed a waiver by Mortgagee of any of its rights or remedies
hereunder with respect thereto.
10. If a libel is filed against the Collateral Vessel or if
the Collateral Vessel is otherwise attached, levied upon, or taken into
custody or detained by any proceeding in any court or tribunal or by any
Government or other authority, Mortgagor will promptly (i) notify
Mortgagee thereof by telecopier, confirmed by letter, at its office at
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇, Attention: Corporate Trust Administration, Telecopier No. (302)
651-8882 and (ii) notify Beneficiary thereof by telecopier, confirmed by
letter, at its office c/▇ ▇▇▇▇▇▇ Financial, Inc., Attention: Legal
Department, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Telecopier No.
(▇▇▇) ▇▇▇-▇▇▇▇, and within 15 days will cause such Collateral Vessel to
be released and all valid liens thereon other than this Mortgage to be
discharged, and will promptly notify Mortgagee and Beneficiary thereof in
the manner aforesaid; provided, however, that the undertaking of such
corrective action shall in no event be deemed a cure of any breach of
this Mortgage or be deemed a waiver by Mortgagee or Beneficiary of any of
their rights or remedies hereunder with respect thereto.
11. Mortgagor hereby acknowledges and confirms as of the
Closing Date (as defined in the MOA) that (a) no loss, constructive loss
or requisitioning for use by any governmental authority of the Collateral
Vessel (and, where applicable, the Collateral) has occurred; and (b) the
Collateral Vessel (and, where applicable, the Collateral) is tight,
staunch, strong and well and sufficiently tackled, appareled, furnished
and equipped and in every respect seaworthy, in accordance with
specifications, in good working order, condition and repair (normal wear
and tear excepted) and without defect in condition, design, operation or
fitness for use. Mortgagor will at all times and without cost or expense
to Mortgagee or Beneficiary maintain and preserve, or cause to be
maintained and preserved, the Collateral Vessel (and, where applicable,
the Collateral) in good running order and repair, so that the Collateral
Vessel shall be, at all times, tight, staunch, strong and well and
sufficiently tackled, appareled, furnished, equipped and in every respect
seaworthy and in good operating condition and in accordance with
specifications; and will keep the Collateral Vessel (and, where
applicable, the Collateral) in such condition as will entitle the
Collateral Vessel to the highest classification and rating for vessels of
the same age and type by the American Bureau of Shipping or other
classification society of like standing, and annually will furnish to
Mortgagee and Beneficiary a certificate by such Bureau or classification
society (if applicable) that such classification is maintained. The
Collateral Vessel shall, and Mortgagor covenants that it will, at all
times comply with all applicable laws, treaties and conventions of the
United States of America, and rules and regulations issued thereunder,
and shall have on board as and when required thereby valid certificates
showing compliance therewith. Mortgagor will not make, or permit to be
made, any change in the structure, character or type of, or any
modifications or improvements to, the Collateral Vessel which diminish
the value, utility, useful life or seaworthiness of the Collateral Vessel
without first receiving the written approval thereof by Mortgagee and
Beneficiary (such approval not to be unreasonably withheld) and, upon
request, shall promptly provide Mortgagee and Beneficiary with all
designs, drawings, plans and specifications relating to any such changes,
modifications or improvements. Mortgagor will notify Mortgagee and
Beneficiary of (i) any damage to the Collateral Vessel requiring repairs
reasonably expected to cost $1,000,000 or more promptly following the
occurrence thereof and (ii) any changes, modifications or improvements to
the Collateral Vessel reasonably expected to cost $5,000,000 or more
prior to commencing such changes, modifications or improvements.
Mortgagor agrees to give Mortgagee and Beneficiary at least
10 days notice of the actual date and place of any survey or drydocking
in order that Mortgagee and Beneficiary may have representatives present
if desired. Mortgagor agrees that at Mortgagee's or Beneficiary's
request it will satisfy the Mortgagee and the Beneficiary that the
expense of such survey or drydocking or work to be done thereat is within
Mortgagor's financial ability and will not result in a claim or lien
against the Collateral Vessel or the Collateral in violation of the
provisions of this Mortgage.
12. Mortgagor at all times will afford Mortgagee and
Beneficiary or their authorized representatives full and complete access
to the Collateral Vessel for the purpose of inspecting the same and the
Collateral Vessel s cargo and papers and, at the request of Mortgagee or
Beneficiary, Mortgagor will deliver for inspection copies of any and all
contracts and documents relating to the Collateral Vessel, whether on
board or not.
13. Mortgagor will not transfer or change the flag or port
of documentation of the Collateral Vessel without the written consent of
Mortgagee and Beneficiary first had and obtained, and any such written
consent to any one transfer or change of flag or port of documentation
shall not be construed to be a waiver of this provision with respect to
any subsequent proposed transfer or change of flag or port of
documentation.
14. Mortgagor will not sell, mortgage, transfer, demise or
other charter or change the management of the Collateral Vessel or the
Collateral, except, with respect to the Collateral Vessel, drilling
contracts that comply with the terms of this Mortgage and the other
Charter Documents and charters or subcharters (whether demise or
otherwise) to the Parent and its Subsidiaries (as defined in the
Charter), without the written consent of Mortgagee and Beneficiary first
had and obtained, and any such written consent to any one sale, mortgage,
transfer, demise or other charter or change shall not be construed to be
a waiver of this provision with respect to any subsequent proposed sale,
mortgage, transfer, demise or other charter or change. Any such sale,
mortgage, transfer or charter of the Collateral Vessel or the Collateral
(including any sale or transfer to the Parent or any Subsidiary (as
defined in the Charter) of the Parent) shall be subject to the provisions
of this Mortgage and the lien it creates. Mortgagor will not charter the
Collateral Vessel to, or permit the Collateral Vessel to serve under any
contract with, a person included within the definition of " designated
foreign country" or "national" of a "designated foreign country" in the
Foreign Assets Control Regulations or Cuban Assets Control Regulations of
the United States Treasury Department, 31 C.F.R., Chapter V, as amended,
or any person included within the definition of "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, within the meaning of said Regulations or of any
regulation, interpretation or ruling issued thereunder.
15. (a) Mortgagor will, at its own expense, when and so
long as this Mortgage or any Secured Obligations shall be outstanding,
insure the Collateral Vessel and keep her insured, in lawful money of the
United States, for not less than the full fair market value thereof. The
Collateral Vessel 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, and shall be maintained in the broadest forms available in
the American or British insurance markets for vessels of the same type as
the Collateral Vessel. In addition, Mortgagor shall, at its own expense,
furnish to Beneficiary a mortgagee's single interest policy (or shall
cause the hull and machine insurance on the Collateral Vessel to be
endorsed to afford breach of warranty coverage for the benefit of
Beneficiary and the members of the Owner Group (as defined in the
Charter)) providing coverage in an amount equal to at least the full fair
market value of the Collateral Vessel. Such mortgagee's interest
insurance shall be maintained in the broadest form available in the
American or British markets for vessels of the same type as the
Collateral Vessel through underwriters acceptable to Beneficiary. In
addition, Mortgagor shall maintain protection and indemnity or equivalent
insurance, through underwriters or associations reasonably acceptable to
Beneficiary in an amount not less than the fair market value of the
Collateral Vessel, provided, however, that war risk protection and
indemnity insurance shall be in an amount not less than the amount of
insurance against total loss. The Collateral Vessel shall not carry any
cargoes or proceed into an area then excluded by trading warranties under
its marine or war risk policies (including expropriation, protection and
indemnity) without obtaining all necessary additional coverage,
satisfactory in form and substance, and satisfactory evidence of which
shall be promptly furnished, to Beneficiary.
(b) The policy or policies of insurance described in this
Section 15 shall be issued by responsible underwriters reasonably
acceptable to Beneficiary in all respects, shall contain conditions,
terms, stipulations and insuring covenants reasonably satisfactory to
Beneficiary in all respects (including, but not limited to, waivers of
subrogation rights of the insurers against the insureds and waivers of
any rights of the insurers to any set off, counterclaim or deduction,
whether by attachment or otherwise) and shall be kept in full force and
effect by Mortgagor so long as this Mortgage or any Secured Obligations
shall be outstanding. All such policies, binders and other interim
insurance contracts shall be executed and issued in the name of Mortgagor
and shall provide that loss be payable to Beneficiary for distribution by
it to itself and Mortgagor, as their interests may appear. Copies of all
such policies, binders and other interim insurance contracts shall be
deposited with Beneficiary. Such insurance policies shall provide for at
least 30 days' prior written notice to be given to Beneficiary by the
underwriters or association in the event of (i) cancellation (or at least
7 days prior written notice, with respect to war risk coverage) or (ii)
the failure of Mortgagor to pay any premium or call which would suspend
coverage under the policy or the payment of a claim thereunder.
Mortgagor shall furnish to Beneficiary annually, not later than thirty
days prior to expiration, a detailed report signed by a firm of marine
insurance brokers satisfactory to Beneficiary as to the insurance
maintained in respect of the Collateral Vessel, as to their opinion as to
the adequacy thereof and as to compliance with the provisions of this
Section 15.
Unless otherwise required by Beneficiary by notice to the
underwriters, although the following insurance is payable to Beneficiary,
(i) any loss under any insurance on the Collateral Vessel with respect to
protection and indemnity risks may be paid directly to Mortgagor to
reimburse it for any loss, damage or expense actually incurred by it and
covered by such insurance or to the person to whom any liability covered
by such insurance has been actually incurred, and (ii) in the case of any
loss (other than a loss covered by clause (i) above or by the next
paragraph of this Section) under any insurance with respect to the
Collateral Vessel involving any damage to such Collateral Vessel, the
underwriters may pay directly for the repair, salvage or other charges
involved or, if Mortgagor shall have first fully repaired the damage or
paid all of the salvage or other charges, may pay Mortgagor as
reimbursement therefor; provided, however, that if such damage involves a
loss in excess of $1,000,000, the underwriters shall not make such
payment without first obtaining the written consent thereto of
Beneficiary. Any loss covered by this paragraph which is paid to
Beneficiary but which might have been paid, in accordance with the
provisions of this paragraph, directly to Mortgagor or others, shall be
paid by Beneficiary to, or as directed by, Mortgagor and all other
payments to Beneficiary of losses covered by this paragraph shall be
applied by Beneficiary in accordance with the Charter Documents.
In the event of an actual or constructive total loss or a
compromised constructive total loss or requisition, all insurance
payments therefor shall be paid to Beneficiary. Mortgagor shall not
declare or agree with underwriters that the Collateral Vessel is a
constructive or compromised, agreed or arranged constructive total loss
without the prior written consent of Beneficiary.
(c) In the event of an actual or constructive total loss of
the Collateral Vessel, shall retain out of the insurance payments
received on account of such loss, which shall become the sole property of
Beneficiary, any sum or sums that shall be or become owing under the
Charter Documents or this Mortgage, 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 Section 26
hereinafter provided.
(d) Mortgagor will comply with and satisfy all of the
provisions of any applicable environmental, health and safety or other
law, regulation, proclamation or order including, without limitation,
those concerning financial responsibility for liabilities imposed on
Mortgagor or the Collateral Vessel with respect to pollution including,
without limitation, the U.S. Water Pollution Control Act, as amended, and
the U.S. Oil Pollution Act, as amended, 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 Collateral Vessel from time to time
is engaged in and the cargoes carried by it.
(e) In addition to, and except as otherwise expressly
provided in, this Section 15, Mortgagor shall maintain insurance with
respect to the Collateral Vessel in the amounts and types specified in
the Charter with respect to the vessel being leased by Mortgagor
thereunder.
(f) Mortgagor will reimburse Mortgagee and Beneficiary
within 3 business days after receipt of a demand therefor accompanied by
a reasonable description of the related expenditures, with interest at a
rate per annum equal to the Overdue Rate (as defined in the Charter) for
any and all expenditures which Mortgagee or Beneficiary may from time to
time make, lay out or expend in providing such protection in respect of
insurance, discharge of liens, taxes, dues, assessments, governmental
charges, fines and penalties lawfully imposed, repairs, attorneys' fees
and other matters as Mortgagor is obligated herein to provide, but fails
to provide. Such obligation of Mortgagor to reimburse Mortgagee and
Beneficiary shall be an additional indebtedness due from Mortgagor,
secured by this Mortgage, and shall be payable by Mortgagor on demand.
Mortgagee or Beneficiary, though privileged so to do, shall be under no
obligation to Mortgagor to make any such expenditures, nor shall the
making thereof relieve Mortgagor of any default in that respect.
16. INTENTIONALLY DELETED.
ARTICLE II
EVENTS OF DEFAULT AND REMEDIES
17. In case any Event of Default (as defined in the
Charter) shall occur and be continuing, then and in each and every such
case Mortgagee, for the benefit of Beneficiary, shall have the right to:
(a) Exercise all the rights and remedies in foreclosure and
otherwise given to mortgagees by the provisions of the Ship
Mortgage Act or any other jurisdiction where the Collateral Vessel
may be found;
(b) Bring suit at law, in equity or in admiralty, as it may
determine or be advised, to recover judgment for any and all
amounts due under the Charter Documents or otherwise hereunder, and
collect the same out of any and all property of Mortgagor whether
covered by this Mortgage or otherwise;
(c) Take the Collateral Vessel and any Collateral, wherever
it may be, without legal process and without being responsible for
loss or damage; and Mortgagor or any other person in possession
forthwith upon demand of Mortgagee shall surrender to Mortgagee
possession of the Collateral Vessel and any Collateral, as demanded
by Mortgagee, and Mortgagee may, without being responsible for loss
or damage, hold, lay up, lease, charter, operate or otherwise use
the Collateral Vessel and any Collateral for such time and upon
such terms as it may deem to be for its best advantage, accounting
only for the net profits, if any, arising from such use and
charging upon all receipts from such use or from the sale of the
Collateral Vessel and any Collateral by court proceedings or
pursuant to Subsection (d) next following, all costs, expenses,
charges, damages or losses by reason of such use; and if at any
time Mortgagee shall avail itself of the right herein given it to
take the Collateral Vessel and shall take it, Mortgagee shall have
the right to dock the Collateral Vessel for a reasonable time (not
to be less than 150 days) at any dock, pier or other premises of
Mortgagor without charge, or to dock it at any other place at the
cost and expense of Mortgagor;
(d) Without being responsible for loss or damage, sell the
Collateral Vessel and any Collateral at any place and at such time
as Mortgagee may specify and in such manner as Mortgagee or
Beneficiary may deem advisable free from any claim by Mortgagor in
admiralty, in equity, at law or by statute, after first giving
notice of the time and place of sale with a general description of
the property in the following manner (which Mortgagor acknowledges
and agrees is commercially reasonable in all respects):
(i) By publishing such notice for 10 consecutive days
in a daily newspaper of general circulation published in New
York City;
(ii) If the place of sale should not be New York City,
then also by publication of a similar notice in a daily
newspaper, if any, published at the place of sale; and
(iii) By sending a similar notice by registered mail to
Mortgagor on the day of first publication.
18. A sale of the Collateral Vessel or any Collateral made
in pursuance of this Mortgage, whether under the power of sale hereby
granted or any judicial proceedings, shall operate to divest all right,
title and interest of any nature whatsoever of Mortgagor therein and
thereto, and shall bar Mortgagor, its successors and assigns, and all
persons claiming by, through or under them. No purchaser shall be bound
to inquire whether notice has been given, or whether any Event of Default
(as defined in the Charter) has occurred, or as to the propriety of the
sale, or as to the application of the proceeds thereof. In case of such
sale, any purchaser who is the obligee of any Secured Obligations shall
be entitled, for the purpose of making settlement or payment for the
property purchased, to use and apply the amount of the Secured
Obligations owing to such purchaser in order that there may be credited
against the amount remaining due and unpaid thereon the sums payable out
of the net proceeds of such sale to the obligee of the Secured
Obligations after allowing for the costs and expense of sale and other
charges; and thereupon such purchaser shall be credited, on account of
such purchase price, with the net proceeds that shall have been so
credited upon the Secured Obligations. At such sale, the obligee of the
Secured Obligations may bid for and purchase such property, and upon
compliance with the terms of sale may hold, retain and dispose of such
property without further accountability therefor.
19. Mortgagee is hereby irrevocably appointed attorney-in-
fact of Mortgagor to execute and deliver to any purchaser aforesaid, and
is hereby vested with full power and authority to make, in the name and
in behalf of Mortgagor, a good conveyance of the title to the Collateral
Vessel or the Collateral. In the event of a sale of the Collateral
Vessel or any Collateral, under any power herein contained, Mortgagor
will, if and when required by Mortgagee, execute such form of conveyance
of the Collateral Vessel or any Collateral or similar document as
Mortgagee may direct or approve.
20. Mortgagee is hereby irrevocably appointed attorney-in-
fact of Mortgagor, in the name, place and stead of Mortgagor, to demand,
collect, receive, compromise and ▇▇▇ for, so far as may be permitted by
law, admiralty, equity or otherwise, all freights, hire, earnings,
issues, revenues, income and profits of the Collateral Vessel or any
Collateral, and all amounts due from underwriters under any insurance
thereon as payment of losses or as return premiums or otherwise, salvage
awards and recoveries, recoveries in general average or otherwise, and
all other sums due or to become due in respect of the Collateral Vessel
or any Collateral, or in respect of any insurance thereon from any person
whomsoever, and to make, give and execute in the name, place and stead of
Mortgagor acquittances, receipts, releases or other discharges for the
same, whether under seal or otherwise, and to endorse and accept in the
name, place and stead of Mortgagor all checks, notes, drafts, warrants,
agreements and all other instruments in writing with respect to the
foregoing.
21. Whenever any right to enter and take possession of the
Collateral Vessel or any Collateral accrues to Mortgagee, it may require
Mortgagor to deliver, and Mortgagor shall on demand, at its own cost and
expense, deliver, to Mortgagee the Collateral Vessel or such Collateral
as demanded. If any legal proceedings shall be taken to enforce any
right under this Mortgage, Mortgagee shall be entitled as a matter of
right to the appointment of a receiver of the Collateral Vessel or such
Collateral and the freights, hire, earnings, issues, revenues, income and
profits due or to become due and arising from the possession, use or
operation thereof.
22. Mortgagor authorizes and empowers Mortgagee or its
appointees or any of them to appear in the name, place and stead of
Mortgagor, its successors and assigns, in any court of any country or
nation of the world where a suit is pending against the Collateral Vessel
or any Collateral because of or on account of any alleged lien against
the Collateral Vessel or any Collateral from which the Collateral Vessel
or any Collateral has not been released and to take such proceedings as
to it as they or any of them may deem proper towards the defense of such
suit and the purchase or discharge of such lien, and all expenditures
made or incurred by them or any of them for the purpose of such defense,
purchase or discharge shall be a debt due from Mortgagor, its successors
and assigns, to Mortgagee, and shall be secured by the lien of this
Mortgage in like manner and extent as if the amount and description
thereof were written herein and shall be payable on demand. Mortgagee
shall notify Mortgagor of any circumstances permitting Mortgagee to take
action under this Section 22 promptly after becoming aware of such
circumstances.
23. Each and every power and remedy herein given to
Mortgagee shall be cumulative and shall be in addition to every other
power and remedy herein given or now or hereafter existing at law, in
equity, in admiralty, or by statute, and each and every power and remedy
whether herein given or otherwise existing may be exercised from time to
time and as often and in such order as may be deemed expedient by
Mortgagee, and the exercise or the beginning of the exercise of any power
or remedy shall not be construed to be a waiver of the right to exercise
at the same time or thereafter any other power or remedy. Unless
otherwise agreed to in writing by Mortgagee, no delay or omission by
Mortgagee or by the obligee of any Secured Obligations in the exercise of
any right or power or in the pursuance of any remedy accruing upon any
Event of Default (as defined in the Charter) shall impair any such right,
power or remedy or be construed to be a waiver of any such Event of
Default (as defined in the Charter) or to be an acquiescence therein; nor
shall the acceptance by Mortgagee of any security or of any payment of or
on account of any part of any Secured Obligations maturing after any
Event of Default (as defined in the Charter) or of any payment on account
of any past default be construed to be a waiver of any right to take
advantage of any future Event of Default (as defined in the Charter) or
of any past Event of Default (as defined in the Charter) not completely
cured thereby.
To the fullest extent that it may lawfully so agree,
Mortgagor covenants and agrees it shall not at any time insist upon,
claim, plead, or take the benefit or advantage of any appraisement,
valuation, stay, extension, moratorium, or redemption law now or
hereafter in force in order to prevent, delay or hinder the enforcement
of this Mortgage or the exercise by Mortgagee of any of the remedies set
forth in Section 17 hereof or the taking of possession of the Collateral
Vessel or any Collateral by any purchaser at any sale held pursuant to
this Mortgage; and Mortgagor, for itself and all who may claim by,
through or under it, as far as it or they now or hereafter lawfully may
do so, hereby waives the benefit of all such laws.
Nothing in this Article II and none of the actions or
omissions to act by Mortgagee contemplated by this Article II shall be
deemed a waiver by Mortgagee of the preferred status of the Mortgage nor
of any of the benefits, privileges or provisions given by the Ship
Mortgage Act, no provision hereof shall constitute a waiver of such
preferred status or of any of such benefits, privileges or provisions,
and in the event that any provision of this Mortgage should be, or should
be held by a court of competent jurisdiction to be, a waiver of or
otherwise prejudicial to such preferred status, then in such event such
provisions of this Mortgage should be and shall be deemed to be of no
force and effect.
24. If at any time after an Event of Default (as defined in
the Charter) and prior to the actual sale of the Collateral Vessel by
Mortgagee or prior to any foreclosure proceedings, Mortgagor offers to
cure completely all Events of Default (as defined in the Charter) and to
pay all expenses, advances and damages to Mortgagee consequent on such
Events of Default (as defined in the Charter), with interest at a rate
per annum equal to the Overdue Rate (as defined in the Charter), then
Mortgagee may accept such offer, but such action shall not affect any
subsequent Event of Default (as defined in the Charter) or impair any
rights consequent thereon.
25. In case Mortgagee shall have proceeded to enforce any
right, power or remedy under this Mortgage by foreclosure, entry or
otherwise, and such proceeding shall have been discontinued or abandoned
for any reason or shall have been determined adversely to Mortgagee, then
and in every such case Mortgagor and Mortgagee shall be restored to their
former positions and rights hereunder with respect to the property
subject or intended to be subject to this Mortgage, and all rights,
remedies and powers of Mortgagee shall continue as if no such proceedings
had been taken.
26. The proceeds of sale of the Collateral Vessel or any
Collateral and the net earnings of any charter operation or other use
thereof by Mortgagee under any of the powers herein specified and any and
all other moneys received by Mortgagee pursuant to or under the terms of
this Mortgage or in any proceedings hereunder, the application of which
has not elsewhere herein been specifically provided for, shall be applied
as provided in the Charter and in such order as set forth therein.
27. Until one or more Events of Default shall happen,
Mortgagor (a) shall be suffered and permitted to retain actual possession
and use of the Collateral Vessel and (b) shall have the right, from time
to time, in its discretion, and without application to Mortgagee or
Beneficiary, and without obtaining a release thereof by Mortgagee or
Beneficiary, to dispose of, free from the lien hereof, any boilers,
engines, machinery, bowsprits, masts, spars, rigging, boats, anchors,
cables, chains, tackle, apparel, furniture, fittings or equipment or any
other appurtenances to the Collateral Vessel that are no longer useful,
necessary, profitable or advantageous in the operation of such Collateral
Vessel and that have an aggregate replacement cost not exceeding
$10,000,000, first or simultaneously replacing the same by new boilers,
engines, machinery, bowsprits, masts, spars, rigging, boats, anchors,
chains, cables, tackle, apparel, furniture, fittings, equipment or other
appurtenances of substantially equal value, utility and useful life
(assuming such replaced items were in the working order, condition and
state of repair required under the terms of this Mortgage) which shall
forthwith become subject to the lien and other terms and conditions of
this Mortgage as a preferred mortgage thereon.
ARTICLE III
INTENTIONALLY DELETED
ARTICLE IV
SUNDRY PROVISIONS
29. For the purpose of this Mortgage and the endorsement of
this Mortgage on the documents of the Collateral Vessel, the total amount
of the Secured Obligations is $60,000,000.00 plus interest, fees and
other expenses and performance of mortgage covenants. The date of
maturity is February 28, 2006 and the discharge amount is the same as the
total amount.
30. All the covenants, representations, warranties,
promises, stipulations and agreements of Mortgagor in this Mortgage
contained shall bind Mortgagor and its successors and assigns and shall
inure to the benefit of Mortgagee, Beneficiary and their respective
successors and assigns and shall survive termination of this Mortgage.
Notwithstanding the foregoing, Mortgagor s rights and obligations
hereunder may not be assigned without the prior written consent of
Mortgagee and Beneficiary. This Mortgage may be assigned by Mortgagee
without the consent of Mortgagor or any person or entity other than
Beneficiary (whose consent shall be required for any such assignment).
Mortgagee agrees to provide Mortgagor with notice of any such assignment
by Mortgagee; provided, however, that failure to provide such notice
shall in no way affect the validity or effectiveness of such assignment.
31. Wherever and whenever herein any right, power or
authority is granted or given to Mortgagee, such right, power or
authority may be exercised in all cases by Mortgagee or such agent or
agents as it may appoint, and the act or acts of such agent or agents
when taken shall constitute the act of Mortgagee hereunder.
IN WITNESS WHEREOF, Mortgagor has executed this Mortgage by
its officer thereunto duly authorized the day and year first above
written.
READING & ▇▇▇▇▇ DRILLING CO.
By:
Name:
Title:
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ACKNOWLEDGMENT
STATE OF )
) ss.
COUNTY OF )
On this the _____ day of November, 1995, before me came
_________________________ to me known, who, being by me duly sworn, did
d e p o s e a n d s a y t h a t h e r e s i d e s a t
________________________________________________________; that he is the
___________________ of Reading & ▇▇▇▇▇ Drilling Co., the corporation
described in and which executed the foregoing mortgage; that he knows the
seal of said corporation; that the seal affixed to said mortgage is such
corporate seal; that it was so affixed by order of the Board of Directors
of said corporation; and that he signed his name to said mortgage by like
order and he acknowledged to me that he executed said mortgage as
_____________________of said corporation, and that the same is the free
and voluntary act and deed of said corporation, and of himself as such
officer for the uses and purposes therein expressed.
My Commission Expires: Notary Public
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Exhibit A
Copy of Bareboat Charter
SEE ATTACHED
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EXHIBIT D
SECURITY AGREEMENT
THIS SECURITY AGREEMENT ("Security Agreement") is given as of
this 28th day of November, 1995, by READING & ▇▇▇▇▇ DRILLING CO., an
Oklahoma corporation ("Grantor"), having an office at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, in favor of WILMINGTON TRUST COMPANY, a
Delaware banking corporation, not in its individual capacity, but solely
as Trustee (in such capacity, "Secured Party") for the benefit of DEEP
SEA INVESTORS, L.L.C., a Delaware limited liability company
("Beneficiary").
WHEREAS:
A. Grantor is the sole owner of the whole of (i) that certain
vessel known as the "▇▇▇ ▇▇▇▇▇▇▇▇▇▇ , official number 651643 (the
"▇▇▇▇▇▇▇▇▇▇"), and (ii) that certain vessel known as the "▇▇▇▇▇▇▇▇ ▇▇▇▇",
official number 601699 (the "▇▇▇▇"), both duly documented in the name of
Grantor under the laws and flag of the United States of America (the
▇▇▇▇▇▇▇▇▇▇ and the ▇▇▇▇, together, the "Collateral Vessels").
B. This Security Agreement is being executed and delivered by
Grantor pursuant to that certain Memorandum of Agreement (the "MOA")
dated of even date herewith by and between Beneficiary and Reading and
▇▇▇▇▇, Inc., an Oklahoma corporation ("R&B, Inc."), a subsidiary of
Grantor s parent corporation, Reading & ▇▇▇▇▇ Corporation. Under the
MOA, R&B, Inc. agreed to sell a certain other vessel to Beneficiary and
Beneficiary agreed to lease that vessel to Grantor under the terms and
subject to the conditions set forth in the Bareboat Charter (the
"Charter") dated of even date herewith by and between Grantor and
Beneficiary (the MOA, the Charter and all other documents executed in
connection therewith, together with any and all amendments, supplements,
renewals or substitutions of all or any of such documents, are sometimes
referred to collectively herein as the "Charter Documents").
C. The Board of Directors of Grantor having determined that
Grantor will derive substantial benefit, directly or indirectly, from the
sale and lease transaction among Grantor, R&B, Inc. and Beneficiary,
Grantor, as required by Beneficiary, is executing and delivering (i) that
certain Preferred Mortgage dated of even date herewith encumbering the
▇▇▇▇▇▇▇▇▇▇ (the "▇▇▇▇▇▇▇▇▇▇ Mortgage") and (ii) that certain First
Preferred Mortgage dated of even date herewith encumbering the ▇▇▇▇ (the
"▇▇▇▇ Mortgage") (the ▇▇▇▇▇▇▇▇▇▇ Mortgage and the ▇▇▇▇ Mortgage,
together, the "Mortgages"), to secure the prompt and complete payment,
performance and observance of all representations, warranties, covenants,
duties, liabilities and obligations of Grantor under the Charter
Documents (the "Secured Obligations").
D. Beneficiary requires that Grantor execute and deliver this
Security Agreement in order to further secure the Secured Obligations.
NOW, THEREFORE, in consideration of the foregoing recitals
and the mutual covenants and obligations contained herein, and intending
to be legally bound, the parties hereby agree as follows:
1. Security Interest.
As security for the Secured Obligations and Grantor's other
obligations under the Charter Documents, Grantor hereby grants to Secured
Party for the benefit of Beneficiary a security interest in and lien upon
(hereinafter referred to as the "Security Interest") the following
described personal property (whether now owned by Grantor or existing or
hereafter arising or acquired by Grantor) and in all proceeds (including
cash proceeds, insurance proceeds and proceeds of proceeds) of such
property in any form (hereinafter collectively referred to as the
"Collateral"):
a. All engines, boilers, machinery, masts, anchors,
cables, spars, rigging, tackle, apparel, furniture, fittings, boats,
chains, equipment, fixtures and all other appurtenances of Grantor
appertaining and belonging to either of the Collateral Vessels or to the
"▇.▇. ▇▇▇▇▇, ▇▇.", the vessel leased by Grantor under the Charter (the
"Charter Vessel"), whether aboard or removed from the Collateral Vessels
or the Charter Vessel, together with all additions, improvements, and/or
replacements thereto or thereof, and not otherwise subject to the
Mortgages (collectively, the "Appurtenances").
b. Grantor's interest in all casualty, liability,
property, indemnity, hull, war risk, pollution and marine insurance
policies, and Grantor's interest in all proceeds thereof and payments
thereunder, relating to either of the Collateral Vessels or to the
Charter Vessel.
c. All of Grantor's accounts, general intangibles and
contract rights consisting of or relating to all present and future
drilling contracts, charters, subcharters and other agreements providing
for the possession, use or employment of the Charter Vessel or of either
of the Collateral Vessels (any agreements relating to the foregoing are
referred to hereinafter collectively as "Contracts") and all rights to
payment under any of the foregoing, whether for hire, indemnity, damages
or otherwise.
d. Grantor's interest in all sums otherwise earned or to
be earned of or from either of the Collateral Vessels or the Charter
Vessel.
2. Representations and Warranties of Grantor.
Grantor represents and warrants and, so long as the Secured
Obligations remain outstanding, shall be deemed continuously to represent
and warrant that (a) Grantor is the owner of the Collateral Vessels free
and clear of all security interests, liens or other encumbrances except
the Security Interest, the Mortgages, liens for current crew s wages,
general average and salvage, in each case, incurred in the ordinary
course of business and that are not yet overdue and, with respect to the
▇▇▇▇▇▇▇▇▇▇ only, the liens and security interests in favor of ABC
Equipment Leasing, Inc. (the "First Mortgagee") created by that certain
First Preferred Mortgage dated January 28, 1987, securing a principal
amount of not more than $11,000,000, which is payable in accordance with
the amortization schedule annexed hereto and made a part hereof as
Exhibit A (the "First Preferred Mortgage"), recorded March 4, 1987, as
Instrument No. 1, Book No. PM149, in the records of the Eighth Coast
Guard District, Port of Houston, Texas; (b) no obligor with respect to
any of the Contracts has any defense, setoff, claim or counterclaim which
can be asserted against Secured Party or Beneficiary, whether in any
proceeding to enforce the Collateral or otherwise (hereinafter, with
respect to the related Contract, each such obligor referred to as an
"Account Debtor"), nor have any amounts payable under such Contracts been
prepaid, pledged, hypothecated or assigned; (c) Grantor is authorized to
enter into this Security Agreement and into the transactions contemplated
hereby and evidenced by the Collateral; (d) Grantor is engaged in
business operations which are carried on at the address specified above,
and Grantor s records concerning the Collateral are kept at the address
specified above; and (e) Grantor is the sole owner of the whole of both
Collateral Vessels and all Appurtenances and other Collateral.
3. Covenants of Grantor.
Grantor (a) will defend the Collateral against the claims and
demands of all other parties, including, without limitation, defenses,
set-offs, claims and counterclaims asserted by any Account Debtor against
Grantor and/or Secured Party and/or Beneficiary; (b) will keep the
Collateral free of all security interests or other liens, mortgages,
chattel mortgages and encumbrances, except (i) the Security Interest and
the Mortgages or any other lien favoring Secured Party, (ii) the First
Preferred Mortgage encumbering the ▇▇▇▇▇▇▇▇▇▇ and (iii) liens for current
crew's wages, general average and salvage, in each case, incurred in the
ordinary course of business and that are not yet overdue, and will not
sell, transfer, assign, deliver or otherwise dispose of any Collateral or
any interest therein without the prior written consent of Secured Party
and Beneficiary; (c) will keep, in accordance with generally accepted
accounting principles consistently applied, accurate and complete records
concerning the Collateral, and at Secured Party s or Beneficiary's
request, will ▇▇▇▇ all or any such records and all or any Collateral to
indicate the Security Interest and will permit Secured Party, Beneficiary
or their respective agents to inspect during Grantor s normal business
hours the Collateral and to audit and make extracts from such records or
any of Grantor s books, ledgers, reports, correspondence and other
records; (d) will deliver to Secured Party and Beneficiary on demand
originals of any and all Contracts, bills of lading, invoices, due bills,
amendments or replacements to any of the foregoing, and other documents
evidencing, representing or relating to the Collateral, or any part
thereof; (e) will notify Secured Party and Beneficiary promptly in
writing, of any change in the address specified above, at which records
concerning the Collateral are kept; (f) will notify Secured Party and
Beneficiary immediately of any default by any Account Debtor in payment
or other performance of its obligations with respect to any Contract;
(g) all Contracts that are or will be charters or subcharters are subject
to Secured Party s consent to the extent required by the Mortgages, all
Contracts that are or will be drilling contracts do and will contain
terms and conditions satisfactory to Secured Party and Beneficiary,
including, but not limited to, coverage of Secured Party and the Owner
Group (as defined in the Charter) by all indemnities and required
insurance from the operator thereunder and do or shall expressly disclaim
any property interest in the ▇▇▇▇▇▇▇▇▇▇, the ▇▇▇▇ or the Charter Vessel,
as applicable, and, without Secured Party s and Beneficiary's prior
written consent, will not make or agree to make any material alteration,
modification or cancellation of, or substitution for, or credits,
discounts, adjustments, offsets or allowances on any of the Contracts or
any Collateral; (h) will keep all tangible property in good maintenance,
condition and repair, and fully insured at all times against fire and
other casualty and extended coverage risks, and shall maintain adequate
public liability insurance with respect to the operation of the
Collateral, in each case all as more fully provided in the other Charter
Documents (including, without limitation, the Mortgages); (i) will not
pledge, hypothecate, encumber or assign or permit any prepayment of any
of the Contracts; and (j) in connection herewith, will execute and
deliver to Secured Party and Beneficiary such financing statements,
assignments and other documents, pay all costs of title searches and
filing financing statements, assignments and other documents in all
public offices requested by Secured Party or Beneficiary, and do such
other things as Secured Party or Beneficiary may request.
4. Verification of Collateral.
Secured Party and Beneficiary shall have the right to verify
the existence, location or condition of all or any Collateral in any
manner and through any medium Secured Party or Beneficiary may consider
appropriate, including by way of audit verifications or estoppel requests
from Account Debtors, and Grantor agrees to furnish all assistance and
information and perform any acts which Secured Party or Beneficiary may
require in connection therewith.
5. Notification and Payments.
On or after the occurrence of any Event of Default (as
hereinafter defined), Secured Party or Beneficiary may notify all or any
Account Debtors of the Security Interest and may also direct such Account
Debtors to make all payments on or in respect to the Collateral to
Secured Party for the benefit of Beneficiary. All payments on, and other
proceeds from Collateral (including cash proceeds, insurance proceeds and
proceeds of proceeds) received by Secured Party directly or from Grantor
shall be applied as provided in the Charter and the Mortgages.
6. Default.
a. Any of the events or conditions constituting an Event
of Default under the Charter shall constitute an event of default
hereunder (herein referred to as an "Event of Default").
b. Upon the happening of any Event of Default, Secured
Party, at its sole election, may declare all or any part of the Secured
Obligations to be immediately due and payable without demand or notice of
any kind.
c. Upon the happening of any Event of Default, Secured
Party shall have and may exercise all rights and remedies which may be
available to it hereunder or under any of the Charter Documents or
otherwise under applicable law, in admiralty or in equity.
d. Without in any way requiring notice to be given in the
following manner, Grantor agrees that any notice by Secured Party of
sale, disposition or other intended action hereunder or in connection
herewith, whether required by the Uniform Commercial Code as presently in
effect in the State of New York or otherwise, shall constitute
commercially reasonable notice to Grantor if such notice is mailed by
regular or certified mail, postage prepaid, at least five (5) days prior
to such action, to Grantor at Grantor s address specified above or to any
other address to which notices hereunder shall be given to Grantor under
the Charter.
e. Grantor agrees to pay on demand all costs and expenses
incurred by Secured Party or Beneficiary in enforcing this Security
Agreement, in realizing upon any Collateral and in enforcing and
collecting any of the Secured Obligations, including, without limitation,
if Secured Party or Beneficiary retains counsel for any such purpose,
reasonable counsel fees and disbursements. Any accounts not paid when
due shall bear interest at the Overdue Rate provided therefor in the
Charter.
7. Miscellaneous.
a. Grantor agrees, from time to time and at the expense of
Grantor, to promptly execute and deliver all further instruments and
documents, and take all further action that may be reasonably necessary
or desirable, or that the Secured Party or Beneficiary may reasonably
request, in order to perfect and protect any security interests granted
or purported to be granted hereby or to enable Secured Party to exercise
and enforce its rights hereunder. Without limiting the generality of the
foregoing, Grantor hereby authorizes Secured Party, at Grantor s expense,
in order to re-perfect or to prevent a lapsing of perfection of any
security interest, to file this Security Agreement and such financing
statement or statements or other instruments, documents or affidavits, or
copies thereof, relating to the Collateral, without Grantor s signature
thereon as Secured Party at its option may deem appropriate, and appoints
Secured Party as Grantor's attorney-in-fact to execute any such copy of
this Security Agreement and/or any such financing statement or statements
or other instruments, documents or affidavits in Grantor s name and to
perform all other acts which Secured Party or Beneficiary deems
appropriate to perfect and continue the Security Interest and to protect
and preserve the Collateral.
b. Upon and after an Event of Default, Secured Party may
demand, collect and ▇▇▇ on the Collateral (in either Grantor s or Secured
Party s name at the latter s option) with the right to enforce,
compromise, settle or discharge the Collateral, and may indorse Grantors
name on any and all checks, commercial paper and any other instruments
pertaining to the Collateral.
c. Upon Grantor's failure to perform any of its duties
under the Collateral, and if an Event of Default shall have occurred,
Secured Party may, but shall not be obligated to, perform any or all such
duties. The amount of Secured Party's expense in connection with any
such performance shall be an additional obligation of Grantor under the
Charter and the other Charter Documents and secured by this Security
Agreement, and Grantor shall pay such amount to Secured Party forthwith
upon written demand by Secured Party or Beneficiary.
d. No delay or omission by Secured Party in exercising any
right or remedy hereunder or with respect to any of the Secured
Obligations or any Contract or Collateral shall operate as a waiver
thereof or of any other right or remedy, and no single or partial
exercise thereof shall preclude any other or further exercise of any
other right or remedy. Secured Party may remedy any default by Grantor
hereunder or with respect to any of the Secured Obligations in any
reasonable manner without waiving the default by Grantor. All rights and
remedies of Secured Party hereunder are cumulative.
e. Secured Party shall have no obligation to take, and
Grantor shall have the sole responsibility for taking, any and all steps
to preserve rights against any and all prior parties to any instrument
constituting Collateral whether or not in Secured Party's possession.
Secured Party shall not be responsible to Grantor for loss or damage
resulting from Secured Party's failure to enforce any Collateral or to
collect any monies due or to become due thereunder, or other proceeds
(including cash proceeds, insurance proceeds and proceeds of proceeds)
constituting Collateral hereunder. Grantor waives protest of any
instrument constituting Collateral at any time held by Secured Party on
which Grantor is in any way liable.
f. The rights and benefits of Secured Party hereunder
shall, if Secured Party so agrees, inure to any party lawfully (under the
laws applying to vessels, the financing of vessels, or otherwise)
acquiring any interest in the Charter or any other Charter Documents or
any part thereof. This Security Agreement may not be assigned by Grantor
without the prior written consent of Secured Party, but Secured Party may
assign at any time this Security Agreement or any rights or interests
hereunder to any person or entity without the consent of or notice to
Grantor or any person or entity other than Beneficiary (whose consent
shall be required for any such assignment).
g. Secured Party, Beneficiary and Grantor as used herein
shall include the successors and permitted assigns of those parties.
h. Notices and other communications required or permitted
hereunder shall be in writing and shall be deemed sufficient for all
purposes if sent by registered or certified letter, nationally recognized
overnight courier service specifying one-day delivery, facsimile or telex
to the recipient's address stipulated below and shall be effective from
the date of receipt thereof.
Other addresses may be substituted for those below upon
giving notice thereof in the manner provided above:
if to the Secured Party: Wilmington Trust Company
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Financial Services
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: Deep Sea Investors, L.L.C.
c/▇ ▇▇▇▇▇▇ Financial, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: Legal Department
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
if to the Grantor: Reading & ▇▇▇▇▇ Drilling Co.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: Chief Financial Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
i. No modification, rescission, waiver, release or
amendment of any provision of this Security Agreement shall be made
except by a written agreement signed by the party to be bound.
j. THIS SECURITY AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO PRINCIPLES OF CONFLICT OF LAWS.
k. GRANTOR, FOR ITSELF, ITS SUCCESSORS AND ASSIGNS, HEREBY
KNOWINGLY AND INTENTIONALLY AND IRREVOCABLY AND UNCONDITIONALLY
a) SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION
OF THE STATE COURTS OF THE STATE OF NEW YORK AND THE FEDERAL COURTS
SITTING IN THE STATE OF NEW YORK AND AGREES AND CONSENTS THAT SERVICE OF
PROCESS MAY BE MADE UPON IT IN ANY LEGAL PROCEEDING ARISING OUT OF OR IN
CONNECTION WITH THIS SECURITY AGREEMENT, THE OTHER CHARTER DOCUMENTS OR
THE SECURED OBLIGATIONS BY SERVICE OF PROCESS AS PROVIDED BY NEW YORK
LAW, b) WAIVES TO THE EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY
NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY LITIGATION ARISING
OUT OF OR IN CONNECTION WITH THIS SECURITY AGREEMENT, THE OTHER CHARTER
DOCUMENTS OR THE SECURED OBLIGATIONS BROUGHT IN ANY NEW YORK STATE COURT
OR FEDERAL COURT SITTING IN THE STATE OF NEW YORK, c) WAIVES ANY CLAIMS
THAT ANY LITIGATION BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM, d) CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF
THE AFOREMENTIONED COURTS IN ANY SUCH LITIGATION BY THE MAILING OF COPIES
THEREOF BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, POSTAGE PREPAID, TO
GRANTOR AT THE ADDRESS SPECIFIED HEREIN AND e) AGREES THAT ANY LEGAL
PROCEEDING ARISING OUT OF, RELATED TO OR IN CONNECTION WITH THIS SECURITY
AGREEMENT, THE OTHER CHARTER DOCUMENTS OR THE SECURED OBLIGATIONS MAY BE
BROUGHT IN ANY COURT OF COMPETENT JURISDICTION IN THE STATE OF NEW YORK.
NOTHING HEREIN SHALL AFFECT THE RIGHT OF SECURED PARTY TO COMMENCE LEGAL
PROCEEDINGS OR OTHERWISE PROCEED AGAINST GRANTOR IN ANY OTHER
JURISDICTION OR TO SERVE PROCESS IN ANY MANNER PERMITTED BY APPLICABLE
LAW.
l. GRANTOR, FOR ITSELF AND ITS SUCCESSORS AND ASSIGNS,
HEREBY KNOWINGLY AND INTENTIONALLY AND IRREVOCABLY AND UNCONDITIONALLY
WAIVES TO THE FULLEST EXTENT PERMITTED BY LAW ITS RIGHTS TO A JURY TRIAL
OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
SECURITY AGREEMENT OR ANY OF THE OTHER CHARTER DOCUMENTS OR ANY DEALINGS
WITH SECURED PARTY RELATING TO THE SUBJECT MATTER OF THE TRANSACTIONS
CONTEMPLATED HEREBY AND THEREBY AND THE RELATIONSHIP THAT IS BEING
ESTABLISHED. THE FOREGOING WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, MODIFICATIONS, RENEWALS, SUPPLEMENTS OR SUBSTITUTIONS TO THIS
SECURITY AGREEMENT OR ANY OF THE OTHER CHARTER DOCUMENTS WHETHER OR NOT
EXPRESSLY SET FORTH HEREIN OR THEREIN.
IN WITNESS WHEREOF, the undersigned has caused these presents
to be duly executed and delivered by its officer thereunto duly
authorized as of the day and year first above written.
READING & ▇▇▇▇▇ DRILLING CO.
By:
Name:
Title:
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Exhibit A
Amortization Schedule
SEE ATTACHED
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EXHIBIT E
OFFICERS CERTIFICATE
The undersigned, the [Assistant] Secretary and the
[__________] President, respectively, of [Reading & ▇▇▇▇▇
Corporation][Reading and ▇▇▇▇▇, Inc.][Reading & ▇▇▇▇▇
Drilling Co.] (the "Company") hereby certify to DEEP SEA
INVESTORS, L.L.C., a Delaware limited liability company,
Buyer under the Memorandum of Agreement (the "MOA"), dated as
of November ___, 1995, by and between [Reading and ▇▇▇▇▇,
Inc.][the Company] (it being understood that capitalized
terms used and not otherwise defined herein shall have the
respective meanings ascribed thereto in the MOA):
1. _______________________ is the duly elected and
qualified [________] President of the Company;
2. _______________________ is the duly elected and
qualified [Assistant] Secretary of the Company;
3. The resolutions of the Company's board of
directors, a true, correct and complete copy of
which are attached hereto as Exhibit "A" and made a
part hereof, (i) were duly adopted [at a meeting of
the directors of the Company held on ____________,
1995 at which the required quorum was present and
voting throughout] [by the unanimous written
consent of the directors of the Company in
accordance with applicable law on __________, 1995]
(the date when such resolutions were duly adopted
being referred to herein as the "Resolution Date")
in accordance with applicable law and the articles
or certificates of incorporation and bylaws of the
Company, (ii) are in full force and effect, (iii)
have not been repealed, amended or modified, and
(iv) authorize the Company to execute and deliver,
and perform the Company's obligations under, the
Charter Documents to which the Company is a party;
4. The individuals listed below (the "Current
Officers") have been duly elected to and qualified
for, and validly hold the offices of the Company
set forth opposite their respective names, and the
signatures set forth opposite their respective
names are their true and authentic signatures:
Name Title_________________________
Signature
Chief Executive Officer
Chief Financial Officer
President
Vice President
5. Each of the Current Officers has the authority to
execute and deliver, on behalf of the Company, the
Charter Documents to which the Company is a party.
6. The Certificate of Incorporation of the Company,
and all amendments thereto, as certified by the
appropriate authority where the Company is
incorporated, a true, correct and complete copy of
which is attached hereto as Exhibit "B" and made a
part hereof, (i) was in full force and effect
(without further modification or amendment) on the
Resolution Date, and (ii) is in full force and
effect as of the date hereof (without further
modification or amendment).
7. The Bylaws of the Company, and all amendments
thereto, a true, correct and complete copy of which
are attached hereto as Exhibit "C" and made a part
hereof, (i) were in full force and effect (without
further modification or amendment) on the
Resolution Date, and (ii) are in full force and
effect as of the date hereof (without further
modification or amendment).
8. Certificates of Existence and Good Standing.
Attached hereto as Exhibit D are recent
Certificates issued by appropriate governmental
authorities which evidence the existence and good
standing of the Company in the jurisdiction in
which the Company is incorporated.
The undersigned acknowledge that (i) this
Certificate constitutes the Officers' Certificate described
in Section 6(e) of the MOA, and (ii) [Investment Entity] is
relying on this Certificate, without performing an
independent investigation, in entering into the transactions
contemplated by the Charter Documents.
IN WITNESS WHEREOF, the undersigned has duly
executed and delivered this Officers' Certificate as of the
____ day of November, 1995.
___________________,
[Assistant] Secretary
I, ___________________, hereby certify that I am
now the duly elected, qualified, and acting [_________]
President of the Company; that ____________________ is the
duly elected, qualified and acting [Assistant] Secretary of
the Company and the signature set forth above his name is his
correct signature; and that the certifications set forth
above are true and correct as of the date hereof.
IN WITNESS WHEREOF, I have duly executed this
Certificate as of November ___, 1995.
_______________, [__________] President
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EXHIBIT F
CONSENT TO PREFERRED MORTGAGE
THIS CONSENT TO PREFERRED MORTGAGE ("Consent") given as
of the ______ day of November, 1995, by ABC EQUIPMENT
LEASING, INC., a New York corporation ("First Mortgagee"),
with principal offices at ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇, in favor of WILMINGTON TRUST COMPANY, a Delaware
banking corporation, Trustee (in such capacity, "Second
Mortgagee") for the benefit of DEEP SEA INVESTORS, L.L.C., a
Delaware limited liability company ("Beneficiary"), both with
offices at c/▇ ▇▇▇▇▇▇ Financial, Inc., Attention: Legal
Department, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
A. Reading & ▇▇▇▇▇ Drilling Co., an Oklahoma
corporation ("Mortgagor"), is the sole owner of the whole of
those certain vessels known as the "▇▇▇ ▇▇▇▇▇▇▇▇▇▇," official
number 651643, gross tonnage 7977, net tonnage 5866, built at
Okpo Island, South Korea, in 1982, duly documented in the
name of Mortgagor under the laws and flag of the United
States (the "Collateral Vessel").
B. Reading and ▇▇▇▇▇, Inc., an Oklahoma corporation
("R&B, Inc."), and American Broadcasting Companies, Inc., a
New York corporation ("ABC, Inc.") entered into two
agreements dated as of March 22, 1982 (as amended, the "TBT
Agreements"). R&B, Inc. and ABC, Inc. subsequently assigned
their respective rights and obligations under the TBT
Agreements to Mortgagor and First Mortgagee, respectively.
C. To secure its obligations under the TBT Agreements,
Mortgagor granted to First Mortgagee a first priority
mortgage on the Collateral Vessel pursuant to that certain
First Preferred Mortgage dated January 28, 1987 (the "First
Preferred Mortgage"), recorded March 4, 1987, as Instrument
No. 1, Book No. PM149, in the records of the Eighth Coast
Guard District, Port of Houston, Texas.
D. Pursuant to that certain Memorandum of Agreement
(the "MOA") dated as of November 28, 1995, by and between
Beneficiary and R&B, Inc., a subsidiary of Mortgagor's parent
corporation, Reading & ▇▇▇▇▇ Corporation, R&B, Inc. agreed to
sell a certain other vessel to Beneficiary and Beneficiary
agreed to lease that vessel to Mortgagor under the terms and
subject to the conditions set forth in the Bareboat Charter
(the "Charter") dated November 28, 1995, by and between
Mortgagor and Beneficiary (the MOA, the Charter and all other
documents executed in connection therewith together with any
and all amendments, supplements, renewals or substitutions of
all or any of such documents, are sometimes referred to
collectively herein as the "Charter Documents").
E. The Board of Directors of Mortgagor having
determined that Mortgagor will derive substantial benefit,
directly or indirectly, from the sale and lease transaction
among R&B, Inc., Mortgagor and Beneficiary, Mortgagor, as
required by Beneficiary, has agreed to execute and deliver a
Preferred Mortgage, granting to Second Mortgagee a second
priority mortgage on the Collateral Vessel (the "Second
Mortgage"), secondary and subordinate only to the First
Mortgage, to secure the prompt and complete payment,
observance and performance of all representations,
warranties, covenants, liabilities and obligations of
Mortgagor under the Charter Documents (the "Secured
Obligations").
F. First Mortgagee wishes to execute and deliver this
Consent in order to evidence its consent to the Second
Mortgage as an additional lien and encumbrance on the
Collateral Vessel.
NOW, THEREFORE, with intent to be legally bound, in
consideration of the foregoing, and for other good and
valuable consideration, receipt of which is hereby
acknowledged, First Mortgage hereby agrees as follows:
1. First Mortgagee, on behalf of itself and its
successors and assigns, acknowledges receipt of notice of
Mortgagor's intent to execute, deliver and file of record the
Second Mortgage, and hereby consents to such execution,
delivery and recording, and to the placing of the Second
Mortgage as an additional lien and encumbrance on the
Collateral Vessel.
2. First Mortgagee represents and warrants to Second
Mortgagee and Beneficiary that the First Mortgagee has not
sold, transferred, assigned, encumbered or otherwise disposed
of the First Mortgage or any of the rights thereunder or the
obligations secured thereby and is the sole holder of such
First Mortgage, each of the rights thereunder and all
obligations secured thereby.
3. First Mortgagee agrees that it shall give Second
Mortgagee and Beneficiary written notice of any default under
the First Mortgage simultaneously with delivery of such
notice to Mortgagor. First Mortgagee shall not exercise any
of its rights and remedies under the First Mortgage or at law
or in equity unless Second Mortgagee or Beneficiary have
failed to cure the default described in any such notice
within 10 days after receipt by Second Mortgagee and
Beneficiary of notice of monetary defaults and 30 days after
receipt by Second Mortgagee and Beneficiary of notice of non-
monetary defaults; provided, however, that if any non-
monetary default by its nature cannot be cured within such
30-day period, Second Mortgagee and Beneficiary shall have
such additional period of time (not to exceed 60 days from
the delivery of such notice to Second Mortgagee and
Beneficiary) as may be necessary to cure the default,
provided that Second Mortgagee or Beneficiary have commenced
curative measures within such 30-day period and are
proceeding diligently thereafter to complete such curative
measures; provided, further, that First Mortgagee may
immediately enforce its rights and remedies under the First
Mortgage if Second Mortgagee or Beneficiary take any action
(whether judicial or pursuant to a power of sale) to
foreclose or otherwise enforce the Second Mortgage. Upon
payment of the obligations secured by the First Mortgage,
First Mortgagee shall promptly execute and deliver to Second
Mortgagee and Beneficiary for filing, at Mortgagor's sole
cost and expense, with each filing officer with which the
First Mortgage, any financing statement or other instrument
covering the Collateral Vessel or any other collateral was
filed, all satisfactions of mortgage, satisfaction pieces,
termination statements and similar instruments, and take or
cause to be taken such other or further action, as Second
Mortgagee or Beneficiary may deem necessary or appropriate to
terminate the First Mortgagee's mortgage, lien and security
interest in the Collateral Vessel or any other collateral.
4. This Consent (together with the Charter Documents)
sets forth the entire agreement of the parties with respect
to its subject matter. Any previous or contemporaneous oral
agreements or understandings with regard to the subject
matter of this Consent shall be of no force or effect. First
Mortgagee, and each person signing therefor, represents and
warrants that it, he or she, respectively, has full power and
authority to execute and deliver this Consent on behalf of
First Mortgagee.
IN WITNESS WHEREOF, First Mortgagee has caused the due
execution hereof by its officer thereunto duly authorized as
of the date first set forth above.
ABC EQUIPMENT LEASING, INC.
By:
__________________________________
Name:
__________________________________
Title:
__________________________________